December 3, 2006

THE IRON LAW OF UNINTENDED CONSEQUENCES:

What's good for pharma is good for America: Critics of drug companies vastly overstate the industry's financial well-being -- and overlook its indispensable contributions to the future of public health (Richard A. Epstein, December 3, 2006, Boston Globe)

[C]ritics treat the industry's multibillion dollar profits as a sure sign of its permanent robust economic status. But those numbers conceal deep vulnerabilities. It is no accident that the shares of major pharmaceutical houses have been hammered over the past three of four years, even as profits appear to be at record highs. Wall Street values companies not only on current earnings, but also on long-term prospects, which are cloudy at best for research pharmaceutical firms. Just this past week, for example, Pfizer announced plans to cut one-fifth of its United States sales force, with a promise of further restructuring in January.

We shouldn't be surprised. The huge profits of major drug firms are often tied to one or two drugs, such as Pfizer's Lipitor or Viagra -- profits that evaporate when their patents expire and generics enter the marketplace. The Standard & Poor's review of pharmaceuticals thus starts somberly, noting that products with $21 billion in US drug sales are going off patent in 2006, with another $24 billion to follow over the next three years -- a sharp dent for an industry that today generates about $250 billion in revenue. All the while, the pharmaceutical houses also must absorb the legal and business risks needed to identify, patent, test, license, and market any new drug.

These trends should worry us all. Pharmaceuticals are not tobacco. There is no reason to rejoice in putting pharma on the ropes if its business reversals hurt the very consumers they are trying to serve. The medical advances of the past 30 years are not just a matter of dumb luck. They are very heavily dependent on the patent law, pricing freedom, and marketing strategies that have allowed these firms to bring a wide variety of vital products to market.

The champions of further regulation argue that their efforts won't limit innovations or curtail the widespread use of new drugs. But there are no free fixes. Too often ill-designed regulation gives us the worst of both worlds -- slower innovation and more limited drug use.


As someone who opposes drug innovation and use, it's too bad Democrats can't destroy the industry.


MORE:
Of Politics and Pills: Eli Lilly's CEO warns that bad policies may imperil pharmaceutical research. (ROBERT L. POLLOCK, December 3, 2006, Opinion Journal)

Is the future of your health riding on what happens in Washington? Sidney Taurel thinks it might be. The Eli Lilly CEO ticks off a list of former "death sentences" being cured or turned into chronic conditions--"AIDS, leukemia, Hodgkin's, hopefully solid tumors within the next few years. The potential for medical research is unlimited. We just need to make sure we don't interdict it by the wrong policies."

And what might those "wrong policies" be? Anything, it would appear, that reduces the financial incentives for drug companies to invest in research and development.

Posted by Orrin Judd at December 3, 2006 9:58 AM
Comments

You oppose drug innovation and use? Would you elaborate just a bit?

Posted by: J. at December 3, 2006 2:38 PM

Bill makes $12 million for writing a book whitewashing himself, Hillary makes $8 million. Daschle makes a couple of mills from his wife's Washington lobbyist firm, Diane Fienstein's husbands makes millions trading his position with the Chinese, Reid makes another million and a half from his real estate deals, JF Kerry's brother built the first Vietnamese resort... They have done zilch to save humanity. The Dems never want to clamp them down for making obscene profits. Yet they complain about Big Oil and Big Pharma's "obscene" profits. When the "obscene" profits no longer coming, the "obscene" profiteers will have to downsize, to lay off their workers who, afterall, are the clogs in the machines that make "obscene" profits. The bosses will retire with their millions, the workers will have to survive with tax-payers' hand-outs. The only way for the Dems to stay in power is to create a population of welfare dependents who cannot survive on their own because their jobs are wiped out by the Dems' "good" intentions, and have to depend on the Dems to raise taxes to "save" them.

Posted by: ic at December 3, 2006 3:36 PM

J.:

www.firstthings.com/ftissues/ft0311/opinion/mathie.html

Posted by: oj at December 3, 2006 5:08 PM
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