Monday, July 18, 2005

The Cost of Research

In an unsigned idiotorial, the Washington Post apparently joins with those who wish to do away with comprehensive medical insurance programs, noting that new medications can be extraordinarily expensive and concluding,
Drug companies charge this much mostly because our broken non-market system allows them to get away with it.
As if the typical patient with a typical illness gets a $100,000.00/year medication? The idiotorial asserts,
The standard justification for high drug prices is that they finance medical research. Yet huge research budgets are justified only if they achieve something useful. Usefulness means not just producing drugs but extending and improving the quality of life at a reasonable price.
Oh - so pharmaceutical research should only take place when the pharmaceutical company knows in advance how much the research will cost through the time of FDA approval, the market for the drug, and that the research will be successful. Because scientific research always occurs in a predictable straight line, and scientists always end up with the exact thing they desired when they commence a particular line of research, right?

Or perhaps you should consider that Viagra was initially developed as a potential treatment for high blood pressure and angina. MAO's, an early form of antidepressant medications, were discovered by a researcher who was trying to create a pain remedy for tuberculosis patients. While modern research attempts to remove chance from the equation, you can't be certain at the outset that research will be successful, that it will produce a medication that is more effective than the alternatives, that it will produce a medication that treats the targeted condition, or that it won't turn out to be a dead end.

The iditorial also omits mention of the cost of advertising, or the drop-offs in price when competing medications come on the market, when production methods improve, and when patents expire. It fails to mention that pharmaceutical companies spend enormous sums on marketing, both to doctors and directly to consumers, and pass those costs along to us in the price of our medicines. It fails to mention that the place where its "straight line" formula best applies is where a drug company is trying to produce a competing medication for an existing problem - that is, it is cheaper and easier to create a medication to compete with others that already exist within a given therapeutic class, than it is to create the first drug within a class.

Incredibly, the idiotorial then attempts to apply a nebulous economic formula to human life, asserting,
Cancer doctors are willing to prescribe medicines costing more than $300,000 for an extra year of life, according to a study by Dr. Eric Nadler of Harvard Medical School. But by analyzing how much people are willing to pay for various life-extending safety precautions, health economists have concluded that society values an extra year of life at about $75,000. The physicians' indifference to cost explains why drug firms charge outrageous prices.
Well, no. Whatever value "health economists" might derive for the value the population at large places on the last year in the life of someone else, the calculus changes when the issue is personalized. Few people would take $75,000.00 to give up their last year of life. Few would take $75,000.00 to give up the last year of a loved one's life. So what exactly is this idiotorial suggesting when it argues that we should look at this $75,000.00 figure, and "create a health care market that pays for only cost-effective treatment"? Cut off the elderly after they hit that magic cost point, and let them pay their own way or die?
Meanwhile managed care companies, which were once regarded as the best hope for containing unjustified spending, have been more or less defeated; but faced with this failure of the private market, federal policy is to move Medicare toward a private model.
So we are told that the problem is that there is too much insulation between medical cost and the consumer, market forces should be applied to make the health care market more "rational" and thus more affordable, but this is best done without "privatizing" Medicare? The mind boggles.

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