I got a preview of Drug Wars by
Robin Feldman and Evan Frondorf. It’s not about the War on Drugs, but about the devices used by Big Pharma to maintain the profits they earn from their intellectual property (ownership of drug patents, brand names and so on) and to stave off competition from generics. Feldman and Frondorf propose a number of reforms to the operation of the patenting system to enhance the role of generics. I’m more interested in a fundamental shift away from using intellectual property (patents and brand names) to finance pharmaceutical research.
Drug Wars covers devices like product hopping and evergreening. The idea is to make small changes to existing drugs, so that generics aren’t exact substitutes. Ideally, this enables a whole new patent (evergreening). Even if not, the change means that generic copies of the old version can’t be substituted automatically when prescriptions are filled. All of this is backed up by massive advertising directed both at consumers (this is only legal in the US and NZ) and physicians.
The cost is mainly, though not exclusively, borne by the US government and US consumers. Other developed countries like Australia bargain with the drug companies to place their product on a list that can be purchased at low cost. If the price demanded by the company is too high, there’s no subsidy and sales are usually very limited. One of the central US aims in both the US Australia Free Trade Agreement and the Trans-Pacific Partnership (killed off by Trump) was to cripple the Australian Pharmaceutical Benefits Scheme and similar measures in other signatory countries. Less developed countries have also resisted the demands of Big Pharma to charge whatever the market will bear, with a fair degree of success.
Could this be done better. The ideal alternative would be an extension of public funding to cover drug development as well as fundamental research (which currently acts as an effective subsidy to Big Pharma). Some of this could be done on the current model of grants for research, but there could also be “prizes”, that is, payments for the successful development of drugs assessed as beneficial. Research results would be shared publicly, and products would not be patented (or, perhaps, patents would be held by the government that funded the work)
Again, ideally, all the developed countries would contribute, and share the results. But the US is large enough (around half of global sales of pharmaceuticals and half of expenditure by pharmaceutical companies) and does so badly under the existing setup, that it could probably act unilaterally.
Here are some relevant numbers, I’ve found around the place. All provisional, corrections welcomed
* Total research expenditure by pharmaceutical companies $76 billion. US share, about $40 billion
* Marketing expenditure by pharmaceutical companies more than $100 billion.
* US Spending on prescription drugs $425 billion
* National Institutes of Health total funding $33 billion
Looking at these numbers, I’d say that if the US government doubled the NIH budget and allocated all the money to drug development it would generate more new and useful drugs than are currently produced by Big Pharma in the US, given that a fair chunk of the $40 billion being spent is devoted either to competitive duplication in the race for new products or to non-productive activities like evergreening. Given that much of the cost of prescription drugs is ultimately borne by the government, even a 20 per cent reduction in total costs would be enough to offset the cost the government, with a big benefit left over for consumers.