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Why Are Drugs So Expensive?
Most drugs are developed by research teams working in pharmaceutical companies. There are large numbers of employees involved in the development of a drug beginning with the biologists who observe that a certain compound produces a desirable reaction. Animals are used to determine if these compounds have desirable effects and side effects which are not too severe. For example, strains of mice are produced which develop lupus and then are used to test compounds which are potential treatments for lupus. Once a compound has proven to be effective in animals it is then used on humans. Small numbers of human subjects are used initially in order to determine if the compound has any possibility for humans. As evidence accumulates which supports the efficacy of the compound, larger and larger clinical trials are conducted until sufficient evidence has been accumulated so that a submission to the FDA can occur. Once the drug has FDA approval, it then must be marketed. Usually approved drugs are patented for a period of around 20 years so that the company which developed the drug is the only one which can market it until the patent expires. The goal for the company is that during the time the patent is in effect it will recover the cost of producing and marketing the drug and make a profit. It is also the case that there are many compounds which initially are thought to be possibilities that never make it to receive FDA approval. The costs associated with these failed compounds have to be covered by the ones which are successful.
The following is a brief outline of how a drug is developed and eventually placed on the market.
1. The compound or device is developed in a laboratory usually using animal models. It is tested for efficacy as well as toxicity.
2. If it passes the animal model testing, a Phase I trial is conducted. In these trials the drug is applied to healthy volunteers (those individuals who do not have the problem the treatment is being designed to improve). The purpose here is to look for side effects (i.e., is it safe for human consumption?)
3. The next step in the process is to conduct Phase II trials. These trials are where the drug is applied to individuals with the problem to determine if the drug is efficacious as well as to continue the safety studies.
4. The next step is to conduct Phase III trials where large numbers of subjects are studied. The results of these studies are submitted to the FDA to be evaluated for eventual approval for marketing the drug.
5. The next step is Phase IV trials which are conducted for drugs already on the market in order to develop additional information about the efficacy of the drug as well as the safety. Phase IV trials are what caused the problem for VIOXX.
Often when an individual goes to the pharmacy to pick up a prescription they receive a generic drug rather than the one which was initially expected. Why is this the case? The primary reason is that the generic drug is less expensive than the original one. Some insurance companies won't pay for the original one if there is a generic one available. The concern is whether the generic is as effective as the original and will it cause more side effects.
What can be said about generic drugs? The generic version of a drug will come on the market when the patent expires on the original drug. The generic drug contains the exact active ingredient as the original drug. Generic drugs must obtain FDA approval and the FDA approval requires that the active ingredient be chemically identical to that in the original drug and that its behavior and effect in the individual be identical to that in the original drug. The form of delivery of the generic must also be the same as for the original one. That is, if the original is in liquid form, so is the generic. If the original is a pill, so must be the generic. However, federal trademark laws require that the generic drugs look different than the original. For example, colors and flavors must be different. Why then is a generic less expensive? In order to produce the generic, not nearly as much research needs to be accomplished even though FDA approval is required. When the patent period is over for the original drug, often there will be more than one company which will market a generic version, which creates competition and often results in lower costs.
If an individual is interested in reading more about generics and herbal medicines, there is an article in the January-March 2005 issue of the magazine entitled, Insidems, starting on page 42. This magazine is produced by the National Multiple Sclerosis Society.
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