Killing the Golden Goose: Prescription Drugs

By December 3, 2006General

Entertaining and informative profile of Sidney Taurel, CEO of Eli Lilly, in the Wall Street Journal, reinforcing his empirical argument that government regulation and price controls discourage investment in drug R&D.

Born in Morocco, and educated later in France and the United States, he joined Lilly in 1971 and has been there ever since. He has also become one of the drug industry’s most thoughtful and outspoken proponents of market-oriented health-care polices–based, it seems, more on experience and observation than innate ideological conviction.

“I’ve seen the bad effects that government policies of price controls and overregulation can have,” Mr. Taurel tells me. “When you look at Europe 30 years ago, that was where most of the innovation in pharmaceuticals used to take place. When I joined the industry, the No. 1 was Roche, and then it was Hoechst and Bayer and all these companies, which today are not as big. What 30 years of price controls have done is more and more of the research has come here. I think only about 25% of the total research in the whole industry is done in Europe.”

But this is no reason for complacency, Mr. Taurel stresses. We are at a “crossroads” in the U.S., he says, “between people who want a government-run system and those of who want a free market” in health care.

Bonus points go to Mr. Taurel for historical references, recalling the negative effects of Estes Kefauver’s anti-drug-campaigning of the ’50s. The “Other” Kefauver Hearings.

The Institute for Policy Innovation is insightful and tireless on this topic, most recently releasing a book by Richard A. Epstein of the University of Chicago, Overdose:
How Excessive Government Regulation Stifles Pharmaceutical Innovation
.

Relevant IPI blog post is here.

UPDATE: Epstein piece on prescription drugs in Sunday’s Boston Globe is here.