Tuesday, March 13, 2012

Does Pharma Have a New Business Model--Besides Outsourcing?

An article by Martha Rosenberg in Counterpunch--
raises some interesting questions about the future of the drug industry. Having not had the opportunity to cross-check the background facts, rather than endorse her conclusions outright I will simply state them as questions worth inquiring into, and invite anyone from the industry who might chance to read this blog to enlighten us as to the answers.

I take Ms. Rosenberg to be making two main points:

  • The world has shifted, making the previous blockbuster model of drug development and marketing increasingly insecure. Ms. Rosenberg cites Germany as one country that has gone the farthest toward demanding that drug companies produce firm evidence that expensive newer drugs do better than old generic drugs, before their health system will pay for them. The industry currently lives in fear that other countries will follow Germany's lead in this (which would of course be an amazingly intelligent thing to do, so don't expect the US to behave that way anytime soon).

  • That being the case, how has Pharma revised its business plan to take these new realities on board? According to Ms. Rosenberg, the industry has only one plan thus far--outsourcing and cost cutting. She states, "Almost 20,000 jobs have vanished at AstraZeneca, Novartis and Pfizer in the last 12 months alone. (AstraZeneca scrapped 21,600 more since 2007). "

Cutting drug rep positions, as we saw in an earlier post here:
--does not necessarily threaten the health of Americans. However, outsourcing research and manufacturing to countries where the FDA has less ability to inspect for safety and to enforce quality standards can hurt Americans, as shown most visibly in the case of the tainted heparin imported from China in 2007:

A business model that would restore the pharmaceutical industry to its once-widely-respected place among American institutions would be to commit itself to the discovery of new drugs that are safe and offer real advantages over existing drugs, and not to market products that fail to meet those high standards. It is worrisome if Ms. Rosenberg is right and the industry is currently unable to come up with such a model, so that sending jobs overseas is the only arrow in its quiver.

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