America’s Drug Habit

AMERICA’S DRUG HABIT….No healthcare system is perfect, and the various European national systems each have problems of their own. Pointing that out is perfectly kosher in healthcare debates, but where does Andrew Sullivan get this kind of stuff from?

The European health systems have, of course, been free-riding on private U.S. drug research for decades. Name a great new drug developed in Europe these past ten years. Their own pharmaceutical industries have been decimated by the socialism Moore loves (and many of Europe’s drug companies have relocated to the US as a result). But I fear the left is winning this battle; and the massive advantages of private healthcare are only appreciated when you lose them.

This business about America providing all the world’s pharmaceuticals is a common trope on the right, but it’s absurd. There are more biotech startups in Europe than in the U.S. Pfizer is targeting Japan as one of its biggest near term growth opportunities (and Japan is also a major source of new biotech development). And plenty of pharmaceutical research is done outside the U.S.: The #3 pharmaceutical company in the world, GlaxoSmithKline, is British. The #4 company, Sanofi-Aventis, is French. The #5 company, Novartis, is Swiss. #6, Hoffman-La Roche, is also Swiss. #8, Astra-Zeneca, is Anglo-Swedish. Their combined R&D spending is slightly higher than the American companies that make up the balance of the top ten.

Now, what is true is that American capital markets are both bigger and generally friendlier to startups than European capital markets, which means that small biotech companies often migrate to the United States in order to get funding. My sense is that Europe is improving on this score, but in any case this has nothing to do with the state of European healthcare. What’s more, an enormous amount of basic research is done in American universities and the NIH, most of it publicly funded. This speaks well for our system of higher education, but doesn’t really say anything about our healthcare industry, which is famously hesitant to invest in genuinely innovative (but chancy) new ventures. Ironically for big pharma’s cheeleaders, it turns out that America’s titans of capitalism mostly prefer to leave the risky stuff to the feds.

Bottom line: Universal healthcare systems use plenty of pharmaceuticals — though they’re generally a little smarter about it than we are. (America tends to be pretty overmedicated.) Basic pharmaceutical research comes largely from universities and government grants, not from U.S. corporations, which mostly specialize in applied research and commercial development. And non-U.S. pharmaceutical companies are alive and well and cranking out applied R&D too. The American drug industry will do just fine if we move to a universal system here. So will the rest of us.