Protect Pharmaceutical Innovation

Abstract

In her Policy Forum “Fixing the legal framework for pharmaceutical research” (26 February, p. [1083][1], published online 11 February), GlaxoSmithKline attorney S. M. Knowles contends that the Hatch-Waxman Act should be altered to increase data exclusivity from 5 to 14 years. If implemented, this disturbing change would likely narrow the drug development pipeline and certainly increase drug prices. Knowles reports the average R&D costs per drug in 2008 to be $1.2 billion. However, when the analysis accounts for tax deductions given to the pharmaceutical industry and removes opportunity costs from the expenses column, the results show an estimate of one-seventh the cost (including drug failures) ([ 1 ][2]) of Knowles' industry-funded analysis. Knowles claims that the inadequate patent system does not allow for cost recovery, yet pharmaceutical companies have garnered three times the profit of the average Fortune 500 company over the past decade ([ 2 ][3]). Knowles also suggests that the federal government should pay for the use of innovator safety and efficacy data by generic competitors, but she fails to acknowledge that worldwide, government and nonprofits already fund the majority of the health R&D that generates these discoveries ([ 3 ][4]). Since its inception in 1984, the Hatch-Waxman Act has saved the U.S. $734 billion by providing an effective conduit for lower-priced, generic pharmacotherapies to come to market. Generic drugs now make up 70% of prescriptions dispensed and account for only 20% of dollars spent on medications in the United States ([ 4 ][5]). Hatch-Waxman has been preserving the precarious balance between public welfare and industry incentive for drug innovation by providing affordable medicines. We agree with Knowles on one point: Hatch-Waxman requires reform to widen the R&D pipeline. Congress must ban brand-name pharmaceutical firms' unethical “pay-for-delay” agreements with generic competitors. In doing so, it would create a paradigm shift, disincentivizing compensatory agreements and, instead, refocusing brand-name companies on constructing novel therapies that may address presently unmet medical needs. 1. [↵][6] 1. B. Young, 2. M. Surrusco , “Rx R&D myths: The case against the drug industry's R&D ‘scare card,’” Public Citizen (July 2001). 2. [↵][7] The Henry J. Kaiser Family Foundation, “Profitability of pharmaceutical manufacturers” (16 September 2009). 3. [↵][8] Global Forum for Health Research, “Monitoring financial flows for health research” (2006). 4. [↵][9] 1. A. B. Engelberg 2. et al ., N. Engl. J. Med. 361, 1917 (2009). [OpenUrl][10][FREE Full Text][11] [1]: /lookup/doi/10.1126/science.1184188 [2]: #ref-1 [3]: #ref-2 [4]: #ref-3 [5]: #ref-4 [6]: #xref-ref-1-1 View reference 1 in text [7]: #xref-ref-2-1 View reference 2 in text [8]: #xref-ref-3-1 View reference 3 in text [9]: #xref-ref-4-1 View reference 4 in text [10]: {openurl}?query=rft_id%253Dinfo%253Adoi%252F10.1056%252FNEJMp0908496%26rft_id%253Dinfo%253Apmid%252F19828525%26rft.genre%253Darticle%26rft_val_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Ajournal%26ctx_ver%253DZ39.88-2004%26url_ver%253DZ39.88-2004%26url_ctx_fmt%253Dinfo%253Aofi%252Ffmt%253Akev%253Amtx%253Actx [11]: /lookup/ijlink/YTozOntzOjQ6InBhdGgiO3M6MTQ6Ii9sb29rdXAvaWpsaW5rIjtzOjU6InF1ZXJ5IjthOjQ6e3M6ODoibGlua1R5cGUiO3M6NDoiRlVMTCI7czoxMToiam91cm5hbENvZGUiO3M6NDoibmVqbSI7czo1OiJyZXNpZCI7czoxMToiMzYxLzIwLzE5MTciO3M6NDoiYXRvbSI7czoyNToiL3NjaS8zMjgvNTk4NC8xMzU0LjEuYXRvbSI7fXM6ODoiZnJhZ21lbnQiO3M6MDoiIjt9