Mark Kleiman Is Clear And Concise

I have annoyed lefty friends of mine with the following thought - if I were at a Hollywood cocktail party, I could probably find 99 out of 100 people there convinced that strong intellectual protection laws for music and films was vital for Hollywood. However, I suspect that aboot 100 out of 100 would decry drug prices as "too high".

But it is the same problem! Doesn't mean we need the same solution. Mark Kleiman explains.

Since I like William Safire, I will agree with him that Canadian and European free-riding and underinvestment in pharmaceutical research is an ongoing challenge. I suspect Mr. Kleiman would concur.

MORE: We will let the Europeans address the free-riding question themselves, with excerpts below.

And we wonder - the Defense industry does expensive, research-intensive projects for (effectively) one customer, the US Government (here I am thinking of the top-shelf products that are not sold abroad). The US Government, in turn, is spending tax dollars wisely on behalf of We The People. Might Big Pharma end up operating under a similar model? And do we have so much confidence in the military-industrial complex that we feel comfortable with that as an endpoint?

June 2002:

I would like Europe to become a centre of excellence and a focus for pharmaceutical research once again," stated EU Research Commissioner Philippe Busquin today at the annual assembly of the European pharmaceutical industry (EFPIA) in Bruges. "

...In recent years, the competitiveness of EU pharmaceutical industry has decreased. The fact is that the US, with a bigger market for drugs, in particular those based on advances in bio-medicines, has overtaken the EU in total research investment. "The EU has been late in grasping the potential of biotechnology for the development of new drugs," says Commissioner Busquin. "But Europe is catching up:...

...Of course we cannot expect the pharmaceutical industry to invest as much in research as in the US, if the value of the EU market remains at only about half of that of the US, particularly if it does not seem to encourage the introduction of innovative drugs," adds Commissioner Busquin.

I.e., no one is willing to pay for new drugs.

That said, when one contemplates the money poured into developing Viagra substitutes, one wonders if this is the very best way to advance R&D.

For most of the past decade, Europe has led in pharmaceutical innovation. In 1997, however, the US overtook Europe for the first time, both in terms of research and development (R&D) investment and output (new drug candidates). In 1990, EU pharmaceutical industry spent 73% of its R&D budget in Europe, but this figure dropped to only 59% in 1999 and the US is now spending 24 billion euros compared to 17 billion euros in the EU. Spurred by more open market regulations, the world market share of US pharmaceutical products jumped in the same period from 31% to 43%, while in price-controlled EU the figure dropped from 32% to 22%.

The competitiveness of US industry has also benefited from a more vigorous exploration of new technological opportunities. Increased professional technology transfer from the public research sector and the establishment of a vibrant biotechnology industry is providing innovative products based on new biotechnological developments to the pharmaceutical industry.

Comments

[Mithras]

Also, much of the "new drug" development is done by companies whose patents on old medications are about to expire. Even though the new drug is not more efficacious than the old drug, they can market it and docs will prescribe it. A government-run system could avoid those costs.

Having said that, I don't think single-payer healthcare will ever happen in the United States. The propaganda is so vile against any kind of government solution that people would sooner let their kids die than vote for single-payer.

[Jane Finch]

Although it sounds good to those who don't want to consider that maybe drug companies are price gouging when and where they can, I'm not convinced that Canadians are free-riding. To my mind, it's the same as a really large corporation negotiating a health deal for its employees...only in this instance, it's the government. Further, I haven't seen the part where the companies are obligated to sell a thing to Canadians, or in Canada.

[The Kid]

The Canucks are hitching a free ride -- they know that they can demand a discount for newer drugs because their market is so small and because they carefully select what new drugs they will offer to the public and restrict the rest. Drug companies will play these games to reap the marginal income and ensure that all their drugs have a fighting chance for approval up north.

Physicians face a similar conundrum -- most docs are not government employees, but are in private practice and to some extent compete against each other in their specialties. But the governments put an annual cap on the amounts paid for physician services. This system has worked for decades, but is collapsing with the aging population that needs more medical care than current budgets can provide.

The caps are one reason that Canada has far fewer MRI and CATScan systems per capita than in the US, and why the waiting times for these diagnostic devices are insane. As near as I can figure, the devices end up being treated as current expenses, i.e., they are not capitalized [and depreciated] over time.

But back to drugs. “Free” drugs allow folks to avoid hard choices. Most folks would rather sit on a couch than walk or work out, eat tasty fat than bland fiber, etc. Cholesterol-reducing, hypertension management, and other optional (in most cases) drugs therefore become mandatory because it’s easier to pop pills than follow a rigorous regimen if someone (or everyone) else is footing the bill. Please pass the Cheetos and the remote. Drug costs will only soar under single-payer and even under our employer-paid system because the beneficiaries perceive the costs as negligible or nonexistent.

But it was orneriness and pride, not altruism, that made me forego the subsidized $29 monthly cost of hypertension and cholesterol medication. I now hang out in bars and beat up people who try to argue for single-payer health insurance. I am getting a workout and changing the world, one weenie at a time.

[Jane Finch]

Kid, you haven't explained a thing. Why do drug companies need "marginal profits" at all? Why would the puny Canadian market mean a damn thing to drug companies, and why would they care so much that their drugs were approved or indeed sold in Canada?

And as for a cap on physician services, au contraire. My province pays a fee for service that is negotiated with the College of Physicians and Surgeons and doctors do fine. As for equipment and certain elective procedures, yes they is rationed...that's the chief feature of a universal system. Unlike the insane no-limits seniors bribery that characterizes US Medicare, in other countries government medical services have to be rationed or they go broke. And who determines wait lists? Not the government...doctors.

[Patricia Downing]

Were you aware that genetic drugs in Canada run much higher than generic drugs in the US?