[Ip-health] Andrew Sullivan: Europe's Beleaguered Drug Companies

[Dean Baker]

Since pharmaceutical companies get the exact same patent protection for
their products in every
country in the world, regardless of where the research was done, how
could a relative decline in
R&D in Europe possibly be explained by lower drug prices there -- except
insofar as drug companies
made a political decision to punish European countries for their pricing
policies?

Mike Palmedo wrote:
> http://andrewsullivan.theatlantic.com/the_daily_dish/2007/06/europes-drug-co.html
>
>
> Europe's Beleaguered Drug Companies
>
> Andrew Sullivan
> 28 Jun 2007
>
> I'm sorry to burst Kevin Drum's bubble, but the pharmaceutical companies
> in Europe have been in difficulties for quite a while now, under the
> burden of the socialism he favors for the U.S. healthcare industry.
> According to the industry's own website, as long ago as 1994, the
> European Commission Report on Europe's ailing drug industry said the
> following:
>
>    "Europe as a whole is lagging behind in its ability to generate,
> organise, and sustain innovation processes that are increasingly
> expensive and organisationally complex". The report underlines that the
> pharmaceutical market in Europe has been negatively affected by
> significant, excessive and uncoordinated government intervention that
> stifles competition and discourages innovation. This also creates
> significant inequity among European patients' rights to access of
> medicines.
>
> Socialism fails. Always has. Always will. And the toll in Europe in so
> many areas is clear. Here's what socialized medical systems have done to
> European pharmaceutical research:
>
>    # For over 100 years, Europe has been a powerhouse of pharmaceutical
> progress and innovation. Over the last decade, however, Europe has
> gradually lost its leadership in the pharmaceutical sector, with a
> steady transfer of its R&D to the US - where policies and market
> conditions are more favourable to pharmaceutical innovation.
>
>    # Key benchmarking indicators show that between 1990 and 2002, R&D
> investment in United States rose more than fivefold, while in Europe it
> only grew 2.5 times.
>
>    # In 1990, major European research-based companies spent 73% of
> their worldwide R&D expenditure on the EU territory. In 1999, they spent
> only 59% on the EU territory. The USA was the main beneficiary of this
> transfer of R&D activity.
>
> America is the last refuge for pharmaceutical innovation. And the left
> wants to kill that off. There's more evidence of what socialism does to
> healthcare R&D in Europe:
>
>    # The latest data on new molecular entities (period 2001-2005) show
> the predominance of the US which has now become the leading inventor of
> new molecules in the world (61 against 51 for Europe)
>
>    # The top 20 companies worldwide shows the leadership of US
> companies. In 2005, nine (9) of the top 20 pharmaceutical companies in
> the world are of American origin (against 8 for Europe).
>
>    # US companies significantly increased their share in the world's
> top selling medicines. On the top 30 worldwide products in 2005, 21
> originate from the US against 8 from Europe.
>
>    # US companies are more successful in disseminating their new
> medicines at international level: 70% of the sales of new medicines
> launched on the world markets during the period 1998-2002 were made in
> the US, compared to only 18 % in Europe.
>
>    # Whereas the European pharmaceutical market was still the world's
> largest market in 1990 (representing 37.8% of the world market), it now
> only represents 30% of the world market (compared to 47 % for the North
> American market).
>
> This is what the left wants to do to pharmaceutical research in the US
> as well. There's a case for it: the usual leftist case for nominal
> equality over quality and progress. They're not being honest about it.
> They need to be.
>
> --
> Mike Palmedo
> Research Coordinator
> Program on Information Justice and Intellectual Property
> American University, Washington College of Law
> 4910 Massachutsetts Ave., NW Washington, DC 20016
> T - 202-274-4442 | F 202-274-0659
> mpalmedo@wcl.american.edu
>
>
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--

Dean Baker (baker@cepr.net)
Co-Director
Center for Economic and Policy Research
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