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Reasonable RX: Solving the Drug Price Crisis
A Real Plan for Making Drugs Affordable-and Promoting Innovation, Too "This book is a necessity for understanding the pharmaceutical industry. Both the pluses and minuses of the present system are set forth with a judicious combination of historical narrative, economic analysis, and statistical data. The highly original proposals for reform will be a major stimulant to analysis and policy-making."-Kenneth Arrow, Nobel Laureate in Economics, Professor Emeritus, Stanford University "This is a timely book by authors who know what they are talking about. They tackle a big problem: rising drug prices that are threatening to overwhelm us all-and especially those with limited or absent health care insurance. Will we drive people overseas for healthcare? Will there be social unrest? This book describes the problem and then offers a solution. Worth a careful read by everyone, pharmaceutical manufacturers and government policymakers especially." -Roger Williams, M.D., Chief Executive Officer of the United States Pharmacopeia and a formersenior official of the Food and Drug Administration "This book confounds two sets of skeptics: Those who say there's no way to resolve the conflict between the need to fund pharmaceutical research and our desire to keep medicine affordable; and those who think that economics never has anything good to say." -Honorable Barney Frank, Congressman from Massachusetts "This book comes at the right time and could become the starting point of discussions, which will eventually lead us into new era in the healthcare care industry. It will without a doubt become a "must" for insiders of the pharma- and biotech industries." -Dr. Jurgen Drews, retired President of Roche Pharmaceutical Group Global Research Acknowledgments viiiAbout the Authors ixIntroduction xi Chapter 1: Drugs and Drug Prices 1Chapter 2: The American Way to Discover Drugs 21Chapter 3: The Drug Industry Today 39Chapter 4: Are Drug Companies Risky? 59Chapter 5: How "Not" to Lower Drug Prices 77Chapter 6: Squandering R & D Resources 103Chapter 7: How to Lower Drug Prices 129 Appendix: Our Solution in Detail 155
Index 177
Index 177
- GenresPolitics
188 pages, Hardcover
First published January 23, 2008
20 people want to read
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Displaying 1 - 3 of 3 reviews
November 11, 2016
The purpose of the book was to introduce a proposal for the restructuring of the American pharmaceutical industry. The authors identify two major problems with the US market for medicine.
They acknowledge that most of the world's new medicine has been discovered and continues to be discovered in American labs, and that this is a tribute to the capitalist model. The potential rewards that make smart people work hard to cure illness are to a great extent financial. But the authors believe that we have arrived at the end of the road on two fronts. First, the costs of new medicines is now so high that normal Americans and the US government will struggle to pay for them going forward. Second, we are not discovering new medicines at the rate at which this used to occur.
The reason for this, according to the authors, is that the pharmaceutical giants pursue blockbusters, which is what makes sense for them financially. Blockbusters are drugs that don't eliminate an illness, but rather treat a condition forever and ever, and for as wide a population as possible. Like drugs that control the cholesterol in your blood for the rest of your life, for instance. This analysis sounds logical; if that's what works for Hollywood (which has exactly the same business model) it probably works for large pharma too. But of course there is a human angle here. Hollywood is entitled to do as it pleases, because it does not handle matters of life, death, illness and cure. On the other hand, medicine is not an indulgence.
Here's what they don't like with the blockbuster model:
1. Lots of "me too" drugs get developed, whose additional usefulness to society is much smaller than their usefulness to the companies that develop them, and at the expense of other potentially useful cures; meanwhile, any potential price benefits to the public are captured by the oligopolistic distributors who want to be able to shop from a couple options, but fail to pass on the savings to patients.
2. Promising drugs that would only help a few people or would only help poor people get put on the back burner
3. Drugs get approved for the minimum possible dosage and it is left to doctors to then go ahead and find other ways they can cure patients in higher dosage. You'd never, ever target the illness where the higher dosage helps.
4. Blockbusters are marketed to consumers directly, rather than the medical community, introducing a whole host of new issues. You could not market something very specific on TV, it would not be cost-efficient, but blockbusters are made for it. The authors argue (persuasively) that this has not been good for doctors and patients.
5. Big Pharma stocks have done unbelievably well since the introduction of the blockbuster model. The authors run some stat tests that in their view prove there is no longer any risk in running a large pharma company, and that there is therefore an imperative to make the industry work for its bread. Yes, the capitalist model works, but this looks to the authors like monopoly returns, rather than perfect competition.
The authors also describe the very lengthy (currently 13 year) three-stage process from when a new cure is discovered to when it has gone through the necessary toxicity tests, efficiency tests and efficacy tests (don't ask) to be ready to go for FDA approval. Apparently 13% of drugs that enter this process survive the 13-year process to make it to the stage where the FDA has a look at them. And it can apparently be an unsavoury process. Drug companies often bury bad results, as they would not want to spare their competitors the bother of pursuing blind alleys, and there have also been occasions when they have been so eager to bring a drug to market that they may have buried bad results in the interest of actually releasing a drug to the public. Testing is done by an industry of lesser-quality panels that the authors describe in detail (and disgust), rather than top scientists and universities, the main objective being low cost.
Once a drug is presented to the FDA for approval, the next process starts whereby the pharmaceutical companies have basically revealed to the market the existence of the new drug, and the process of marketing essentially starts. This process once involved pharmaceutical companies selling directly to doctors, but these days there are three avenues. They also advertise straight to the public, and (predominantly) distribution is in the hands of an oligopoly of three corporations that sit between the pharmaceutical companies and the HMOs and pharmacies. The authors don't have too many compliments for this part of the chain either...
So what is their solution? Well, you spend the whole book waiting for it. I really think the authors ought to have outlined it in the introduction. It would have allowed me to read the entire book with half my brain attuned to how all the issues they touch upon would relate to the solution, but it's not what the authors chose to do. And when you get to the solution, you kind of figure out what cause their shyness. On the other hand, had they put it in the introduction, there's every chance I would never had read the book and that would not have served me well either...
They propose that the industry is cut in half, at the waist, so to speak. Companies should either work toward bringing new drugs up to the point where they are ready for FDA approval or they should be in the business of marketing drugs, starting from the FDA approval onwards.
This of course begs the question of why this split would stop the guys who come up with the drugs from beavering away to produce the blockbusters that the marketing behemoths crave.
The second innovation proposed by the authors addresses this. It's an agency that has the exclusive right to buy the drugs from the companies that develop them and the exclusive right to auction them off to the marketers. This company would not pursue profit. It would sometimes sell on the rights with strings attached on price, would discourage me-too drugs, would not actively pursue blockbusters, would overpay for cures for illnesses there's no profit in, but large public benefit etc.
The authors basically propose that we stick government somewhere in the middle. But of course it would not be government, it would be a PRIVATE agency. Like, wait for it, Fannie and Freddie.
And that's where the authors lost me, frankly. I did read it till the end, but I was so deflated.
That said, hopefully somebody picks up from the authors and finds some other solution. The points they have made about what does not work seem valid. But the events of 2008 are solid proof that government agencies are a recipe for private profit and public risk.
Perhaps regulation can be introduced that can be made an industry split to work. The book did convince me that there is merit to the idea of separating the marketers from the scientists, or at the very least there is merit to not involving marketers from the very start.
Dunno, perhaps a government competitor could be introduced. In the media business, every UK resident is familiar with the BBC, for instance. I find it does a stellar job. My wife, on the other hand, who works in media, believes it renders the UK a media wasteland compared to her native America.
The book leaves me with more questions than answers, but hopefully with better questions than I had before...
They acknowledge that most of the world's new medicine has been discovered and continues to be discovered in American labs, and that this is a tribute to the capitalist model. The potential rewards that make smart people work hard to cure illness are to a great extent financial. But the authors believe that we have arrived at the end of the road on two fronts. First, the costs of new medicines is now so high that normal Americans and the US government will struggle to pay for them going forward. Second, we are not discovering new medicines at the rate at which this used to occur.
The reason for this, according to the authors, is that the pharmaceutical giants pursue blockbusters, which is what makes sense for them financially. Blockbusters are drugs that don't eliminate an illness, but rather treat a condition forever and ever, and for as wide a population as possible. Like drugs that control the cholesterol in your blood for the rest of your life, for instance. This analysis sounds logical; if that's what works for Hollywood (which has exactly the same business model) it probably works for large pharma too. But of course there is a human angle here. Hollywood is entitled to do as it pleases, because it does not handle matters of life, death, illness and cure. On the other hand, medicine is not an indulgence.
Here's what they don't like with the blockbuster model:
1. Lots of "me too" drugs get developed, whose additional usefulness to society is much smaller than their usefulness to the companies that develop them, and at the expense of other potentially useful cures; meanwhile, any potential price benefits to the public are captured by the oligopolistic distributors who want to be able to shop from a couple options, but fail to pass on the savings to patients.
2. Promising drugs that would only help a few people or would only help poor people get put on the back burner
3. Drugs get approved for the minimum possible dosage and it is left to doctors to then go ahead and find other ways they can cure patients in higher dosage. You'd never, ever target the illness where the higher dosage helps.
4. Blockbusters are marketed to consumers directly, rather than the medical community, introducing a whole host of new issues. You could not market something very specific on TV, it would not be cost-efficient, but blockbusters are made for it. The authors argue (persuasively) that this has not been good for doctors and patients.
5. Big Pharma stocks have done unbelievably well since the introduction of the blockbuster model. The authors run some stat tests that in their view prove there is no longer any risk in running a large pharma company, and that there is therefore an imperative to make the industry work for its bread. Yes, the capitalist model works, but this looks to the authors like monopoly returns, rather than perfect competition.
The authors also describe the very lengthy (currently 13 year) three-stage process from when a new cure is discovered to when it has gone through the necessary toxicity tests, efficiency tests and efficacy tests (don't ask) to be ready to go for FDA approval. Apparently 13% of drugs that enter this process survive the 13-year process to make it to the stage where the FDA has a look at them. And it can apparently be an unsavoury process. Drug companies often bury bad results, as they would not want to spare their competitors the bother of pursuing blind alleys, and there have also been occasions when they have been so eager to bring a drug to market that they may have buried bad results in the interest of actually releasing a drug to the public. Testing is done by an industry of lesser-quality panels that the authors describe in detail (and disgust), rather than top scientists and universities, the main objective being low cost.
Once a drug is presented to the FDA for approval, the next process starts whereby the pharmaceutical companies have basically revealed to the market the existence of the new drug, and the process of marketing essentially starts. This process once involved pharmaceutical companies selling directly to doctors, but these days there are three avenues. They also advertise straight to the public, and (predominantly) distribution is in the hands of an oligopoly of three corporations that sit between the pharmaceutical companies and the HMOs and pharmacies. The authors don't have too many compliments for this part of the chain either...
So what is their solution? Well, you spend the whole book waiting for it. I really think the authors ought to have outlined it in the introduction. It would have allowed me to read the entire book with half my brain attuned to how all the issues they touch upon would relate to the solution, but it's not what the authors chose to do. And when you get to the solution, you kind of figure out what cause their shyness. On the other hand, had they put it in the introduction, there's every chance I would never had read the book and that would not have served me well either...
They propose that the industry is cut in half, at the waist, so to speak. Companies should either work toward bringing new drugs up to the point where they are ready for FDA approval or they should be in the business of marketing drugs, starting from the FDA approval onwards.
This of course begs the question of why this split would stop the guys who come up with the drugs from beavering away to produce the blockbusters that the marketing behemoths crave.
The second innovation proposed by the authors addresses this. It's an agency that has the exclusive right to buy the drugs from the companies that develop them and the exclusive right to auction them off to the marketers. This company would not pursue profit. It would sometimes sell on the rights with strings attached on price, would discourage me-too drugs, would not actively pursue blockbusters, would overpay for cures for illnesses there's no profit in, but large public benefit etc.
The authors basically propose that we stick government somewhere in the middle. But of course it would not be government, it would be a PRIVATE agency. Like, wait for it, Fannie and Freddie.
And that's where the authors lost me, frankly. I did read it till the end, but I was so deflated.
That said, hopefully somebody picks up from the authors and finds some other solution. The points they have made about what does not work seem valid. But the events of 2008 are solid proof that government agencies are a recipe for private profit and public risk.
Perhaps regulation can be introduced that can be made an industry split to work. The book did convince me that there is merit to the idea of separating the marketers from the scientists, or at the very least there is merit to not involving marketers from the very start.
Dunno, perhaps a government competitor could be introduced. In the media business, every UK resident is familiar with the BBC, for instance. I find it does a stellar job. My wife, on the other hand, who works in media, believes it renders the UK a media wasteland compared to her native America.
The book leaves me with more questions than answers, but hopefully with better questions than I had before...
October 23, 2023
went in searching for a pbm rebate scheme explanation but did not find it so 2 stars
a discussion on orphan drugs and compositionally similar drugs alone is inadequate and doesn't deconstruct the money flow & profiteering of the industry fully 2 stars
a discussion on orphan drugs and compositionally similar drugs alone is inadequate and doesn't deconstruct the money flow & profiteering of the industry fully 2 stars
Displaying 1 - 3 of 3 reviews