Map of life expectancy at birth from Global Education Project.

Thursday, March 10, 2011

Makes sense to me

I won't bore you with a lengthy recitation of what's wrong with the drug development process. If you've been reading Stayin' Alive for very long you've heard all about it. Basically, drug companies want to make money, and the way they do that is by getting patents and marketing exclusivity which lets them charge big bucks for pills that cost a couple of cents to make. On the other hand, it costs a lot to get a drug approved, so they aren't nearly as interested in products that they only sell you once -- ones that actually cure your problem -- as they are in products that you have to keep taking forever. And how serious your problem is pretty much doesn't matter -- baldness is just as profitable as multiple sclerosis.

The results are that poor people -- which means most of the people on planet earth -- can't afford drugs that could save their lives; badly needed drugs, such as new antibiotics, get little investment; and drug companies pour a lot of their revenue into marketing for drugs for diseases that probably don't even exist, or brand name drugs that are no better than cheap generics.

Joseph Stiglitz (the dirty commie) has an idea. The government already pays gazillions of dollars for brand name drugs. Instead of rewarding drug companies with patents, why not just hand them the money up front, and then make them sell the drugs cheaply? The amount of money they get depends on priorities set by criteria of public need. So there would be a big prize for a new class of antibiotics, or really effective treatments for autoimmune diseases. (A cure for type 1 diabetes anyone?) and much smaller prizes for baldness and restless leg syndrome.

This could be completely spending neutral -- the money the government spends now to buy brand name drugs could be diverted to the prize fund. Neither Stiglitz nor I nor anyone has actually done a formal analysis, and maybe it isn't really possible to figure out ahead of time, but I'd be willing to bet that you could actually spend less and get a better public payoff than we're getting now from drug development. And even better, the drugs would be cheap for everyone, including people in poor countries. The world would become more egalitarian, at no cost to either the federal treasury or the pace of new drug development. The companies incentives to invest could be made exactly the same in magnitude, but directed toward more socially productive ends.

Easy! Sensible! Contradicts free market fundamentalism! Not going to happen!


scott huminski said...

U.S.A. State Sponsored Terror (rock music video) Released

Anti U.S. Police State Musician/activist, Scott Huminski, releases his 5th rock video with his band Scott X and the Constitution Commandos.

Television interview at:

davidknz said...

From little ol NZ, right at the back of the class :-)
Labour Associate Health Spokesperson Iain Lees-Galloway says if John Key does not take action then access to affordable medicine will be traded away in the Trans Pacific Partnership.

"Labour supports the TPP trade negotiations but will be calling on the government to take a hard line in the negotiations to prevent the removal of Pharmac's role and ensure drugs and medicines are kept affordable for New Zealanders," he said.

Pharmac is internationally renowned for its ability to deliver low-cost medicines to all New Zealanders, Lees-Galloway said.

"Having delivered in excess of $700 million in health cost savings, Pharmac truly is a New Zealand success story and should be kept right off the bargaining table no matter how much big drug companies want it to be there," he said.

"The way we buy medicines ensures all New Zealanders can afford the treatments they need, as do our patent laws. Nothing should change that," he said.