Free markets or patent protections? Research costs, role of FDA cited in drug debate.(Practice Trends)

Nobel prize-winning economist Milton Friedman, Ph.D., found himself in the distinctly unfamiliar position of opposing free trade during a four-way debate on whether Americans should be able to buy U.S.-made drugs from Canada and European nations at cut-rate prices.

Dr. Friedman said that pharmaceutical companies face unique challenges in recouping what he considers the unreasonably steep, Food and Drug Administration-driven cost of developing new drugs and bringing them to market.

They are justified in receiving economic protection from competition that would arise if consumers, pharmacists, and state and local governments could buy cheaper versions of American drugs from Canada or overseas, he said at a debate sponsored by Pacific Research Institute.

"We don't have free trade in medicine because of patents, which are a form of monopoly," Dr. Friedman asserted. "The real problem is the [FDA]. The cost of approving new drugs is intolerably high."

On that point, Dr. Friedman and his chief challenger in the debate, U.S. Rep. Gil Gutknecht (R-Minn.), agreed, even when Dr. Friedman called for a new federal drug approval system that would review safety data only, leaving the question of efficacy to the marketplace.

But Rep. Gutknecht sharply questioned the need to grant pharmaceutical companies pricing protections in exchange for performing innovative research.

"If [free] markets work for pork bellies, they will work for Prilosec," the congressman said. Pharmaceutical companies will never walk away from research but might spend less money on researching copycat drugs, advertising campaigns, and administration if they were forced to compete in an open market without price protections.