E-drug: Re: US compulsory licensing proposal for medicines (contd)
-------------------------------------------------------------------------
Let me try once more to state my position. First, I would ask John Urquhart
if he has actually read the Eastman Commission Report (Report of the
Commission of Inquiry on the Pharmaceutical Industry). If he has a copy
then he can turn to page 65 and read the following: "An overall summary of
the comparison of the growth and development of the pharmaceutical industry
in Canada relative to that of the United States yields the straightforward
conclusion that growth has been more buoyant in Canada than it has been in
the United States since 1967." (By the way Harry Eastman who headed the
commission was not a wild eyed radical but a well respected middle of the
road professor of economics from the University of Toronto.) Urquhart
should know that the idea that there was deinvestment in Canada as a
result of the 1969 changes was something that was put out by the
pharmaceutical industry but that it is far from an accepted fact and as the
quote above shows the idea that there was any substantial negative impact
on the pharmaceutical industry was rejected by the Eastman Commission.
There are a number of other factors that contributed to any changes that
took place in the industry during the 1960s and 1970s including the
political instability in Quebec (the site of many subsidiaries of
multinational pharmaceutical companies) as a result of the election of a
separatist government, worldwide consolidation of some companies, the
acquisition of Canadian owned companies by multinationals and the
subsequent reorganization that took place.
Even when it comes to investment in research in Canada post 1969 the
position that there was a decline is difficult to support. According to a
1981 study for the Economic Council of Canada (P.K. Gorecki, "Regulating
the Price of Prescription Drugs in Canada: Compulsory Licensing, Product
Selection and Government Reimbursement Programmes") "There has not been a
massive reduction in R&D activity in Canada . . . Indeed, the weaker
inference that R&D has declined is not supported." The amount spent on R&D
in 1980, in real terms, was above that spent in 1969 and the pattern of
spending mirrored what happened in R&D expenditures in Canadian industry
generally.
As far as the 1991 Di Masi study on the costs of research and development
of new drugs the plain fact is that this study only looked at R&D costs for
drugs that were entirely developed IN-HOUSE by American owned companies.
That means that if the molecule had been discovered or codiscovered by the
NIH or any other institution it was not considered in this study. Similarly
if a compound had been discovered or developed by a nonAmerican owned
company it was excluded in this study. The number of new chemical entities
that are entirely developed in-house by American owned companies is about
25% of the NCEs that are introduced in any given year. That is the group of
drugs that the conclusions of the Di Masi study applies to. Furthermore, Di
Masi did not consider tax credits in arriving at his conclusions about how
much the R&D of a new drug costs.
If 1980 data on the average effective patent life of NCEs is considered
irrelevant by Urquhart then there is 1990 data which gives a patent life of
10 years in the USA. (Data from the Jacobzone publication from the OECD.)
The 8 year period that I suggested was just that, a suggestion. The period
of exclusivity could have been negotiated or it could have varied depending
on factors such as the amount of money that companies were investing in R&D
(more R&D done in the U.S. longer patent exclusivity), where the raw
materials were sourced (longer exclusivity if they were sourced in the
U.S.), etc.
Just how risky is the pharmaceutical industry? There is no doubt that there
is risk entailed in looking for new drugs but that risk may be overstated
by the industry and its supporters. A 1974 study in Canada that looked at
risk in 71 manufacturing industries ranked the pharmaceutical industry 67th
out of 71, in-other-words, near the bottom in terms of riskiness. Before
Urquhart points out that this study is old and irrelevant, let me just note
that in the 1970s people from the pharmaceutical industry were citing the
high risk in the industry. One more point about risk, this from the
Eastman Report ". . . the ultimate outcome is an industry that may well
have adapted to inherent risk in such a way as to eliminate substantial
portions of that risk." (page 250).
Finally, it might do well to review the history of patent protection in
some developed countries where the pharmaceutical industry has done much of
its research and development:
Japan-before 1976 only product-by-process patents were available (in a
product-by-process patent the product is only protected if manufactured by
the patented process; there is no protection if it is manufactured by a
different process)
Italy-medicines were not patentable before 1979
Switzerland-medicines were not patentable before 1978
United Kingdom-per se protection of chemicals was abolished between
1919-1949 and compulsory licensing provisions for manufacture of medicines
in place from 1923-1977
West Germany-per se protection of pharmaceuticals only since 1968
France-until 1960 full ban on pharmaceutical patents; partial ban until
1978
Joel Lexchin
--
Joel Lexchin MD
121 Walmer Rd.
Toronto, Ontario
Canada M5R 2X8
T: +416-964-7186
F: +416-923-9515
e mail: joel.lexchin@utoronto.ca
--
Send mail for the `E-Drug' conference to `e-drug@usa.healthnet.org'.
Information and archive http://www.healthnet.org/programs/edrug.html
Mail administrative requests to `majordomo@usa.healthnet.org'.
For additional assistance, send mail to: `owner-e-drug@usa.healthnet.org'.