Me-too drugs: is there a problem

Introduction This brief note presents an economic perspective on “me-too” drugs (sometimes also called “follow-on” drugs). Me-too drugs are products which largely duplicate the action of existing drugs. Several recent books (such as Angell (2004), Avorn (2004) and Goozner (2004)) have heaped criticism on the drug industry for the increasing extent to which investment appears to be focused on developing drugs which have a similar mechanism of action to pre-existing drugs. Others, such as Calfee (2000) and diMasi and Paquette (2004) have defended me-too drugs, as providing more therapeutic options and enhancing competition. diMasi and Paquette have also observed that many me-too drugs enter development long before the first drug in a new class is approved, so that in many cases me-too drugs are the result of parallel development rather than of imitation. The key problem with me-too drugs is that, to the extent that they are similar to pre-existing drugs, they diminish the incentives for innovation in pioneering drugs without adding therapeutic value. Me-too drugs also absorb R&D resources, which is wasteful if they are undifferentiated from pre-existing drugs. On the other hand, the more differentiated me-too drugs are from pioneering drugs, the greater their potential benefits, and the less they harm the incentives for pioneering research. Defined very narrowly as drugs which have more or less identical clinical outcomes to pre-existing drugs, me-too drugs are likely of little value – indeed in this case they effectively undermine the intent of patent protection, without even providing much benefit from price competition. But drugs which are more differentiated in clinical outcomes are also sometimes described as me-too drugs, and such drugs may create value without substantially harming incentives for pioneering innovation – indeed, to the extent that a drug is differentiated, it becomes more of a pioneer and less of a me-too. It would be useful in any discussion of me-too drugs to be clear about the meaning of the term. I would suggest that a me-too drug is one that is approved after a pioneering drug and which is the “same”, in the sense of the US Orphan Drug Act, and is not clinically superior (Milne, Kaitin and Ronchi, 2001, p. 7). “Same” in the Act is normally defined as comparable or similar. Examples of me-too drugs which fit into this definition could be Nexium and Clarinex. Obviously, however, there is a continuum of drugs within and outside this definition which may be to a greater or lesser extent me-too