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September 03, 2008

Drug Companies Need Political Support

Robert Essner
Executive in residence; retired CEO of Wyeth
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While the Olympic games and Michael Phelps’ spectacular array of medals distracted us for a few weeks, the political season is now back upon us in full force. John McCain and Barack Obama are sparring on a number of topics, but remarkably there is one issue on which they agree: “taking on” Big Pharma.

However, it is their support, not attacks, that the industry really needs. Drug companies today are in their most precarious positions ever; budgets are being cut and employees are being let go in record numbers. Investors, realizing this, have taken the market caps of nearly all the major U.S. drug companies down dramatically — Merck and Pfizer, the traditional industry leaders, have each lost about half their value since the beginning of this decade.

We can no longer assume that this industry will continue to pursue the business model that created many of today’s medical miracles and enabled many others. Anyone reading this might already be familiar with the numbing economics of the drug business today. It takes an average of one to two billion dollars to bring a new drug to market and a decade or more to develop it. On top of this, nearly every project that begins in the laboratory ends in disappointment. This, more than any other reason, is why nearly every new therapy is invented and developed in the private sector. Governments and academia lack the stamina to sustain repeated and expensive failures.

Politicians who really care about our future, our health and our happiness should today be worried that the drug industry won’t be able to fulfill its mission, that it won’t keep supplying us with the new drugs and vaccines that we need to keep our healthcare system functioning and solvent in the face of the massive influx of the aging Baby Boomers.

The Baby Boomers are coming, and they are bringing with them chronic conditions as they age in numbers we’ve never seen before. Take Alzheimer’s disease for example. More than one in 10 people who live past age 60 will become a victim of the disease, and for those who live past 80, the figure approaches half. The Alzheimer’s Association projects that treatment costs for Medicaid alone will increase by $100 billion per year from 2005 to 2015.

The Boomers also bring something new to healthcare: an absolute belief that they are entitled to the best care available. This sense of entitlement and their willingness to use their political and legal power to get it means that demand for sophisticated healthcare will skyrocket in the years ahead.

The only realistic way we can satisfy the needs and expectations for healthcare over the next three decades is with new technology, new drugs, new biologicals and new vaccines. We need meaningful treatments for Alzheimer’s, congestive heart failure, cancer and all the other conditions for which current treatments are still vastly inadequate. It is in the laboratories of the drug companies who are today investing over $40 billion each year on R&D where these advances will happen. These companies — who are putting billions on the line into high-risk projects to improve public health — need a government that understands that they deserve to make a good economic return when they are successful.

But there is little hope that you’ll hear any of this from either campaign this fall; the “get tough” rhetoric polls too well. Maybe when the campaign is over, our new president will realize that we need to nurture pharmaceutical innovation, not attack it.


by Ryan Petersen | September 03, 2008 at 10:09 PM

I totally agree. We should support the drug companies by asking doctors to prescribe more anti-depressants rather than suggesting things like exercise. Another way we could support them is to give our children more pills to cure them of hyper-activity attention deficit, so they can sit still so we can enjoy re-runs of Friends.

by Amit Rakhit | September 04, 2008 at 10:43 AM

The reality is that for every 250 compounds that make it to initial clinical trials, only 1 will ultimately be approved (if at all). The cost of developing and bringing a compound to market is about $750million-1 billion. This doesn't take into account the cost and resources for the hundreds of compounds that did not make it to the clinical trial phase. As for recommeding exercise, the reality is that there are about 30 million heart attacks/chest pain episodes a year- which is about 3000 per day. Because of innovations in the pharma industry, new treatments for heart attack have improved the morbidity and likelikhood of survival by anywhere from 15-30% in the last 10-15 years. In the US alone, over 60% of the population are considered overweight or obese (BMI>25), yet doctors have been promoting exercise and good eating habits for years without a lot of effect (ie "you can lead a horse to water..."). This has caused an overwhelming increase in diseases such as high cholesterol, diabetes, etc. For example, a new patient is dagnosed with diabetes every 15-20 seconds. Uncontrolled diabetes leads to significant morbidity and mortality, such as early CV death, blindness, kidney disease, peripheral nerve disorders, etc. Exercise and 'holistic' medicine alone have not been successful at preventing the complications from diabetes, but today patients have a wide variety of treatment options to hlpe manage their disease because of developments in the pharma industry. Though it is easy to crticize as the general public sees pharma as 'gouging' consumers with high prices, the reality is that this is an industry that has been at the forefront of innovation and technological advances in medicine. I agree with the Robert Essner in his article that nurturing "innovation" in the industry and working together to address issues are the ways to move forward since the demands by the ultimate customer- in this case, patients- will undoubtedly increase as people demand more from their healthcare dollar.

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