percent of the prescriptions filled for pharma-
ease categories produces newer medications
Most countries
ceutical products.89 Increased generic compe-
that are likely to be more effective in reducing
regulate drug
tition reduced the returns on brand-name
mortality, morbidity, and, ultimately, total
prices. . . .
drugs by an estimated 12 percent.90
medical expenditures.
Generic drug producers do little original
Even me-too products increase competition
Massive waiting
research, because they are designed to imitate
and thereby lower prices. Some me-too drugs
lists, care denied,
brand-name drugs and be offered for sale at
result when a company proceeds on a parallel
lower prices. Ironically, it is the brand-name
research track but comes in second or third.
disincentives
drug industry that has come under criticism
Moreover, me-too pharmaceuticals often yield
for R&D, and
recently for producing "me-too" drugs.91 A
important advances.95 For instance, the antide-
limited access to
May 2002 study by the NIHCM Research and
pressant Zoloft helps many people who weren't
aided by earlier products.96 Lichtenberg found
Educational Foundation found that only 15
new technologies
percent of new drug approvals from 1989 to
only weak support for the view that new "prior-
and treatments
2000 were for "highly innovative drugs"--
ity review" drugs (drugs assessed as represent-
are standard.
medicines with new active ingredients that
ing advances over available therapy) reduce
provide significant clinical improvement. It
mortality more than new "standard review"
noted that in the last half of the 1990s the
drugs (drugs appearing to have health effects
similar to those of already marketed drugs).97
number of incrementally modified drugs
approved by the FDA grew at a faster pace
Indeed, Raymond Woosley and Sally Usdin
than drugs based on new molecular entities.
Yasuda of Georgetown University report that
It then criticized new "standard-rated" incre-
72 percent of the drugs approved from 1981 to
mentally modified drugs--those approved in
1988 and classified by the FDA as offering little
1995 or later but providing no significant
therapeutic value compared to existing prod-
clinical improvements over existing prod-
ucts turned out to be a front-line therapy for
ucts--for accounting for 36 percent of the
the disease they treated. For example, the FDA
increased retail spending on prescription
classified Prozac as providing only a marginal
drugs from 1995 to 2000.92
improvement over existing anti-depressive
medications.98
That sort of criticism misunderstands
and minimizes the valuable role of "between-
"New and improved" versions of existing
patent" competition. A recent National
drugs may have different safety and efficacy
Bureau of Economic Research study by
profiles from other drugs in the same thera-
Frank Lichtenberg and Tomas Philipson
peutic class, which enables physicians to
points out that a patent protects an innova-
match drugs with the needs of different
tor only from other competitors seeking to
patients so that more people can be treated
produce the same product, but it does not
with a particular type of therapy than would
protect him or her from other competitors
be the case if only one drug were available.
producing better products under new
Other incrementally modified drugs can
patents.93 In the case of drug innovators,
enhance patients' choice and convenience
such between-patent competition (called
and make it easier for patients to comply
with prescribed drug regimens.99
"creative destruction") occurs early instead of
late in the life of a patent. It is at least as effec-
Quite simply, newer medications tend to
tive, and perhaps twice as effective, as generic
be more effective in reducing mortality, mor-
competition ("uncreative destruction") in
bidity, and ultimately total medical expendi-
tures.100 If anything, drugmakers are being
cutting consumer prices. In fact, only a
minority of drugs--perhaps as few as 10 per-
singled out for criticism because the system
cent--ever faces any generic competitors at
has worked too well, encouraging develop-
all.94 Perhaps more important, stimulating
ment of a host of newer, better, and more
therapeutic competition within various dis-
expensive medicines.
11