Letter: Companies must recoup costs of developing drugs

Tuesday, Nov. 2, 2004 | 8:55 a.m.

Nowhere in the Las Vegas Sun's Oct. 10 editorial on prescription drugs does there appear any discussion of foreign price controls, the costs of developing new pharmaceutical miracles or the free ride that foreigners now obtain at the expense of U.S. consumers.

Canadian and other foreign sources are "cheap" because those governments impose price controls on drugs. This has resulted in a long-term decline in research and development and the pharmaceutical industry in general in those countries. Importing those price controls would produce the same results in the U.S.

Bringing a new drug to market costs more than $800 million and takes more than 15 years. Yes, the federal government could negotiate much lower prices, since the cost of producing a pill is very low once the R&D costs have been borne. But someone has to pay the market price so that companies recoup their investment.

The current shortage of flu vaccine is a case in point. Why is it, after all, that only two manufacturers produce flu vaccine? Is it because profits are high? Shortages of childhood immunization vaccines have become commonplace now that the federal government negotiates for millions of consumers.

If we want to continue to develop drugs that alleviate human suffering, it is important to keep in mind how such miracles actually come about.

SALLY C. PIPES Editor's note: Sally C. Pipes is president and chief executive officer of the Pacific Research Institute in San Francisco, a conservative think tank which receives some of its funding from drug companies.

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