Response on Drug Patents

Response on Drug Patents-Becker. Again, many more comments than I can possibly respond to. I will just make a few points. Yes, drug companies spend a lot on marketing, but much of that is valuable to patients in terms of finding out about new drugs that might be helpful. What disturbs me more are the scary and exaggerated warnings that sometimes accompany these ads, presumably to protect against lawsuits in the present highly litigious legal environment. Some of you were surprised that a free trader like myself would not be enthusiastic about re-importing from countries like Canada that keep prices low through price controls and bloc buying of drugs. But drug companies, as well as other companies, should have the right to have legal contracts enforced. And the contracts with Canadian health organizations that buy drugs presume that Canadians, not Americans, will use the drugs sold to them. Still, as I pointed out, and some of you reinforced by your comments, if such re-importation did occur on a large scale, the result would be fewer drugs sold to Canada and higher prices there. That would then induce the Canadian health service to crack down on re-importation to the USA, as they are already doing. Many, but certainly not all, of the comments distrusted patients to know when drugs might help, and like the FDA�s requirements of efficacy. I oppose this requirement in my commentary because that greatly slows down the approval process, and can mean the difference between life and death for seriously sick individuals. I believe that the growth in access to the internet and other sources of information has made patients much better informed than they were when the efficacy standard was introduced in 1962. No doubt, consumers will make mistakes in the health area as well as in others, but I much prefer that very sick people control their own treatment rather than it being controlled by government officials. Some of you like Michael Kramer�s proposal for prizes, and I agree it is worth greater examination. But I do believe that it would be politically difficult to implement efficiently, and probably is not a good idea. Drug companies clearly cater to the larger and richer markets, so they work on diseases in advanced economies rather than those found in Africa and other poor nations, and work on more common diseases, not the rare ones. The Orphan Drug Act tries to encourage research on diseases that are less common. And a forthcoming study by Tomas Phillipson, Rodrigo Soares, and myself shows that poorer nations do benefit, with a lag, from medical advances in rich countries. Yet it could be important for some private philanthropic organizations-like the Gates Foundation- and perhaps international bodies to encourage research on diseases found among poor nations, and help pay for drugs that help these populations.

Comments

[Palooka]

"No doubt, consumers will make mistakes in the health area as well as in others, but I much prefer that very sick people control their own treatment rather than it being controlled by government officials."

I agree to a certain extent. It seems to me a hands off policy make sense especially for the patient with a serious or life threatening disease. It is unfortunate, however, that many drugs which alleviate or remedy mild or moderate illness or symptoms often cause more harm than good in a significant percentage of patients. Perhaps the most notorious in recent memory is the weight loss drug, phen phen (sp?), which caused serious cardiac injury. I can see little justification for making drugs which cause serious side-effects, and only alleviate mild or moderate health risk.

The availability of alternative medicines, the efficacy of the medicine in question, and the seriousness of the condition suffered by the patient should all play a role in determining what level of government regulation and approval is appropriate.

[valuable?]

but much of that is valuable to patients in terms of finding out about new drugs that might be helpful.

Valuable? Helpful?

Please explain how an advertisement that does not actually TELL you what the drug is used for, and instead says "talk to your doctor" is either valuable OR helpful?

How about the web self-test for a 'mental health' drug, where even if you answered every question 'correctly' (IE No need for the drug) the web ad said 'ask your doctor anyway'.

How are EITHER of these cases 'helpful' or 'valuable' to patients? Valuable to the drug companies stock price, sure. Helpful to the profit margin, yes.

[JennyD]

This is a terrific blog. Thank you. Please keep the comments because they are interesting too, and really give you both some things to respond to.

[Paul Goff]

The British during the famine years in Ireland, made little effort to bring relief to the country. They believed free market forces would provide. During the time when millions were dying, Ireland exported grain to markets where prices were higher.

When a person is sick, health care is not optional. If care is delayed or omitted the patient often suffers. Our country for all the money spent has mediocre health care outcomes.

We criticize explicit rationing in other systems while we ration more subtly by financial status.

It is a fact that the cost for some new drugs exceeds the median income in the United States. As has been discussed this pricing has little to do with the cost of development but reflects the companies assessment of what the market will bear. Fortunately most of these have marginal benefit and one can truly tell a patient that it is not worth the money.

There are however a few truly lifesaving medications. People of average and below average means with no or limited insurance who need these medicines are out of luck. Like the Irish in the 19th century, they die.

[Sami]

First, I agree with Jenny D that this is great blog and I have learned a lot by reading everyones comments.

I don't think its a matter of distrusting the patient to be able to find information on the drugs to make a choice, but more that without efficacy the doctors and scientists won't know which drug will work. You will certainly increase the drugs available, but the the high rate of failure in the efficacy phase will mean that there would be a lot of drugs on the market that just don't work. The information is simply not there for anyone to make an informed decision. The dying patients that you talk about will try anything, but won't it waste their time and money to try drugs that don't work. To me the efficacy phase is an important part of drug development skipping it is like putting an unfinished product on the market. I think this is much more dangerous than beneficial to the patients.

[David]

If marketing of prescription drugs to consumers is so important and valuable, why is it a relatively recent phenomenon, at least in the volume we see today? We require doctors to write prescriptions because they have the expertise necessary to determine whether a particular drug will help a particular patient. In contrast, patients with no medical training are in a worse position to understand the true risks and benefits of particular drugs. It seems to me that most marketing to consumers is for the purpose of "branding" - to induce potential patients to prefer one me-too drug to another, for no better reason than they saw a slick TV ad. The truly important marketing done by drug companies is the marketing to doctors, who need to have as much information as possible about various drugs in order to know which ones to prescribe.

This is not to say that drug companies have no right to market their products to consumers. Of course they do. But when they spend vast amounts of money on marketing, they should not be heard to argue that high drug prices are based solely on the need to do research and development.

[Rahul]

Dear Prof Becker,

I was very surprised to see you opposing re-importation, on the grounds that:

But drug companies, as well as other companies, should have the right to have legal contracts enforced.

The implication here is not for property rights, it is for goverment fiat. What I mean is that not every legal contract that government enters into is a good thing.

Would you also protest the dismantling of government-mandated private monopolies, since they are voiding a contract with a/several private company/s? Would you oppose the reduction of trade barriers? Would you protest de-regulation?

Also, if Canadian prices increase (from their quasi-price control levels), why is that necessarily a bad thing? Also, do you really believe that the Canadian government will be effectively (or popularly) able to ban John Doe from sending his Grandma across the border arthiritis medicine?

Why not look at drug re-importation as a reduction of trade barriers, that rationalises prices (and public policy) across the whole world?

[Bernard Girard]

I am a bit disappointed by this conversation. What I read here, coming from two very famous intellectuals, is not different from what you can read in the industry's litterature.
And some remarks just seem strange. You write : "No doubt, consumers will make mistakes in the health area as well as in others, but I much prefer that very sick people control their own treatment rather than it being controlled by government officials." But how can a very sick person choose her drugs and control them? how can we judge the quality of the doctor that prescribe drugs? We just cannot : remember the placebo effect. We need government officials because they know better than we do how to control the industry, how to evaluate a drug, a doctor. They know better because it's their job.

[Palooka]

Bernard,

I think you're failing to realize a distinction implicit in Becker's comment. He said that seriously ill patients should be able to control their own treatment. Implicit in this statement is the exclusion of those patients which are not seriously ill and those patients who are ill but can likely improve their situation with mainstream treatment.

A large menu of options (even experimental and untested drugs) would seem most permissable when a patient is a) seriously ill and b) mainstream/established medicine has little promise for their treatment. Relaxing regulatory control for these individuals doesn't just make sense, it's the only humane thing to do--give them some hope, some options to prolong or improve their lives rather than withold medicines which could improve their lives because they haven't proven safe or effective yet. If a patient faces a terminal illness with little or no mainstream medical treatment available, why should they be prevented from taking a drug which may save their life?

[Timothy]

The thing a lot of folks are missing is that drug advertisements are regulated by the government. The warning must be there, and until very recently it was illegal to tell you what a drug was for in an advertisement.

As for this:

We need government officials because they know better than we do how to control the industry, how to evaluate a drug, a doctor. They know better because it's their job.

You do realize this is a tautology right? We need officials who know better. Why do the officials know better? Because it's their job. Furthermore, this sort of reasoning is exactly what led to the European nanny-state: it is never right to assume that individuals are too stupid to be the arbiters of their own destiny.

Lastly, it's important to note that the alternative to expensive drugs is not cheap drugs but rather no drugs. That's right, without the ability to profit monetarily, the drug companies will not bother with R&D. Just look at the vaccine market. Will the government take over when private industry has been forced out? Maybe, but I promise it will cost more [taxes are a cost, remember] and do less than the current private-industry model. For example, NASA: "I spend over $1 billion per shuttle launch and all I got was this stupid velco."

[asdf]

It's kremer not kramer.

[Charle Lapp MD]

A pill costs 10-25 cents to make.The rest is R&D marketing etc. 80+million$/drug is spent oon R&D. Only 1/5 become saleable products.I have and assortment of pens and mugs that were advertising for drugs withdrawn from the market for various reasons.Time and experience are needed to detect all problems. Europe has a multination system for testing and evaluation which brings drugs to market cheaper and faster,I have no knowledge of their results as to effectveness and safety.Pills are much cheper..

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[Anonymous]

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