[Ip-health] Looking back at the rollout of the $802 Million DiMasi estimate, in 2001

Jamie Love james.love at keionline.org
Fri Nov 28 12:38:39 PST 2014

That should read, the WTO had just adopted the Doha Declaration on TRIPS
and Public Health,

On Fri, Nov 28, 2014 at 3:02 PM, Jamie Love <james.love at keionline.org>

> Many here remember the earlier $802 million estimate for drug development
> costs, by DiMasi, Grabowski and Hansen.  The study itself was published in
> 2003 in the Journal of Health Economics.  According to the Journal, the
> manuscript was "Received 17 January 2002; received in revised form 24 May
> 2002; accepted 28 October 2002."  What many may not recall is that the
> results of the Study were announced November 30, 2001, at a press
> conference organized by Merck, in a Philadelphia Hotel, miles from Tufts.
> Speaking at the press conference was  Raymond V. Gilmartin, then the CEO of
> Merck, and since May 2001, a board member of Microsoft.
> I mention this because the results of the new study are also being
> announced well in advance of the availability of the study, a practice that
> seems quite unusual, and designed to shield the estimate from scrutiny on
> the details of the data use to justify the estimate, and also making it
> harder to evaluate the relevance of the study to real world controversies.
> Why was the study announced on November 30, 2001?  For one thing, the WHO
> had just adopted the Doha Declaration on TRIPS and Public Health, and
> people were loudly questioning the benefits of strong patent protection.
> Here are some quotes from the NYT and WSJ reports of the 2001 Philadelphia
> press conference.
> Jamie
> ----------------
> Robert Pear, Research Cost For New Drugs Said to Soar, New York Times,
> December 1, 2001.  http://www.nytimes.com/2001/12/01/business/01DRUG.html
> The Tufts study included the costs of developing and testing drugs that
> never reached the market. The number of such drugs far exceeds the number
> approved for sale. Dr. DiMasi said the study also included some of the cost
> of capital — what could have been earned if investors had put their money
> in securities of equal risk, rather than in pharmaceutical research and
> development.
> Dr. DiMasi, an economist, said he had not audited the data provided to him
> by drug companies. But he said he thought the companies were being "quite
> straightforward and honest." Moreover, he said, the information on specific
> drugs was consistent with aggregate data published by the industry's trade
> association.
> Data for the study were obtained from 10 drug companies, and the Tufts
> center receives financial support from drug companies, among others. But in
> issuing the study, the Tufts center said it was "widely respected as an
> independent source of information on drug development." Dr. DiMasi said
> there were "no strings attached" to the money it received from drug
> companies.
> Gardiner Harris.  Cost of Developing New Medicine Swelled To $802 Million,
> Research Study Reports, WJS. revised December 3, 2001.
> http://online.wsj.com/articles/SB1007336440403996240
> Merck & Co. Chairman and Chief Executive Raymond V. Gilmartin attended the
> unveiling of the Tufts data at a Philadelphia hotel and said increased
> clinical costs stem from demands by managed-care buyers that drug companies
> prove the value of their drugs in larger and longer trials.
> As for the politics surrounding the DiMasi study, Mr. Gilmartin said the
> DiMasi study sheds no light on drug prices. "The price of medicines is not
> determined by their research costs," Mr. Gilmartin said. "Instead, it is
> determined by their value in preventing and treating disease."
> Mr. Gilmartin also argued that, given the enormous cost of research, big
> pharmaceuticals companies, not small biotechnology firms, are essential for
> developing medicines. He also said that patent-protection laws, which have
> come under attack by some drug-company critics, are vital to encouraging
> and protecting such huge investments.

James Love.  Knowledge Ecology International
KEI DC tel: +1.202.332.2670, US Mobile: +1.202.361.3040, Geneva Mobile:
+41.76.413.6584, twitter.com/jamie_love

More information about the Ip-health mailing list