Healthy Skepticism Library item: 19978

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: Journal Article

Priorities In The Pharmaceutical Industry
Health Affairs 2004 Jan; 23:(1):9
http://content.healthaffairs.org/content/23/1/9.full

Abstract:

PROLOGUE: Among the controversial issues that have arisen in health policy in recent years, none has been more contentious—or engaged public attention more vigorously—than the accelerated growth of pharmaceutical use and spending and related concerns about drug prices. The debate centers on the question of whether high prices for new, on-patent drugs are excessive or reasonable in relation to the costs of research and development (R&D). The complexity and prolonged time span of pharmaceutical R&D make these questions particularly difficult to answer clearly and decisively. Further complicating the picture, the pharmaceutical industry has been undergoing major structural change, as the upstream domain of discovery research has opened up to entrepreneurs and private investors.

The following paper by Iain Cockburn of Boston University provides a lucid and scrupulously fair explanation of how the changing structure of the industry might affect the delicate balance between prices and R&D costs. What ought to concern us, Cockburn suggests, is the productivity of the investments made in research and whether the “vertical dis-integration” of the industry has helped or hurt. His objectivity provides welcome relief from a polarized and ideological argument and concludes with a memorable plea for patience.

Tom Croghan of RAND and Polly Pittman of AcademyHealth address the issue of pharmaceutical productivity from a different angle. Decision making in the pharmaceutical industry allots sizable resources to the production of lifestyle and “me-too” drugs despite burden-of-disease data showing that it would be more socially useful to target other priorities such as emerging infectious diseases, the problem of drug-resistant infections, and a shortage of treatments for many chronic conditions. The authors look under the hood of the decision-making process to shed light on how priorities might be reordered and identify several policy levers that might be used to redirect energy and resources toward objectives that would produce the biggest payoffs in terms of human welfare.

Next, Colorado-based health business consultant J.D. Kleinke offers a contrasting assessment of the industry’s achievements, which emphasizes its exceptional successes during the recent years of rapid change and growth. Insurers and regulators who are preoccupied with spending increases might fail to recognize the benefits that pharmaceutical innovation has conferred in treating a widening array of conditions, and they risk killing the golden goose with short-sighted cost-control strategies. Kleinke proposes cost-sharing strategies based on the measurable value of pharmaceutical treatments as an alternative approach. Finally, a response by Fabio Pammolli and Massimo Riccaboni of the University of Florence offers an international perspective on the foregoing analyses.