Healthy Skepticism Library item: 13180

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: report

Baker D
The Benefits and Savings of Publicly-Funded Clinical Trials of Prescription Drugs
Washington, DC: Center for Economic and Policy Research 2008 Mar
http://www.cepr.net/documents/publications/clinicaltrials_2008_03.pdf

Abstract:

The current system in which prescription drug trials are financed, and often conducted directly by
the company holding intellectual property rights in the drugs, leads to substantial economic
inefficiency for two reasons. First, it creates an obvious conflict of interest since the party
conducting the trial has a direct financial stake in the outcome. The second major source of
inefficiency is that recovering the investment from the trials through higher drug prices leads to a
much larger gap between drug prices and the marginal cost of production.

This paper outlines a proposal for public funding of prescription drug trials, through contracting
with private sector firms to conduct trials. The cost of the trials, approximately $20 billion in 2007, could be more than recovered by paying lower prices for drugs purchased through the Medicare
prescription drug program. This price reduction would be brought about by changing the rules on
the drug program so that Medicare would negotiate prices in the same way as the Veteran’s
Administration. Removing the conflict of interest inherent in the current system of clinical trials and bringing drug prices closer to marginal costs would eliminate much of the inefficiency of the current system. It could also lead to substantial public health benefits…

Notes:

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