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Innovation is the lifeblood
of the pharmaceutical industry. Over the last century, that industry
has been responsible for thousands of new drugs, based on hundreds of
thousands of smaller incremental innovations. The breakthrough
“blockbuster” drugs taken by millions of patients today were not
produced from thin air. Most represent the combined weight of seemingly
small improvements achieved over time. The advantages of incremental
improvements on existing drugs are paramount to overall increases in
the quality of health care. As the pharmaceutical industry developed, classes of drugs—those with
similar chemical composition and which treat similar conditions—have
grown to provide physicians with the tools they need to treat diverse
patient groups.

Still,
critics have been highly condescending about what they call “Me-too”
drugs—drugs within the same chemical class as one or more others
already on the market—which they claim add little or no therapeutic
value and are nothing more than an opportunity for pharmaceutical
companies to fleece unsuspecting consumers. While some claim that
there are too many similar drugs, and that pharmaceutical industry
research and development could be more profitably directed toward
developing entirely new classes of medicines, drugs based on incremental improvements generally represent advances in
safety and efficacy. They also provide new formulations and dosing
options that significantly increase patient compliance—both of which
lead to improved health outcomes. From an economic standpoint, adding
new drugs to a class of medicines also offers the possibility of lower
drug prices as competition between manufacturers increases.
Additionally, pharmaceutical companies depend on incremental
innovations to provide the revenue that will support development of the
riskier, capital-and research-intensive blockbuster drugs.

When
critics refer to Me-too drugs, they do not mean exact generic copies of
already existing drugs, or illegal counterfeits. Instead, Me-toos have
a similar chemical composition to one or more others on the market, and
have similar biological effects. But, in order to be approved, Me-too
drugs must undergo the same extensive clinical testing as other new
drugs to determine their safety and efficacy because they are
chemically different. In addition, these differences, even if small,
typically must represent a medical advancement—such as fewer side
effects or improved efficacy for patient sub-populations—in order to
attract a portion of the market away from the first approved drug in
the class. Nevertheless, many drug industry critics have called for
federal policies to inhibit the development and marketing of such
incrementally improved medicines. But policies that curb incremental
innovation will ultimately lead to a reduction in the overall quality
of existing drug classes and could arrest the creation of truly novel
drugs.

Research in any industry is a building process. Few
scientists develop groundbreaking drugs from no prior research. Most
work within, and respond to, existing knowledge—reading the same
medical literature, and reacting to new technological breakthroughs at
the same time. It is not hard to imagine, therefore, that many
different companies would be working on similar drugs. In fact, it is
often the case that the only reason why one drug is called novel and another a Me-too analogue is the speed at which each moves through the regulatory process.

Like
other technological and value-added industries, the pharmaceutical
industry depends on small steps for the creation of blockbuster drugs,
which often result from a long series of small innovations. It also
depends on these steps for the creation of drugs that provide slight,
incremental improvements on existing drugs—thereby adding to a drug
class, increasing competition among drugs, and incentivizing further
innovation. As the National Research Council has observed, “the cumulative effect of
numerous minor incremental innovations can sometimes be more
transforming and have more economic impact than a few radical
innovations or ‘technological breakthroughs’.” The net effect of
increasing the number of drugs through innovation leads to advances in
safety, efficacy, selectivity, and utility of drugs within a specific
class.

Importantly,
providing physicians with a variety of prescription options within a
given therapeutic class is paramount to the provision of optimal health
care. This is especially true for some drug classes, such as those
relating to the central nervous system, for which overall response
rates can be as low as 50 percent. For unknown reasons, certain
patients respond differently to different drugs within a single class.
If physicians have many options at their disposal, they can calibrate
their prescribing patterns to better address the needs of specific
patients. The existence of multiple similar molecular agents also
provides backup in situations where the novel drug in a class is found
to have unacceptable side effects and is thus removed from the market.
As patients come to depend on a particular class of drugs, it is
essential to make sure that they do not lose access to needed medication as a result of regulatory action.

One
of the most vehement criticisms made against Me-too drugs is that they
siphon money away from research that could be devoted to the creation
of novel breakthrough drugs. This assumption is incorrect for a host of
reasons, the most important of which is the fact that the
pharmaceutical industry depends on selling the products of incremental
innovations to provide the revenue for research and development of
breakthrough drugs. Additionally, while it is unrealistic to presume
that every incremental innovation leads to cost savings, the sum of all drug innovations can result in cost savings by reducing
overall treatment costs, shortening or obviating hospital stays,
increasing worker productivity and reducing absenteeism, and lowering
drug costs through increased competition among manufacturers.

Ideally,
every new drug would represent an unprecedented breakthrough and lead
to the creation of a completely novel treatment. This, however, is not
the reality of the pharmaceutical industry, or of any other
development-based industry. Creating drugs based on incremental
innovations provides pharmaceutical companies with a secure stream of
revenue, which can be directed to higher-risk, potential
blockbuster-yielding research. Policies aimed at reducing the
industry’s ability to obtain revenues from incremental innovations
could be self-defeating, as those industries will then have less
revenue to reinvest in R&D for new drugs. Put simply, limiting
incremental drug innovation is analogous to limiting competition. The
ultimate result could have devastating consequences for the future of
the pharmaceutical industry and for the millions of patients who depend
on it.

The authors and CEI would like to thank the International Policy Network in London, which published an earlier version of this paper.

Front page image: CC Joe Thorn, "Human Frailties."  Source

Related Files: Wertheimer and Santella - Pharmaceutical Evolution.pdf