Paper Declares that with Respect to Drug Innovation, "Europe Is Ahead"

    By Donald Zuhn --

A paper published in the latest issue of the policy journal Health Affairs disputes the widely held notion that the United States has eclipsed Europe in terms of pharmaceutical research productivity.  In the article, entitled "Global Drug Discovery: Europe Is Ahead," Dr. Donald Light, a professor of social medicine in the Department of Psychiatry at the University of Medicine and Dentistry of New Jersey, reexamined a data set originally collected by Dr. Henry Grabowski (professor of economics at Duke University) and Richard Wang (director of health services research and policy analysis at AstraZeneca Pharmaceuticals) and concluded that "the United States never overtook Europe in research productivity."

In a 2006 Health Affairs paper entitled "The Quantity And Quality Of Worldwide New Drug Introductions, 1982–2003," Dr. Grabowski and Mr. Wang looked at all of the 919 new chemical entities (NCEs) approved between 1982 and 2003, and concluded that "U.S. firms overtook their European counterparts in innovative performance or the introduction of first-in-class, biotech, and orphan products."  In particular, the authors compared the number of NCEs discovered in the U.S., Europe, or Japan between 1982-1992 and 1993-2003, and determined that NCE development was shifting away from Europe and Japan and towards the U.S.  Following a reexamination of this data, Dr. Light concluded that "Congress and large purchasers are motivating companies to develop and market drugs that add little value, instead of rewarding true added value," and that "[t]his is not good for the long-term vitality of the industry or for those paying too much for too little."

Simply looking at the data collected by Dr. Grabowski and Mr. Wang, Dr. Light noted that "European research productivity scarcely declined, and Europe continued to dominate in discovering all NCEs as well as the highly profitable global NCEs," adding that "[c]learly, the United States did not overtake Europe in discovering new chemical entities, and European researchers lost less ground than either Europeans or Americans believe." (see Light, 2009, Exhibit 1).

Dr. Light, however, was interested in analyzing this data in view of total research funding (especially in view of data showing that research investment between 1990 and 2007 grew 5.2 times in the U.S. versus 3.3 times in Europe).  In other words, Dr. Light wanted to determine how much bang for the buck each region was getting.  Thus, he compared the proportion of industry R&D funding in the United States, Europe, and Japan to the proportion of NCEs developed in each.  In his paper, Dr. Light notes that because annual figures were not available, he used investment figures for 1990 and 2000 that were reported by member companies to U.S., Japanese, and European trade associations, and which were collected by the European Federation of Pharmaceutical Industries and Associations (see Light, 2009, Exhibit 2).

Dividing the proportion of NCEs shown in Exhibit 1 by the proportion of R&D investment shown in Exhibit 2, Dr. Light determined that:

[T]he United States discovered far fewer NCEs than its proportional share of funding:  0.76 (25.3/33.3) in the first period [1982-1992] and 0.75 in the second [1993-2003].  Europe's ratio of all NCEs to investment went from 0.99 in the first period to 1.17 (43.3/36.9) in the second.  Japan's proportionate ratio was the highest: 1.49 in the first period and 1.36 in the second.

From this, he contended that "[t]he big news in terms of innovation and international policy is the low and flat U.S. productivity and the high Japanese productivity," and further argued that "Grabowski and Wang's conclusions about U.S. dominance are not supported by their own data."  However, in view of the growing importance of biotech drugs (see, e.g., "BioWorld Reports on the Top 25 Biotech Drugs" and "Future Drug Sales Predictions Highlight Importance of Follow-on Biologics Legislation"), it is interesting to note that Dr. Light's analysis shows that "European researchers became much more innovative in the second period but did not catch up with their U.S. counterparts, even though U.S. productivity declined" (see Light, 2009, Exhibit 4).

Looking forward, Dr. Light suggests that "[g]iven the new institutes in European countries that bring together applied scientists from industry and academe to translate discoveries into drugs, such as Top Institute (TI) Pharma in the Netherlands [which funded Dr. Light's study]; Karolinska Institutet Innovations in Stockholm, Sweden; and the broader European Innovative Medicines Initiative, returns on R&D investment in Europe may increase further during the next decade of 2004-2014."  As for the implications of his study on U.S. drug policy, Dr. Light states that:

Congressional leaders and others concerned about high prices of new patented drugs will be heartened by this analysis, because lower European prices seem to be no deterrent to strong research productivity.  A previous analysis using industry-based data showed that pharmaceutical companies recover all costs and make a good profit at European prices.  Europeans are not "free riders" on American patients -- another myth promoted by industry that assumes that countries are separate R&D/market silos that should each pay for themselves.

Comments

[Kevin E. Noonan]

Re: "free-riders"

Except, of course, where US companies are denied patent protection for biotech inventions that are then freely made and sold in Europe.

Any data in his report about which of the NCEs (US vs. EU vs. JP) were the most profitable? Wouldn't it also be consistent with his data if the lower amount of investment in Europe resulted in fewer blockbuster drugs? And did he compare the requirements for safety and efficacy in the EU vs. the US (since a large part of the cost of bringing drugs to market in the US are due to regulatory requirements)?

I am generally skeptical when data from one study is repackaged by another researcher, especially when the conclusions so clearly favor the researcher's sponsor.

But you read the report - any insights?

[saddlepack maker]

"Congressional leaders and others concerned about high prices of new patented drugs will be heartened by this analysis, because lower European prices seem to be no deterrent to strong research productivity."

This really is an asinine statement. When the U.S. comprises at least 50-75% of the world-wide market, of course that lower prices in 10-30% of the world-wide market would not be a deterrent to strong research productivity. Can he really make this statement with a straight face if the U.S. were to significantly lower prices? Especially in light of the fact that development costs had not decreased over the last decade but in fact significantly increased.