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BMJ. Jan 22, 2005; 330(7484): 165.
PMCID: PMC544984

US drug industry's claims of other countries "freeloading" are a myth

A member of George Bush's Presidential Business Commission—a group of business and professional people who are advising the president on the next election—has launched a scathing attack on the US pharmaceutical industry and on the industry's claims that other countries are damaging drug development by paying lower prices. Delivering the David Rogers lecture at Cornell Medical College in New York last month, bioethicist Donald Light said no evidence existed to support the view that European nations were "freeloading" and that the current US attempts to raise prices through free-trade agreements with other countries were simply designed to boost profits, not research and development. Professor Light, a former fellow at Princeton University, New Jersey, holds academic appointments at the University of Pennsylvania and the University of Medicine and Dentistry of New Jersey. He is also a member of the National Republican Business Advisory Council.

His lecture was particularly critical of a landmark 2003 speech given by the then FDA commissioner, Mark McClellan, which claimed that lower foreign drug prices were unfair to the United States and were slowing drug development worldwide.

On the contrary, Professor Light argued, there was evidence showing that European nations paid for their research and development costs through domestic drug sales, that research and development expenditures had grown substantially in many European nations in recent years, and that as a proportion of global sales, European nations tended to produce more genuinely new drugs than the United States. Moreover, the large price differential between the United States and the rest of the world was due to rapidly increasing US prices, rather than prices in other countries being substantially lowered.

Referring to an article that he published last year with coauthor Joel Lexchin from York University in Toronto (American Journal of Bioethics 2004;4(1):1-4), Professor Light said that only a small proportion of drug companies' research and development expenditure goes on basic research. He said that the bulk goes on more applied research and testing and that US taxpayers, not drug companies, fund or subsidise the bulk of basic research.

The pharmaceutical industry and its advocates within the Bush administration and Congress are currently waging a major publicity campaign, claiming that lower foreign drug prices are a threat to innovation and to the ongoing supply of safe and effective new treatments. The campaign coincides with new free-trade agreements—such as the agreement with Australia that came into force last year (bmj.com, 21 Aug 2004, News Extra)—that have been marred by controversy over drug pricing. Professor Light argued that the United States was against free trade by using free-trade agreements to lock out cheaper imports and trying to raise drug prices in other countries.

"Since current western European prices more than pay for research and development just out of domestic sales, this new set of international trade barriers to price competition and free trade in prescription drugs seems aimed at raising the industry's sagging profits, not at increasing innovation," Professor Light told the BMJ .

Professor Light's lecture is at www.bioethics.upenn.edu/People/?last=Light&first=Donald


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