The innovation problem is that discovering new drugs is cheap, but testing them is very, very expensive. Government labs--as currently constituted--are good at discovery, but aren't big enough to do the testing. And the high-prestige scientists at the NIH aren't going to want to get dirty: testing is low-prestige work.

Right now we award patents to drug companies because they spend the bucks in testing. It always seems a bit nuts to me--the government (and some indies) are doing the high-brain low-money work, and Big Pharma adds the bucks. I've always been told that government is good at big bucks grind-em-out stuff like roads, and the private sector is where you want to be nimble. But what do I know?

Pharmaceutical innovation is important. I need my boner pills, and I need something to calm my restless legs after a hard day on the couch watching football.

I know that there's real innovation out there, too, but it seems sometimes that all the big money goes into the boner and baldness divisions. And the money they budget to bribe my doctor to prescribe this instead of that.

Of all the arguments against national healthcare, it's the only one that seems to have some serious basis in fact.

Most if not all of the big pharmaceutical companies spend more on advertising than research, so...

THIS IS EXCELLENT NEWS!!! FOR HILLARY!!!!

*

Kevin, step away from the big bowl of Kool-Aid.

Big Pharma's interest in innovation is in discovering innovative new ways to part consumers from their money. If it isn't a pill that treats -- but doesn't cure -- a condition that is very widely experienced, they are not interested for perfectly good market reasons.

Innovation that is useful in terms of preventing, curing and treating health problems is something that the government alone does -- increasingly, governments not in North America.

Innovation is a reason for government supervision, not a reason against.

Kevin,
I suspect people care plenty about innovation. They just don't believe Big Pharma is doing much of it.

Is it populism or democracy that you find ominous, Kevin? Of course, the masses will always, to some degree, lurch towards ill-considered solutions,for a variety of reasons. That is where leadership should come into play. We are hardly facing a precipice; sliding towards mob rule or a totalitarian response. Those will only occur if the elites fail to recognize that the current rigged(paid off)game benefitting the few at the expense of the many and the country, is becoming unacceptable. I suspect few in the rabble want the drug companies nationalized and creativity smothered. They just want good drugs available at a reasonable price. They are just saying, 'FIX IT!'. Only the wealthy, securely well insured(if that is possible anymore) and big pharma itself would claim that it is not broken.

I'd like to see the gov't stear innovation towards things we actually need. The pharma market is instead chasing dollars, because the doctors can be trusted (bribed) to push new variations of dry eye drugs on the rubes.

Could you imagine what we could accomplish if those same resources were focused on cancer?

Screw them. They spend more money on penis pill commercials than they do on research.

"Of all the arguments against national healthcare, it's the only one that seems to have some serious basis in fact."

I think you mean it's the only argument that might have any basis in theory. (As opposed to the other arguments, which are dismissed more easily).

Cuz I don't think there's any empirical evidence that this effect occurs. European pharma is probably just as innovative. And the defense industry here is pretty innovative, in spite of having one giant buyer, mostly.

Kevin, please actually read the poll results rather than Ezra's unfortunate paraphrase. The exact question was:

What if you heard that limiting the prices of
prescription drugs might lead to LESS research and
development of new drugs since drug companies
would be making smaller profits. Would you still
think there should be more regulation of the prices charged for prescription drugs?

To which 48% responded that there should still be more regulation over today. That doesn't say that people are "unconcerned" about the possible effect, it says only that they consider the benefits of some (undefined) increase in price regulation to outweight the potential loss. And, if I read you right, Kevin, you agree.

So what's the problem?

Your comment supposes that for-profit research and development is the only venue. R&D for medicines for many diseases are unfunded because there is an insufficient market to justify the investment. Conversely, much is invested into R&D for tweaking existing medicines with large markets in order to extend patent protection.

So an alternative analysis should include supplementing (not eliminating) for-profit R&D with not-for-profit R&D.

American men will not support national healthcare because it might prevent innovation of new drugs for their ED.

There is a fallacy about innovation and corporate funded research. I would refer you to Capitalism 3.O by Peter Barnes - pages 128-130.

Pharmacheutical companies spend $25 Billion a year on research - 70% of which is spent on copycat drugs that mimic competitors brands and add no significant health benefit. The federal Government could easily fund 100 percent of non-copycat research - and place the drugs in the public domain.

He goes on to point out that we actually have a pretty good track record in government financed research. The entire computer industry was grew out of research at the US Army's Ordanance Corps and the Internet came out of defense research at the National Science Foundation.

Most if not all of the big pharmaceutical companies spend more on advertising than research, so... - Augustus

One of the first things a new Dem administration needs to do badly: BAN ALL consumer advertising for prescription pharmaceuticals. Only trade magazines for health professionals should ads be allowed. That's one of my biggest beefs with them. It's a crime that they spend 2:1 on advertising and marketing that I help pay for through higher insurance premiums. Oh, and not to mention you get medicine that often either doesn't work or it causes some other goddamn problem.

I'm optimistic that people are finding the innovation argument to be unpersuasive. That is, sure, it might need some tweaking, but come one, we need better and cheaper health care first, and let's not allow this argument to stand in the way any longer.

Maybe that isn't true, but I do think that eventually bad arguments can lose their ability to dissuade folks from taking action on important issues. Innovation is an issue, but it is finally being recognized and a lot more solvable after universal care is available instead of fixing it first. House on fire, hangnail, and all that.

When this trade-off becomes anything resembling a possible consequence of some sort of policy that may come to fruition, I will consider getting concerned. Possibly.

When I was in graduate school in the early 1990s, I helped research and write a JETRO (Japan External Trady Organization) funded study comparing the pharmaceutical industries in the U.S. and Japan. The question, then, as it was with other industries that one would assume the Japanese should excel in if not dominate, was why Japan's pharmaceutical industry was such an also-ran compared to those in the U.S. and Europe.

Part of the problem was that the Japanese were late to the business, not really having sufficiently recovered economically to be competitive until the late 1970s. It is sometimes possible for late comers to an industry to have advantages by not having to incur the start-up costs (in terms of physical and human assets) borne by the pioneers.

But, as I recall (I haven't reread the study for at least 10 years), another of the "short comings" was the national health system reimbursements for prescription drugs. (The Japanese also aren't quite the hypochondriacs Americans are, expecting to find a cure for everything, including "happiness" in a pill. But I digress.)

As most of you are probably aware, "big pharma" makes its big killings in the U.S., and sells product at considerably lower prices throughout the rest of the world. The pharmaceutical companies will tell you this is the only way they can afford funding for research. This also is why they want longer patents for "blockbuster" drugs.

While there is certainly some truth to this, like all major corporations, the CEOs and senior officers also just need those six- and seven-figure bonuses every year to help maintain their fragile self-esteem. But I digress yet again.

But Japanese patent protection and national health reimbursement/pricing discouraged (then) Japanese companies, which historically always operate on thinner margins than do U.S. or European companies (though they also don't have jump through hoops quarter-to-quarter to support stock prices to the same degree - but I digress a third time). This, along with vestigially risk-averse companies, prevent(ed) Japanese drug companies from "betting the farm" on products that may not work or be approved.

What Jim Pharo said.

Free-market incentives are almost as perverse in the prescription drug market as in the health insurance market. Big Pharma currently has very little incentive to innovate in the areas where healthcare most needs innovation. We desperately need a new generation of antibiotics to combat MDR and XDR tuberculosis, but that market doesn't promise extravagant profits. We need better drugs for all the endemic diseases of poverty, but the free market will never provide them.

Pharma has had several decades to demonstrate just how wonderfully innovative they can be under deregulation. The results are on your TV every evening.

This is just so much mental masturbation. What good is it to have a fancy new drug if you can't afford it? Consumers understand this, and they're just making a logical choice.

If the drug companies had any sense of history, they'd welcome regulation. It's government regulation that made the pharmaceutical companies what they are today (in fact the same could be said for most industries). Before government regulation, we had the wild west: salesmen hawking patent drugs on the street corner. Consumers didn't know if the drugs would make them better or worse... or even kill them. Buying required a leap of faith. In steps the government, and efficacy and safety are (somewhat) assured, and a rational market is established. Plus, there was the added benefit of protecting the established drug companies from challenges by small upstarts. Too bad the supreme court appears poised to eliminate the most basic consumer protection against irresponsible drug companies.

Research on profitable pharmaceuticals is conducted by Big Pharma. Research on useful pharmaceuticals is conducted by Big Government. Pfizer may someday cure the cold sore, but it'll be government-sponsored research that cures cancer.

Now if they'd only make a pill that creates the effects of big fattie.

Thersites - "I need my boner pills, and I need something to calm my restless legs after a hard day on the couch watching football."

So, does this explain your choice for the primary?

Thersites - "I need my boner pills, and I need something to calm my restless legs after a hard day on the couch watching football."

So, does this explain your choice for the primary? Posted by: optical weenie

Thersites isn't supporting Huckabee, is he?

The drug industry is such a mess you could pretty much kill them all and let God sort it out. If America's asthma sufferers ever figure out what the drug companies are doing to them, that could happen.

A Congress elected, not by drug companies, but by the people, could make one quick move- stop allowing advertising as a deductible business expense. That's a 'modest' change that would ring a lot of bells.

Thersites isn't supporting Huckabee, is he?

More likely a valiant write-in for the Rudester, who's all about flaccid self-control and restless jabbering. You faked us out, thers!

Jeebus, get a grip man. Any innovation that happens happens at Universities (who then hand patents over to big pharma) or government facilities. What Pharma does is create a lot of "me too" drugs that may or may not be better than those that they are replacing. Recently there was a study done on some of the commonly prescribed anti-depression drugs. I guess that they don't do to damn much, but cost a bunch. Huh?

"Cuz I don't think there's any empirical evidence that this effect occurs. European pharma is probably just as innovative. And the defense industry here is pretty innovative, in spite of having one giant buyer, mostly. "

European pharma makes its profit in the United States. (Heck many of them do the research in the United States too). The flag on the company isn't dispositive, the place they make their profit is the important question to address when you want to look at whether or not profit is funding pharma.

As for the defense industry, it is innovative but fantastically expensive. I fully expect that government could do almost as well as pharma does now, just that it would be much more expensive.

Giving more drug development responsibilities to academic and/or government funded researchers will not help promote the development of new drugs since they currently lack the expertise to transform a lead compound into a drug. Academic chemists often come up with compounds that show impressive activity against a particular cancer cell line. These compounds can be useful as a starting point for additional research, but often they have problems which an experienced pharmaceutical chemist will recognize immediately.

Here are some examples of potential problems with a chemical compound.

The molecular weight(MW) is too high. Generally, the MW should be below 500. Anything higher has problems getting absorbed into the bloodstream.

The compound is too greasy, becomes bound to proteins in the blood and never gets near its intended target.

The compound has reactive functionalities which can create toxic metabolites. An example is a benzene ring with two adjacent hydroxyl groups. These often are transformed by the body into a highly reactive class of compounds called quinones. Often conversion to toxic compound is the only reason for the observed activity. The compounds are promiscuous, that is they interact with many targets in the body, and can never become drugs.

The compound is not soluble. This can cause problems with formulating the drug so it can be tested in assays and animals.

The compound is not stable. Compounds can degrade at normal room temperatures, they may not survive the rigors of the stomach or bloodstream. Peptide compounds can be quite active, yet never become drugs because they get broken down in the stomach.

Academic researchers generally do not concern themselves with the developability of the compounds they test. They looking to see what causes activity against an enzyme or cancer cell-line. And they are correct to do this.

The research is often invaluable in finding a starting point, yet it can still take several pharmaceutical companies over a decade to transform the lead compound into a drug. Sometimes , thousands of variations of the lead compound need to be made before a compound is good enough to submit for clinical testing in people. A very good chemist makes only 100-250 compounds a year. It takes a lot of work to make thousands of compounds for a project.

Transforming a lead compound into a drug is an incredibly complex endeavor and readers who are interested in finding out more about the difficulties associated with drug development should check out Derek Lowe's blog In the Pieline
http://pipeline.corante.com/

Permit me to say a few words on behalf of new drugs.

I’m an insulin-dependent type 1 diabetic. For the last 10-12 years I’ve been part of several Phase 1 clinical trials of new diabetes meds (all injectables but not insulin). The companies have been small venture capital-funded biotech start-ups seeking to commercialize research coming out of top academic labs. (Who funded that research? Beats me.) As I understand it, the researchers doing the original work are not physicians but scientists with little interest and competence in turning basic science discoveries into a new medicine. So their discovery got licensed to start-ups run by academically-inclined doctors who did additional research into the hormone’s potential as a new medicine. The docs supervising my clinical trials were at research institutes associated with major academic medical centers.

Clinical trials are about a drug’s safety and efficacy. In one of my trials, the hormone worked a little TOO well. It so reduced insulin requirements that the FDA feared a long-time diabetic using the new hormone might continue taking his usual dose of insulin and thereby be at risk for extremely low blood sugar. (Leading to convulsions, blacking out, even death.) I got invited to Washington to testify before an FDA panel of top diabetes experts who worried that if it were not possible to properly educate endocrinologists and their patients about how the new medicine worked in the real world, it might be better if it were not approved.

I just don’t see university-based scientists giving a damn about these kinds of problems. Saying we need to steer more money to research scientists doing the heavy lifting in university- or NIH-funded labs and less to drug companies supposedly piggybacking off their hard work strikes me as total bullshit. The skill sets and interests involved, while complementary, are utterly different.

As someone whose continued good health and -- dare I say it? -- life depends on new drugs, I’d rather have a little less money (because these drugs are expensive) and a longer, better life than more money and a shorter, less healthy life.

Kaiser’s poll asked the wrong question. Trading off lower prices for less research misses the point. Kaiser should have made the point of the trade-off explicit, It should have asked if Americans want better drugs that save more lives or do we want a few more dollars in our pockets.

Even on such trivial drugs as Pfizer’s boner pill that allows middle-aged men to act like 16-year olds, most Americans feel the way I do. It's worth paying good money to get a higher quality life.

But, yeah, it’s time that the FDA not give approval to line extensions and the other tricks Big Pharma uses to keep the generics at bay. The marginal cost of a generic drug is trivially small and the money Big Pharma has earned by the time a drug loses patent protection ought to be fair recompense for their risk-adjusted investment.

Won't universal health care potentially put more dollars in the hands of folks making drugs that are applicable to impoverished people?

The dark side of populism: please don't kill us or rip us off anymore. Pretty dark.

This actually strikes me as the dark side of populism. I'm not convinced that, say, national healthcare in the United States would actually have much effect on pharmaceutical innovation, but it's certainly something we should at least be concerned about.

I don't see any evidence that we should be concerned about it, because for it to be something that we should be concerned about, there should be substantial reason to believe it would be the case, and there is certainly at least as much reason to believe that there would be a positive effect in refocussing innovation as that there would be a negative effect from reducing the total number of new drugs introduced if the government took a bigger role in providing healthcare and setting priorities.

OTOH, this survey isn't about national healthcare, its about attitude toward regulation of pharmaceuticals, which is pretty much orthogonal to national healthcare. Actually requiring (for instance) clinical trials that are conducted on populations that are similar to those the drug is intended to be used on rather than filtering for the people with the least number of problems other than those at which the drug is targetted would not constitute national healthcare, though it is one that would have been more likely to identify some of the high-profile dangers that have shown up in a approved drugs only after they were generally available on the market.

Of all the arguments against national healthcare, it's the only one that seems to have some serious basis in fact.

Please, present this "serious basis in fact".

Anyhow, much of the "pharmaceutical innovation" centers around producing new drugs that can be marketted to replace existing drugs when patent protection runs out, so that monopoly rents can continue to be extracted. While I certainly see how that benefits pharmaceutical stockholders, I fail to see how the resulting high price of healthcare and replacement of tried-and-true drugs in the market with less well-understood drugs without substantially greater effectiveness benefits anyone else.

Kevin,

Keep your eye on the ball: nobody should be talking about nationalizing medicine. What you want is nationalization of the payment system, Canadian style.

Our medical system in Canada is much freer and more innovative than that in the States because it is run the way it ought to be -- the very difficult and complicated layers of medical societies, hospitals and other institutions, the teaching hospitals and universities, and the patients and doctors themselves.

We don't suffer from the American problem of everything being regimented to the rules and convenience of the insurance companies.

The scandal of the year is that both Hillary and Obama are promising Romney-care -- the system where the government pays the insurance companies 5% of GDP (on top of the 10& that medical care costs) to do the bill paying and regulating.

This is an insane rip-off, whether it's done by Romney in Massachusetts or made national by a Democratic Administration.

I like how the free market fanatics point to the defense budget as if that were the model we would use. The DOD is a bloated inefficient mess primarily owing to the fetishization of the military. Has the military served a useful function in the past five decades? Not really. Has it eaten trillions of dollars that could have gone for something useful? Of course it has. Does that have anything to do with how medical research would fare under the government? Not the slightest bit.

In spite of the propaganda against it, the government runs programs like Social Security and Medicare with a rather impressive efficiency. That's because there's no need to suck out money for profit and for multi-million dollar salaries. In fact, one could rationally make the argument that it is the private side of the munitions industry that ensures bloat and inefficiency.

Anyone who claims government is inefficient has never worked for even a moderate sized private company.

Problem with innovation is "hired-to-invent," a corporate perversion of the patent system which gives to investors and takes away from inventors.

As one who went from government R&D to private sector R&D, I must say how extremely disappointed I was in the private sector. They actually expect you to work, which was something I never experienced working for the government where we had a good old time fucking off most of the day.

We spend 50-100% more on health care than other industrialized countries and have mediocre health care results. Unfortunately the free market system doesn't work in health care because when sick people don't have time to "shop" for the best deal when they become sick and don't have, and can't have full knowledge of results and alternatives. The system is inefficient and in many ways cruel.

In regard to drug costs, government sponsored research approximates 20 billion a year. For this money many new agents are identified and initial testing for efficacy and safety done. If promising, the drug entity is then acquired by drug companies--lots of money is provided researchers and universities to smooth the path.

It matters not whether there is a long difficult inconclusive series of clinical trials or short definitive ones. New drugs are priced based on what the people will pay. If the drug is for cancer, i.e. relatively few patients with serious potentially fatal illness the sky is the limit.

Consider, for example,the drug imitinib (Glivec) for Chronic Myelogenous Leukemia. It was developed under grant funding from the government. Because it was so effective, it is a great medication, only a few very small clinical trials were required. It instantly became the drug of choice for the disease. Yet the price is in the $25-$40,000/year range.

Other new cancer drugs may cost as much as $100,000/year for the drug alone, with many drugs in the $25,000 to $50,000/year range. This means a single drug costs more/year than automobiles. Over a lifetime a single drug could cost more than the patients home. Single drug costs may exceed the average and median income in the U.S. Is this a sustainable system or a farce? Do we need some form of reality and regulation?

Dole Bayh the legislation that made possible the movement of drugs developed with government funds to the private sector has provisions calling for reasonable pricing of drugs--it has never once been used.

www.medicynic.com

The scandal of the year is that both Hillary and Obama are promising Romney-care -- the system where the government pays the insurance companies 5% of GDP (on top of the 10% that medical care costs) to do the bill paying and regulating.

McCain wants to do only subsidies, no mandates, and NO public plan availability, while allowing your employer to ditch your coverage and supposedly "compensate" you for that cost, while they turn you lose to purchase an "individual plan" whereby the insurance companies make the biggest profit margin and you have no protection of a large group. Yeah, there's an even worse alternative.

in case anyone is wondering, spending for prescription drugs accounts for less than 15% of the US healthcare budget. retail spending (i.e., non-hospital) spend is under 10% of the total budget. if you are looking for major efficiencies in our healthcare system, reforming big pharma probably won't do it.

Joe S.,

The testing is several times more expensive than it has to be because most of it is directed toward gaming the patent system and securing patent lockdown on all the major possible variants of a drug, rather than testing the version that's actually marketed.

The drug companies, not to put too fine a point on it, are fucking liars.

"Innovation is a reason for government supervision, not a reason against."
___________________

That might be true on the pure research side, but on the medical application side, government health care wouldn't seem to be a great engine of innovation. While government will support the search for genuine breakthrough drugs, there is less evidence they'll pay much for incremental improvements in existing drugs. Anyone who has been treated in a government health care facility can tell you about the unavailability of the latest drugs for your particular ailment. The distribution of drugs in a government system is usually centrally controlled, so that someone at the top decides which drugs will be available. If a cheaper, but slightly less effective drug will do the trick, don't waste your breathe arguing that you'd really like to try that new, more expensive drug you've heard about. Odds are, they won't have stocked it, precisely because it's more expensive. Come to think of it, without much need to adverstise to the public, there's no reason to believe you'd ever have heard of the new drug in the first place.

Please, before asking questions about profits, make sure that you understand a simple equation:

Revenue - Expenses = Profits

Expenses include things like advertising and-oh, yeah-R&D and testing. There is absolutely no argument for pharmaceutical companies to have a higher profitability rate than any other companies. Profits are what are returned to investors: what you spent in research has already been accounted for (just like what you spent in advertising, free samples to doctors, and fees to lobbyists).

"There is absolutely no argument for pharmaceutical companies to have a higher profitability rate than any other companies."
___________________

What is an acceptable profitability rate for a drug company? How much advertising is too much? How much return should investors expect?

The critics don't say.