War on brand-name drugs

Ashley Milne-Tyte Jan 3, 2007

War on brand-name drugs

Ashley Milne-Tyte Jan 3, 2007


MARK AUSTIN THOMAS: Democrats will be in the driver’s seat for both houses of Congress beginning tomorrow. A new AP-AOL poll shows that Democrats have strong public support for one their key issues: prescription drugs. 69 percent want the federal government to make it easier to buy prescription drugs from other countries. 79 percent of Democrats favor the idea compared with 61 percent of Republicans. Those with higher education were more likely to support the issue. One business group that hopes to benefit from this plan is the generic drug industry. We get more from Ashley Milne-Tyte.

ASHLEY MILNE-TYTE: About 56 percent of prescriptions are for generic drugs these days.

Generics are anywhere from 30 to 90 percent cheaper than their brand-name equivalents. Back in September, Democratic Representative Henry Waxman of California spoke at a generic drug industry conference.

HENRY WAXMAN: It’s one of the most effective ways to lower the cost of drugs is to increase the presence of generic drugs in the marketplace.

Especially biotech drugs, he said. They are widely seen as the drugs of the future, but most Americans can’t afford them. That is, Waxman and others say, until generic drugmakers are allowed to copy biotech drugs once their patents have expired, just as they do chemical drugs.

But the biotech industry isn’t keen on this idea. They cite the hundreds of millions they invest in research and getting a drug to market. They also claim that there are safety concerns.

Kathleen Jaeger of the Generic Pharmaceutical Association isn’t buying it.

KATHLEEN JAEGER: Brand pharma and bio are trying to play the “science scare card” in order to keep generics out of the marketplace.

She says the generic industry’s greatest hope is that Congress will vote in 2007 to pass a bill Representative Waxman has introduced. It would give the FDA the authority to approve generic biotech drugs.

JAEGER: And then Congress also has the opportunity to remove additional barriers to access, including the growing use of authorized generics by brand companies.

Authorized generics are generics sold under license from the patent-holder, brought out once the star product is off patent. They can mess things up for regular generics jumping into the market at the same time.

But Paul Howard of the Manhattan Institute points out that companies like Pfizer spend around $800 million developing a new drug. They have to be allowed to make decent profits. Congress should tread carefully.

PAUL HOWARD: If we shift the incentives more in favor of generics by cutting patent times, you could see a loss in innovation.”

A loss, he says, that would hurt patients who’d miss out on new drug breakthroughs funded by the brand companies.

Ross Devol of the Milken Institute agrees brand drug makers need their incentives. He says that in Europe, where governments have stepped in to cap the prices on some brand-name drugs, there’s not as much innovation as there is in the U.S.

ROSS DEVOL: Today in the United States research and development expenditures in the pharmaceutical area are 20 to 25 percent above Europe.

Still, he says, unlike price caps, an increase in generic competition is a pro-market way to cut drug prices and that goal should resonate with both political parties.

In New York, I’m Ashley Milne-Tyte for Marketplace.

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