Affluent Americans pay a premium, and the rest of the developed world rides on our coattails.
President-elect Obama will have to choose: more diversity on the pharmacy's shelves or less at the cash register. He says he wants both, but he's going to get only one or the othermore drugs to fit more biochemical profiles, or lower, more uniform drug prices negotiated by the federal government.
He's said to be a strong supporter of "personalized medicine." Good call. One lung cancer drug targets a receptor that predominates in patients of Asian ancestry. White Americans have less tolerance for some antidepressants, antipsychotics and heart-disease drugs. Blacks respond poorly to certain drugs for high blood pressure and hepatitis. Tolerance for many drugs hinges on how well patients metabolize and expel them, which seems to depend on a couple of thousand variants in a couple of hundred different genes. drugs will lead to much better medicine.
But tailoring is expensive. When drugs fragment the market, their huge development costs get spread across fewer patients. The hostile economics of small-market drugs were first addressed by Ronald Reagan and Henry Waxman in a spectacularly successful instance of bipartisan collaboration. Enacted in the shadow of the newly discovered AIDs epidemic, the 1983 Orphan Drug Act provides various tax credits and exclusive marketing rights for any drug developed to treat a disease that afflicts fewer than 200,000 U.S. patients. At the time, AIDs still seemed rare enough to meet that threshold, and a few years later the law helped launch the first pathbreaking hiv drugs.
Since then about 1,600 orphan drugs have been certified, more than 280 have been licensed and used to treat 14 million patients. One recent estimate suggests that 6,000 diseases that collectively threaten 25 million Americans qualify as orphans, and new links between genes and disease are discovered almost every day. Far more drugs will be required to treat uncommon genetic diseases that aren't quite rare enough to qualify as orphansroughly speaking, flaws that show up (as single copies) in more than 5% of Americans. Countless other genetic differences will be implicated in side effects, driving still more fragmentation in the pharmacy.
In the long run precisely tailored medicine will be cheaper because chemistry is inherently cheaper, and far more effective, than the hands-on care provided by doctors and hospitals. But patients have to cover chemistry's upfront costs, and that means patent protection for a while. It takes a delicate choreography of patent-protected monopoly and cutthroat competition to get innovation first and rock-bottom prices later.
Along with many influential Democrats in Congress, the President-elect also favors having the federal government "negotiate with the drug companies for the cheapest available price on drugs." That means only one thingweakening the patents involved in the expensive front end of this dance. Placing a single huge buyer between a patented drug and the disease it treats will indeed lower the cost of treating itso long as someone else has already paid to get the drug to market.
The rest of the world counts on the U.S. to be the someone else. New drugs are introduced here, affluent Americans pay premium prices while the patents last, and less affluent Americans, along with the rest of the developed world, get a sharply discounted ride on our coattails. While the patent lasts, however, some of the free riders don't get the drug at all. The 6,000 British victims of kidney cancer don't get Pfizer (nyse: PFEnewspeople)'s Sutent, because the government sets a $23,000 cap on what it will pay for a drug expected to prolong life by six months. Most other countries are openly or tacitly doing the same. Former Bush Administration officials agree it's only a matter of time before the U.S. does, too. The new Administration wants it to happen on the double.
Faced with a monopoly buyer's outright refusal to buy, drug companies do try to cut special deals to recover whatever they can on drugs already developed. But every time another country monopolizes its buying and tightens the squeeze on the patent, the financial picture takes another step back toward orphan. Pfizer won't pull the plug on yesterday's Sutent, the one already bottled and licensed. But a buyer's cartel may well force it to pull it on tomorrow's. Once the U.S. joins the big-government buyer's club, the jig is up. Many smaller- market drugs will never make it through the economic gate at all.
We stand on the threshold of a new era of biochemistry so stunningly powerful that it lets us tune and fix human chemistry from the bottom up. It is dreadfully ironic that affluent countries have chosen this moment to throttle the research engine.
Original Source: http://www.forbes.com/forbes/2009/0112/072.html