Commentary published in Pharmaceutical Executive, May, 2001

March's Back Page editorial by Sidney Wolfe, MD, criticizing drug industry profits and proposing price controls, demands a forthright response. The answer to his question, "Research or profit?" is a resounding BOTH! And we can thank our lucky stars for a successful worldwide industry that receives funding for its high-risk ventures to create cures and palliatives that improve lives in addition to making a healthy profit.

Our question for Dr. Wolfe is: What will price controls do for the American people? Surely a 6.8 percent reduction in prices, which is what Wolfe's fuzzy math seems to propose, won't solve th problem and may cause investors to flee from the pharma industry, slowing the rate of drug development. That would solve nothing and place one of the most valuable US enterprises in danger. P The central issue is not drug prices, profits, or research; it's the patchwork condition of the US healthcare system. The pharma industry has failed to communicated that message. As good as it is, our healthcare system is not fair to everyone, and pharma alone can't change that.

In the best of all worlds, prescription medicines would be covered by insurance just as other health services are. Although a significant percentage of the US population has Rx coverage, many who need it most, such as Medicare patients, frequently must pay for their own medications, which they can't afford. That problem should be -- and is being -- addressed by Congress.

Another important problem is perceptual. A $100,000 hospital charge or a $25,000 doctor bill may go unnoticed if, as sometimes happens, the patient never sees the bill. But spending a few hundred dollars for medications that could prevent the first two expenses is seen as "unacceptable" because the money often comes directly out of patients' pockets. Putting drug costs and benefits into context would help the national debate immensely.

A third problem is cross-border pricing differences, which are largely the result of government price controls or different living standards. Compare the standard of living of an average worker in Mexico with that of an average US worker, and you'll get the point. The Mexican economy simply will not support the kind of pricing that incorporates research costs. The result is that the United States, the last major country without price controls, pays the research bill.

Fair? Probably not, considering that many countries with price controls have living standards equal to or better than ours, yet we foot the research bill, and they ration access to those drugs through price controls. Would Americans like to see a reduction in research so that US drug prices are the same as in Mexico? We think not.

Medicare drug coverage under a private system will help. But, unfortunately, what is needed is an overhaul of the whole US healthcare system, because even if price controls were initiated, there still would be millions of US citizens without healthcare insurance. And the drumbeat for the lower drug costs that Wolfe advocates will go on.

Wolfe also raided the well worn subject of me-too drugs, those incremental discoveries that lead to the breakthrough milestones we all desire. He can't get away with firing that scud, either. Few astute business people would invest half a billion dollars to create a new product that takes 12 years to bring to market and that has to compete with as many as four or five other me-toos, when and if FDA approves it.

But if someone did invest the money, got lucky, and received approval, would that investor abandon the effort because there was competition? The result of such competition may actually be twofold: lower drug prices and/or a reduction in overall healthcare system costs, which brings us full circle. Perhaps the solution to Wolfe's complaint is that we need more, not fewer, me-too products.

Of course, as industry advocates, we realize we are preaching to the choir. But we hope the choir will begin to sing outside the church, lest Wolfe's message become the new economic gospel of the land.

Harry Sweeney is deputy chairman for the American Association of Advertising Agencies' Medical Advertising Committee.