Unbiased Analysis of Today's Healthcare Issues

Drugs, Drugs and more Drugs

Written By: Jason Shafrin - Aug• 10•07

“Why is there so much controversy about drug testing? I know plenty of guys who would be willing to test any drug they could come up with”George Carlin

The New York Times published two articles this week about prescription drugs. The first deals with generic drugs (“More Generics Slow Rise in Drug Prices“); the second with the right of terminally ill patients to use drugs which have not yet met FDA approval (“Court Rejects the Right to Use Drugs Being Tested“).

Generic Drugs

Generic drugs are great for consumers in the short run, and likely in the long run. Since patents grant a monopoly to one firm, the ending of a patent leads to a competitive market place. Since marginal costs are so low for pharmaceuticals–but development costs are high, the price cuts can be dramatic. What happens to the inventing firm after a patent expires?

Last week, the big drug maker Johnson & Johnson announced it would eliminate up to 4,800 jobs as it braced for generic competition to its drugs, Risperdal for schizophrenia and Topamax for seizures and migraine headaches. In the last year, combined United States sales of the drugs were $4 billion.

Shortly after the Johnson & Johnson statement, Sanofi-Aventis announced that it had already been hard hit by low-cost alternatives to its sleeping pill, Ambien, which became available in generic form in April. As frequently happens when generics appear, sales of the name-brand Ambien plunged — to $91 million in the second quarter, from $420 million in the same period last year. Generics already account for 60 percent of prescriptions in this country. And that portion is expected to rise, as cheaper substitutes arrive to treat many chronic conditions.

So will big Pharma go bankrupt? It turns out that many of these large companies are creating their own generics. “For example, the generic unit of Pfizer, Greenstone, last year began marketing its own version of the Pfizer antidepressant Zoloft.”

For a more detailed discussion regarding the merits and demerits of the patent system for medications, see my post about intellectual property.

Untested Drug Use

The Side Effects May Vary blog summarizes and adds much to the NYT article about the Appeals Court banning terminally ill patients from taking drugs which have not yet been approved by the FDA. There are 2 posts (Part I, Part II). The blog talks about the Abigail Alliance:

One of the groups who took the case to court (and will subsequently be filing an appeal to the Supreme Court) is the “Abigail Alliance for Better Access to Developmental Drugs.â€? Abigail Burroughs was a college student diagnosed with head and neck cancer, who, after exhausting all available therapies, tried to obtain the drugs Iressa and Erbitux in a last ditch effort to save her life. The problem was that those two drugs were being tested in a clinical trial – one that she did not qualify for because her cancer was not the type it was being tested on. She died, and the drugs ended up getting approved 2-3 years later – Erbitux has since been shown to prolong lives of patients with Abigail’s cancer.

I think an FDA prohibition of any drugs is ridiculous. Patients should be able to choose what type of medicines should go in their body. I do not, however, believe the FDA should be disbanded. They provide a valuable service of providing health care information to physicians and the public. Doctors would likely be wary to recommend non-FDA approved medicine to patients in most cases, however this would still allow terminally ill patients and other with a high risk tolerance to take the drugs. As stated on the Abigail Alliance website:

“Every drug for cancer and other serious life-threatening illnesses that the Abigail Alliance has pushed for earlier access to in our five and a half year history is now approved by the FDA! Many lives could have been saved or extended, if there had been earlier access to these drugs!â€?

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  1. Interesting take on generic drugs, however, I think you may want to consider the benefits of allowing someone to profit disproportionately from them– a characteristics made impossible by another 3rd party intermediary, the pharmaceutical wholesalers.

    The major issue is that with absolute commoditization of generic molecules, there is zero effort to promote or perform further research in these categories, as selection is solely a matter of price and reliable supply.

    Even Bayer/ Aleve/ Tylenol in the OTC market have some brand strength and therefore the incentive to perform additional research and focus on promoting their product instead of just taking share in a category. I talk a bit more about this in my blog

  2. Chris says:

    If we break down the rules for clinical testing, then the incentives to participate in randomized controlled trials goes away and we are not going to know if these compounds work or do not work. FDA through DDMAC regulates the claims that ethical products can make and they need to know where to draw the line in what the products can do.