Monday, September 20, 2004
Is the drug industry overrated and under-regulated?
[William Hathaway, "The Truth About Drug Companies," The Hartford Courant, reprinted in The Wichita Eagle, 19 September 2004.]
Fortunately, this review of Dr. Marcia Angell's "The Truth About Drug Companies" recognizes that there are some flaws in her arguments, but the author may not realize the extent of them:
There is no gray in Angell's analysis, but there should be in the public debate.
For instance, Angell seems to suggest that dramatically trimming drug companies' profits would limit their ability to buy legislators and regulators, an argument that would lead to the collapse of the U.S. economy if applied to all industries with lobbyists in Washington.
There still will be arguments among those who read this book on the best path to take. But there will be few Bush, Kerry or Nader supporters who advocate the status quo in how we regulate the pharmaceutical industry. Angell raises important issues that should be addressed by presidential candidates.
The Hoover Institution's Dr. Henry Miller is a bit more harsh in his review:
The pharmaceutical industry has structural problems, to be sure. As Dr. Angell points out, drug companies do develop too many "me-too" drugs that differ little from earlier products, and spend disproportionately on marketing and promoting them.
But in large part these strategies are the result of the industry's being the victims of government policies, not, as Dr. Angell argues, their beneficiaries. In spite of increasingly powerful and precise technologies for drug discovery, purification and production, development expenses have soared: On average, including both out-of-pocket expenses and opportunity costs, it now costs more than $800 million to bring a new drug to market.
One important reason for these debilitating costs goes all but unmentioned in Dr. Angell's account: The highly risk-averse FDA keeps raising the bar for approval, especially for innovative, high-tech products and technologies. Immunotherapy tailored to individual patients, human gene therapy, and "biopharming" -- the production of drugs in gene-spliced crop plants and animals -- have been hit especially hard. But Dr. Angell's prescription is for regulators to become even tougher and less "accommodating" -- according to her, "there is now far too much emphasis on speed at the FDA." But this would only push R&D costs higher and reduce further the number of drugs approved.
Instead of Dr. Angell's snake oil, what we need is regulatory reform to lower the costs and time of drug development. That would stimulate the formation of new companies and enable them to pursue more drug candidates, including some that are medically needed but offer only modest revenues.
Dr. Angell's proposals to, in effect, nationalize the American system of drug development reflect almost inconceivable naiveté. They are reminiscent of economist Milton Friedman's example of a flawed syllogism: Capitalism has worked everywhere it has been tried; socialism has failed everywhere it has been tried; therefore, let us try socialism.
A spirited diatribe can educate and entertain, but in The Truth About the Drug Companies, Dr. Angell does neither. Her diagnoses are wrong, and her remedies -- which are reminiscent of the government controls and centralized planning of the old Soviet Union -- are far worse than the disease.
[William Hathaway, "The Truth About Drug Companies," The Hartford Courant, reprinted in The Wichita Eagle, 19 September 2004.]
Fortunately, this review of Dr. Marcia Angell's "The Truth About Drug Companies" recognizes that there are some flaws in her arguments, but the author may not realize the extent of them:
There is no gray in Angell's analysis, but there should be in the public debate.
For instance, Angell seems to suggest that dramatically trimming drug companies' profits would limit their ability to buy legislators and regulators, an argument that would lead to the collapse of the U.S. economy if applied to all industries with lobbyists in Washington.
There still will be arguments among those who read this book on the best path to take. But there will be few Bush, Kerry or Nader supporters who advocate the status quo in how we regulate the pharmaceutical industry. Angell raises important issues that should be addressed by presidential candidates.
The Hoover Institution's Dr. Henry Miller is a bit more harsh in his review:
The pharmaceutical industry has structural problems, to be sure. As Dr. Angell points out, drug companies do develop too many "me-too" drugs that differ little from earlier products, and spend disproportionately on marketing and promoting them.
But in large part these strategies are the result of the industry's being the victims of government policies, not, as Dr. Angell argues, their beneficiaries. In spite of increasingly powerful and precise technologies for drug discovery, purification and production, development expenses have soared: On average, including both out-of-pocket expenses and opportunity costs, it now costs more than $800 million to bring a new drug to market.
One important reason for these debilitating costs goes all but unmentioned in Dr. Angell's account: The highly risk-averse FDA keeps raising the bar for approval, especially for innovative, high-tech products and technologies. Immunotherapy tailored to individual patients, human gene therapy, and "biopharming" -- the production of drugs in gene-spliced crop plants and animals -- have been hit especially hard. But Dr. Angell's prescription is for regulators to become even tougher and less "accommodating" -- according to her, "there is now far too much emphasis on speed at the FDA." But this would only push R&D costs higher and reduce further the number of drugs approved.
Instead of Dr. Angell's snake oil, what we need is regulatory reform to lower the costs and time of drug development. That would stimulate the formation of new companies and enable them to pursue more drug candidates, including some that are medically needed but offer only modest revenues.
Dr. Angell's proposals to, in effect, nationalize the American system of drug development reflect almost inconceivable naiveté. They are reminiscent of economist Milton Friedman's example of a flawed syllogism: Capitalism has worked everywhere it has been tried; socialism has failed everywhere it has been tried; therefore, let us try socialism.
A spirited diatribe can educate and entertain, but in The Truth About the Drug Companies, Dr. Angell does neither. Her diagnoses are wrong, and her remedies -- which are reminiscent of the government controls and centralized planning of the old Soviet Union -- are far worse than the disease.
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