Drug Costs: Control at Price of Research?

Article excerpt

By Mariann Caprino

Associated Press

NEW YORK _ One of the drug industry's favorite arguments against lower prices is the possibility that money would be deprived from research critical to developing lifesaving medicines.

Experience in countries where drug prices are regulated shows pharmaceutical makers are right _ up to a point.

"Simple observation would show that there is little pharmaceutical research undertaken in nations having the lowest pharmaceutical prices," said Albert Wertheimer, dean of the Philadelphia College of Pharmacy and Science's School of Pharmacy.

Take Australia, where 90 percent of all prescriptions are regulated. Drugs cost 55 percent of average world prices in 1987.

But one result, Wertheimer said, is that "with virtually no incentive to develop new drugs, the pharmaceutical industry there produces few new medications."

The U.S. drug industry, one of the most profitable businesses in the world, is a key target of the Clinton administration as it grapples with taming the nation's spiraling medical bills.

The industry's drug prices have been deeply criticized as a symbol of heartless greed. Several lawmakers have called for price restraints to be included in the health care reform package the administration is shaping.

Drug makers have suggested that such restraints would obstruct the pipeline of new drugs.

"What's important is to find some happy medium that makes drugs available at affordable prices but does not stymie the efforts of an extremely successful industry," said Dr. Alan L. Hillman, director of the Center for Health Policy at the University of Pennsylvania's Leonard Davis Institute.

It might feel like walking a tightrope, but experience in England, France and Germany shows it is possible to lower drug prices without harming the industry, he said.

In Britain, for example, home of drug giants Glaxo, SmithKline Beecham and Wellcome, the government allows companies with more innovative products to keep more of the profits.

France, with stiff regulations on the drug industry, is home to a number of successful, large drug companies like Rhone-Poulenc. Drug makers there are required to show a new drug will save costly medical treatments down the road in order to justify the price.

U.S. drug makers already know how to operate in regulated markets; about 45 percent of their sales are derived overseas. …