E-drug: Re: US compulsory licensing proposal for medicines (contd)
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Joel Lexchin's communication on compulsory licensing contains a great deal
of mis-information.
When the Canadian government instituted compulsory licensing, most of the
research-based firms closed down their research operations in Canada. So
much
for 'continuing to invest in Canada'. Why should they invest in the
process of
invention in a country that does not respect intellectual property?
The 1980 data on patent life preceded enactment into US law of the
Waxman-Hatch
Act of 1984, which allowed for extensions of patent coverage to compensate
for
regulatory delays. 1980 data are irrelevant to the present situation.
Finally, the rate of expenditure in development of a new drug increase as a
new
molecule passes from preclinical testing to phase I to phase II to phase
III
testing, with the steepest rises occurring from the latter half of phase II
onward through III. The fact that a molecule may have been discovered in
some
laboratory other than that of the firm which undertakes to develop the
molecule
as a pharmaceutical product has relatively minor impact on the economics of
development, unless the original owner of the molecule has carried the
molecule
past mid-phase II, when the costs really start to climb. The notion that
'cooperation with the NIH, universities, research centers, etc' appreciably
mitigates R&D costs, or "excludes about 75% of NCEs" is simply incorrect.
None of these institutions are organized or financed to shoulder any
appreciable part of the several hundred million dollar per drug investment
in
R&D needed to bring a product to market. Many are citing figures as high
as
$500 million per NCE-based new pharmaceutical product, but one should wait
for
a forthcoming update on this figure from the Tufts Center for the Study of
Drug
Development.
Pharmaceutical R&D is a high risk business, and high risk investments
command
high returns in the marketplace for investment moneys. If high returns are
not
forthcoming, the money goes elsewhere. A good example is venture capital:
no
one in that business (in his/her right mind) will look at a business plan,
irrespective of field, that does not make a plausible case for a 7-fold or
greater return on the initial investment within a 5 year time frame. With
a
little help from Econ 101, you can figure out what kinds of returns will
flow
back to a venture fund that experiences various percentages of failures.
Pharma R&D is just another high-risk investment opportunity, along with oil
exploration, startup companies in electronics, life sciences, e-commerce,
and
the like, plus venture capital funds.
The authoritative source for the costs of pharma R&D, the impact of
early-stage
licensing-in, and so forth, is the Tufts Center for the Study of Drug
Development. Dr Joseph DiMasi there is the resident expert.
E-drug is not well-served by ill-informed comment being passed off as
authoritative.
John Urquhart, MD, FRCP(Edin)
Professor of Pharmacoepidemiology, Maastricht University, Maastricht, NL
Chief Scientist, AARDEX Ltd/APREX Corp, Zug CH & Union City, CA, USA
Professor of Biopharmaceutical Sciences, UCSF, San Francisco
urquhart@ix.netcom.com
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