By Robert A. Ingram, in the WSJ. He is the former CEO and chairman of GlaxoWellcome, is a general partner in Hatteras Venture Partners, which invests in early-stage life-science companies. He serves as lead director at Valeant Pharmaceuticals, and on the boards of Edwards Lifesciences and Regeneron Pharmaceuticals. Excerpts:
"The reason new medications are so expensive is that research is expensive. It takes, on average, $2.6 billion and 10 or more years to research and develop a successful new treatment, according to researchers at Tufts University. This decade of development is a time of intense trial and error, and often failure. The U.S. Food and Drug Administration approves only 12% of potential medicines that enter clinical trials.
Price controls and other restrictions on an industry that is already among the most highly regulated in the world will make a complex R&D challenge all but impossible. If research companies are unable to recoup their investments, they will effectively be deterred from devoting the necessary money and time to developing new medicines."
"Far from being a driver of costs, prescription drugs reduce overall health-care spending. Medications can eliminate the need for more expensive care, especially hospital visits. For example, a study in Health Affairs a few years go showed that every dollar spent on medicines for heart failure, high blood pressure, diabetes and high cholesterol generates $3 to $10 in savings from emergency room visits and inpatient hospitalizations."