Pharmaceutical Policy

As Bush signs his much ballyhooed (and much lamented) "Medicaid prescription benefit bill" into law, the cynics among us note that, like everything controvercial Bush does or proposes, it isn't scheduled to take effect until after the upcoming election, with some measures put off until 2010.

There is no question but that the bill is loaded with pork, and it contains provisions which seem designed to force up the cost of drugs, such as bans on imports, and the prohibition against Medicare using its massive buying power to negotiate favorable prices from pharmaceutical companies. Any genuine free trader would be offended by that first provision, and any fiscal conservative would be appalled by the second.

But leaving all of that aside for a moment, there are some poorly kept secrets about the pharmaceutical industry which should have been addressed as part of this Medicare bill.

First, prescription drugs - even new "wonder drugs" - aren't always all they're cracked up to be. As The Independent notes:

A senior executive with Britain's biggest drugs company has admitted that most prescription medicines do not work on most people who take them.

Allen Roses, worldwide vice-president of genetics at GlaxoSmithKline (GSK), said fewer than half of the patients prescribed some of the most expensive drugs actually derived any benefit from them.

The article also presents some related statistics:

Therapeutic area: drug efficacy rate in per cent

• Alzheimer's: 30
• Analgesics (Cox-2): 80
• Asthma: 60
• Cardiac Arrythmias: 60
• Depression (SSRI): 62
• Diabetes: 57
• Hepatits C (HCV): 47
• Incontinence: 40
• Migraine (acute): 52
• Migraine (prophylaxis): 50
• Oncology: 25
• Rheumatoid arthritis: 50
• Schizophrenia: 60

Also, much drug research and marketing is focused not on bringing patients the best and most cost-effective treatments, but is instead aimed at convincing doctors and patients to try expensive new patented medicines instead of cheap generics - or instead of somebody else's analogous medication. An appalling amount of the "drug research" investment which supposedly justifies the sky-high prices we pay for medicine is directed not at conditions for which no effective treatment is available - but instead, the lion's share of new drug research is directed at finding drugs to compete with other pharmaceutical companies' most profitable products. This can have a benefit for the consumer, as evidenced by the proliferation of antidepressants on the market, but that choice comes with a high price tag. (And the choice is diluted by the fact that pharmaceutical ads mislead customers into thinking that these "wonder drugs" will work for everybody.)

Thus, as turns out to be the case with blood pressure medications, patients have paid a small fortune for new "wonder drugs" which, as it turns out, are no more effetive than diuretics - generic medications available for pennies per dose.

There is a relatively simple solution to these problems - requiring pharmaceutical companies to test drugs not only against a particular disease or disorder, but also against competing medications. A recent Washington Post editorial suggests the following:

Two easy reforms would rectify this information deficit.

First, the government could empower NIH or an independent agency to conduct systematic comparative trials on all classes of medicines with multiple entries. The results of those trials would provide physicians with authoritative clinical practice guides to the best and most cost-effective medicines.

Second, the FDA's drug approval process could be amended to include comparative clinical trials for any new drug that a company wants to bring to the market.

The industry will complain that the additional clinical testing would drive up the cost of approving new drugs and choke off innovation.

But just the opposite would occur. The pharmaceutical industry currently spends more than 60 percent of its $34 billion research and development budget on clinical trials.

But much of that money is wasted on trials designed to benefit the marketing arms of the companies and winds up generating more noise than useful information for practicing physicians.

A new requirement that drug companies test their latest offerings against existing medicines would force them to focus their R&D budgets on truly innovative medicines and help identify the best uses for existing drugs.

That approach makes more sense than most of what Bush just signed into law.

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