Can Drug Company Profits Be Justified? Argumentative Essay Examples

The current pharmaceutical market at present is immense, with yearly sales in the hundreds of billions of dollars. Drugs are purchased to control cancer and other chronic diseases, as well as to prevent the spread of infectious diseases and thus are responsible for our quality of life as we know it today. As a result of their prominent role in public health, drugs must be under strict regulation and are rigorously tested for efficacy, safety and consistency. This paper argues that the high cost of drugs is warranted for a number of reasons. Besides the rationalizations described above, the paper also argues that profits are a driving force for drug companies to invest in research and development for the next generation of pharmaceuticals. The paper concludes with a breakdown of the factors involved in determining the cost of drugs.
The world’s best and newest medicines are developed by a handful of pharmaceutical companies. There are a number of reasons for this. Currently, it takes billions of dollars and at least a decade for a new compound to be screened and identified through drug discovery, then move through the pipeline of research and development. The cost for discovering, developing and marketing a new drug, taking into consideration upcoming drugs that fail to make it to the marketplace, is estimated to between $4 billion to $11 billion per drug [1, 2]. It is necessary, therefore, that capitol invested in a new drug be set in place many years before the drug is able to generate any kind of revenue.
Human clinical trials themselves, a necessary part of drug development, are both lengthy and expensive. Even with this large commitment only a small percentage of drugs actually are approved after surviving the rigor of clinical trials. For example, in 2010 only twenty-one new drugs were approved by the FDA [2]. Few small scale companies will be able to invest in the creation of a new drug from its infancy and manage its regulatory expenses; rather, they must form strategic alliances with or be bought out by large pharmaceutical companies in order to develop their products to the point of commercialization. Since it is only the very large pharmaceutical firms who can afford the high cost of research and development, the industrial landscape is composed of a few large multinational companies which dominate globally.
Expenses aside, the pharmaceutical industry itself generates enormous profits. For example, global spending on prescription drugs in 2011 was almost $1 trillion US dollars, with one third of the market located in the US alone [1, 2]. A clear negative effect of this kind of power is presented by Marcia Angell, MD, in the New England Journal of Medicine [3]. She contends that pharmaceutical companies have large and powerful lobbies in Washington, and wield so much leverage that corporate profits are greater than the averages expected. This bargaining clout can be huge with respect to politics. For example, Angell mentions that this lobbying power caused Congress to prevent Medicare from purchasing drugs at lower prices, thus causing taxpayers to pay more for their much needed drugs. She also claims that biosimilars and biobetters, drugs that are not necessarily going through the same clinical trials and regulatory hurdles, make up a significant proportion of new drugs coming out into the marketplace [4, 5]. These assertions argue that much of the high expense of today’s drugs is the result of corporate greed. However, there are arguments that can counter these statements, and a few are presented below.
Government regulation of drugs is without question an essential and financially challenging point for pharmaceutical companies. The structure of drug regulation has expanded over time and grown in sophistication to meet the changing needs of the pharmaceutical industry. The complexity of drug regulation is the result of a constantly updated policy response to protect the public from pharmaceutical activity. Regulatory policy must include licensing, inspection of manufacturing facilities, the management of clinical trials and ensuring the product’s quality. To ensure transparency, the information gathered for the regulatory process must be made public. Regulatory fees are paid by both the taxpayer and the company.
While extensive regulation and clinical trials are all costly ventures, it is important to examine what occurs when these features are removed from the sale of pharmaceuticals, as is the case with the complementary/alternative medicine industry. The use of natural products has increased in interest over the past few years, and the regulatory structure as it now stands is poor [6]. Patients who use these substances are subject to much misinformation and are taking unnecessary (and unintentional) health risks. Herbals and dietary supplements can cause hepatotoxicity and kidney problems, among other health issues. Regulation of these medicines is highly variable and the regulatory bodies in Europe still do not require testing for premarket safety [6, 7]. It is not too hard to envision that this could be the fate of the products of the pharmaceutical industry if tight regulations were not in place.
Besides a strict multilevel regulatory framework, protection of intellectual property is also an expensive necessity. Patents are important because of the length of time and extensive cost in bringing a new drug to the marketplace. In addition to this, patent protection ensures that a drug is not undervalued by a competitor who makes a similar drug without investing the same research and development efforts into its discovery. The cost of patent protection also enables drug companies to provide incentives to their employees to make investments in both time and energy in order to bring new medicines through the pipeline. Ultimately, the cost of a new drug takes into consideration the predicted market size, by factoring in the number of consumers who will purchase the drug. If the price is set too high, no one will buy the drug,. Conversely, the company will lose on profits if the price is set to be too low. This can be further nettled down by comparing the price of the next treatment for a particular disease that is available. As a result, although the cost of a new antiviral treatment for Hepatitis C Virus (HCV) is extremely high, the alternative medical treatment is even more costly yet less effective [8].
In conclusion, drug discovery and development is a very expensive proposition for a number of reasons. The high costs of drugs due to the need for clinical trials and regulation for safety and efficacy are augmented by the fact that only a small proportion of new drugs become approved by government appointed bodies. In addition, patent protection is expensive and is necessary to provide the motivation for investors of drug companies to make a commitment for the long time it takes to see the commercialization of a new pharmaceutical product actually realized. While it may be true that large multinational pharmaceutical companies have powerful lobbies in Washington, DC, it is also true that large pharmaceuticals also join alliances with not- for- profit organizations to provide medicines at reduced costs to developing countries, as has taken place with the provision of anti-retroviral drugs for the HIV/AIDS patients in sub-Saharan Africa [9, 10]. The current cost of drugs today reflects the contributions of all of these factors. Thus, the profits of pharmaceutical companies are indeed justified.

References

"Top Pharmaceuticals: Introduction: Emergence of Pharmaceutical Science and Industry: 1870-1930". 2005 American Chemical Society http://pubs.acs.org/cen/coverstory/83/8325/8325emergence.html
Walter Sneader (31 October 2005). Drug Discovery: A History. John Wiley & Sons. pp. 155–156. ISBN 978-0-470-01552-0.
Marcia Angell, M.D. The Truth About the Drug Companies, New England Journal of Medicine. Volume 351:1580-1581, October 7, 2004, Number 15.
Tsuruta LR, Dos Santos ML, Moro AM.Biosimilars advancements: Moving on to the future. Biotechnol Prog. 2015 Feb 23.
Ahmed I, Kaspar B, Sharma U. Biosimilars: impact of biologic product life cycle and European experience on the regulatory trajectory in the United States. Clin Ther. 2012 Feb;34(2):400-19.
Vamenta-Morris H, Dreisbach A, Shoemaker-Moyle M, Abdel-Rahman EM. Internet claims on dietary and herbal supplements in advanced nephropathy: truth or myth. Am J Nephrol. 2014;40(5):393-8.
Navarro VJ, Lucena MI. Hepatotoxicity induced by herbal and dietary supplements. Semin Liver Dis. 2014 May;34(2):172-93.
Hutchison C, Kwong A, Ray S, Struble K, Swan T, Miller V. Accelerating drug development through collaboration: the Hepatitis C Drug Development Advisory Group. Clin Pharmacol Ther. 2014 Aug;96(2):162-5.
Feinmann J. Antiretrovirals planned for developing world. Lancet. 1997 Dec 13;350(9093):1759.
Simmons B, Hill A, Ford N, Ruxrungtham K, Ananworanich J. Prices of second-line antiretroviral treatment for middle-income countries inside versus outside sub-Saharan Africa. J Int AIDS Soc. 2014 Nov 2;17(4 Suppl 3):19604.