The American Spectator

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Special Report

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Observes the Milken Institute: "Biopharmaceuticals accounted for 8.2 percent of all industry R&D in the United States in 2002, despite representing only .3 percent of total non-farm employment."

This R&D is what generates the other important public benefit, life-saving-and-enhancing drugs.

Last year the U.S. biopharmaceutical industry won FDA approval of 38 new products. In industry parlance, there were 31 new molecular entities and seven new biologics.

A half dozen of the medicines treat cancer. Three address infectious diseases, two ease pain, and two help eliminate radiation contamination. Others treat alcoholism, blood disorders, depression, diabetes, immune deficiency, kidney disease, pulmonary disease, and more.

There's also the prospect of more and better drugs in the future. The leading drugmakers alone have 146 medicines in development for heart disease and strokes, the second and third leading killers, after cancer, in America.

Of course, not all of these substances will make it to the drugstore, let alone become blockbusters. But that's why it costs so much to make drugs.

Pharmaceutical companies spend about a fifth of their sales revenue on R&D. Spending has more than doubled over the last decade. The Tufts Center for the Study of Drug Development figures that the average cost of creating one drug has increased about two and a half times since 1987, to $802 million.

Yet only three of every ten medicines that get to market -- the latter only about one out of every 5,000 to 10,000 compounds originally examined -- actually earn enough revenues to cover their R&D cost. And the three successes have to rack up sufficient sales to pay for dry holes and everything else.

It's not an easy business.

IT IS MADE MORE DIFFICULT by a public that doesn't want to admit that such benefits don't come cheap and politicians dedicated to winning votes by demagoguing the industry. Although there probably isn't an American alive today who hasn't benefited from a new medicine developed in the last decade, over the same period the drugmakers have increasingly been compared to tobacco companies, polluters, and corporate outlaws.

Participants at the CALBIO conference spent most of their time discussing how better to create new medicines. Panel sessions examined how to raise funds for life science companies, deal with the threat of bioterrorism, and understand new emerging medical technologies,

Yet the attendees also worried about regulatory efforts, especially attempts to drive down prices through price controls, restrictive drug formularies, and "reimportation" of their own products from abroad. Such steps threaten even industry leaders, such as Pfizer, Johnson & Johnson, and Merck.

Far more vulnerable, however, are smaller biotech concerns, and especially recent start-ups which have no ongoing sales or accumulated income and thus must entirely depend on investment capital. C. Boyd Clarke, CEO of Neose Technologies, a Pennsylvania biotech concern, observes that "more than 90 percent of such companies remain unprofitable 30 years into the biotech age."

It is far better to get sick today than it was 10 or 20 or 30 years ago. A coalition of seven health care organizations, The Value Group, recently estimated that every dollar invested in health care yields benefits of $2.40 to $3.00.

Still, too many people tragically die. But, thankfully, fewer are likely to die 10 and 20 and 30 years from now. Biopharmaceutical researchers are offering Americans a bright future filled with unbounded opportunities.

However, these possibilities will go unrealized if politicians kill the golden goose. Alas, unlike the golden eggs of the fable, wonder drugs cannot be produced for nothing. Those of us who benefit so much from the wonders of biopharmaceutical research must be willing to pay for them.

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