Jeremy Laurance: Regulators must ensure innovation is rewarded

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The drugs industry has a long and inglorious history when it comes to the promotion of its products. Exaggerated claims of benefit, under-reported adverse effects and selective publication of results have featured regularly over the years.

Last month, GlaxoSmithKline agreed a record $3bn settlement with US regulators for aggressive marketing and selective use of data.

But perhaps it is not all the drugs companies' fault. It is, after all, a profit-driven industry with demanding shareholders who have become accustomed to double digit growth.

If regulators want to ensure value from the vast sums spent by the world's governments on drugs, they have to ensure the incentives are aligned in the right direction. In Norway, a "medical need" clause limited the number of new drugs approved, with the result that the country offered only seven different versions of one painkiller, compared with 22 in the Netherlands.

But that clause was eliminated when Norway joined the European Medicines Agency in the mid-1990s, as did the UK.

New ways of rewarding innovation are urgently required. In both the US and Europe there are moves to make drugs companies more accountable by requiring them to provide evidence of benefit over existing treatments, rather than in comparison to placebos, before licences are granted for new drugs.

In the UK, the Government has proposed a system of value-based pricing, in which the sums paid by the NHS will be determined by how much benefit the drugs bring.

But experts say this judgement should be made further up the line, at the point of licensing, not at the point of payment by the NHS.

But one thing is not in doubt: after half a century of drug scandals, culminating in this year's billion-dollar fines, it is clearly time for a new approach.

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