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Thursday, June 28, 2007

More on Big Pharma: The European Connection

This is what the left wants to do to pharmaceutical research in the US as well. There's a case for it: the usual leftist case for nominal equality over quality and progress. They're not being honest about it. They need to be. -AS


Wow. The film hasn't even been released and everyone is already lobbing "dishonest".

It may be that "socialism always fails", but it's not clear that this is an example of it.

THE U.S.'S RUNAWAY PRICE UMBRELLA - WRONG KIND OF 'COMPETITIVE EDGE'?

The principle reason that the U.S. has been a center of gravity is because it hasn't addressed the soaring costs of drugs, rising rates of drug utilization, or pharmaceutical companies possibly using pricing power to continue to drive "high" profit growth for ever larger companies.

Here is a graph of how prices for drugs on patent have moved in the U.S. versus the rest of the developed world. Had the U.S. moved to improved access years ago, instead of "managed care", it's not clear whether a shift away from Europe would have occurred, in the same degree.

What's more, not all of the shift in R&D to U.S. protection has been the result of a price umbrella, either. The U.S. has a deep market and well established lines between private and public research. The Europeans do not.

# It would be too simplistic to attribute the deterioration of the European pharmaceutical environment to a single factor. As a whole, Europe remains less attractive for R&D investments than the US. The economic and healthcare environments, the science base, the investment conditions, the regulatory framework, and societal attitudes towards new technologies all contribute.
# US patients, for example, are better informed and more willing to embrace innovation - they want to have the benefits of new approaches to healthcare and new treatments immediately, and to use them effectively.

LINES OF SIGHT THAT CURB EXCESS, RULES THAT INCENTIVE ADAPTIVE BEHAVIORS

Last, I'm not big on governments getting involved in price-setting or questioning anything but blatantly fraudulent 'drug innovations' (or doing much else than facilitating level playing fields, redressing externalities, or regulating natural monopolies).

However, sometimes monitoring and working with industry to reduce cost, is enough. Have a look at this reported success:

The [Canadian Patented Medicine Prices Review] Board’s record in fulfilling its mandate is well-known. We have achieved compliance with the Patent Act through our ongoing monitoring of the prices of new and existing patented drugs, obtaining the cooperation of patentees through our Voluntary Compliance Policy, and in using the statutory provisions for public hearings and remedial orders when necessary.

Over the past decade, the publicly-funded drug plans, which account for approximately 40% of total drug expenditures in Canada, have adopted a large number of innovative approaches to help contain costs while still providing for prescription drug coverage.

These initiatives by both levels of government have helped to ensure that drug prices in Canada have not increased faster than overall consumer prices as measured by the Consumer Price Index.