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November 25, 2014


Hey Kevin,

Very interesting and thought provoking article. As I've repeatedly said before, those that expect, including legislators, that there is a "free lunch" for drug development are badly mistaken. The R&D won't be spent for drug development if the ROI isn't there.

I would simply note a different angle: STOP using the american public to subsidize foreign sales.

Yes, this set of circumstances that you describe may lead to the outcome of those branded drug manufacturers simply not offering their product in nations for whose policies artificially prevent a decent profit IN THOSE REGIONS.

I do not take comfort in those who may have to suffer for their government policy. AT THE SAME TIME, living here in the States, and having for some time now been forced to augment the profits for these international (read that as Big Corp) drug companies, I welcome the ability to reimport based on a legitimate application of exhaustion doctrine. I do not feel bad at all that this extinguishes a certain business model that unfairly raises my prices here in order to recoup the artificially low prices elsewhere.

"a 90-day supply of the generic drug costs $187 in New York while the same amount of the branded version, sold as Lanoxin, costs $24,30 in Canada."

Is this meant to be the other way round? In the other two examples, the Canadian price was the cheaper of the two.

GrzeszDeL, last time I checked 187 > 24.3. But I'm getting old, maybe things have changed recently.

Even if you do not have re-importation, the price differential for some drugs is such that "pharmaceutical tourism" makes sense. As an example, for SOVALDI it would be cheaper to take a 12-week vacation in a low-drug-cost country and get the drug there than to pay US list price of $84,000 for a treatment cycle.


No, that is not supposed to be the other way around, and is a perfect example of what I call in my post "profit augmentation for other nations."

That business model has been sheltered for far too long.

I believe the Canadian Government negotiates price and quantity based on expected need. A few years ago there was talk of an export ban in Canada due to shortages caused by the importation of drugs into the US. I am not sure such a ban was put in place. If not, would Canada revisit an export ban,if the US lift its ban?

Sorry, everyone, the Canadian price of branded digoxin should be $24.30 not $24,40 (commas are awfully small and look like periods in these fonts).

Thanks for the comments

A lot of the criticism of "me-too" drugs strikes me as ignorance about how drugs and formulations work.

Drugs with the same primary target usually have differences in their binding affinities to subtypes of the target, secondary effects, pharmacokinetics, etc. Even getting the same drug in greater purity, or a different formulation is technically demanding and can be a significant advantage.

e.g. Relenza was the first neuraminidase inhibitor for treating influenza, but could not be administered orally, and lost market share to Tamiflu, which was orally active. GSK developed inhalational powder forms of Relenza, and also showed that it could treat forms of influenza that were resistant to Tamiflu. Are these all just "me too" developments?

Thank you for the thoughtful and informative post. The problem of course with getting people to understand why it is not a good idea to reduce ROI on drugs is that it takes some imagination to consider long-term effects. It's too bad there aren't well-known examples of drugs that were at one time not pursued or developed due to an investment decision but that later were pursued and ended up being very useful. For awhile some years ago there were a few articles about how the incentives to develop new antibiotics had decreased and so there were fewer in the pipeline, but that seems to have been forgotten even with the increase in MRSA problems. It would be great if some pharma executives would talk to Congress about lines of research or development that are next on the chopping block; maybe some members would find that compelling, if only perhaps because somebody in their family is unfortunately afflicted.

For more on this topic--exhaustion of patented goods abroad--see Prof. Sarah Rajec's (William & Mary) informative paper on this topic, here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2428383.

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