European pharmaceutical companies ahead of US in drug discovery

11 September 2009

A new analysis of 20 years of data contradicts previously published claims that United States pharmaceutical companies are better innovators than their European counterparts, and questions whether Americans actually benefit from the higher prices they pay for many prescription medications.

The re-analysis by Dr Donald W Light, a professor of social medicine and comparative health systems at the UMDNJ-School of Osteopathic medicine, appears in the current Health Affairs-web exclusive.

The study shows that, dollar for dollar, European pharmaceutical researchers outdo their American colleagues in "innovative performance or the introduction of first-in-class, biotech, and orphan products," a finding that could have enormous implications for the current debate over the cost of reforming healthcare in the United States.

"One implication is simply that American research teams need to figure out why they are not as productive," said Light, who is also the current Lorry Lokey Visiting Professor at Stanford University.

"Another is that robust European research and development takes place at about half the US prices for patent-protected drugs. Without jeopardizing domestic research or the development of new drugs, US drug prices could be about half their current level, which would help significantly to hold down rising healthcare costs and the amount of out-of-pocket costs that consumers have to pay for medications."

In his re-analysis, Light examined data on new chemical entities (NCEs) introduced between 1982 and 2003. NCEs are drugs introduced in a majority of the world's largest markets. He compared the percentage of the drug research funds invested by companies to the percentage of NCEs credited to the United States, Europe and Japan to measure each area's research productivity. For example, an area that received 33% of research investment should be expected to produce 33% of NCEs, a ratio of one-to-one (1.0).

He found that while the United States' share of research funding increased dramatically between 1990 and 2000, its research productivity remained at a relatively constant ratio of about 0.75. Over the same period, Europe's share of research funding plummeted, but its research productivity ratio increased from 0.99 to 1.17.

Along with this growing productivity gap, Light points out that little evidence exists to support claims that most new drugs are of high quality or "important" to patients. He cites the example of "me-too" drugs, such as Nexium, Lipitor, and new cancer drugs that generate large revenues at high prices but generally have not been clinically proven to be superior to existing drugs. According to Light, this allows drug companies to generate profits at the expense of patients who get little if any benefit from the development of these drugs.

"The real innovation crisis for patients is not the decline in the discovery of new molecules, but that the vast majority of new drugs offer few therapeutic advantages and greater risks than already available medications," Light said. "High prices enable companies to spend 2.5 times more on marketing than on research and development. It's a system that rewards better marketing over discovery, innovation and therapeutic value."

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