Global Health Futures: Less Research and Development from Drug Companies

(photo credit: Arturo de Albornoz)

Right now, drugs are mainly developed by pharmaceutical companies. They invest a big pile of shareholder money into researching new drugs, and then they make big profits off the drugs that are effective and get popular. Very few drugs are developed by government or NGO research. However, that is going to change, in part because of US health care reform. Public-private partnerships like advance market commitments for vaccines, NGO-supported drug research, and other innovative mechanisms will change who develops drugs and what kind of drugs are developed.

What does US health care reform have to do with global drug R & D? Drug companies make more profit in the US than any other country in the world. Other countries have price limits on drugs (something that's far easier in a single-payer health system) and other controls to keep medicine affordable. At present, the US has very few. So we fund research and development for the whole planet in our willingness to pay outsize prices for our drugs. I suspect that will stop in a reformed health care system.

Since it's unlikely that other countries will raise their drug prices to compensate, drug companies will be reluctant to develop new drugs at the rate they used to. (Edited to add: I did a little more research, and apparently drug companies don't actually develop most of their drugs. They buy the rights from US-government funded researchers for drugs that seem close to market readiness. So they are basically slecting which drugs go to market.) That's not actually a terrible thing - since drug companies are selecting for profit, not maximum medical benefit, they are mostly developing new drugs that aren't any more effective than older ones. Or, worse yet, researching and marketing different delivery forms of drugs that have been on the market for years. Losing those kinds of drugs won't hurt health. If health care reform is done well, it will incentivize drug companies to develop new drugs that are medically useful, as opposed to new drugs to cure eyelash inadequacy.

Health care reform and changes to drug company R & D will also draw attention to the challenges and opportunities of drug development. This is where the innovative mechanisms come in. Advance market commitments, where donors promise to buy newly developed vaccines at a certain price and volume, provide incentives to develop valuable new drugs. They are win-win public private partnerships. RU-486, the abortion pill, is produced by the Population Council in the US, because no drug company was willing to do so. The NGO stepped in to expand women's choices.  I think we'll see more and more of these kinds of innovative mechanisms. The need for them will increase and become clearer, and donors like to fund them, because medicines are a pleasingly clear-cut solution to global health problems.