Is There a Political Assault on the Pharmaceutical Industry?

The Cato Institute held a forum today to explore the issue of whether there is a political assault against the pharmaceutical industry afoot entitled, ?Demonizing Drugmakers?? Tom Miller of Cato moderated the panel discussion, which included Doug Bandow of Cato, Dr. Scott Gottlieb of the Food and Drug Administration, Dan Mendelson of The Health Strategies Consultancy, and Michie Hunt, president of Hunt and Associates.

Due to the current political debates surrounding prescription drugs including reimportation, patent life and generic drugs, price controls, formularies, and lawsuits, Doug Bandow said, ?it would be hard to sustain this type of action without what I consider the demonization of drug makers.? And Bandow believes the discreet campaign going on has had an impact on public perception of the pharmaceutical industry.

Bandow emphasized that it is important to point out the improvements in health that we are seeing for the money we are spending on prescription drugs. He mentioned the studies by Frank Lichtenberg and others that show the improvements in health care that accompany increased spending on drugs. Still, critics of the pharmaceutical industry have been able to build their arguments around one central issue: cost.

?The pharmaceutical industry is facing a confluence of uncertain circumstances today,? said Scott Gottlieb. According to Gottlieb, the process of developing new drugs has gotten incrementally more difficult, and more expensive. While the total spent on research and development last year in the United States was about $32 billion, Gottlieb estimates the worldwide figure to be about $57 billion. He also said there has been a decline in the number of FDA approvals, but that the decline stems from fewer applications from pharmaceutical companies, not the FDA approval process. ?The future does look better,? said Gottlieb. He pointed to the growing pipelines of the pharmaceutical companies and an increase in new drug approval applications at the FDA as reasons to be optimistic.

Dan Mendelson said the core paradox is why the pharmaceutical industry is being vilified when they are producing such a tremendous benefit. He discussed five reasons why he believes the industry is being vilified:



  1. Consumers see the cost of pharmaceuticals more than other health care costs. Consumers should be made more aware of their other health care costs, not less aware of their prescription drug costs.


  2. The government is not doing enough to pay for health care for the poor, particularly prescription drugs. Mendelson says the Medicare prescription drug bill should do more to help the low-income.


  3. Prescription drugs are seen as both consumer products and medical products. Mendelson believes direct-to-consumer advertising helps to blur the lines between consumer product and medical product.


  4. Government price controls lead to some paying more than others for the same product. Everyone would be better suited with a competitive market approach.


  5. The pharmaceutical industry is not viewed as science-driven. The industry needs to be more aggressive in marketing themselves as a science-intensive industry, much like the biotechnology industry has.

Michie Hunt presented findings from her own research which shows highly innovative drugs are rare. Of the new drugs approved from 1989 to 2000, only 15% fell into the most innovative category, priority New Molecular Entities (NMEs). She argued that we may be spending massive amounts of public and private investments on incremental improvements to existing drugs and for treatments of rare diseases instead of new innovative drugs for epidemics and chronic diseases.

–Joe Moser
Galen Institute

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The Cato Institute held a forum today to explore the issue of whether there is a political assault against the pharmaceutical industry afoot entitled, ?Demonizing Drugmakers?? Tom Miller of Cato moderated the panel discussion, which included Doug Bandow of Cato, Dr. Scott Gottlieb of the Food and Drug Administration, Dan Mendelson of The Health Strategies Consultancy, and Michie Hunt, president of Hunt and Associates.

Due to the current political debates surrounding prescription drugs including reimportation, patent life and generic drugs, price controls, formularies, and lawsuits, Doug Bandow said, ?it would be hard to sustain this type of action without what I consider the demonization of drug makers.? And Bandow believes the discreet campaign going on has had an impact on public perception of the pharmaceutical industry.

Bandow emphasized that it is important to point out the improvements in health that we are seeing for the money we are spending on prescription drugs. He mentioned the studies by Frank Lichtenberg and others that show the improvements in health care that accompany increased spending on drugs. Still, critics of the pharmaceutical industry have been able to build their arguments around one central issue: cost.

?The pharmaceutical industry is facing a confluence of uncertain circumstances today,? said Scott Gottlieb. According to Gottlieb, the process of developing new drugs has gotten incrementally more difficult, and more expensive. While the total spent on research and development last year in the United States was about $32 billion, Gottlieb estimates the worldwide figure to be about $57 billion. He also said there has been a decline in the number of FDA approvals, but that the decline stems from fewer applications from pharmaceutical companies, not the FDA approval process. ?The future does look better,? said Gottlieb. He pointed to the growing pipelines of the pharmaceutical companies and an increase in new drug approval applications at the FDA as reasons to be optimistic.

Dan Mendelson said the core paradox is why the pharmaceutical industry is being vilified when they are producing such a tremendous benefit. He discussed five reasons why he believes the industry is being vilified:



  1. Consumers see the cost of pharmaceuticals more than other health care costs. Consumers should be made more aware of their other health care costs, not less aware of their prescription drug costs.


  2. The government is not doing enough to pay for health care for the poor, particularly prescription drugs. Mendelson says the Medicare prescription drug bill should do more to help the low-income.


  3. Prescription drugs are seen as both consumer products and medical products. Mendelson believes direct-to-consumer advertising helps to blur the lines between consumer product and medical product.


  4. Government price controls lead to some paying more than others for the same product. Everyone would be better suited with a competitive market approach.


  5. The pharmaceutical industry is not viewed as science-driven. The industry needs to be more aggressive in marketing themselves as a science-intensive industry, much like the biotechnology industry has.

Michie Hunt presented findings from her own research which shows highly innovative drugs are rare. Of the new drugs approved from 1989 to 2000, only 15% fell into the most innovative category, priority New Molecular Entities (NMEs). She argued that we may be spending massive amounts of public and private investments on incremental improvements to existing drugs and for treatments of rare diseases instead of new innovative drugs for epidemics and chronic diseases.

–Joe Moser
Galen Institute

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About the author