Wednesday, November 14, 2007

The Innovation Myth

One of the most cherished arguments of the opponents of public health care, is that medical innovation comes from private medicine. 'Look at America', they pronounce smugly, 'the world leaders in medical innovation and it's all thanks to the free market!'

Not so fast. Turns out, yet again that public enterprise is the real innovator:
The single biggest source of medical research funding, not just in the United States but in the entire world, is the National Institutes of Health (NIH): Last year, it spent more than $28 billion on research, accounting for about one-third of the total dollars spent on medical research and development in this country (and half the money spent at universities). The majority of that money pays for the kind of basic research that might someday unlock cures for killer diseases like Alzheimer's, aids, and cancer. No other country has an institution that matches the NIH in scale. And that is probably the primary explanation for why so many of the intellectual breakthroughs in medical science happen here.
Market forces can actually squelch innovation: A longstanding drug treatment for metabolic disorders has been discovered to be one of the most exciting potential cancer treatments to come down the pike in years, but big pharma refuses to do the clinical trials necessary to put it in the treatment pipeline.

Because it's a longstanding drug treatment it can't be patented as a cancer treatment and make them billions - in fact the more effective it turns out to be the more it might cut into the profits from the compounds - most much more toxic and very possibly much less effective - that they can patent, so cancer victims suffer and die because the profit motive discourages innovation.

It's not the only example either. When a cheap cancer drug in really cheap quantities turned out to be a cure for macular degeneration, the drug company behind it tried to stop the affordable treatment of blindness so that they could split off the compound responsible and sell it for a hundred times more.

So another of the dwindling arguments for profit driven medicine down. Next?

3 comments:

HellKaiserRyo said...

Cliff, you are really deluded:

"When a cheap cancer drug in really cheap quantities turned out to be a cure for macular degeneration, the drug company behind it tried to stop the affordable treatment of blindness so that they could split off the compound responsible and sell it for a hundred times more."

You called it a "cheap cancer drug". I suggest that you read this:

http://www.nytimes.com/2006/02/15/business/15drug.html?ex=1297659600&en=62aabaec5acffa8c&ei=5090&partner=rssuserland&emc=rss

So do you think it is a cheap cancer drug?

Cliff said...

Somebody didn't follow the link.

The dosage required for the macular degeneration treatment is about $20 worth of the drug. One time. Yes I call a blindness cure for twenty bucks cheap, don't you?

But I certainly won't argue the point that the drug company wants to charge too much for it as an expanded cancer treatment. Read your own link - it's double the price the same drug costs as a colon cancer treatment - relatively cheap in relation to other treatments - to expand it to other cancers.

Thanks for helping to make my argument.

HellKaiserRyo said...

My point that it isn't cheap as a cancer treatment.

Well, the article does state that bevacizumab is cheaper than another monoclonial antibody called cetuximab. However, cetuximab, according to the article isn't a "blockbuster:"

"The drug, used for colon cancer, sells for $9,600 monthly, but is not as widely prescribed as Avastin and is typically used only as a last-resort treatment for a few months."

Maybe they have to charge more as it does not have a large customer base (the justification for the pricing of "orphan drugs"). In contrast, bevacizumab could benefit a way array of patients thus expanding the customer base for Genentech. Maybe the price could be lowered if it was expanded, and Genentech could still retain sufficent remuneration.

I do agree that ranibizumab is too expense as a cure for macular degeneration if becavizumab suffices.

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