America’s pharmaceutical practices came into question Tuesday evening when a former editor of the New England Journal of Medicine sparred with notable law professor Richard Epstein, debating how current policy serves domestic health interests.
Over 350 students and other members of the University community met Tuesday at 5:30 p.m. in Rockefeller Chapel to listen to the debate.
Advances in medicine over the last century have drastically changed the way humans live, for the better according to Dr. Mark Siegler, Professor of medicine and debate moderator. Between 1900 and 2000, life expectancies in every part of the world doubled as a result of advances in public health and medical science. Simultaneously, the cost of healthcare in the industrialized world has steadily climbed.
“In 2002, healthcare costs in the United States reached $1.2 trillion,” Siegler said. These rapidly rising costs are keeping many in the United States from benefiting from recent advances made in medical science. This is notable when it comes to the price of prescription drugs, the focus of Tuesday’s debate.
Relman spoke first, severely criticizing what he believed to be a ruthlessly profit-driven pharmaceutical industry. Relman argued that over the past few decades, priorities among the companies that make prescription drugs have changed. “When the industry started, their interests were quite different,” he said. “Now they are run primarily in the interests of investors and senior executives.”
Relman said that the pharmaceutical sector has been the most profitable industry in the United States for the last 20 years. “They have been making double digit profits year after year,” Relman said.
What’s worse is that the “vast majority” of new drugs are no better than many older ones, Relman said.
The pharmaceutical industry has had to invest huge sums to market these expensive but only marginally superior drugs. According to industry experts, the price of prescription drugs is rising, because the price of research is increasing. Many in the industry claim that, on average, it costs $800 million in research to develop one new drug.
Relman said that these costs are highly over-estimated, and upon close analysis the average cost of developing a new drug is more like $100 million. According to Relman, drug companies are reaping massive profits without conducting significant research.
“It’s a basic matter of philosophy,” Relman said. ”Healthcare is not just another economic commodity. People who have to pay for prescription drugs should not have to bear the costs of marketing. We could have a much more efficient, much more honest drug industry if investors stopped running it.”
Epstein responded to Relman’s criticisms by making precise economic arguments. “The only sustainable way to get funds to industry is to get profits,” Epstein said, arguing that the only way that the pharmaceutical industry could continue to conduct major research would be if someone was willing to provide the capital. The only way that capital could flow towards drug companies, he said, would be if they could provide large profits to those investors.
Attributing the recent increase in drug costs to the fact that it has become harder to develop new drugs, Epstein noted that the research required to invent a new drug is much more expensive than it used to be. He characterized the period between 1960 and 1980 as a period of “low-hanging fruit,” when the knowledge base already available to researchers was wide enough so as to permit the creation of a number of effective drugs for a relatively small investment. The law of diminishing returns makes it clear that one cannot expect a good thing to continue forever.
“The question is one of industrial organization,” Epstein said. “It’s difficult to figure out where the next dollar is best invested. The reason that business consultants and executives have so much say in the matter is because they know more about it.”
While Relman demanded that the pharmaceutical industry be regulated, Epstein said that it did not need to be. According to Epstein, industries should only be regulated to realign private interests with public interests. He claimed regulation was unnecessary, because it was in the public interest to continue investing heavily to find new drugs. He suggested that Americans could begin paying less for their prescriptions, but it would mean embracing a much slower pace of innovation in the pharmaceutical industry.
For the most part, medical students and professionals attending were satisfied with the debate’s results. Referring to Epstein’s argument, first-year medical student Steve Bachta said, “I had not thought about it from an economic point of view.” Bachta came thinking Relman’s was right, but as he left he said he was no longer so sure.