Drug pushers fuel a costly habit

April 30, 2004

It's marketing not medical research that makes drugs pricier than they need be, argues Merrill Goozner

The senior-citizen drug benefit signed into law by President George W. Bush last autumn guarantees that Americans will continue to pay the highest prices in the world for pharmaceuticals. And although other countries, including European ones, have formulae for negotiating reasonable prices for consumers, they are under US pressure to follow suit.

But why are prices rising in the US? The lobbying power of the drugs industry is a major factor, but it needs to be backed by a good argument.

Most people believe the industry when it puts the need for high prices down to research and development costs.

The industry's argument rests on several key assertions. It assumes that industrial labs are the primary source of medical advances and that new therapies for as-yet incurable diseases depend on generous funding of the industry's labs. And it concludes with the assertion that it costs on average $800 million (£448 million) to develop a new drug.

Each of these arguments is false. In an era dominated by genomics and microbiology, medical innovation depends more than ever on early-stage research that focuses on understanding the basic causes of disease. Before developing a drug, scientists must learn the complex protein chemistry of a disease. Within the cascade of biochemical events, they must next identify and validate a molecular drug target. Only then can a drug be developed.

This is arduous work that is rarely successful. Breakthroughs in understanding almost always depend on the unplanned and unpredictable interplay of basic science. Virtually all this work takes place at universities, in non-profit labs or in the public sector.

Without this basic understanding, curing disease is impossible, especially when it comes to the degenerative diseases of ageing. Yet the global pharmaceutical industry pours billions of dollars into research in the name of pursuing cures for these diseases. Where does it go?

For many firms, a primary research activity is developing new drugs that mimic the actions of drugs already on the market. Perhaps the old drug is coming off patent. Or the company needs an entry in a market dominated by one of its rivals. A recent survey of all drugs approved in the 1990s found that more than half fell into this "me-too" category.

In the US, a substantial portion of the industrial research dollar also gets devoted to funding clinical trials that provide no significant information for doctors. They are designed to get more doctors prescribing the newly approved drug. Sometimes they are published in second-tier medical journals, and copies are handed out by the 70,000 sales representatives who visit doctors' offices in the US every day.

Without this wasteful research, the industry's estimate of what it costs to develop a new drug could be at least halved.

This is not to say that once government-funded basic science comes up with a valid drug target, industrial labs do not sometimes play a crucial role in developing a molecule that can inhibit that target. And industry largely funds the clinical trials needed to prove a drug's safety and efficacy. But even in this arena, publicly funded researchers are increasingly taking the lead in coming up with innovative technologies and using technology-transfer laws to funnel their lead compounds, monoclonal antibodies and recombinant proteins to small biotech firms willing to gamble on developing the drug.

The debate over US prescription drug policy has gone global. US trade representatives argue that European consumers are free-riding on US innovation. They say world prices must rise so US prices can come down. The reality is that the US can lower its drug prices to those of the rest of the advanced industrial world without jeopardising the hunt for the next generation of cures.

Merrill Goozner directs the Integrity in Science Project at the Washington-based Center for Science in the Public Interest. He is author of The $800 Million Pill: The Truth Behind the Cost of New Drugs , published next week by the University of California Press, £16.95.

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