Fighting Big Pharma. [View All]

[LiviaOlivia]

FIGHTING PHARMA. The weekend was dotted with articles detailing Big Pharma's readiness to go to war with the Democrats over Medicare prescription drug bargaining, which is really a way of saying the weekend was dotted by articles fed by Pharma's PR firms into the eager and willing hands of newspaper reporters, who are all too pleased to pass on their doom-and-gloom predictions.

Pharma is arguing Medicare's user base is so massive that government negotiation amounts to de facto price controls, which would decrease innovation. So though Pharma accepts such "price controls" from the VA, Canada, France, Germany, Japan, and Medicaid -- all of who pay far less than Medicare -- innovation cannot sustain the addition of Medicare's patients.

We should hope not. 2/3rds of Pharmas current R&D budget goes not towards creating new drugs for killer conditions, but towards crafting copycats of other blockbuster drugs, which evade the patent protections placed by competitors. Another massive proportion of the actual research is conducted in the public sector and licensed out at minuscule prices through the Hatch-Waxman Act. Indeed, lower prices and innovation aren't either/or, they're both/and. Were I the Democrats, I'd decree that some proportion of the savings from negotiation go to the NIH to fund the lifesaving research that gets turned into lifesaving drugs, rather than going to subsidize the useless research that goes to create a knockoff version of Lipitor.

Pharma isn't fighting this battle because they're terrified of losing even one dollar that could go towards innovation. They already spend twice as much on advertising as they do on R&D. And most of the R&D doesn't "innovate" at all. They're waging this war because they want to make more money. That's their job. But it's the governments job to advocate for the public interest, and better pharmaceutical prices, particularly coupled with more investment into cutting edge, lifesaving drug research, is the public interest.

--Ezra Klein
November 27, 2006
http://www.prospect.org/weblog/2006/11/post_2138.html#014639