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Logo of bmjThis ArticleThe BMJ
BMJ. 2007 September 1; 335(7617): 454.
PMCID: PMC1962855
Review of the Week

Should we loosen the grip on drug companies?

Reviewed by Richard Smith, executive director, UnitedHealth Europe, London

Overdose: How Excessive Government Regulation Stifles Pharmaceutical Innovation. Richard A Epstein. Yale University Press, £18.95, pp 288. ISBN 978 0 300116 64 9. Rating: ***.

It costs $40bn a year to produce just a handful of new drugs. Richard Smith reviews a highly publicised new book that claims over-regulation is holding the drug industry back.

The American drug industry is over-regulated and consequently innovation is stifled and patients are denied drugs that could help them. This conclusion of Richard Epstein, a professor of law from Chicago, in his widely quoted book, probably sounds shocking to many BMJ readers. The more familiar story is that the US Food and Drug Administration (FDA) is in the pay of an industry that makes excessive profits, spends more on marketing than research, produces mostly “me too” drugs, medicalises much of life's problems, and is a malign and excessive influence in all of health care. That story was well told by Marcia Angell, former editor of the New England Journal of Medicine, in her best selling book The Truth about Drug Companies: How They Deceive Us and What to Do About it (review BMJ 2004;329:862 doi: 10.1136/bmj.329.7470.862). Epstein's book might be regarded as the antidote, and he is scornful of what he sees as the shallow thinking of Angell and many other critics of the industry.

Epstein's book examines the regulation of every stage of the process of producing and marketing drugs, and his arguments are dense and driven by economic, business, and legal thinking. Passionately pro-market and libertarian, he has consulted extensively for drug companies and so has experienced first hand much of what he writes about. The differences between him and Angell are probably driven by their different perspectives, and most doctors unsurprisingly will find themselves on the side of Angell. The biggest difference may be that Epstein seems to believe that almost all drugs, including me toos, have something important to offer, whereas doctors are unimpressed with many new drugs. But Epstein is not to be brushed aside. As British doctors know through the changing regulation of their own profession, over-regulation can be as bad as under-regulation, and it's far from simple to get the balance right. Some of the changes Epstein advocates might result in improvements to the system.

Something that is irritating about the books of both Epstein and Angell is that they make almost no reference to the world beyond the United States, which is disappointing when the drug industry is global. But this insularity is perhaps forgivable when drug companies gain about half of their revenues from North America. Whether drugs live or die is largely determined by how they do in the United States.

The first problem that Epstein sees in the United States is that “overreactive conflict of interest regulations” have driven researchers in academia and the private sector apart, so reducing chances of cross-fertilisation. Then “the ever wider net of regulation” at all stages has made it tougher to get a drug to market, and “constant attacks on . . . intellectual property rights” threaten to undermine the whole system. The FDA is much more worried about letting through a bad drug than it is denying patients access to a drug that may help them, and price restrictions, far from making drugs more available, will make them less available. Finally, the liability system has gone nuts—potentially compensating people with hundreds of millions of dollars for problems that they probably would have developed anyway and when they may not even have taken the drug.

I may have been selected to review Epstein's book because I'm a “known critic of the drug industry,” but I find that I agree with some of Epstein's arguments. For example, he points out that a licensing body like the FDA can make two sorts of errors—a type I error when a drug that should be kept off the market is allowed onto the market and a type II error where a valuable drug is kept off the market. One criticism is that regulatory bodies are much more concerned about type I errors, but a more cogent criticism is that taking a drug off the market means that it cannot be available to people who might benefit from it. It would be better—and more modern and less paternalistic—to allow individuals and their doctors to assess the risks and benefits for themselves. Such a system would, however, depend on a reliable flow of uncorrupted evidence, which may not be easy to achieve.

The fundamental problem for the drug industry is that it is spending more to produce fewer new drugs—and many of those drugs provide patients with only marginal benefit. In 1996 the industry spent just over $15bn (£7.5bn; €11bn) and produced nearly 60 new molecular entities; in 2006 it spent over $40bn for just over 20 new entities. Only five of the major drug companies make more than 10% of their revenues from drugs launched in the past five years. “The road to progress has gotten steeper,” writes Epstein. But is the answer lighter regulation when companies have become more aggressive in their marketing (illustrated best perhaps by what even Epstein concedes was the overpromotion of Vioxx (rofecoxib)), are devoting themselves to developing drugs for lifestyle problems, and are failing to produce major new drugs for important conditions? It's more of a problem of science than law.

Lighter regulation won't solve the problems of the drug industry, but anybody who wants to enter seriously into the debate around regulation of the drug industry should read this book. It will infuriate some, but I like to believe that rationality, paying close attention to argument and evidence rather than polemic and emotion, will best take us forward—and many others believe so as well. Unfortunately we're probably all wrong.

The Food and Drug Administration is much more worried about letting through a bad drug than it is denying patients access to a drug that may help them


Overdose: How Excessive Government Regulation Stifles Pharmaceutical Innovation

Richard A Epstein

Yale University Press, £18.95, pp 288

ISBN 978 0 300116 64 9

Rating: ***

Articles from The BMJ are provided here courtesy of BMJ Publishing Group