What Ezra said.

They all like to quote Milton Friedman who always wanted to abolihsh the FDA. Like Milton, they forget those wonderful pre-FDA days when these companies sold "patent medicine" which was always some variation of an opium and alcohol mix. The worse thing recently was big pharma and big media waiving the ban on prescription medicine advertisements on TV/radio.

Big pharma does not encourage innovation. It spends tons more on marketing than on R&D. Most "new" drugs are “me-too” drugs- a slightly different but no better version of another drug that already is available, often cheaper. Of the 78 drugs approved by the FDA in 2002, only 17 contained new active ingredients, and only 7 of these were classified by the FDA as improvements over older drugs. None of those 7 came from a major drug company. They just market the hell out of their products. The FDA doesn’t require a new drug to be better than an old one, just better than a placebo. These drugs involve little risk and are extremely profitable. There's very little incentive to innovate, except maybe to maintain the charade that they're innovative.

As a general point, it's very hard to oppose government regulation of publishing companies on the grounds that it would reduce innovation but also oppose creating a prize-based system to reward different kinds of innovation.

Ezra,

I'd ask that you really do some reading on drug R&D and some real thinking on drug R&D prizes.

We have a prize system today. Its called profit. There are clearly misaligned incentives in today's system, but these can be fixed without proposing to take yet another part of our health care system and moving it outside of the market system. At the end of the day, too many of these solutions depend on a small group of "experts" making the right decisions on health care-- in this case, what the right "prize" level should be taking into account the risk of the specific science, unmet need for the disease, impact of the disease relative to society and the operational challenges of providing evidence that the drugs is safe and effective. That's what would need to be done for a prize system.

As I've suggested before, you're still due for a primer on R&D. "Pharmaceutical research" refers to a specific set of activities that is only part of what's needed to bring a new drug to patients, and the government is typically only involved in the early, exploratory phases of research (and typically more focused on understanding disease rather than drugs to cure them, although this has shifted more towards drugs).

Rather than looking at the stereotypical model of Pharma R&D from the past (pharma develops drugs and makes profit) the system today is increasingly very different with a variety of "prizes" that you'd probably envisage in your system:

-- Academic lab or small biotech does early/late research identifying new potential drugs-- they receive $$$ from larger players to continue development.

-- Mid/large biotech or pharma takes drug through clinical trials to determine if drug works, if so, then large pharma gives $$$ so pharma can sell the drug

-- Large pharma sells the drug to market for $$$ from patients who use it.

I'd be happy to map on the criteria above (degree of unmet need, value over existing therapy, risk of science, etc.) to these three different tiers of "prizes" although I think its pretty clear. Our focus should be understanding the nature of market misincentives and correcting them, rather than changing the system wholesale. A market system which allows many people/groups to weigh in on a drug's value will be better in the long-run than relying on a small group of experts to determine that value in order to distribute "prizes."

Finally, as I've said before, while its clear that there are problems to be fixed with pharma, when you look at the impact of this industry, this shouldn't be a primary target for health care reform. If we are looking at potential cost-savings from today's system based on drug reform, metrics assessing the value provided from drugs compared to other elements of health care (or many other industries for that matter), or the total "waste" in drug spend compared to clinical practice of medicine-- for someone interested in reform, drugs just simply shouldn't be the focus. The practice of medicine should be priority #1, by far. So please, be original. I understand why politicians harp on the drug industry-- they are looking for votes and profits from the winners (and ignoring the losers) is just an easy sell. But any sober analysis of our system would suggest your efforts are spent on several other things, many of which you're rarely posted on this blog.

Why not socialize the pharmaceuticals? It's basic science. Could hardly be worst than the capitalist PHARMA. As far regulations, everyone wants the restaurant where they eat inspected. Good regulation is necessary. De-regulation has been a disaster.

One other thought-- on this poll questions from above:

What if you heard that limiting the prices of prescription drugs might lead to LESS research and development of new drugs...

Heard? Might? If you're going to test the question of whether people are willing to make the tradeoff-- then ask them to make the tradeoff. The question above is asking them if they support cutting prices because there's an argument out there that innovation could be reduced. The title is not close to being supported by the title of the slide. At all.

Harvard School of Public Health was involved according to the slide-- I hope they won't be the experts you're depending on for those determining those prizes...

As part of a single-payer system, or any system in which government could negotiate drug prices, I would welcome a government system of pharmaceutical reimbursement that was higher for more innovative drugs. Most of them aren't, though, and there's no way to justify the billions pharma makes on many of them, with government-funded health plans footing much of the bill. It simply isn't the case that the reason pharma makes so much money off drugs is because of how innovative they are.