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Sunday, October 05, 2003


Blues and hard ons. That's the stuff your modern PharmaFrankenstein conglomerate battens onto, like a garbage fly taking on slime. Take GlaxoSmithKlein. Here's a multi-billion dollar, global corporation that sees, in this world of malaria, hepatitis C, and cancer a real growth opportunity in next generation Paxil and its newest drug, Levitra, to combat that truly fatal disorder, the unruly penis:

"The company says it plans to hold a meeting for analysts on Dec. 3 to describe in detail all the new drugs it hopes to roll out, including an AIDS drug and a medicine for incontinence, both of which are under review by the Food and Drug Administration. "If I can deliver this pipeline, the creation of value will be enormous," Dr. Garnier said. Convincing investors that the future is bright is crucial for Glaxo because the next several years don't look so good. Generics are threatening the company's biggest sellers, including the anti-depressant Paxil. The company's historical lead in AIDS drugs is slipping. And while its newest drug, Levitra for erectile dysfunction, is doing well, the company has few other potential big sellers ready for introduction in the next two years."

The Times story about Glaxo's failure to deliver on the 'synergies" that were supposed to power the merger that created the firm in 2000 takes aim at the problems in the laboratory -- problems at the heart of the Pharma industry. The Times angle is that these problems are organizational -- different lab routines, priorities and projects got tossed together, and that mix, along with the imperative to cut costs and raise profits, has devastated the 'intangible" knowledge structure that supports drug innovation.

But buried in the piece is an interesting graf that throws a light upon the announcements newspapers trot out almost every day about this or that medical breakthrough:

"Mergers are hardly the only reason Glaxo and its competitors have produced so few new medicines. The science of drug development has become tougher. New technologies like robotic screening machines that rapidly test millions of chemical compounds against biological targets have not worked as well as industry executives hoped. And the avalanche of genetic information created over the last several years has led to more confusion than clarity."

Shades of James Le Fanu, the British doctor whose book, The Rise and Fall of Modern Medicine, was reviewed, with enthusiasm, years ago by LI. Le Fanu pointed out some startling things. For one thing, accident has played far more of a part in the history of drug development than anybody wants to admit. From the accidents that were capitalized on in the invention of Penicillin, to the vast, random experiment of administering a variety of chemicals to a host of humans during world war two -- which was the basis for the post-war discovery of the first anti-psychotic drugs, and of cortisone. Le Fanu was also very scoriating about genetic medicine and about epidemiology. Actually, he might have been a little too scoriating about both. However, there might be something to his sense that natural selection is not something that can be completely modeled by a computer algorithm. The "biological targets" that are aimed at by the "millions of chemical compounds" give us a sense of the still prevailing model of linear processes that bedevils expert systems. If these were really "targets," then surely throwing a million darts would hit one of them. But of course, this is a very foolish way to envision predator prey relationships. It is a very foolish way of modeling both genetic and pathogenic diseases.

For more about Le Fanu, here's our review

There is an economic moral, too, to be drawn from Glaxo's problems. A major argument of those who support BigPharma, like Andrew Sullivan, is that the free market cannot be trusted to encourage drug innovation. Of course, Andrew Sullivan types say just the opposite -- however, if you parse their prose, what they are really saying is that Pharma companies should enjoy extended monopolies on their Intellectual Property. This means essentially closing down the market in generic drugs. The argument goes something like this: because the lab work to produce a pharmaceutical is so costly, and because the tests and bureaucracy that intervene before the drug gets to market are also so costly, pharmaceutical companies should enjoy a longer period of monopoly in order to recoop their investments. The problem with this argument is that it ignores the fact that other salient avenues of cost cutting make it more likely that a pharmaceutical company will use that monopolistic advantage not to find new drugs, but to piggyback on successful older drugs. This, after all, is the ultimate cost cutter. Monopoly, in other words, creates a vicious incentive. That incentive would be abolished if, in fact, we encouraged a healthier market in generics. That we are contemplating allowing generic drugs to be imported from Canada that can't be manufactured here points to the convolutions by which Pharmaceutical companies have successfully blocked the real working of a free market economy. Remember, Adam Smith was much more concerned about the pernicious effects of monopoly than he was about State intervention in the economy per se: in fact, Smith pointed out that it the use of monopoly was precisely the preferred State method for economic intervention. At least in the realm of the health industry, we need a return to Smith.

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