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Re: E-DRUG: Costs of developing drugs

E-DRUG: Costs of developing drugs

A couple of points of clarification here.  First the figures that drug
companies quote cover only a subset of all the new drugs that are
introduced.  The current figure of about $500 million is based on research
done in the early 1990s.  The drugs that were considered were ones that
were developed entirely in-house by American owned companies.  Therefore,
it excludes drugs developed by European, Japanese, etc. companies; drugs
that were "licensed in" from other companies (about 40% of drugs introduced
by American companies are licensed in from other companies); drugs that are
developed in conjunction with universities, hospitals, government
laboratories, etc.; and drugs that are not NCEs (new chemical entities)
e.g. different formulations of existing drugs.  Furthermore, this figure
does not take into account tax writeoffs for doing research.  Here in
Canada these writeoffs mean that about 40% of pharmaceutical R&D is
financed through public money because of foregone income tax revenue.

David Henry is quite right when he says that the amount that we pay for new
drugs should be linked to their benefit to society rather than on the basis
of what it costs to develop them.  My concern here is that the
pharmacoeconomic studies that we (Australia, Ontario, British Columbia) are
using to assess benefit are largely being done by the drug companies.  In
fact, some companies are helping to finance an institute for
pharmacoeconomics in the province of Alberta.  Why?  Bob Evans, a well
known health care economist had a good answer. In an editorial in the
Annals of Internal Medicine, (Manufacturing consensus, marketing truth:
guidelines for economic evaluation,  Annals of Internal Medicine, 123
(1995) 59-60) he observed that industry interest in pharmacoeconomics
reflects the move in decisions over drug purchasing from individual
physicians to health care plan managers.  Marketing strategies directed at
physicians are no longer adequate to move the product and hence the
pharmacoeconomic study.  Pharmacoeconomics therefore, from the industry
point of view, becomes another marketing tool.

Joel Lexchin
121 Walmer Rd.
Toronto, Ontario
Phone:  (416)-964-7186
Fax:  (416)-923-9515
e mail:  joel.lexchin@utoronto.ca

[Moderators Comment: Would this be a bad thing if drug industry reps used
pharmacoeconoimic arguments to promote their products? I think not. I would
be far more impressed with a case that their drug was more cost effective
than existing drugs, particularly if the data was provided and the
assumptions defined. Richard Laing Co-Moderator]

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