• Drug Discovery: U.S. vs. Europe

    An interesting paper by Donald Light was posted on the Health Affairs website on 25 August 2009. “Global Drug Discovery: Europe is Ahead” aims to debunk two popular misconceptions about pharmaceutical research: (1) That the U.S. has eclipsed Europe in drug research productivity and (2) that most new drugs are therapeutically important. In summary Light’s findings are as follows.

    • Using data on all 919 new chemical entities (NCEs) approved between 1982 and 2003, Light shows that Europe still leads the U.S. in percentage of NCEs discovered and percentage of NCEs deemed “global” (introduced into four or more of the G7 countries).
    • From results produced by the European Federation of Pharmaceutical Industries and Associations, Light shows that between 1990 and 2000 the U.S. has not increased its productivity of pharmaceutical research as measured by the percent of NCEs discovered divided by the percent of funds invested (1990 U.S. value 0.76, 2000 value 0.75). Meanwhile, Europe has increased its productivity (1990 Europe value 0.99, 2000 value 1.17).
    • Finally, Light cites numerous studies that have found that about 11-15 percent of NCEs are therapeutically important and this rate has held steady for forty years. The rest are not clinically more effective than previously existing treatments.

    It is well-known that we pay relatively higher prices for drugs in the U.S. than elsewhere. It is often argued that one benefit of high prices is high rates of innovation and more effective NCEs. Yet, U.S. innovation rates and rates of clinically important NCEs are not particularly high, nor are they growing. Of course, European companies benefit from high U.S. prices as much as U.S. companies do and people in the U.S. benefit from European drugs as much as Europeans do. So, despite Light’s findings it isn’t clear to me that they are in and of themselves arguments against the compensating benefits of high U.S. prices. If it were the case that U.S. purchasers only bought from U.S. firms then Light’s argument would be air tight.

    If Light’s findings are accurate, what is clear is that European pharmaceutical companies are operating more efficiently than their U.S. counterparts. The obvious question is why? The answer is beyond the scope of Light’s article.

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