New Government Drug Center for R&D? How About Competitiveness?

The New York Times on Saturday reported the Obama Administration’s plans to directly fund pharmaceutical development through the establishment of a National Center for Advancing Translational Sciences. From “Federal Research Center Will Help Develop Medicines“:

The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines.

Maybe this is a good idea, maybe not, but isn’t it a great example of a familiar cycle? The private sector creates a productive, innovative and profitable industry, government regulates it, taxes it, regulates it some more, the litigation industry sues it, and the media hound it. Profits and innovation suffer the predictable response, and then government steps in to direct it, fund it, and, correct, regulate it some more.

Other examples come to mind, such as the fossil fuels industry or even agriculture.

Speaking of litigation, members of the American Association for Justice — the trial lawyers lobby — organize “litigation groups” dedicated to suing on various products, processes and, relevant for this case, prescription drugs. From the winter convention’s schedule, the meeting list for the drug-targeting groups:

  • Yaz/Yasmin Litigation Group Meeting
  • Levaquin Litigation Group Meeting
  • Gadolinium Litigation Group Meeting
  • Hydroxycut Litigation Group Meeting
  • Darvon/Darvocet Litigation Group Meeting (Proposed)
  • Denture Cream Litigation Group Meeting
  • Heparin Litigation Group Meeting
  • Reglan/Metoclopramide Litigation Group Meeting
  • Chantix Litigation Group Meeting
  • Fentanyl Pain Patch Litigation Group Meeting
  • Avandia Litigation Group Meeting

UPDATE (9:45 a.m.): Ted Frank at Point of Law reaches a similar conclusion, calling the proposal “Regulatory creep in action“:

So: the Supreme Court and Congress refuse to provide protection under tort law to pharmaceutical manufacturers who comply with federal labeling-law regulation, forcing transfers of billions of dollars from researchers to attorneys, and the Obama administration acts to roll back preemption even further (except when local government seeks to follow federal law and investigate immigration violations). And then creates a gigantic health-care intervention that suggests that new pharmaceutical inventions down the line will be subject to monopsony pricing. And is now surprised that pharmaceutical research and development spending has dropped, so proposes to create a new bureaucracy to spend $1 billion on politically attractive pharmaceutical research projects that the free market has not thought worthwhile, all while ignoring the absence of basic research supporting the spending. One can quickly see this won’t end well (it’s reminiscent of the $20 billion wasted by the Carter administration on “synfuels”), but you won’t see the left pointing out that the Obama administration is politicizing science. Or that the problem of pharmaceutical companies being deterred from research spending has a tort-reform solution that is both much more efficient and much cheaper to taxpayers.

Join the discussion 3 Comments

  • rahmat IRP says:

    the cost of producing medicine may be reduced, if partially outsourced to emerging markets.

  • […] This post was mentioned on Twitter by John Modisett, jt. jt said: New Government Drug Center for R&D? How About Competitiveness?: The New York Times on Saturday reported the Obam… […]

  • Glenn Lammi says:

    Those who question the length of drug patents or their very existence often argue that many drugs benefit from research performed by the government or by entities which receive government funding. For that reason, the patent terms should be lessened and/or government should have an enhanced ability to impose compulsory licensing measures. One could certainly see the government research entity and its investments creating future opportunities for the limitation on patent terms and lengths, which would certainly be a disincentive for the companies who would develop and sell the drugs from participating in this program.

Leave a Reply