Late Saturday Night DriftsPosted: January 23, 2011
Some where in another world (Minneapolis to be precise), I did work for a managed pharmacy benefits plan that was owned by United Health Care but was sold off to SmithKline Beecham (now GlaxoSmithKline). This was during the “Hillarycare” debates. I know a lot about this because one of our VPs was on her panel and one of the hearings was held there. I honestly thought that the DOJ would call the merger thing off because it was an appalling example of a vertical monopoly. That didn’t happen.
During the mid nineties, Big Pharma wanted their hands on the ability to call the plan formularies for defined benefit plans and stack them with their drugs. All of them were scrambling to buy managed drug plans from Insurance Companies at the time. Managed pharmacy benefit plans basically meant a windfall for any drug listed on the formulary. Big Pharma had a plan and I was privy to the business deal which was to just tweak some chemical formula enough to call something a new drug, get it subject to a new patent, stick it on a formulary, and watch the profits roll in.
Don’t even get me started on how erectile dysfunction drugs made their way to formularies. The race for profits is frequently a race to a place with nonexistent ethics. So, based on the short amount of time I witnessed that situation, I took my fees and ran to New Orleans. I couldn’t say much then because I was at a level where I was silenced by the merger negotiations and the SEC.
So, why do I mention that now? Because, this doesn’t surprise me at all. Drug development is a business model and any one who thinks otherwise is sadly mistaken and most likely sadly at the bottom of the food chain and uninformed. Important drugs are not discovered because there is basically no money in it and there will never be any corporate money invested in it.
Public Health is part and parcel of the Public Interest. The parable of Erectile Dysfunction Drugs may have a different ending if this policy actually sees the light of day. Fortunately, it’s not completely up to the whims of creationists who hate science. This move recognizes that the profit motive doesn’t always drive the correct priorities for society. It only drives the correct money flows for something in high demand at particular time. Rich people with a flaccid penis and a fear of wrinkles are driving the market. So, what about Public Health?
The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines.
The new effort comes as many large drug makers, unable to find enough new drugs, are paring back research. Promising discoveries in illnesses like depression and Parkinson’s that once would have led to clinical trials are instead going unexplored because companies have neither the will nor the resources to undertake the effort.
The initial financing of the government’s new drug center is relatively small compared with the $45.8 billion that the industry estimates it invested in research in 2009. The cost of bringing a single drug to market can exceed $1 billion, according to some estimates, and drug companies have typically spent twice as much on marketing as on research, a business model that is increasingly suspect.
The National Institutes of Health has traditionally focused on basic research, such as describing the structure of proteins, leaving industry to create drugs using those compounds. But the drug industry’s research productivity has been declining for 15 years, “and it certainly doesn’t show any signs of turning upward,” said Dr. Francis S. Collins, director of the institutes.
There’s another idea worth considering. There are many drugs that are in the public domain. There are many folks on medicare and medicaid plans. There are also veterans. Why not have the government offer to help start up small firms around the country that will produce those drugs at a minimal cost and reasonable profit with big time orders from all these government plans? The idea is just to save money on drugs going to those covered by public health programs and create manufacturing jobs in places that need them. Many old drugs are just as effective as their minimally tweaked but patented counterparts that are advertised and marketed into a high profit set up per the nifty Big Pharma Business model. Why pay for maximum profits to a market filled with a few greedy oligopolies when you can promote some nice little business all over Main Streets of American instead and Public Health instead and stir up a few jobs in the process?
Let the competition for government contracts really begin!
So, it’s an Open Thread, but that’s an article and a policy worth some discussion.