Thursday, August 04, 2005

Sending Pharma Better Signals

Science magazine editorial (Science Avorn 309 (5735): 669) Subscription required.

"It's time to reassess what drives the discovery of new drugs.....Patentt laws usually allow a company bringing a final product to market to keep all the marbles, often shutting out the upstream basic research on which those products are based. Those same laws also guarantee a brand-new patent to a manufacturer that makes a trivial change in an existing molecule, even if the 'new' drug has the same clinical effect. The U.S. Food and Drug Administration (FDA), for its part, sends forth only a weak signal........The ultimate market signal 'dollars' comes from the country's health payors. With the notable exception of the U.S. Department of Veterans Affairs and a few large health maintenance organizations, payors in both the public and private sectors willingly, if complainingly, pay for whatever doctors prescribe and companies charge, however unremarkable a drugÂ?s therapeutic value or cost-effectiveness.

"How can we change these noise-laden signals into a message that could foster more useful pharmaceutical innovation? We can start by using patent laws to increase rewards for the basic science that undergirds so much of what the industry does. Those laws could also take a more conservative view of whether a company's one-atom changes or isomerization of an existing molecule warrant monopoly protection. The FDA could require more useful and demanding pre-marketing studies and ask its advisory committees to comment on whether a newly approved drug is an important therapeutic contribution or an unremarkable addition to an already-full class. Prescribing physicians could focus more on actual clinical trial data and refuse to help sell a drug just because it has a zippy marketing campaign. And patients could learn that advertisements are not the best measure of a medicineÂ?s therapeutic value. Payors inside and outside government could make purchasing decisions based solely on critical reviews of the clinical and economic evidence."

There are new developments in the offing that will increase the importance of "getting the prices right". On the one hand, we need to finance large scale information systems to track the successes and failures of medical interventions, now that such systems are technologically possible and affordable. On the other hand, we will need to develop an entirely new medical practice using genetic and proteomic information to guide the prescription of pharmaceuticals, in order to take advantage of the advances in molecular biology.

A Modest Proposal (perhaps partially in the spirit of Jonathan Swift)

It seems to me that paying for drug discovery by providing temporary subsidies to private firms through allocation of intellectual property rights to new drugs has one thing to recommeit it -- it generates a lot of revenue for innovating firms. Existing means of increasing the buying power of consumers have disadvantages: it is very expensive to educate the consumers to buy wisely, and the public often dislikes the regimentation that comes from government operated or HMO operated health services with their formularies. Publicly financed pharmaceutical research seems to have the disadvantages that it doesn't raise enough money, and that it raises funds primarily for those efforts that gain political support which are not always the most cost-effective. While a mixed strategy seems necessary, perhaps the current balance can be improved.

Dr. Avorn's recommendations seem quite reasonable. Let me also suggest that special purpose taxes be considered, such as taxes on health care and pharmaceuticals that would be set aside specifically for biomedical research and development. Patents given for pharmaceuticals represent something like "tax financing" for pharmaceutical R&D, and reforms of the patent law to reduce the government-imposed-monopoly subsidies might allow a "revenue neutral" direct tax on pharmaceuticals. If the patents on "me-too" drugs and drugs with questionable efficacy could be reduced, and the revenue directed to R&D on vaccines and drpreventiveventative properties, we might all benefit. Indeed, if the high-priced, long-term medical care for chronic conditions could be taxed, and the funds used for R&D on interventions to prevent the need for such care, we might also be much better off!

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