Merrill Goozner has a very interesting 4 part series on the pharmaceutical industry. Goozner talks of the inordinate amount of spending on pharmaceutical R&D yet notices a decrease in truly beneficial medicines. Pharmaceutical firms focus on trying to produce mass-market, blockbuster drugs for markets such as acid indigestion, headaches, and depression, but many of these drugs have little incremental benefit over existing medicines. For instance, Goozner notes that “Despite its lack of additional efficacy compared to the OTC medications that could be obtained at a fraction of its price, Nexium was the second best-selling drug in the world in 2006 with $6.7 billion in sales and a 16.9 percent annual growth rate.”
Goozner claims that stricter FDA regulations lead to more drug innovations. “If anything, history shows that the tougher the rules, the greater likelihood that industry will pursue innovative therapies. The number of new drugs and biologics approved by the agency fell consistently over the past 15 years, a period when the legal and regulatory environment was becoming substantially more hospitable to winning approval of new technologies.” I do not agree with this. It could be the case that high regulatory periods happened to be the ones where the most innovation took place by coincidence. Further, it could be that drugs were developed in the ‘easy’ regulatory period but because of the lag in development, they may have only been approved during the strict regulatory era.
Goozner also wisely notes the problems of developing drugs for the developing world: no money, no drugs.
“Where there is no money, there is no market, and hence does not attract investment by the global pharmaceutical industry. Malaria, leishmaniasis, Chagas disease, hookworm, drug-resistant tuberculosis, diarrheal diseases – the list of infectious diseases devastating the developing world is long, and the science to develop cutting edge therapeutics for treating them is at the pharmaceutical industry’s fingertips. But its resources are rarely deployed in that direction because there is no potential financial payoff.”