The Rest of the Story . . .

  • by: |
  • 08/25/2005

It’s been called the “Seen and the Unseen” by essayists. It’s referred to as “concentrated costs, diffuse benefits,” by economists. Others refer to it as “single-entry bookkeeping,” “focusing on the negative,” “telling only half the story.” In the drug debate, this often centers on pricing.

Brand name drugs cost more, decry the crusaders for price controls. They neglect to mention that the same competition also drives down generic prices to the lowest in the industrial world, as I pointed out in a recent post. But there’s plenty more than myopic focus on pharmaceutical costs misses.

In an example of excellent journalism, the Philadelphia Inquirer weighs in on the other half of the story on U.S. free market pricing of pharmaceuticals. No, it’s not about impoverished seniors, but how the industry’s massive investment in the Philadelphia region is providing jobs and pumping money into local school districts.

“You tend to go where you are welcome,” Pfizer’s CEO Henry McKinnell told the reporter. The story chronicles numerous Europe-based companies that are expanding in the United States, and we’re benefiting from our hospitality. The pharmaceutical industry employs 46,800 people in the Philadelphia region. It generates $5.8 million in taxes for one school district. “It’s pretty simple,” Montgomery County Planning Commission director Kenneth Hughes said of Merck, “They are growing and generating lots of jobs and tax revenue and prosperity.”

And where the research exists, the drugs will follow. U.S. labs generate 70 percent of new drugs worldwide. More important for Americans, these new drugs hit the pharmacy shelves here first. The story notes:

“From 1993 to 1997, Europe accounted for 81 unique new drugs versus 48 in the United States, according to the study by Bain, whose clients include pharmaceutical companies. But from 1998 to 2002 the trend was reversed, with 85 new drugs introduced in the United States compared with 48 in Europe.”

This is a piece to save for the next round of D.C.-based advocacy attacks on the pharmaceutical industry.


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.

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