WASHINGTON — Create a company. Raise money from investors. Spend billions of dollars. Develop life-saving products. Suffer the vagaries of the marketplace. Be vilified.
That seems to be the lot in life of pharmaceutical firms.
In early December a Washington Post article headlined: “Chemical Compound Shows Promise Against Tuberculosis: New Medicine Is Best Hope Against Disease in 40 Years.” But success is never assured: witness the decline in Merck’s stock price after it withdrew the drug Vioxx and the similar hit suffered by Pfizer when the same health concerns were raised about Celebrex.
And politicians never let up. Democratic presidential candidates criticized the drugmakers in the last election. Governors also bash them. Legislators continue to target them. Seniors demonstrate against pharmaceutical firms. Activists naturally attack them.
Even Marcia Angell, former editor of the New England Journal of Medicine and an otherwise sober analyst who made her name criticizing unfounded litigation over silicone breast implants, has joined the anti-industry crusade with her book: The Truth About the Drug Companies.
ANGELL’S ARGUMENTS AREN’T new. They center on the complaint that the drug companies are private, not public. That is, they are profit-driven, decide what to research, set their products’ prices, and advertise their wares.
That’s the way most of the economy works. But to some that seems unfair when it comes to pharmaceuticals. Which is why Angell, along with a gaggle of activists and politicians, would turn the drugmakers into public utilities and regulate prices.
It’s easy to sit in judgment of the industry. For instance, the drugmakers spend too much on administration and marketing, charges Angell. Companies produce too many “me-too” drugs. Patents are restrictive; advertising is excessive.
Too much and too many compared to what, however?
All firms in all industries spend money on administration and marketing. Unfortunately, no company has ever figured out how to operate otherwise. But the drugmakers devote a larger percentage of their resources to research and development than does any other industry.
Particularly curious is Angell’s criticism of company efforts to promote their products. Although one can legitimately question measures that bias treatment decisions, surely firms need not hide their products from doctors and patients.
Marketing is intended to sell medicine; otherwise there would be no money to develop drugs or get them in patients’ hands. Marketing and R&D are complementary. More products require more advertising; more advertising generates the demand for more products.
In the case of drugs, two-thirds of marketing expenses are free samples. Which usually end up as patient discounts, distributed by physicians for free.
ANGELL COMPLAINS THAT THE industry develops too many “me-too” drugs, that is, products treating conditions where other medicines already are available. It’s for the money, she says.
Of course it is. If there is a demand for competitive products, companies will meet it. That doesn’t diminish the incentive to create blockbuster drugs — like a new TB treatment — however.
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H/T to National Review Online