Pharmaceutical returns

What will this increased investment mean for pharmaceutical returns in the future Some of the research dollars are pursuing the development of me-too NCEs that will compete with similar... 

Eastman Goal Chemicals. In 1983 Eastman Chemical Co. became the first chemical producer in the United States to return to coal as a raw material for large-scale manufacture of industrial chemicals (35). In that year, Eastman started manufacturing acetic anhydride from coal. Acetic anhydride is a key intermediate for production of coatings, ceUulosic plastics, and cellulose acetate fibers. Acetic anhydride from other sources also is used in the manufacture of pharmaceuticals, starches and sweeteners, and flavors and fragrances. 

A number of approaches have been made to justifying the implementation of IT systems within drug discovery, and ELN is no exception, although these systems do seem to have generated something of their own mythology in terms of return-on-investment ( ROl ) and other justification methods. What is clear from our work with major pharmaceutical customers is that there is broad acceptance of the benefits to be accrued from implementation of an ELN. The areas of benefit at which the majority of customers have looked are ... 

In short, we return to C. P. Snow s recommendation that the scientist and humanist converse more. The conversations, analysis, and discussion should include the third culture, the technologist. Therefore, although we have not provided specihc and detailed analysis of issues related to computer use in the pharmaceutical industry, believing as we do that that sort of analysis is for the specialized philosopher doing conceptual analysis in computers ethics, we do urge that applied philosophers be part of the research team. Also, in the dynamic and flexible world of technology, applied philosophers—not just the people in the held of computers—should help draft policy statements and codes of conduct. 

So far, no scientific extrapolation has been published on the cost savings for the chemical industry when using micro reactors. Industrial experience is also not known at least, it has not been communicated. Thus, one is boimd to rely on expert opinions given in the press and trade press. Mostly these come from suppliers of the technology, aiming to convince industry of the benefits of their systems, by prognosis of a return on investment. Considering the pharmaceutical R D efforts of the order of US 50 billion worldwide, CPC/Mainz sees a potential for an increase in profit of more than US 15 billion if micro reactors are implemented consequently [246]. 

The present Spanish system of price control is inefficient, as it provides notable negative incentives for pharmaceutical consumption and expenditure it would be desirable to replace it with a more flexible system such as an overall profit control system, or a combination of price-cap regulation and rate of return regulation. 

The distortions that patents provoke were reviewed recently by Kremer.14 Monopoly prices create both static and dynamic distortions. On the one hand, some consumers will not be able to pay prices that are fixed above the marginal cost in order to recover the investment in R D. On the other hand, potential investors will not necessarily take the consumer surplus into account when they decide to carry out research projects. The value of a patent - and in this case of a pharmaceutical - may be very different for different consumers, but price discrimination is impossible. The industry may shelve certain projects owing to the lack of a satisfactory return, because of the difficulty of price discrimination. Kremer even claims that the welfare loss due to monopoly prices is in the region of a quarter of the sum of the profits and the consumer surplus. Other authors, such as Giiell and Fischbaum,15 estimate welfare loss as being around 60 per cent of the sales figure. 

Three submarkets of the pharmaceutical market can be distinguished innovative patented products sold by prescription, products whose patent has expired and are sold by prescription, and products sold without a prescription. The public regulation of prices in the first of these submarkets, and often also in the second, is a fact that can be observed in most Western countries, with certain notable exceptions such as the USA. Concern about the particular characteristics of the pharmaceutical market (for example, the existence of patents and the pharmaceutical industry s rate of return), together with the desire to provide the majority of the population with access to medicines, regardless of their ability to pay (in many countries the public sector is the main buyer in this market), has led to the fairly widespread adoption of more or less strict price intervention and control policies for pharmaceuticals. 

If products under patent are exempted from the RP system, do the negative effects on the R D of the pharmaceutical sector disappear The exclusion of medicines with a current patent may reduce the economic erosion of the rights granted by the patent, and also the disincentive to invest in R D. But negative effects on innovation are not totally eradicated, as (a) RP increases the uncertainty on the expected return on the investment, (b) incentives for innovation will be damaged due to the fact that the R D process is a joint production process, since the overall return is reduced when RP is applied, and (c) the exclusion of patented products has proved to be only partial in some cases (for example, not excluding drags under a process patent). 

Furthermore, the price elasticities of demand for pharmaceuticals are likely to differ depending on individuals income. If low-income households have a more price-elastic demand, an increase in co-payment will cause them to make a proportionally larger reduction in their pharmaceutical consumption than high-income households. The same thing could happen if we make the comparison in terms of levels of health. We are faced with equity problems, to which we will return below. 

In the case of chronic processes, the patient can, at any time, take the decision to stop the treatment, as a reaction to changes in price or other variables. Whereas the econometric technique for analysing the demand for pharmaceuticals for acute processes is that of discrete choice models, here we will apply duration or survival models. In addition, the technology of drags for chronic diseases can have non-constant returns to scale. For example, the consumption of anxiolytics raises the tolerance and reduces the effect, resulting in an increase in the necessary dose. 

Systems with freedom of prices These are the countries in which pharmaceutical companies are free to fix the price they see fit for their medicines. This is the case in the USA and the UK. However, freedom of prices does not mean the absence of any type of regulation. Thus, in the UK the Pharmaceutical Price Regulation Scheme6 establishes limits to the return that can be obtained by the companies. Indirectly, this limits the price of the drags. 

In general, the results confirm the short-term nature of the pharmaceutical cost containment strategy. The trend followed by spending in the long term effectively shows a return to the initial levels prior to the measures. 

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