Beating The Cow To Better The Milk

However bad our prospects are now, on TechCentral Dr. Gilbert Ross reminds us it's worse for the pharmaceutical industry:

The Obama administration has taken up the cause of encouraging drug importation. No one in the administration seems to know -- or care -- that importing cheaper drugs will not only expose Americans to sub-standard, counterfeit, and toxic copies of American-made brand name drugs, but will simultaneously import foreign price controls (if Congress really wanted to conserve healthcare dollars, they would pass tort reform and reduce the insidious costs of defensive medicine).

Such artificial price-fixing was a major factor in the decline of European pharmaceutical research and the concomitant revival of our own. But that was then, this is now: a bipartisan coalition of Senators is trying to poke holes in the dike that the FDA had erected against cheap, but unreliable, imported drugs. The dual threats of counterfeits and price controls are coming to a pharmacy near you.

The Obama health plan also includes over $1 billion to institute "comparative effectiveness" criteria for new drug approvals. This means drug trials will have to show that a new drug is not merely effective and safe, but somehow better than its older competitors. Currently, getting a new drug approved for marketing consumes over a billion dollars and ten to fifteen years. To show superiority to drugs already on the market will take longer and be more expensive. This will exert a chilling effect on drug companies that are considering testing new drugs without clear blockbuster potential, since failure to attain FDA approval leads to massive financial losses. Recently, Pfizer scrapped testing of two new drugs in late-stage clinical trials. Were these drugs effective? We'll never know: the world's largest drug maker stated that there was insufficient evidence that they were better than currently marketed drugs, and thus they feared investing millions more in a dead-end trial.

Of course, beating up on "Big Pharma" is bad for us--it likely will suppress investment and innovation in new drugs. The last two years "saw a historically low number of new drug approvals," which I expect to decline further under the new Obama Administration. That's not good for our health or our economy.