Democrats' Rx? Generics

WSJ ^ | November 21, 2006 | ANNA WILDE MATHEWS

[Brilliant]

NEWLY EMPOWERED Democrats' vow to cut health-care costs might spell bad news for the brand-name pharmaceutical industry, but their efforts could provide new momentum for the generic-drug rivals' agenda.

Boosting the generics industry may prove to be a politically palatable way to follow up on the party's campaign promises. That's because making more room for generics is meant to cut prices through increased competition -- a solution that is easier to sell as pro-market than other proposals Republicans will portray as precursors to federal price controls. In addition, some legislation that must be renewed in 2007, including laws providing vital funding to the Food and Drug Administration and encouraging studies of drugs' use in children, could provide gridlock-proof vehicles for generics provisions.

"Overall, because of the shift in Congress, next year could be the most important year to the generics industry since 1984," when Congress passed the law that opened the door to the modern generics business, says Jake Hansen, a vice president at generics maker Barr Pharmaceuticals Inc...

The most important question will likely be how and whether to create a legal pathway for the FDA to approve generic versions of biotechnology drugs. The 1984 law that created a framework enabling the FDA to approve generic drugs focuses on traditional, chemically derived drugs such as Prozac, but didn't give the agency a way to approve generic versions of most biotech products. Now, the issue will get a push from several key Democrats, though it will be difficult to pass such a complicated and contentious change in 2007.

An array of other measures aimed at smoothing the way for traditional generic drugs will also get attention, and could well be tucked into broader bills next year. Among them are proposals to limit branded-drug company tactics that thwart generic competitors...

[BlazingArizona]

That works if you assume that ONLY US companies are doing R&D. But, nearly half of the name-brand drugs are imports -- from Japan, Israel, Germany, India and other countries.

Furthermore, a large chunk of the "American" R & D consists of foreign companies doing business in New Jersey. There are tax advantages in doing so, and they can do biotechnology, which is no longer legal in Europe and Australia/New Zealand.

[BlazingArizona]

That's true, and in a sense that is natural. You don't expect some subsistence farmer in Africa to pay for it. So you really have no objection if Big Pharm sells their products in Africa, for local consumption, at a price which covers only the incremental cost of production plus a nominal profit on that cost.

On the other hand, consider the market for computer chips. Like the pharma companies, chip manufacturers must incur huge R & D costs to bring each new product to the market. But because the market for computer chips is uncontrolled (no government regulations requiring consumers to pay rigged high prices) chip prices are low all over the world. Americans can afford the latest gear without government subsidies, and your African farmers can now buy hand-cranked laptops for $100 apiece.

[Tench_Coxe]

Hmmmm. I wonder if these were the same folks touting other generic products?

[Brilliant]

When there is only one purchaser, and it's the government, it's the same result as price regulation. You're just dealing with semantics.

I agree that they don't force the companies to sell, but they don't do that by regulating prices, either.

[go-dubya-04]

I wouldn't expect or want Congress to do that. Your hostility should be pointed at the countries that fix prices, not the companies who are forced to live with that environment. Price fixing would kill the industry that saves millions of lives. What's your answer to the world forcing these companies to supply all those free AIDS drugs to Africa? Your answers are beyond stupid and your hostility is pointed in the completely wrong direction. You still haven't answered my question about all the wonderful drugs that those terrific generic companies have brought forth with their profits.

[conservatism_IS_compassion]

Like the pharma companies, chip manufacturers must incur huge R & D costs to bring each new product to the market. But because the market for computer chips is uncontrolled (no government regulations requiring consumers to pay rigged high prices) chip prices are low all over the world. Americans can afford the latest gear without government subsidies, and your African farmers can now buy hand-cranked laptops for $100 apiece.

The point there, surely, is that pharmaceutical development would be a lot faster without government regulation - or indeed without ethical constraints - than it now is with both of the above.

With the problem being that we tried that approach a century ago - and got a bunch of innocent coke addicts who just thought they were self-medicating, assuming it was their right to ingest whatever made them feel good. Try that today and you'll have wall to wall zombies on Vallium, cocaine, meth, and God only knows what else. Probably Provigil (which AFAIK could be less problematical than caffeine). All advertised on TV and sold over the counter.

[itsahoot]

Sounds like more Free Trade to me.

Sounds more like dumping to me. Our industries regularly get their panties in a knot over the Japanese doing that to them, particularly in electronics.

[rhombus]

Our industries regularly get their panties in a knot over the Japanese doing that to them, particularly in electronics.

Yup, they sure do and they'll lobby for every possible advantage they might be able to buy.

[BlazingArizona]

With the problem being that we tried that approach a century ago - and got a bunch of innocent coke addicts who just thought they were self-medicating, assuming it was their right to ingest whatever made them feel good. Try that today and you'll have wall to wall zombies on Vallium, cocaine, meth, and God only knows what else.

...which is exactly the drug problem we have today anyway! The restrictions hamper only the responsible; the irresponsible will always find a way to get high illegally. I say stop subsidizing them and make them accept the consequences of their own lifestyle. If government regulation in the area were cut back to truth in labeling and advertising, today's rich information searching technologies would enable us to make our own decisions. In such an environment, guess what: most of us would still feel better buying medication on the advice of a credentialed expert, especially one who could offer lower prices in a competitive market.

[conservatism_IS_compassion]

Try deregulation today and you'll have wall to wall zombies on Vallium, cocaine, meth, and God only knows what else.

...which is exactly the drug problem we have today anyway! The restrictions hamper only the responsible; the irresponsible will always find a way to get high illegally. I say stop subsidizing them and make them accept the consequences of their own lifestyle.

Well, they claim that you can strongly correlate the ebb and flow of crime with the flow and ebb of constraints on the availabilitly of meth. Stuff apparently makes you feel great but in the process rapidly burns out your brain's ability to even feel OK. Just seems like the pharm people will inevitably find the way to make us all addicts of something.