Xconomy News: Weston, MA-based Biogen Idec, the largest maker of injectable treatments for multiple sclerosis, met its goals in a second clinical trial for an oral pill to treat the disease. The pill reduced flare-ups by 44 percent when taken twice per day, and by 51 percent if taken three times a day.
A friend of mine, George Martin, has challenged me to defend the high drug prices in the US. He asks why doesn’t the US government buy drugs from Canada and cut costs of US healthcare?
I agree with George’s argument that drugs cost less in Canada or Europe because their governments each provides single purchasers that forces prices down. I am sure the US could also cut prices.
Unfortunately, I think we need to be honest about the effect of cutting those prices. Drug companies create new drugs because new drugs generate profits.
The importance of the US market to drug comapny innovation is reflected by the fact that the overwhelming majority of R&D for new drugs comes from the USA. Even research outside the US, is driven by the chance to sell in our market.
The US consumer subsidizes the EU consumer.
Does this mean that opening the US borders to drugs from the EU or Canadian markets would stifle innovation? . Let me avoid answering that question by offering four questions:
1. Would you buy shares in AMGEN if you read that their profits were going to fall?
2. If AMGEN could not get higher prices for Erythropoetin in the US, would they raise prices esewhere?
3. Do we need twenty of thirty new marketable drugs every year? Would we be better off without Gieevec and Avastin? An outcomes researcher might say “yes.” He might say we would get better health if the dollars were spent on prenatal care or an increased supply of nurse practitioners.
4. Generic manufacturers in India and China are encroaching on the US market. Will their lower costs and absence of research drive investments our of pharma and into more profiteable industries?