David R. Henderson  

How to Kill Drug Development

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My co-author and former student, Charles Hooper, has written an excellent article on today's Forbes.com. In the article, Hooper calls himself a "drug killer," telling why he advises firms to "kill" even drugs that have promising uses. Here's a quote:

A lot of new medicines are tossed into the trash for reasons that have nothing to do with safety and efficacy. We have helped kill drugs for brain cancer, ovarian cancer, melanoma, hemophilia and other debilitating conditions. It breaks my heart. But we would never recommend that a company knowingly lose money unless some other crucial, nonfinancial objective was being achieved.

The whole thing is worth reading. Also, he quotes from his article, Pharmaceuticals: Economics and Regulation, in The Concise Encyclopedia of Economics.

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CATEGORIES: Regulation

COMMENTS (8 to date)
dearieme writes:

He's a "subjunctive killer" too, I see.

Kevin writes:

I agree that drug development would stop pretty much dead in its tracks (unless the govt pays for it directly, which I think is likely). I don't agree with the implication that this is a bad thing. We spend tons of money on drugs that sustain lifestyles that aren't possible without drugs. It wouldn't surprise me if less drug development and marketing actually resulted in a healthier population.

Not that the intrusion on liberty is right, but I think as a health matter this could actually improve things.

mark writes:

I actually went and read the article. So what would be different under a Republican president? Were there changes in FDA policies instituted by Bush that would be undone by a Democrat? Did not the Vioxx fiasco occur under a Republican?
It is hard to be terribly concerned about the "Obama is a socialist" theme when one has lived under Republicans for twenty of the last twenty-eight years.

Dr. T writes:
But, we would never recommend that a company knowingly lose money unless some other crucial, nonfinancial objective was being achieved.
I'm trying to figure out how treating disease fails to qualify as a "crucial, nonfinancial objective." If companies that develop drugs for treating cancers and other serious conditions are afraid of losing money, then they should license the drugs to other companies willing to take the risk. Killing such drugs may not be illegal, but it certainly is immoral.
Tom West writes:

If NICE controlled our automobiles, we would all be driving used 1983 Honda Civics.

I think that's it in a nutshell. You don't get Lexus health-care for Civic prices and those who promise as much are either dreaming or lying.

On the other hand, there's probably not a huge difference in the outcomes in the end - both cars will get you there one way or another.

Backing off the analogy, you can probably get 90% of the health outcomes of the US for 50% of the price. The big mistake is to think you can get 100% of the health outcomes for anything less that 100% of the price.

As Arnold has stated many times, if you want insulation, you have to have rationing.

I see the trade-offs of private vs. socialized health-care as:

- Freedom of choice
- Slightly higher health outcomes
- Pleasanter health care experience
- More private medical research


- Universal coverage
- Insulation from costs
- Vastly smaller cost to overall economy

Not being someone for whom freedom of choice is a 'religious' issue, I'm not certain that either side has an automatically compelling case.

Personally, as a Canadian, the current situation is ideal (for us). We get the benefits of socialized medicine while also obtaining the benefit of medical research courtesy of the US. However, in the absence of that medical research, I'm not certain many Canadians would still want to switch. People don't really value the absence of future advances...

Kurbla writes:

You don't get Lexus health-care for Civic prices and those who promise as much are either dreaming or lying.

Maybe you cannot get that - but you can get Civic health care for Lexus prices easily - and maybe you already drive one. Sweden has roughly twice lower infant mortality and 5% longer life expectation at half of the price per capita - and some countries get similar results for even lower price.

Tom West writes:

I suspect that has to do more with life-style differences than anything else. The question is what would American outcomes be if they were treated under the Swedish health-care system, and in that I suspect we would see substantially worse results than the Swedes do.

If you wanted to bring the health outcomes of the bottom quintile (economically speaking) of Americans up to match the bottom quintile of Swedes, I think you'd have to change a *whole* lot more than just the health-care system. You'd have to reshape American society (and its people) from top to bottom. And that's not going to happen.

Bill Drissel writes:

Last time I looked, we could save 11/12ths of the expense and considerable time if we reverted to the pre-1964 FDA requirement of safety rather than safety + efficacy.

Would you comment on the fraction?

Bill Drissel
Grand Prairie, TX

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