COMMENTARY: I Want a New Drug

[Murray Charters <mcharters@xxxxxxxxxxxxxx>]

I Want a New Drug
By Rich Tucker
CNSNews.com Commentary
August 11, 2003

Where do prescription drugs come from?

Do they fall from the sky? No. Do they come from Canada? No.

The answer is that prescription drugs come from prescription drug companies. 
Sure, that sounds obvious. But apparently
it's not crystal clear to everyone.

In the Aug. 4 Washington Post, political cartoonist Tom Toles lambasted the 
drug industry. It was represented by an
obscenely fat man (helpfully labeled by a pin that said "Drug Co.") cheerfully 
taking a wad of cash from a frail-
looking older man.

"Drug Co." explains, "The exorbitant prices you pay for your drugs is [sic] for 
all the research we do." In the next
panel he enters the "Research Department," peopled by "TV ads," "goodies for 
doctors," "lawyer fees for patent
extension" and "cash for politicians." "Drug Co." says, "Today we're studying 
where investing $100 million produces the
fattest boost in our profits."

Now, let's be fair: Drug companies do make a lot of money. And they invest a 
chunk of that income -- tens of millions
of dollars, in fact -- in promoting their products. That includes spending on 
ads, lobbyists, and samples for doctors.
They also attempt to maintain patents on their successful (and profitable) 
drugs. What industry doesn't try to hold on
to its patents as long as it can?

But this spending on promotion is far exceeded by investment in Research and 
Development, which is where prescription
drugs really come from. According to the Pharmaceutical Research and 
Manufactures of America, an industry group, drug
companies roll one out of every five dollars of revenue back into R and D. They 
usually don't get a big return on their
investment. Only three out of 10 drugs on the market sell enough to recoup the 
cost of R and D.

It costs an estimated $500 million to bring a single new medicine to market. 
And on average, for every drug that makes
it to the pharmacy, about 5,000 are rejected. Those are pretty daunting odds, 
since a drug company is never going to
make a dime off a drug that doesn't make it to market.

This is also why prescription drugs don't come from Canada.

The Canadian health-care system is "single payer." That means the government 
sets the price of drugs, so they're often
cheaper to buy there than they are on the free market in the United States. But 
the trade-off is that many prescription
drugs aren't available, or are severely rationed, north of the border, because 
the government isn't willing to pay
market prices for them. It's because of these price controls that Canada 
doesn't have the successful drug industry we
do.

The House of Representatives recently voted to allow "reimportation" of drugs 
from Canada, at that country's reduced
process. But as Nina Owcharenko of The Heritage Foundation notes, that could 
end up hurting people in both countries.
"The effect of reimportation," she writes in a recent paper, "in all 
probability would be the opposite of that intended
by its proponents: Prices would be more likely to increase in Canada than they 
would be to decrease in the United
States."

Prescription drugs are making life better, and even making life possible, for 
millions of Americans. In fact,
prescription drugs are probably the biggest difference between medicine today 
and medicine 40 years ago. Back then,
they were so rare that Congress didn't bother to include a drug benefit in 
Medicare -- a matter lawmakers are still
wrestling with today. Today, drugs help patients regulate their blood sugar, 
blood pressure, cholesterol and allergies.
They help AIDS patients stay alive while scientists search for a cure. Drug 
companies are racing with government
researchers to find that cure, and my money's on the drug industry. Eventually, 
they'll also find cures for
Alzheimer's, Parkinson's, arthritis, and other diseases -- unless we strangle 
Research and Development by trying to
limit the profits made by the drug industry.

Consumers and insurance companies, of course, want the lowest prices possible 
for prescription drugs. But let's make
sure that in striving for that goal, we don't end up killing the goose that 
lays the golden eggs: The R and D
departments of our drug companies. The free market is working here in the 
United States, and it's making life better
for all of us -- not just drug-company executives.

(Rich Tucker is a staff writer and media trainer at The Heritage Foundation, a 
Washington-based public policy research
institute.)


Reference:

In the Aug. 4 Washington Post, political cartoonist Tom Toles lambasted the 
drug industry.


Missing the Point of Medicare Reform: Why Drug Reimportation Is Bad Policy
by Nina Owcharenko - WebMemo #304 - June 26, 2003


SOURCE: Cybercast News Service




* * *

----------------------------------------------------------------------
To sign-off Parkinsn send a message to: mailto:listserv@xxxxxxxxxxxxxxxxxxxx
In the body of the message put: signoff parkinsn