Despite the considerable achievements of the pharmaceutical sector over the last century and the benefits that have ensued, these remain mostly underappreciated. Some analysts, for instance, continue to believe that spending on drugs is too high compared to the real advantages they provide.
Marc-André Gagnon, assistant professor at Carleton University and a long-time critic of the pharmaceutical industry, is one of them. Without any solid evidence to back up his claim, Gagnon argues in a recent article that more than 80 per cent of new drugs entering the market are merely carbon copies of existing drugs — commonly called “me-too” or “follow-on” drugs — without any real therapeutic advance.
Such criticisms, however, reveal a complete ignorance of the nature of the innovation process in the pharmaceutical industry.
Generally speaking, technological progress — whatever the sector — occurs only following numerous incremental improvements to existing products and production processes. In this, the pharmaceutical industry is no exception. The advances achieved over time, while seemingly small in the short term, end up being decisive factors to patients’ health and quality of life when extended over a number of years.
In the pharmaceutical sector, small innovations made over decades have gradually led to the marketing of drugs that are ever more effective, safer and better tolerated by patients. The fact that nearly two out of three drugs (63%) appearing on the World Health Organization’s essential drug list are “follow-on” drugs contradicts Gagnon’s claim and shows the importance of incremental innovation in this industry.
For example, the pioneering beta-blocker drug used in cardiology in the 1960s, pronethanol, was found to have undesirable side effects and was quickly replaced by better versions. Research carried out in the 1980s and 1990s then led to the development of more effective beta-blockers like carvedilol and metoprolol that proved more effective in treating congestive heart failure. After over four decades of incremental innovation in this area, several versions of “me-too” drugs were designed and are now used to treat a whole array of diseases like arrhythmia, glaucoma, and hypertension.
In fact, so-called “me-too” drugs are quite often innovative products that have simply lost the race to become the first drugs in their particular therapeutic class. The development of a new drug is a lengthy and costly process that takes on average 12 to 15 years of research and $1.2 billion in investments. Hence, several new drugs entering the market are the results of simultaneous R&D investments made by competing firms aimed at discovering innovative drugs.
Even if they are used to treat the same conditions, drugs within a therapeutic class offer a whole range of small differences that enable doctors to find and prescribe the most suitable medicine given their patient’s specific needs. Follow-on drugs provide patients with benefits that may sometimes appear slight but that are nonetheless very real. For example, improvements in terms of dose or dosage (a pill that only needs to be taken once a day instead of three or four times) can increase the likelihood that patients will adhere fully to their prescribed treatment, with all of the positive health consequences that this entails.
These products can moreover be in competition with the pioneer drugs in their respective therapeutic classes, which has the effect of offering patients additional options and exercising downward pressure on prices. For that matter, competition has intensified over the years thanks to incremental innovation, as shown by the continual reduction in the amount of time during which a pioneer drug remains alone in its therapeutic class, which has fallen from an average of 13.5 years in the 1960s to 1.1 years at the beginning of the new millennium.
Gagnon not only fails to acknowledge the benefits from incremental innovation in the pharmaceutical industry but he also advocates the adoption of public policies that would further discourage firms to invest in R&D. Contrary to Gagnon’s claims, if such initiatives were to be implemented, they would decrease rather than increase the likelihood of discovering new and better drug therapies.
Yanick Labrie is an Economist at the Montreal Economic Institute. The views reflected in this op-ed are his own.