A flawed business model

Commentators quoted in the New York Times article fault Pfizer's concentration on what are called blockbuster drugs, those that generate more than a billion dollars in yearly revenues:

The era of the blockbuster - and the blockbuster business model - may well be coming to an end. If you get away from Wall Street, it's not hard to find people who view things that way. "I don't think the model makes sense anymore," said the Harvard economist David Cutler.

"The blockbuster model does not work as a business anymore," said Roger Longman, a managing partner at Windhover Information, a health care consulting company.

But that is a very superficial way of looking at things. Pharmaceutical companies generally rely on patentable drugs which they can sell at high prices without having to fear competition as long as the patent holds good. That means, their research - by necessity - has to go further and further away from using natural molecules, those the human body has been exposed to and has learned to live with for millennia.

Instead of searching for better ways to deliver nutrients that help our bodies cope with stress and illness, the pharmaceutical world must look for synthetics, which are patentable but which, more often than not, end up disturbing homeostasis, in an effort to suppress this or that symptom. The real causes of illness are almost never addressed.

While pharmaceutical producers have to make ends meet, there is no reason that our health should be the playground for an investment industry that is yielding insane profits to shareholders. But as long as pharmaceutical companies profit from disease, rather than from health, we will have disease as a major outcome. This puts incredible stresses on national health systems, which not only must pay for the overpriced drugs but end up having to provide hospitals and care for an increasingly sick population.

Pfizer's recent restructuring move only shows the tip of the iceberg. What is at stake is not only the pharmaceutical business model. The real question is: can we allow companies to profit from ill health rather than from good health, and can society continue to foot the bill for the outcome in terms of public health.

Something has to give - sooner or later. Whether Pfizer follows the pharmaceutical blockbuster model is not the question. We need deep reforms to bring the pharmaceutical industry out of the doldrums. And those reforms must bring better health outcomes than patentable synthetic molecules are able to deliver.

You can find the New York Times article here, but below is, for archive purposes, a copy.

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THE NEW YORK TIMES
January 27, 2007
Talking Business

The Dangers of Swinging for the Fences
By JOE NOCERA

There was once a pharmaceutical company that could do no wrong. It had the best-selling drug in the world. It saturated the airwaves with its ads, and swarmed doctors' offices with its army of good-looking sales representatives. It had mastered the art of turning drugs into blockbusters. It made many billions in profits. Wall Street analysts loved it. That company, for those among you with short memories, was Pfizer. And that era when it was the king of the hill wasn't some distant age - it was just maybe three or four years ago. Oh, how the mighty have fallen!