Friday, May 06, 2005

Erectile duplication

Ezra tells us what ails the drug industry:

drug company R&D is rarely spent on the life-saving, critical medicines that we imagine.

So assume one company brings out a new, powerful, statin drug. The others will rush it back to the labs, figure out how to change a few [functional groups] in order to call it to evade the patent while retaining the effect, put it in for testing and, so long as it works better than the placebo, the FDA will approve it. That, of course, is where the marketing comes in. Since they've all got the same drugs -- and if R&D were truly on such shaky grounds, this would be the problem, not drug reimportation -- they have to use advertising strategies to get a leg up in the market.

Viagra, Levitra, Cialis. It was fun to giggle at the ad about the 4-hour erection that requires immediate medical attention, but resources spent slicing a piece of the ED market are not being used in the socially optimal way. I'm reminded of a rueful comment from someone at Glaxo Wellcome back when I interned there -- "We're a second-to-market company." Somebody else proves that you can make the drug, our chemists reinvent the wheel, and we get our piece of the pie.

I don't know if this duplication results in price cuts, but even if it does, it'd be better to achieve those price cuts through reimportation or collective bargaining in a universal health care system than through a process where companies spend big money fighting out zero-sum games.

Lots of other good stuff in Ezra's post, too, so go read it.


Rousseau said...

If this is true, why does the industry not fight for better (ie, actually purposeful) patent laws?

Neil Sinhababu said...

I don't know whether it's possible to write patent laws to deal with these issues. How many functional groups do you have to change, and how significantly, in order to escape the original patent? This stuff would be pretty hard to codify.