Bollettino

PS – we urge readers to peruse this James Surowiecki article about Big Pharma, and then compare it to the LI criticism of a former Surowiecki piece on big pharma. We reproduce our piece, all the way back from 2001, here. Has Surowiecki been sneaking glances at our humble blog? The suggestion that he makes – that smaller R&D firms represent the coming wave of research, while the Pharma dinosaurs should either learn to market efficiently or die in their own stupors, is exactly the point we were making about the way monopoly has practically driven efficiency out of the big Pharma culture. Here’s our humble little piece:

In the November 5th New Yorker there is a column by the astute but limited James Surowiecki, who makes the standard case against breaking the Bayer patent on Cipro. The case goes like this: to come up with an antibiotic takes years of R & D, and R & D costs beaucoup millions; so if in the end, the anti-biotic isn't a moneymaker, then R & D into other anti-biotics will be inhibited. Thus it is socially advantageous not to bust Bayer's balls, so to speak.

Unfortunately, as Surowiecki sleepwalks through his econ 101 lecture, he adds a number of facts that contradict his larger point, and support the idea that monopoly actually has an inhibiting effect on medically important R & D. He averts to the slowdown in antibiotic research after 1967, a generally agreed upon high point in the war against infectious diseases. That slowdown, he contends, was market driven:

"Besides, given the choice between making an anti-biotic that a person might take for two weeks once in a lifetime or developing an anti-depressant that a person would take every day for the rest of his life, drug companies naturally opted for the latter." If S. could be shaken out of his dogmatic slumbers for a bit and made to read back his own sentence, he might notice that monopoly, here, does the opposite of what he claims it does. It levels the field so that it makes it more profitable to de-emphasize exploring anti-biotic pharmaceuticals as compared to the more lucrative anti-depressives. In other words, bad research drives out good. And the penalty for that is minimal, given that anti-biotics are being held in a sixteen year bondage according to federal law, and the patent time frame is easily extendable. S. even is hip to the result of this: "that's why in the past twenty-five years they {big Pharma] have developed just one new class of anti-biotic." Well, let's look at correlations. We have an increasingly sophisticated sphere of intellectual property laws, and we have an increasingly debauched drug research system, more interested in those nifty sex-drive-n'-hair enhancers than in coming up with cures for multiple drug resistant tb. Now if the state were sensitive to this, it would not hand out monopoly power like candy. If there was a smaller time frame, the sex-drive-n-hair enhancers would have to be marketed more efficiently, as generic drug companies can come up with amazing copies quickly. In this atmosphere, the profitability of anti-biotic drugs as compared to others would go up, since there is less likely to be a major profit in copying them, and there is more reason to emphasize them for their developers. They would be mid-list drugs, steady sellers. Moreover, breaking up the monopoly power of big Pharma would recognize the R & D real world - which is networked through a university system largely subsidized by the good old Gov. Perhaps smaller companies can't compete with giant companies that dragoon, or tempt, researchers into more frivolous but lucrative research. But if there were more starters, there might just be more incentive to do that major research. In other words, more competition, lower entry costs, is what we should be aiming at.

Of course, Surowiecki's idea that tech comes when you lay out money as automatically as an old pooch trots to the dogfood bowl when you put out the Gainesburgers is pretty naive. It shows zero feeling for the history of the golden age of medicine, which was driven, pre-1967, much more by an ethos of public healthcare than by the numbers pharmaceutical giants are used to now. And another hint: the fons et origo of that era is clearly the biggest of all state endeavors of the 20th century -- as with most of our technology, the modern medical era can be tracked back to WWII. War is the mother of invention.
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