Book Review

Reasonable Rx: Solving the Drug Price Crisis

N Engl J Med 2008; 359:875-876August 21, 2008

Article

Reasonable Rx: Solving the Drug Price Crisis
By Stan Finkelstein and Peter Temin. 188 pp. Upper Saddle River, NJ, FT Press, 2008. $27.99. ISBN: 978-0-13-234449-4

This masterly book is strong on diagnosis but, like much of medicine, rather light on evidence concerning the effectiveness of the treatment the authors propose to control drug prices. Drug prices are high, but industry defends its profitability as essential to the process of identifying and marketing new chemical entities that will benefit patients.

But increasingly, the emperor's clothes seem threadbare. The age in which new products benefit large groups of patients is receding into history. The industry now has to invest in designer drugs for smaller groups, often targeting a specific genetic profile that limits the number of people who may benefit from its development. Some of these drugs, such as cancer drugs, are of minor benefit, offering small additions to the length and quality of life at extraordinary cost.

Finkelstein and Temin highlight many familiar problems in the pharmaceutical sector. For instance, they point out that the industry derives profits from the treatment of elderly patients who take numerous pills for multiple health problems; it is often difficult to determine individual effect, and mass consumption is thereby perpetuated. The authors explain how direct-to-consumer advertising compounds the inappropriate use of pharmaceuticals that physicians initiate, asserting that perhaps 20% of drug use is to treat conditions for which use of the drug is not sanctioned by the Food and Drug Administration.

The authors go on to explain that the safety review process, which delays the translation of new products into marketable entities, has made the clinical research industry extremely lucrative, as specialist firms expedite the production of evidence and opinion to ensure prompt market approvals. These activities can produce biased “science,” with physicians and economists acting as marketing advocates for the industry. And “managed care,” in its many forms, has failed to control both prices and the inappropriate use of pharmaceutical products. Similarly, Medicare Part D, even with its politically artful use of copayments, will control neither cost inflation nor inefficient prescribing.

After setting out this litany of sins of omission and commission, Finkelstein and Temin propose radical reform of an industry of formidable economic power that maintains its size and profitability with highly efficient lobbying in Washington. They propose separation of the creation of new products from the marketing of new products. A nonprofit Drug Development Corporation would commission new drugs from research scientists and acquire property rights to new inventions. The corporation would then auction these new products to competing companies, who then would be responsible for their marketing. Separating the roles of invention and marketing would, the authors assert, enable the corporation to use incentives to focus the former activity on high-priority areas and to use its price-capping powers in auction allocations to control prices.

Achievement of this nirvana would be difficult. Such a corporation would require an annual budget of $30 billion to fund research — a cost that would be offset by auction revenues in the future. Capping prices is easier said than done and would diminish auction bids. And none of the authors' proposals address the issue of inappropriate prescribing by physicians.

These reform proposals are a major assault on the interests of the pharmaceutical industry, which will oppose these changes. Consideration of how to succeed in bringing such a plan through the labyrinths of the American political process needs careful analysis.

This invigorating book sets out the problems of the pharmaceutical industry with great clarity. We can all agree that the incentives in this market are perverse and that reform is necessary. The real issue up for debate is whether these skilled authors offer feasible and efficient proposals.

Alan K. Maynard
University of York, York YO10 5DD, United Kingdom
akm3@york.ac.uk