Pfizer has announced plans to sell cheaper versions of its competitors' branded drugs when they lose patent protection. Greenstone, Pfizer’s generics unit (which it inherited in the 2003 acquisition of Pharmacia) has primarily sold copycat versions of Pfizer's own branded drugs when they lost patent protection, not other companies' drugs. (Pfizer's generics business is among the Top 10 generic companies by sales as measured by IMS Health.)
And they aren't alone in making more aggressive moves into the generics business. Novartis’ Sandoz unit is already a leader here, GSK is partnering with South Africa's Aspen Pharmacare Holdings, and Daiichi Sankyo is taking a majority position in India’s Ranbaxy.
According to David Simmons, general manager of Pfizer's new Established Products unit "We're always about innovation, and it will always be the lifeblood and sustaining element of Pfizer, but we don't see it as the be-all and end-all.”
Business is business, and Pfizer’s decision makes sense. But, when the world’s largest pharmaceutical company says that innovation isn’t the “be-all and end-all,” there’s a much larger policy issue at stake – like the future of innovation.
Innovation is slow. As any medical scientist will tell you, there are few "Eureka!" moments in health research. Progress comes step-by-step, one incremental innovation at a time. Companies more often profit by improving existing chemicals and making processes more efficient than by revolutionizing the whole field with new products.
Innovation is hard. Today it takes about 10,000 new molecules to produce 1 FDA-approved medicine. And if that's not frightening enough, only 3 out of 10 new medicines earn back their research and development costs. And here's the kicker -- unlike other R&D-intensive industries, pharmaceutical investments generally must be sustained for over two decades before the few that make it can generate any profit.
Innovation is expensive. In 2003, researchers at TuftsCenter for the Study of Drug Development estimated the costs to bring a new medicine to market to be $802 million, and others suggest that the total cost is closer to $1.7 billion
Innovation is under attack. From accusations of the “me-too” variety, to crackpot schemes to replace pharmaceutical patents with a “prize” system, life for innovator pharmaceutical companies is rough and tough. Israel Makov (formerly the Big Abba of generics giant Teva) once told me that he wasn’t really in the pharmaceutical business, but rather “in the litigation business.”
(PS/ If we don't think seriously about serious patent reform and towards more robust protection of data exclusivity we are going to seriously jeopardize the potential for new medicines -- at a time when science makes potential breakthroughs tantalizingly close.)
But innovation is important – and not just for pharmaceutical industry profits. Increases in life expectancy resulting from better treatment of cardiovascular disease from 1970 to 1990 have been conservatively estimated as bringing benefits worth more than $500 billion a year. In 1974, cardiovascular disease was the cause of 39 percent of all deaths. Today it is about 25 percent. Cerebrovascular diseases were responsible for 11 percent of deaths back then. In 2004 they caused 6.3 percent of deaths. Kidney diseases were linked to 10.4 percent of deaths and now they are associated with 1.8 percent. And that’s just for the United States.
As Harvard University health economist (and Obama healthcare advisor) David Cutler has noted: "The average person aged 45 will live three years longer than he used to solely because medical care for cardiovascular disease has improved. Virtually every study of medical innovation suggests that changes in the nature of medical care over time are clearly worth the cost."
When innovator drug companies decide to play more aggressively in the generic drug world – that’s business, sound business. When a senior executive at the world’s largest drug company says that innovation isn’t the “be-all and end-all” – that’s frightening, very frightening.
To borrow an over-used adjective from the world of global climate change -- we must protect "sustainable" innovation.
Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.
