Money for comparative effectiveness research for drugs was salvaged in the federal stimulus, despite the intense lobbying of the drug industry. This is a good thing. PhRMA has criticized the bill, arguing (risibly) that somehow more information in the marketplace will lead to denial of treatment. They would prefer us to have less information — to keep doctors and patients guessing about what drug works better for a particular ailment.
… Now, we often get criticized on this site for being “anti-business”. And sometimes we get criticized on this site for being anti-union. One might well ask, What's the point of consistency? I hope that we try to evaluate the actions of either unions or business, based on how closely they have aligned their own interests with those of the public at large. All interest groups will claim “What's good for us is good for the country” or state, or community. So in any given situation, we can ask, Is that a plausible claim? Or an excuse to charge a rent, or extort some unearned benefit from the public, via unequal power of politics or markets?
Everyone — especially those of us in Massachusetts — has an interest in a thriving drug industry, for reasons medical and economic. The question is the mode of doing business: Does the corporations' good overlap with the public's? Or are they appropriating value from us?
If drug companies are required to compete directly on cost and effectiveness, their business strategy will indeed have to change. Currently, the typical strategy seems to be: a.) develop a drug, b.) test it for general efficacy and safety, and c.) market it. In the absence of neutral, reliable comparative data between drugs, marketing weighs much more heavily in how drug companies compete than efficacy, safety, and price.
With the federal government playing the role of an honest and neutral broker, the balance will shift; the function of efficacy/safety/price will become much more prominent. Maybe we would see a shift in resources away from marketing, and toward R&D. Drug companies will still compete, they will still sell drugs, the winners will still make money — lots of it. But the results of such competition will be much more likely to bear real medical benefits for the public.
It's not that drug companies can't do business this new way; but since the old business model has been so lucrative, they're resistant to change. Their behavior is rational, in a way; but they circumscribe their own interests away from those of the public at large. Perhaps they will realize someday that the alternative will make them money, too.