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Argument: Profit interests corrupt investments in medical innovation

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Supporting quotations

Jonathan Cohn. "Creative Destruction. The best case against universal health care." The New Republic. November 12, 2007 - "Somebody still has to turn scientific knowledge into practical treatments. Somebody has to apply the understanding of how, say, a cancer cell reacts in the presence of a chemical in order to produce an actual cancer drug. It's a laborious, frustrating, and risky process--one for which, traditionally, the private sector has taken primary responsibility. And, yet, that doesn't mean the private sector always performs this function particularly well. Unlike the NIH, whose support for medical research seems to represent a virtually unambiguous good, the private sector's efforts to translate science into medicine are much more of a mixed bag.

As books like Marcia Angell's The Truth About the Drug Companies and Merrill Goozner's The $800 Million Pill point out, a lot of the alleged innovation we get from private industry just isn't all that innovative. Rather than concentrating on developing true blockbusters, for the last decade or so the pharmaceutical industry has poured the lion's share of its efforts into a parade of "me-too" drugs--close replicas of existing treatments that offer little in the way of new therapeutic advantages but generate enormous profits because they are patented and because companies have become exceedingly good at promoting their sales directly to consumers.

The most well-known example of this is Nexium, which AstraZeneca introduced several years ago as the successor to Prilosec, its wildly successful drug for treating acid reflux. AstraZeneca promoted Nexium heavily through advertising--you may remember the ads for the new "purple pill"--and, as a result, millions of patients went to their doctors asking for it. Trouble was, the evidence suggested that Nexium's results were not much better than Prilosec's--if, indeed, they were better at all. And, since Prilosec was going off patent, competition from generic-brand copies was about to make it a much cheaper alternative. (The fact that Prilosec's price was about to plummet, needless to say, is precisely why AstraZeneca was so eager to roll out a new, patented drug for which it could charge a great deal more money.)

The Nexium story highlights yet another problem with the private sector's approach to innovation. Because the financial incentives reward new treatments--the kind that can win patents--drug- and device-makers generally show little interest in treatments that involve existing products. Yet sometimes finding a new way to use an old remedy is the best way to innovate. As Goozner notes in his book, even as Prilosec and its competitors (like Tagamet) were flying off the drugstore shelves, academic scientists were arguing that it made more sense to treat some patients with a regimen of older drugs--antibiotics?--that could cure ulcers rather than combat their effects. But no drug company was going to make a fortune repackaging old antibiotics. So the industry, having already invested heavily in products like Nexium, basically ignored this possibility."

"Single-Payer FAQ". Physicians for a National Health Program. Retrieved May 30th, 2008 - It is also important to note that studies show that, in the U.S., the number of clinical research grants declines in areas of high HMO penetration. This suggests that managed care increasingly threatens clinical research. Another study surveyed medical school faculty and found that it was more difficult to do research in areas where high HMO penetration has enforced a more business-oriented approach to health care.

Finally, it appears that the increasing commercialization of research is beginning to slow innovation. Drug firms’ increasing reliance on contract research organizations (and for-profit ethical-review boards) has coincided with a sharp drop in innovative new drugs and a spate of “me-too” drugs - minor variations on old drugs that offer little benefit other than extended patent life."

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