Solving the drug price crisis

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Two MIT pharmaceutical industry experts believe that the mounting U.S. drug price crisis can be contained and eventually reversed by separating drug discovery from drug marketing and by establishing a non-profit company to oversee funding for new medicines.

The experts are Stan Finkelstein, M.D., senior research scientist in MIT's Engineering Systems Division, and Peter Temin, Elisha Gray II Professor of Economics and they detail their proposal in their new book, "Reasonable Rx: Solving the Drug Price Crisis" (published by Financial Times Press).

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.

Derek Lowe, Ph.D., author of In the Pipeline, eloquently outlines his thoughts and concerns about this new proposal in his blog post. He says, "I have an instinctive distrust of plans that call for a board of dispassionate technocrats to step in and do things that the market is supposedly doing by itself." I enjoyed reading his take on the issue. Read more here.

Excerpts taken from this MIT press release

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I'm not so sure deregulation would work for Pharma. I mean, the comparison to electricity rings hollow to me.

Why? Because I now pay almost double per kWh that I did pre-deregulation.

It's not entirely clear to me that deregulation is the main cause of increased electricity cost.

Karen, thanks for blogging this. Very interesting idea.