MIT: Rx for high drug prices

Next, drawing on recent history, they propose dividing drug companies into drug discovery/development firms and drug marketing/distribution firms, just as electric utility firms were separated into generation and distribution companies in the 1990s.

Following the utility model, Finkelstein and Temin propose establishing an independent, public, non-profit Drug Development Corporation (DDC), which would act as an intermediary between the two new industry segments - just as the electric grid acts as an intermediary between energy generators and distributors.

The DDC also would serve as a mechanism for prioritizing drugs for development, noted Finkelstein.

“It is a two-level program in which scientists and other experts would recommend to decision-makers which kinds of drugs to fund the most. This would insulate development decisions from the political winds,” he said.

Finkelstein and Temin's plan would also insulate drug development from the blockbuster mentality, which drives companies to invest in discovering a billion-dollar drug to offset their costs.

An example of the blockbuster mentality is developing a new drug for hypertension, one that varies only slightly from those already on the market, but that can bring in huge profits if aggressively marketed.

For Finkelstein, a physician, and Temin, an economist, societal needs for medicines are swiftly extending beyond national boundaries: Diseases affecting the developing world--afflicting people too poor to make drug development attractive for businesses--will soon affect health inside the United States.

“Global travel and climate change both require that U.S. drug development and innovation policy rethink the way drugs are developed, and for whom. Air travel, migrations, a global workforce--all these mean unusual diseases could become usual here,” Temin noted.

Climate change also may affect drugs their proposed DDC would select for funding.

“Especially in the southern states, tropical diseases are likely to increase with global warming, and people will need treatments for them. In our plan, the DDC would encourage research in advance of the market - and, we hope, in advance of disaster,” he said.

Written by Sarah H. Wright, MIT News Office