Trade Group's Fight
Against Drug Review
Is Self-Defeating
November 30, 2004; Page A4

If pharmaceutical executives ever ask themselves how one of America's most successful industries became one of its most hated, they need look no further than their own trade group -- the Pharmaceutical Research and Manufacturers of America -- to find an answer.

The group has become a parody of a Washington special interest. It opposes any measure that risks putting a dent in corporate earnings, no matter how small, while ignoring public benefits, no matter how large. It fights ferociously for short-term gains that are likely to be overwhelmed by long-term losses. Like a child on the beach, it is frantically building walls and dikes around an elaborate sand castle that's soon to be crushed by the incoming tide.

The latest example of this self-defeating behavior is the group's opposition to the Drug Effectiveness Review Project, an effort by Oregon and 11 other states to compare the effectiveness of popular drugs. The logic behind this effort is crystal-clear: To win Food and Drug Administration approval, a pharmaceutical company generally has to demonstrate that a new drug is 1) safe and 2) more effective than a placebo. It doesn't have to show how the new drug compares with others already on the market. That's useful information, particularly when the new drug (think Vioxx) might cost 10 times as much as an over-the-counter alternative (Aleve).

But PhRMA has only criticism for this effort. "The idea of evidence-based medicine has been around for years," Wanda Moebius, a spokeswoman for the trade group, told the New York Times last week. "But it's been distorted in Oregon so that it's based more on economics than on evidence."

Well pardon me, Ms. Moebius, but galloping health-care costs are destroying family, corporate and government budgets with equal aplomb. Doesn't economics deserve a bit of attention here? Leave aside for a moment the great national debate over who should make decisions about the cost-effectiveness of various health-care treatments. Surely, someone should. And whoever makes those decisions -- be it doctors, consumers, employers, insurance companies or governments -- needs good information on which to base them.

The Drug Effectiveness Review Project says its sole purpose is to provide information. It doesn't tell states how to use the information. Pam Curtis, assistant director for planning for the project, says many states do use the research to make decisions about what drugs their insurance programs will cover. Others use it to educate doctors, hospitals and consumers, so they can make better choices. What's the industry's objection to that?

I say this as someone who believes -- unlike an increasing number of Americans -- that the U.S. pharmaceutical industry is a national treasure. It is hard to think of another industry that has saved so many lives or done so much to improve the quality of lives. Moreover, many of the policy proposals being bandied about Washington these days would hurt not just the industry, but public health as well. Allowing the federal government to negotiate prices directly with the drug companies, for instance, is a bad idea. As the biggest buyer of health care, the government wouldn't negotiate prices, it would set them. And price controls would be ruinous to this innovative industry.

Drug companies also are right to worry about how state governments set their drug-buying policies. One-size-fits-all decisions about which drugs are covered and which ones aren't often hurt the interests of consumers, as well as the bottom lines of drug companies.

But if the industry hopes to succeed in fighting off destructive regulation in the long run, it needs to take a break from its post-election celebrations and start devising a progressive agenda now. Consumers are upset about drug costs, states are upset about drug costs and once the federal government starts paying the bills for the new Medicare drug benefit in 2006, it's going to be very upset about drug costs. The drug companies need a real answer to those very real concerns.

Better information about the effectiveness of pharmaceuticals as well as their safety ought to be a starting point. If drug companies honestly think the Oregon project isn't the best source of information, then they should take the lead in coming up with alternatives. The companies can't be expected to do comparative research themselves; the risks of coming out on the losing end of such studies are too great. Instead, what's needed is a respected, independent organization, perhaps funded jointly by insurance companies, hospitals and doctors as well as by drug companies and governments, that can study the available evidence and, when necessary, commission further research.

To avoid government price regulation in the long run, the drug companies need a marketplace for drugs that works effectively to control costs without compromising quality. Better information is the prerequisite.

Write to Alan Murray at Alan.Murray@wsj.com

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