Little Innovation, Lots of Promotion

Dr. Joel Lexchin, Professor, York University’s School of Health Policy and Management

Let’s give the drug companies their due. Some drugs have been major advances and we are truly better off for having them. Drug therapy has transformed AIDS from a death sentence into a chronic disease and a few new cancer drugs are significant advances.

But despite the claims of Russell Williams, President of Canada’s Research-Based Pharmaceutical Companies, most drugs do not offer any advantages over existing ones. It’s interesting to speculate on the evidence that Mr. Williams uses for his assertion, since virtually all of the trials that drug companies sponsor are either non-inferiority or equivalence trials, that is, they are not designed to show that one product is better than another. Moreover, when a new drug in a class is introduced, it is not tested in people who have failed an existing product in the same class. How then can we know how much additional value new drugs have?

The drug bulletin La revue Prescrire looks at new drugs and new indications for drugs in the French market, and between 1996 and 2006 undertook almost 1000 such evaluations. Two products were major therapeutic innovations in an area where previously no treatment was available and 38 had value as important therapeutic innovations but with limitations. Even including drugs with some value but that do not fundamentally change present therapeutic practice, we are still left with 85% of new drugs and new indications that fail to provide any new therapeutic value.

When new patented drugs are marketed in Canada, their prices are typically set at the level of the most expensive product in their therapeutic group regardless of whether or not they offer any incremental therapeutic value. Companies charge what they think that the market will bear, not what it costs to research and produce the drug. When drugs come off patent and generic products appear, brand name companies still refuse to engage in price competition.

Utilization and demographic changes are partly responsible for driving up expenditures on prescription medications, but Mr. Williams omits one of the major cost drivers which is the substitution of older less expensive drugs by newer more costly ones; newer ones that are generally no better than the existing drugs. Thiazide diuretics cost pennies per day and the ALLHAT study showed that they were at least as good, if not better than, the calcium channel blockers and angiotensin converting enzyme inhibitors that cost dollars per day.

One of the main causes of this shift in prescribing patterns is the aggressive promotion of new drugs. Work that I co-authored showed that in the United States companies spend over $57 billion per year promoting products to doctors. While we don’t have any exact Canadian figures, even dividing by 15 means that in Canada companies could be spending $3.8 billion annually, almost 4 times what they spend on research and development. What’s more, most of that promotional spending is going toward new drugs for which we have only very incomplete safety information.

Finally, nearly all of the literature that looks at the relationship between using promotion as a source of information and prescribing behaviour finds that prescribing deteriorates the more doctors listen to the messages from drug promotion.

Mr. Williams cites a study that claims that, had the rest of Canada increased drug spending at the rate that Quebec did, we could have saved over a billion dollars in other health care costs. Mr. Williams should have mentioned that this study was sponsored by an unrestricted grant from his organization. A more glaring omission is the fact that Quebec’s policy on paying for medications means that even if a generic version is available, the Quebec government will continue to pay the price of the brand-name version for up to 15 years.

We should pay for innovation, unfortunately in the case of drug therapy too often we are paying for the promotion of new drugs that offer no new therapeutic value.

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Some of the material on this page is written by guest bloggers. We appreciate their opinions. However, please note that they are not necessarily those of the Health Council of Canada.

Putting Drugs into Perspective - The Value of Innovation

Guest Blogger: Russell Williams, President of Rx&D (Canada’s Research Based Pharmaceutical Companies)

In our continuing dialogue on improving our health care system, I would like to put the issue of drug costs in perspective.

First of all, we cannot assess value for money in isolation. New medicines and vaccines, when appropriately utilized, improve and save lives, while saving costs elsewhere in our health-care system by reducing wait times, hospitalization and surgery.

New medicines and vaccines continue to be an important contributing factor in reducing hospitalization rates in Canada. According to the Organisation for Economic Co-operation and Development (OECD), hospitalization due to ulcers dropped by 71%, diabetes by 37% and breast cancer by 30% between 1980 and 2005. Furthermore, between 1980 and 2004, mortality rates for lung disease decreased by 79% and heart attack by 70%. For HIV/AIDS, mortality rates plunged by 78% and hospitalization by 50% between the mid-nineties and 2004-05.

Several studies clearly show that access to innovative medicines and their optimal use allow patients to avoid more costly treatments such as surgery and hospitalization. For example, a study published in 2007 in PharmacoEconomics journal shows that if other Canadian provinces had increased their spending on innovative medicines in the early 1980s like Quebec did, they would have saved over a billion dollars in health care costs for hospitalization and other services.

Canadians can also be assured that they receive excellent value for their patented prescription medicines, which over the past ten years have been priced, on average, 7% below the international median and have actually decreased when inflation is taken into account. The same cannot be said for Canadian generic drugs, which several studies, including one by the federal Competition Bureau, have shown are among the highest in the world.

While it is true that overall prescription drug expenditures have risen, according to the Canadian Institute for Health Information, this is not due to price, but rather utilization caused in part by an increase in the prevalence of disease, earlier diagnosis, as well as demographic changes.

The cornerstone of our industry is innovation recognising that new technologies and cutting edge treatments hold the key to improving patient outcomes and maximizing value for money in health. Member companies invest over $1 billion dollars each year in research and development in Canada; but, the development of each new medicine or vaccine is both risky and expensive, requiring up to 15 years of research and an investment of about $1 billion.

Timely access to new medicines and vaccines must be a priority as we move towards improving our health system, thus fostering better health outcomes and supporting discovery of new treatments and therapies which will further improve effectiveness.

We need to put the power of innovation to work to improve the health and prosperity of Canadians, while getting the best value for our health-care dollars.

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Some of the material on this page is written by guest bloggers. We appreciate their opinions. However, please note that they are not necessarily those of the Health Council of Canada.