- The Washington Times - Wednesday, April 27, 2005

Someone once asked Nobel laureate physicist Riccardo Giacconi, who conceived the Hubble telescope, why so many great European scientists moved to America. “A scientist is like a painter,” Mr. Giacconi said. “Michelangelo became a great artist, because he had been given a wall to paint. My wall was given to me by the United States.”

Today, we stand at the dawn of an age of personalized medicine, when screening for genetic variations will allow us to provide the right drug, to the right person, at the right time, for the right outcome, as a matter of course. Yet even as we are on the verge of this triumph, what Mr. Giacconi called our great wall of innovation is being painstakingly disassembled, brick by brick, and shipped to Asia and India, where policy-makers are more appreciative of the alchemy of entrepreneurship that sustains scientific progress.

Last week, Congress held hearings on the Pharmaceutical Market Access and Drug Safety Act of 2005. This bill forces companies to sell, make and import their products from Canada and elsewhere, where government sets prices and access to medicines. (Incredibly, it would also let versions of drugs that haven’t gone through the Food and Drug Administration testing process into the United States. But that’s for another article.)

Forcing companies to basically ship their medicines overseas so they can be discounted and re-sold into America would destroy the global market for new medicines, as it has already done in Europe. Thanks to Europe’s version of drug importation, it’s biotech companies have no cash, their drug companies launch fewer new products than 10 years ago compared to America and biomedical research dollars have flowed to the United States.

Now, some of the European companies that moved here to escape price controls are already preparing to move again, to Asia, if Congress passes the act.

Five years ago, for instance, Sir Thomas McKillop moved research operations of his pharmaceutical firm, Astra Zeneca, to America to escape the European regime of price controls and rationing. Recently his company developed two cancer drugs at considerable cost and risk. On April 15, however, Sir Tom announced that, with passage of the Pharmaceutical Market Access Act, he would likely relocate Astra Zeneca to China or India.

“There is real danger for the United States to catch the European disease,” Sir Tom told the Telegraph of London. “Europe lost its prominent position in pharmaceutical research because of policies that favored parallel trading of drugs between states.”

Parallel trading is the sleazy international underbelly of national price controls. Middlemen buy drugs in countries with the lowest government-set prices, like Spain, and resell them in countries with higher reimbursement rates, such as Germany. The parallel importers who bought these same medicines from across the European Union made profits of $800 million at the expense of pharmaceutical firms. When these middlemen are allowed to make profits that the drug companies aren’t, the frustration of the drug companies becomes easy to understand.

Importation is only part of the problem. People wonder why companies don’t charge Canada and Europe more. Even when faced with data that different drugs provide important benefits to specific groups of patients, governments in Europe or Canada or Australia use rationing and the threat of not paying for the drug altogether to keep prices low. In Australia, one of the countries that Congress wants to import from, patients taking Gleevec have to sign a contract promising they will go off the drug when the government wants them to. In England and Canada, some drugs that are standard therapy for treating Alzheimer’s or lung cancer here are unavailable even after years of delay and price controls.

The coalition that has rallied around price controls likes to say, “A drug that is unaffordable is neither safe nor effective.” But as the “European disease” has shown, price controls will not merely make medicines more “affordable.” They will make them unavailable and undiscoverable.

Meanwhile, India and China are eager for Congress to impose price controls on our biotech and drug firms. They see them as a competitive advantage. India has 80 firms engaged in modern biotechnology, including protein engineering, molecular design and monoclonal antibodies. Investment in drug research has increased by 400 percent over the past five years because the Indian government has been strengthening patent protection, lifting price controls and allowing nascent drug companies to keep their profits without capital-gains taxes. Drug and biotech executives are hailed as heroes, not public enemies. India, along with Singapore, Korea and China, are giving this generation of “molecular Michaelangos,” as we might call them, the wall that our own politicians are destroying.

“If you look at the history of industry, where it is not welcome and does not have a receptive market, there will be a loss of competitiveness,” Sir Tom said. He was talking about Europe. But he might as well have been talking — from New Delhi headquarters about the American Disease, five years from now, after Congress imposes forced importation and price controls.

Robert Goldberg is director of the Manhattan Institute’s Center for Medical Progress.

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