Reasonable Rx : solving the drug price crisis /

Finkelstein (MD, research scientist, MIT) and Temin (economics, MIT) are a dream team in combining their respective expertise in this excellent, timely analysis of the roles of government, pharmaceutical companies, and market forces in the pricing and availability of drugs. They identify and explain the positive association between drug prices and innovation. The problem is that attempts to control prices and/or quantities of prescription drugs can lead to decreases in research and development (R and D). After a careful review of the structure, conduct, and performance of the drug industry, the authors label the industry as dysfunctional. Their proposed solution is to "eliminate the linkage between drug prices and drug discovery." Instead, a new independent public nonprofit drug development corporation (DDC), financed by the federal government, foundations, etc., would buy the drug patents developed by the private and public sector R and D firms. In turn, the DDC would hold public R and D auctions for licenses to the highest qualified bidders. This study offers a dramatic opportunity to consider a major restructuring of the pharmaceutical industry that could lead to efficient use of resources, prices that reflect values for consumers, and incentives for innovation, research, and development. Summing Up: Highly recommended. Upper-division undergraduate through professional collections. F. W. Musgrave Ithaca College

Finkelstein and Temin propose solving the drug pricing crisis by separating development from production. Before laying out their plan, however, they so clearly explain why the price problem exists that even if they didn't advance a solution, the book would remain highly recommendable. The number of genuinely effective drugs burgeoned only after World War II, and the industry soon realized that specifics for diseases affecting the largest populations that can afford them were golden geese. Every company searched for such blockbuster drugs to ensure ever-rising share prices. But while the quest for blockbusters made drug stocks very safe investments, it increasingly depressed development of remedies for the diseases of populations large, such as AIDS sufferers in Africa, and small, such as those susceptible to rare diseases that can't afford them. Meanwhile, R & D challenges, hence costs, escalate as new drugs are less often found than made. Finkelstein and Temin want the industry broken in two, with an independent agency funding R & D firms and awarding limited proprietary rights to producers. Sounds promising.--Olson, Ray Copyright 2008 Booklist