NCPA - National Center for Policy Analysis

Pharmaceutical Industry Under Political Attack

May 17, 2002

Federal and state officials are attempting to control prices for drugs, limit sales, destroy pharmaceutical industry marketing networks and undercut patent rights. This vendetta may very well seriously crimp the industry's spending on research and development for new drugs, experts predict.

  • The industry spends $30 billion a year to research and develop new products -- which is 20 percent of sales, five times the American R&D average.
  • The industry spends an average of nearly $900 million per drug.
  • Of every 5,000 to 10,000 substances reviewed, only one ultimately makes it to market -- and only one-third of those actually makes money.
  • The question arises as to whether drug companies would commit themselves to the whole costly and lengthy process were it not for effective and secure patent protections -- and the answer is: of course not.

Forces are at work that would limit patent protections. More than two-thirds of doctors worry that doing so will reduce research on rare conditions and actually raise consumer prices -- by forcing recovery of costs over a shorter period. A majority fear the result will be fewer generics, since they ultimately derive from brand drug development.

Source: Doug Bandow (Cato Institute), "Threatening Pharmaceutical Innovation," Washington Times, May 17, 2002.


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