A version of this Health Alert appeared at Forbes.
That’s not a headline you’ve read before, I’ll bet. New evidence suggests that drug companies invest too much in therapies targeting diseases at late stages and not enough on prevention or early-state therapies.
It is emotionally satisfying and socially acceptable to say that buying an extra few months of life is priceless, but if resources invested in such drugs could have been invested in drugs that would have dramatically increased the quality or length of lives of other patients, it is not evil to suggest that the resources were misallocated.
Eric Budish of the University of Chicago, and colleagues, have observed that drug companies invest significantly more in researching and developing therapies for late-stage than early-stage cancers. They have identified the patent system as the culprit. As summarized in the Economist’s Free Exchange blog:
The economists find that pharmaceutical companies conduct 30 times more clinical trials for recurrent cancer drugs than for preventive drugs (the effect persists even after adjusting for market size). The authors also show that firms divert their R&D expenditures away from more curable, localised cancers and focus on incurable metastatic and recurrent cancers instead. The patent system encourages pharmaceuticals to pump out drugs aimed at those who have almost no chance of surviving the cancer anyway. This patent distortion costs the U.S. economy around $89 billion a year in lost lives.
To put it (a little too) simply, patents have a term of twenty years. If a drug-maker has to do a clinical trial that lasts ten years until it reaches its endpoints, it will have only ten years of patent life. If a trial for a late-stage cancer only takes one year to reach its endpoints, it will have up to nineteen years of patent life. Here is an example from the study:
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