Drugs: Is Something Rotten?


The Truth Behind the Cost of New Drugs

By Merrill Goozner

University of California -- 297 pp -- $24.95

In an ideal world, pharmaceutical companies would devote their vast research resources to searching for long-shot cures for major scourges such as Alzheimer's disease. They would sponsor trials to help doctors figure out what treatments work best and are most cost-effective. They would develop drugs and vaccines against malaria, schistosomiasis, and other Third World diseases, even though there's little chance of making money off them. And they wouldn't threaten cuts in research and development for breakthrough medicines whenever politicians challenged their ability to charge high prices.

What a world it would be. But the pharmaceutical industry is no paragon of selfless public service, as Merrill Goozner, former chief economics writer for The Chicago Tribune, documents in his provocative but insufficiently reflective The $800 Million Pill. The industry's claim that it needs big profits to create tomorrow's cures is a half-truth at best, for instance. Goozner shows that 50% of the industry's $30 billion research budget "is spent on drugs that add nothing significant to physicians' armamentarium for fighting disease." Instead, they are often new entries in already crowded classes of medicines. He recounts how many drugs were created with government funding -- then were sold to consumers at sky-high prices. And he proves that Big Pharma need not require $800 million to develop an important new drug, as it insists. The industry has "skewed priorities," he charges.

Yet Goozner really shouldn't be that surprised. What he has actually discovered is that the pharmaceutical industry is a business, with all the good and bad that capitalism brings. Of course, drugmakers charge the highest prices the market will bear for their products, just as other manufacturers do. Anything less, and they're not doing their duty to shareholders. And is it really a shock that companies spend a big chunk of their R&D budgets on drugs that sometimes show no clear medical advantage but that bring surefire profits, or on trials aimed solely at boosting sales?

Goozner calls these uses of research dollars a "waste of resources." Yet they do increase revenues, which, after all, is the goal of business. And if consumers are paying high prices for drugs discovered with taxpayer money, how is that different from the computer and Internet world, where tech businesses profit on research that was originally funded by the government?

In fact, there often is an inherent conflict between doing well financially and doing what's best for medicine. At the same time, there are plenty of public-spirited industry scientists and executives who are horrified at the shenanigans some companies use to maximize profits. The author tells some of the disturbing stories but fails to recognize the demands of business.

The tales of avarice and misbehavior raise serious questions: Should drugmakers be held to a higher standard than, say, auto makers? Do we need new regulations or incentives to prod the industry into focusing more of its R&D on important medical needs? This book was a golden opportunity to tackle these deeper issues. But Goozner largely ends up emptying his notebooks, while taking the usual potshots at the industry.

Along the way, though, he does offer good narratives, such as the story behind Amgen Inc.'s (AMGN ) blood-boosting EPO, the world's best-selling biotech drug. That tale involved decades of work by an academic scientist -- and the collection of 2,550 liters of urine from Japanese patients. And the author brings a keen eye to the development process. One insight is that the perseverance of individual scientists is often crucial. Novartis (NVS ) is reaping plaudits and billions of dollars in revenues right now from its cancer drug Gleevec, but the treatment would have never come to market without Brian Druker at the Oregon Health & Science University. The company originally thought that the market -- patients with a rare leukemia -- was too small to justify developing the drug. Druker, however, lobbied hard for human trials after showing that the medicine worked in a test tube. He even gave Novartis an ultimatum. "Either get it into clinical trials or license it to me," he said. Now, Gleevec is a blockbuster. Yet "it took a dedicated researcher...before a reluctant drug company delivered on the promise of its proprietary product," observes the author.

Goozner also emphasizes the pressing need to uncover the basic mechanisms of disease, and he describes how universities and nonprofit groups are filling some of the gaps in drug development. And he offers a promising solution to the problem of not knowing which drugs work best: a govern-ment-funded institute that would pit drugs against each other in trials. But he did miss the chance to help readers understand the often conflicting interests of drugmakers and public health -- and to explore further solutions to this dilemma.

By John Carey

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