The lesson came as Pfizer, a leading pharmaceutical maker, canceled trials of a new cholesterol-controlling drug — torcetrapib.
As the stock market opened on Monday, Pfizer's announcement over the weekend sent its stock tumbling 14 percent, kicking the stuffing out of the company's estimated worth by more than $20 billion.
In the days that followed, news agencies from the New York Times to Bloomberg to the London Times analyzed the financial ramifications for Pfizer. But many of these stories and reports also took a look at what the news meant to those who depend on new drugs, those that fight high blood pressure, combat AIDS or fend off infections after transplants.
In the case of torcetrapib, Pfizer had been targeting heart disease, which in 2003 killed 911,000 people in the United States alone, according to the American Heart Association.
Pfizer's had a lot riding on this new drug. Decades of research, by some estimates, and nearly $1 billion were written off with the decision to cancel trials.
This has left Pfizer with no successor to its $7 billion-a-year drug Lipitor which, in 2010, goes generic.
If the story were to end here no one would shed a tear for Pfizer. It still has billions in reserve and will move on to develop other new and innovative drugs.
It is the consumer — those threatened with or suffering from heart disease — that have taken the biggest hit with Pfizer's failure. Until Pfizer or one of its competitors comes up with the next breakthrough drug those 911,000 deaths a year will continue.
But the hope for those consumers lies in the reality that, despite billion-dollar losses, research will continue. But why?
Commercials currently being aired on television for Merck and other drug companies suggest that altruism might have something to do with it. The reality, however, is that drug companies need to chase the almighty dollar just like the average working man or woman.
In the case of Lipitor, Pfizer's exclusive right to produce the drug it developed runs out in four years. Without a replacement drug, the company stands to lose billions. But next year brings a new Congress, one with new members who want to squelch the profit motive that led to Lipitor and cut the death rate from heart disease.
Somehow, goes the argument, allowing the federal government to negotiate prices on behalf the sick and elderly will solve the problem of high prices.
But Economics 101 at any accredited university proves otherwise.
No drug company can afford to develop new drugs out of the goodness of its heart. Forcing prices down for one segment of the population most likely forces them up for another. And across-the-board price controls don't work, as President Richard Nixon learned.
There is little argument that drug prices are rising too fast and that Americans are being forced to choose between food and medicine.
The debate is over how to control those prices and how to stop seniors who are risking their lives by purchasing drugs from Canada and Europe.
The first step is to recognize the role the free market plays in setting drug prices. The second is to come to terms with the need for drug companies to make a profit and put a portion of that profit into research and development.
Some ideas along these lines have already been floated. Among them are legislation that would encourage the sharing of drug patents and the earlier introduction of generic drugs while ensuring that companies like Pfizer can recoup their research and development costs.
Regardless of their methodology, all of these suggestions take a responsible approach to solving the problem, not a knee-jerk one.
There needs to be a win-win resolution to the high cost of drugs, not one that simply drives the rugged heel of the federal government into the face of the pharmaceutical industry.
Too many lives are at stake.
source - Foster's Online