The $800 Million Pill: Fact or Fiction?

The following were my opening remarks to the AARP forum, “The $800 Million Pill – Fact or Fiction,” held on September 21 in Washington:

If you’ve read at least the subtitle of my book, you know I come down firmly on the fiction side of this equation. But before I get into the particulars of why I know that to be the case, allow me to start by offering a few words of praise for the pharmaceutical industry. When drug companies are on their best behavior, they play an important role in bringing new drugs to market. They have extraordinary skills in the design, formulation and manufacturing of chemicals and proteins that can do extraordinary things for human health. At times its scientists have played crucial roles in understanding the biology of disease and the ways that disease can be effectively – and allow me to underline the word effectively – treated. They also play a large role in financing important – and I underline the word important – clinical trials.

But, alas, that describes less than half of what the pharmaceutical industry does with its research and development budgets, which take about 20 percent on average of every drug consumer dollar. And in recent years, that good portion of that 20 percent – the Dr. Jekyl portion of industry R&D – has been declining as R&D departments have been taken over by Mr. Hyde – the companies’ marketing arms and the marketing imperative dictated by what it takes to remain the nation’s most profitable industry.

Every one of those skills can be used for purposes that add absolutely nothing to physicians’ armamentarium for fighting disease. Science can unearth new ways of treating diseases that are already well controlled. Chemistry can develop new molecules that are minor variations of molecules already on the market but threatened by patent expiration and going generic. Clinical trials can be deployed not as a powerful tool for understanding treatment but as thinly disguised marketing stunts, to encourage physicians to prescribe a particular drug; to prompt them to prescribe drugs for off-label uses; to gin up barely scientific observational studies published in second-tier medical journals that can then be handed out by the tens of thousands of drug salespersons knocking on doctors’ doors every day. That, ladies and gentlemen, describes our drug marketplace today.

When university economists funded by the drug industry came up with the $800 million number, they never took any of those factors into account. To economists, any economic activity is a net social positive. The idea that there might be what I like to call corporate waste never enters into their equations. But it seems to me that when we have seniors climbing on buses to buy drugs in Canada and Tijuana; when the Medicare system faces bankruptcy in part because of its escalating drug bill; when last year’s drug benefit will pay for less than half of the projected increase in senior citizen drug expenditures (largely because the drug industry succeeded in prohibiting the government from negotiating on price), then it is critical that policy makers and every citizen understand where new drugs – significant new drugs – really come from and what they really cost to make.

I looked for answers to those questions by looking at what many people consider to be some of the more significant medical breakthroughs of the last quarter century. They included leading biotechnology drugs like recombinant erythropoietin (Epogen and Procrit on the market) and the triple cocktail for AIDS, which was the greatest new threat to human health we’ve faced in recent times. What we see in these cases is that the key scientific understandings that led to these drugs began and were developed in the public sector – by scientists working on public payrolls or at universities on government grants. What we also see is that the evolution of understanding that leads to medical innovation almost always took decades, and was the product of dedicated scientists who very often were not just close to the laboratory bench, but had intimate involvement with patients at the bedside. Industry almost never funds those kinds of careers. It can’t. Its scientists move from project to project depending on what holds the most promise for the bottom line in the short run.

When the government gets involved in directed research campaigns – such as the effort to come up with a treatment for HIV/AIDS – we can see this dynamic at work. All the work to understand this new pathogen was conducted by government-funded scientists. All the early drugs, even the ones nominally owned by industry, were shepherded through their trials by government-funded clinicians. As I document in the book, the government spent over $10 billion between 1985 when it got seriously involved in fighting the disease and 1996, when the triple cocktail emerged and dramatically lowered the death rate from AIDS. Total industry spending – and I reviewed the entire industry – did not equal even a third of that. Yet because the drug cocktail allowed patients to live, AIDS therapy became a $7 billion a year global market – dwarfing the amounts industry spent on R&D during all of the early years of development.

Allow me to conclude my initial presentation with what I believe should become our common sense understanding of medicine and this industry. What will it cost to develop a successful Alzheimer’s drug? Well, we could say that the cost is infinite. Why? Because we don’t understand that disease yet, at least not in a way that allows scientists to come up with a successful therapy. So the common sense I think we should have about medical progress as we debate issues like drug industry pricing is that medical progress is rare; it is almost always the product of prolonged investigation by dedicated scientists who have devoted their careers to understanding the pathways of disease and identifying possible ways for intervening; that those careers are almost funded by the government or non-profit institutions; and that then and only then can the skills that reside not just in industry but also in many academic and non-profit labs be deployed to develop therapies that may successfully intervene in that disease.

The idea that we can only get medical innovation by pouring endless amounts of senior citizen dollars into industry coffers like some chemical in a beaker defies both historical experience and common sense. When science arrives at a point where it has identified a way to successful intervene in a disease state, there will be no shortage of companies ready and willing to pounce on such discoveries and bring them through the development process to the market – no matter what we do in the short run on drug pricing.

Posted by gooznews at September 23, 2004 07:53 AM