April 12, 2001
Vol. 20 No. 14

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    Direct-to-consumer advertising of new drugs one topic of Law School conference

    By Peter Schuler
    News Office

    In a joint effort by the Law School, the Medical School and the Harris Graduate School of Public Policy Studies, scholars will examine the current state of the drug industry at a conference at the Law School Friday, April 20, and Saturday, April 21.

    The conference, titled “The Regulation of Medical Innovation and Pharmaceutical Markets,” will feature speakers who will analyze the new phenomenon of direct-to-consumer drug advertising, the relationship between research and development in pharmaceuticals and price competition, the regulation of adverse drug reactions, and insurance markets and pharmaceuticals, among other topics.

    Tomas Philipson, Professor in the Harris Graduate School of Public Policy Studies and one of the conference organizers, noted, “Medical innovation and pharmaceutical markets worldwide have always been subject to substantial public intervention. The drug industry is one of the most highly regulated. This conference will discuss and re-evaluate many of the old regulations as well as consider the merits of new proposals.”

    The other conference organizers are Mark Siegler, the Lindy Bergman Distinguished Service Professor in Medicine, and Richard Epstein, Interim Dean of the Law School and the James Parker Hall Distinguished Service Professor in the Law School.

    Areas of public control of the pharmaceutical industry include intellectual property, product safety and pricing. New proposals include the expansion of Medicare to include prescription drug coverage, intellectual property regulations that would apply to such research tools as genetic information, and control of drug pricing by the states.

    “Many major problems of legal and industrial organization can be seen profitably through the provision and regulation of pharmaceutical products, both domestically and abroad,” Epstein noted.

    “A fundamental concern is that the provision of medical services goes hand-in-hand with the provision of prescription drugs. Any stress on one part of the system necessarily reverberates on the other. The pharmaceutical industry operates on a model in which it costs a half billion to make the first tablet and a penny to make the second. And this conference is even more timely because of the current attacks on pharmaceutical patents by drug manufacturers in underdeveloped nations, particularly regarding AIDS drugs.”

    Philipson added, “Regulation of medical innovation, particularly drug innovation, is a very critical public policy issue. Recent work by economists has shown the potential importance of medical innovation on the growth in longevity and growth in overall well-being, not just material well-being.

    “If current proposals for broad public financing of drugs are adopted, it is likely that price controls will be adopted down the line if patented drugs will be priced too high due to the lowered price sensitivity of demand,” said Philipson.

    “The end result will be that there will be a significant trade off between making lower-priced drugs available today and reduced quality in drugs for future generations because of the disincentive for drug companies to innovate.”