“This article”:http://www.americanscientist.org/template/BookReviewTypeDetail/assetid/39097;jsessionid=aaa5f9pT7Kt1Vn in the latest issue of American Scientist reviews some recent well-informed criticism of the industry, including the findings of a 2002 “report by the U.S. lobby group ‘Families USA’”:http://www.familiesusa.org/site/DocServer/PPreport.pdf?docID=249 that found nine of the largest US-based pharmaceutical companies spent an average of only 11 percent of revenues on R&D compared to 27% of revenues on marketing, advertising and administration. The American Scientist reviewer argues, however, that the greatest public policy problem posed by big Pharma is not the venality of the firms but the lack of comparable data on the efficacy of their products and on the quality of their research. bq. The FDA and its European counterparts can demand that pharmaceutical companies provide them with data to show that drugs are efficacious. But they have no mandate to show that drugs are effective‚Äîthat they will work not only in closely monitored clinical trials but also in the real world under a variety of conditions. Nor is there any systematic, independent source of evidence about the comparative value of drugs and medical technologies. Head-to-head trials comparing a drug with a rival company’s similar product or generic version are almost nonexistent. There are no databases that report the results of all trials in a standardized way, describing adverse events and efficacy in various subpopulations. In the absence of this data, consumers and government authorities are unable to make reasonable decisions about the public resources that should be available to these firms (including not only tax subsidies but also the patent monopolies they so vigorously protect) or the price that should be paid for their products. On the specific issue of Vioxx, the revelations seem to be getting “only worse”:http://news.ft.com/cms/s/b9967e4a-5cf0-11d9-bb9c-00000e2511c8.html Australia’s “Pharmaceutical Benefits Scheme”:http://www.health.gov.au/internet/wcms/Publishing.nsf/Content/Pharmaceutical+Benefits+Scheme+(PBS)-1 review of drugs that are subsidized for public health use is an essential source of information on efficacy because it is charged with reviewing the relative value of big Pharma’s products and allocating it’s $5.6 billion budget accordingly. h4. Update January, 6: Better late than not at all: bq. From Thursday, drug industry associations in the US, Europe and Japan will co-ordinate an industry-wide plan to publish on the internet detailed information on completed and current clinical trials of their drugs. Although the scheme is voluntary, drugs companies will be under great pressure to take part in it. (“ft”:http://news.ft.com/cms/s/35b81458-5f5c-11d9-8cca-00000e2511c8.html) fn1. The Familes USA report (well worth skimming) shows that the 11 percent number is likely an exaggeration, since the companies do not report the after tax value of R&D expenditure which attracts tax subsisidies that halve the average income tax paid by these giant corporations to 17 percent.
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher