Publication Date

April 2012


Damien Sheehan-Connor


General Scholarship


English (United States)


Innovation in the pharmaceutical industry has enhanced the length and quality of human life. The industry has been widely criticized for emphasizing immediate profits over innovative R&D and for wasteful promotional spending. Through an analogy between the pharmaceutical and the illicit drug industries, I build the case for government regulation of both industries to promote social welfare. I identify practices in the prescription drug industry that waste resources on similar follow-on drugs that could instead be invested in innovation for the public welfare. I conduct case studies of three pharmaceutical markets: gastrointestinal disorders, depression, and erectile dysfunction. While follow-on drug development frequently is wasteful, it sometimes adds benefits. Analysis of data compiled from industry and scholarly analyses implicates excessive marketing as the driver of wasteful follow-on drug development. Marketing appears to be designed to induce “irrational demand,” similar



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