Canada and other countries with universal health care systems are keeping drugs cheap by “freeloading” off of American innovation, says the chief executive of one of the world’s largest pharma companies.
“Canada is cheaper because of (drug) ration(ing). And Canada is cheaper because ... it freerides off American innovation,” Pfizer CEO Ian Read said in an appearance at the National Press Club in Washington, D.C. last week.
Asked what he would do about it, Read suggested negotiating tougher free trade deals that would reduce the ability of governments to pay less for drugs, such as through longer patent terms.
“You need good trade agreements where intellectual property is protected,” he said, according to a transcript of the appearance. Read noted Pfizer did not support the Trans-Pacific Partnership (TPP) because it did not do enough to extend pharma patents.
Read made an argument familiar to those in the pharma industry: That developing drugs is extremely costly, and U.S. patients and insurance companies are in effect subsidizing cheaper drugs for other countries.
“Without the U.S. market, there would not be the tremendous expansion in the innovative therapies that are available today and will be available in the future,” he said. “Basically, you're seeing Europe freeriding on American innovation.”
Read cited data from Boston University showing how developing a new drug takes 10 to 15 years and costs US$2.6 billion on average (read “Tufts New Estimate of Costs to Bring a Drug to Market & Beyond”; http://sco.lt/7tlZ9F).
“Pfizer spends $8 billion a year on research and development,” he added. “We’re lucky if we produce three (new) drugs a year.” [Meanwhile, Pfizer’s profits are more that 2X what it spends on R&D. See the data here: http://sco.lt/5nPE93].