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Will Congressional Drug Policies Harm Medical Innovation?
Although American fears of a swine flu pandemic appear to be waning, government officials are well-prepared should the disease strengthen.
Within hours of the outbreak, Homeland Security Secretary Janet Napolitano authorized the release of 11 million doses of the flu treatments Tamiflu and Relenza from the country's Strategic National Stockpile. And in early May, Health and Human Services Secretary Kathleen Sebelius announced the
acquisition of 13 million more courses of the drugs.
The United States hasn't always been so well-prepared when facing a major public health threat. During the 2001 anthrax scare, federal officials
feared they would exhaust their supply of the antibiotic Cipro. The government threatened to revoke the drug's patent unless Bayer, its
manufacturer, agreed to sell millions of doses of Cipro at a drastically discounted price. Bayer gave in, selling the drug at a price below its research and production costs.
The government must be able to respond quickly to a health emergency such as an anthrax attack or an outbreak of the flu. There may not be time to engage in a drawn-out bargaining process for treatments.
But some lawmakers on Capitol Hill want to hand government the power to dictate the prices of drugs in both crisis and normal circumstances. Such actions would threaten the future of drug research. This could mean that innovative treatments like Cipro, Tamiflu, and Relenza wouldn't be available because they would never have been created.
Legislation is under consideration in Congress that would restructure the Medicare drug benefit so that the federal government can "negotiate" prices
with drug companies. But as the Cipro example shows, the government is too powerful to "negotiate" with private firms. It simply names the price it
will pay, and that's that.
Drug makers spend an average of more than one billion dollars to bring a single new drug to market. For every 5,000 compounds they test, just one new
medicine ends up gaining approval from federal regulators. If the government were to forcibly suppress drug prices, many companies would not have the
resources to continue this research, and many promising new treatments would vanish from the research pipeline.
That's exactly what happened 16 years ago when Congress merely considered instituting price controls on pharmaceuticals. The Clinton administration's
health reform plan included price ceilings for certain breakthrough medicines. Anticipating reduced potential for profit, venture capital support for medical research virtually dried up.
It wasn't until three years later, after the Clinton plan was defeated, that research and development investments and expenditures returned to previous levels.
Less money for research leads to fewer life-saving drugs, including the very kinds of antiviral treatments being used worldwide to ward off swine flu.
Swine flu treatments Tamiflu and Relenza are the products of private enterprise. Tamiflu, an oral treatment, was invented by California biotech firm Gilead Sciences and licensed to Swiss pharmaceutical giant Roche. Relenza, which is inhaled using a special device, is made by British firm GlaxoSmithKline.
Imagine if these companies had faced the prospect of price controls when they were developing these treatments. What if they'd determined that they
wouldn't be able to recoup their initial investments if they were forced to sell at below-market rates? They might have shut down their research
operations entirely and redirected their investments toward more profitable enterprises. Those now suffering from swine flu would face fewer, if any,
treatment options.
During the current swine-flu scare, public health officials appear to have done an admirable job getting doses of medication to the populations that
need them. But to ensure that innovative drugs like these are available during the next health crisis, lawmakers should resist the temptation to
institute price controls on prescription drugs lest their actions halt work on the very drugs we need to protect ourselves.
Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on patient-centered solutions to health
reform. She can be reached at P.O. Box 320010, Alexandria, VA, or at turner@galen.org.

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