Pharma R & D Spending is Down

July 1st, 2011 by Comments Off on Pharma R & D Spending is Down

And that’s probably bad news. Here is Megan McArdle, writing in The Atlantic:

For the first time ever last year, the global drug industry cut its R&D spending.  The trend is expected to continue, at least in the near term.

You might initially think that this is good news for cost control–the expensive brand name drugs will all go generic, and we’ll save a bunch of money on prescription drugs.  And indeed, this is absolutely true.  But this will have repercussions for other areas of health care, and those repercussions are not good.  While some drugs are simply an added expense (think chemotherapy prolonging the lives of people who would otherwise have died sooner), many of the real blockbusters substitute for labor-intensive treatment.  Statins instead of cardiac catheterizations or coronary bypasses.  Avandia instead of amputations.  Hydro-chlorothiazide instead of nursing home care for your massive stroke.

We’ll still have all those drugs, of course.  But with less R&D, we’ll presumably see fewer pharmaceutical substitutes for the expensive conditions we still spend a lot of money treating, like Alzheimer’s. Which means that health care expenses might actually rise faster than we expect.

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