The secret gets deadlier
by Mary J. Ruwart
Continued from, “Millions die waiting for life saving drugs.”
By now, you’ve probably realized that excess regulation-that is, regulation that harms instead of helps-is the deadly secret behind soaring pharmaceutical prices. Unfortunately, the death toll from the 1962 amendments is not limited to their impact upon drug development time, nor is their monetary cost limited to soaring pharmaceutical prices.
As you might imagine, as the cost of development rises, pharmaceutical firms must focus their resources on fewer drugs. In order to recover the larger costs of development, they must also focus on drugs that enjoy a broad market. Consequently, some drugs that might greatly benefit desperately ill people are never developed.
For example, my work on prostaglandins and liver disease came to the attention of a prominent FDA examiner, who took the time to call me personally. “Dr. Ruwart,” he said, “I want to encourage you and your company to develop this treatment for cirrhotic liver disease. As you know, there really is no other cure.”
The Upjohn Company wanted that too. After all, the company had invested many years and large sums of money in these potent hormones. In addition, a therapy for chronic liver disease would save thousands of lives each and every year.
However, no one had yet been able to even partially reverse liver disease. Consequently, we did not know how many people we needed to study in order to get the statistical significance that the FDA required. Cirrhotic liver disease takes years to develop and could take years to heal. We didn’t know how many years people would need to be treated or the best dose to use.
All of these uncertainties meant that it was very unlikely that the first efficacy study we attempted would give us the statistical significance required by the FDA. If we didn’t guess right the first time, we would have to start the long trial over again. In the meantime, our patent on the prostaglandin would probably run out and the drug would “go generic” immediately. We would be very unlikely to recover our development costs. The decision not to develop a novel therapy for an untreatable disease was primarily driven by the fall out from the 1962 amendments.
How many life-saving drugs never make it to the marketplace because of the added time and money costs imposed by the amendments? No one knows for sure, but two separate studies suggest that Americans would have access to at least twice as many new pharmaceuticals as we do today.30 What are the costs, in money and in lives, when half of our potential new therapies have never make it to the marketplace? Just as we calculated the potential loss of life due to delays, we can calculate the potential loss of life associated with lost innovations.
We can also calculate the financial loss of the “abandoned” drugs. For each dollar we spend on NCEs, we save $2.12 on other types of health care costs, like hospitalization. For example, taking an anti-ulcer drug saves us from undergoing ulcer surgery, the treatment of choice before these drugs were introduced.
The first anti-ulcer drugs were pricey (about $1,000 for the year of treatment), but they were still cheaper than a $25,000 surgery. The drugs also saved lost work and leisure time as well. When pharmaceutical treatments allow us to continue working (or playing) instead of staying in bed recovering from surgery, we save an additional $1.11 that we would have otherwise lost for each dollar we spend on new drugs.
Click on image to enlarge
Table 3 summarizes the cost of lost innovations, both in lives and in money. Several estimates are shown, depending on whether one believes that the lost innovations are as effective as currently marketed drugs, half as effective, or only one quarter as effective.
Even if we assume the lost innovations are only one quarter as effective as currently marketed drugs, the loss of life is 4.1 million. In other words, even with conservative assumptions, almost as many people die from lost innovations as they do from development delays. If we assume that the lost innovations are just as effective as currently marketed drugs, 16.5 million lives have probably been lost. Thus, the lost innovations have probably resulted in as many deaths, if not more, than the developmental delays caused by the amendments. It goes without saying that these numbers are far in excess of 68,230, the maximum number of lives saved by the amendments.
© 2005 by Mary J. Ruwart – This is a serialization of Dr. Ruwart’s 2005 special report entitled “The Deadly Secret Behind Soaring Pharmaceutical Prices.”
Mary J. Ruwart, Ph.D., is the author of Healing Our World, a liberty primer for liberals, Christians, New Agers, and pragmatists. She also wrote Short Answers to the Tough Questions: Sound Bites for the Libertarian Candidate after her Internet column (www.self-gov.org) of the same name.