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Drugs & Economies: Agreeing to Disagree
Abenaki Recognition: Who Gives A Hoot?
Drugs & Economies:
Agreeing to Disagree
By Karen Kerin
Crow Cohen, who writes the monthly “Crow’s Caws” column for Out in the Mountains, is probably Rush Limbaugh’s stereotypical “feminazi.” I met her at a social function where we shared a table, and was greeted by her opening gambit, “We won’t agree on politics.”
Well, that was almost true. We talked about our differing views on the “war against terrorism” and soon drifted into a mutual concern, the plight of the elderly facing the choice of their medicines or eating. Crow is a social worker and sees the problem up close and personal. She complains that the executives of the pharmaceutical companies are overpaid and contribute to the high price of prescription drugs. She also admits that the majority of the elderly are social security beneficiaries. Time kept us from getting very far into resolving the problem, so this column is for you Crow, my new friend.
Those “overpaid” drug company executives are hired and compensated by the board of directors at a level determined by the marketplace. Stockholders elect the directors. The stockholders are ordinary folks who invest in pharmaceutical companies for a somewhat higher rate of return, despite the higher risk, on their retirement savings or pension funds.
It is true that some executives for drug companies do make millions of dollars per year in compensation, but it is not because they are bad people or because they are trying to drive the price of drugs to new highs. It is because they are making decisions about huge sums of money and regularly manage to earn a profit for the stockholders they work for. That is what the stockholders want them to do and they are willing to pay high compensation for that service. That said, it is clear that the wages of the drug executives are at the discretion of the stockholders, but that doesn’t explain the high cost of drugs because the executive compensation is not even a drop in the bucket.
On average, it costs about $500,000,000 to bring a new drug to market. That is from the time it is first thought to have potential benefits to the time the first dose is sold. But a lot happens in between. The process starts with the publication of results of basic studies of particular ills and diseases. These studies are often done in universities and frequently are funded with government grants. However, that is only the starting point for creating a new drug.
The first step is finding substances that interact with the misbehaving cells to reduce pain or halt or even reverse the bad effects. That is educated trial and error. Once a promising substance is found, trials are run in the laboratory. If the substance proves to be efficacious, then a means of delivery is developed. That could be a pill or an injection or even a patch. Somewhere at this point, the company has an emerging intellectual property, a discovery that merits protection with a patent. The choice is a very tough one because to patent too early diminishes the length of time the company has to recover its costs, but to fail to patent could result in another company patenting the same new drug.
Getting past the development and patent stage, the company must move into the alpha and beta testing stages. The alpha stage is extensive testing on higher order mammals in preparation for limited trials with humans. This is all very carefully documented and submitted to the Food and Drug Administration (FDA) as the beginning of the approval process. Once the FDA is satisfied with the alpha trials, it authorizes beta testing on a controlled population of humans. The alpha and beta testing can take many years and diminishes the time a company has for its intellectual property to have patent protection. In any case, once final approval is given, manufacturing and marketing begins.
Manufacturing is an amazing story because dosage is critical. The drug must have a strength that is closely controlled, so that the dose response curve doctors depend on is accurate. The data must be carefully documented for publication in the Physician’s Desk Reference that doctors rely on for choosing the correct drug for a patient’s ills. Samples must be sent to doctors for them to give to patients. This helps a doctor develop confidence in the drug.
Advertising begins to let the world know there is a solution for a particular illness or disease. Finally, the introduced and manufactured drug has to be made available in the distribution chain. It isn’t like selling apples. Drugs are controlled substances, and security is a major issue. Many drugs have a limited shelf life and must be disposed of if not used within a specified time.
The tasks to bring ever newer and more efficacious drugs into the toolkit of life-saving and quality-of-life-improving drugs is daunting. It is expensive and risky business, but the alternatives for civilization are far less tasty. In the area of antibiotics alone, countless people live today who would otherwise have perished. Like our liberty, the price may be very high, nonetheless, we must pay it. The true problem to be solved is how we fund the cost.
It is the elderly who most suffer. It is the poor elderly who face the choice between eating and their needed medicines. The majority of the elderly have Medicare that fails to provide the least expensive alternative to a better quality of life by forcing the unwelcome choices. Funding a drug benefit in Medicare seems far less expensive than to raise the retirement benefit to meet the competing needs of food and medicine. What would be better is to meet both needs in a fairer and more balanced way than the current structure provides.
Karen Kerin is a candidate for the Republican nomination for Vermont’s single Congressional seat. She lives in South Royalton.