How valid are skeptics’ arguments that pharmaceutical companies aren’t trying to cure deadly diseases because doing so would impact their bottom line?
There are two possible answers here, depending on how the question is read. If the accusation is that companies will not make R&D investments to address diseases whose markets are too small or too impoverished to generate a positive return on that investment, then the answer is “of course they aren’t”. Profit-seeking organizations seek profits, not losses.
One response to this issue is to create incentives that make formerly unprofitable investments profitable. The Orphan Drug Act of 1983 in the US provides incentives for the development of orphan drugs, defined as drugs targeting the treatment of diseases affecting less than 200,000 people in the US, or for which there is “no reasonable expectation” of profitability. By one accounting, the number of orphan drugs approved jumped from 34 in 1967-1983, to 347 from 1984-2009.
The other approach is to fund non-profit organizations that engage in drug development. Non-profits have made significant contributions to developing treatments for “diseases of poverty” such as Chagas’ disease, malaria and other afflictions suffered principally by people living in countries whose total health budgets may amount to a few dollars per year per citizen.
The second, more sinister reading of the question is an accusation that companies deliberately develop drugs that treat, rather than cure diseases. In this way, they act like dope dealers whose customers, once addicted, can be exploited to generate an endless stream of profit. It is a view that Pfizer PFE -1.53% prefers to create drugs like Lipitor, which patients take for the rest of their lives, rather than a single treatment that cures high serum cholesterol once and for all.
I don’t doubt that there are drug company execs whose utter amorality would lead them to pursue such a strategy if it were feasible. The shenanigans we’ve seen from Valeant and Turing are ample evidence of that.
But it would be a losing strategy. There is real competition in the pharma industry, and a drug that cures a disease will kick the ass of a drug that merely controls it. We’ve seen this competition play out just recently with Sovaldi, which cures Hepatitis C infections, rather than just suppress them as ribavirin/interferon therapy (usually) did. Sovaldi had the most profitable launch of any drug in history. No drug company exec is going to pass on that type of opportunity.
For better (mostly) and worse, we have a market-oriented system of drug development. Markets don’t always get things right, and have their blind spots. It’s the job of governments to align market incentives with societal needs when possible, or create alternative institutions when not. The latter approach means paying higher taxes. I would hope that those who complain of greedy drug companies are willing to vote higher taxes to create alternative paths to drug development. Otherwise they are showing the same greed (albeit at a smaller scale) as the worst players in the industry.