Saturday, August 29, 2009

Europe Leads US in Drug Research; PhRMA Calls Foul

You used to hear the expression, "The U.S. has the best health care system in the world." You can still hear it, especially among the crowds that are disrupting town hall meetings to denounce "the government" taking over healthcare. But you're hearing it less and less as informed people realize that the data simply are not there to back up any such claim.

So--what about: "America leads the world in discovering and developing innovative medical therapies"?

So says PhRMA in its response to an article just published on line in Health Affairs by my esteemed colleague Donald W. Light (; the rebuttal from PhRMA is at

So let's look at the data.

Light set out to revisit a 2006 paper by Grabowski and Wang, that claimed that over the years, U.S. drug firms had first caught up with and then exceeded the research output of European companies in meaningful innovations. The original paper by Grabowsky and Wang (
was a huge favorite of the drug industry, for reasons PhRMA makes clear in its rebuttal. The European scene is characterized by government price controls that limit drug company revenues to about 60 percent of what they can get on the U.S. market. Non-Pharma analyists report that at that rate of return, the European drug companies have plenty to invest in research and make a tidy profit besides. But PhRMA wants to claim that this terrible European climate stifles research, compared to the open, Wild West of America where the companies can charge whatever they darn well please. Anything that suggests that the Europeans are actually doing OK, and maybe the U.S. could do better at lower cost if we emulated some of those European policies, is anathema to PhRMA.

So just how did Light get PhRMA demanding his scalp? He followed all the methods in Garbowski and Wang's original paper, except for one thing. He reasoned that if the drug companies spend twice as much for research in one place as in another, they should ideally see twice as much results in the first location. So he corrected the Grabowski and Wang calculations for how much the companies spent in U.S. vs. Europe. Basically he asked not about total research output but research productivity--how much bang for the buck.

Even before he did his correction, Light noticed that Grabowski and Wang did not paint quite the picture that PhRMA likes to claim. Their research output data showed the U.S. coming up and Europe going down, but Europe did not go down by much, and in several output categories, Europe was still ahead of the U.S.

But the results certainly changed when Light added in the correction for total amount spent. In just about every measure of research productivity, comparing the decades 1982-92 with 1993-2003, Europe improved while the U.S. fell off.

Up till now, Light had basically emulated all the methods of Grabowsky and Wang, with the single exception of adding the correction for level of research funding. But he could not do this for the second major claim of the earlier paper, which was that the vast majority of the new drugs discovered in the U.S. are of great therapeutic importance and significantly impact human health.

Light stated, first, that the original paper never defined the specific criteria for deciding what was a "quality" drug, and second, he corresponded extensively with Grabowsky but could get no satisfactory answer. So instead, Light simply recapitulated the findings of numerous other surveys, some of which were also mentioned in HOOKED. These other surveys all concluded that on average, perhaps one out of nine new drugs discovered during the period 1983-2003 really constitutes a major therapeutic advance. This was the conclusion the FDA was coming to, when it used to rank new drugs--until PhRMA used its lobbying muscle to force the FDA to drop those rankings, as the results were so embarrassing for the industry.

That's what Light had to say--what about the PhRMA rebuttal?

First they accuse Light of using incorrect methods--for instance, deciding which country discovered a new drug by looking at the country where the drug firm has its headquarters. Light's answer here is obvious--you liked the results of Grabowsky and Wang's article; all I am doing is repeating their methods, with one add-on.

Next they dispute the claim that so few new drugs are real advances, but all they have to offer here are anecdotes, no comprehensive data.

Finally they show their true c0lors by saying that it simply has to be true that the U.S. is more productive in pharmaceutical research than Europe, because the U.S. has a market system favorable to drug company profits, it it simply has to be true that research thrives in a favorable market environment. (Don't bother us with facts.) Because if it wasn't true, then there would be no logical reason why the U.S. should not follow Europe's lead in implementing policies that restricted the huge profits the industry can now make in the U.S. So we simply can never be allowed to go down that path.

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