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Book Reviews

Snake Oil by John Diamond
Damming half the stream (Boston Consulting Group)

Snake Oil, John Diamond Vintage £7.99 ISBN 0099428334


John Diamond died in March 2001 three years after he was diagnosed with throat cancer. Many will have read about the progress of his disease in the Times weekly column that he wrote and in his book: C; Because Cowards get Cancer too ( Bandolier 71 ). His fight was no different from the many courageous battles undertaken by cancer sufferers but as a journalist and broadcaster John Diamond had the skill and the opportunity to make his fight public.

During his illness he formed strong opinions about alternative therapies in cancer treatment and the first six chapters of his unfinished book, Snake Oil (edited after his death by his brother in law, Dominic Lawson), deal with this topic. The second half of the book contains examples of his articles both about cancer and about other subjects - the one on happiness that he wrote in Jan 2001 is just beautiful.

For a wordsmith of John Diamond's calibre it must have been particularly harsh to lose the ability to communicate verbally. It may have been some consolation to him, and certainly to the advantage of his readers, that he was able to use IT as an alternative communication tool.

Bandolier 's view is that both of John Diamond's books should be standard texts, allowing his marvellous literary legacy to educate future generations.

Damming half the stream


People have enquired about the comments in Bandolier 90 about a report from the Boston Consulting Group that asks whether market interventions work to ensure cost-effective access to innovative pharmaceuticals, not surprisingly, sponsored by a major pharmaceutical company. The evidence it uses is somewhat different from that we are used to. Its conclusion is that market interventions have often been counterproductive.

Interventions and results


The report examines effects on supply and demand of price or volume controls to hold down costs, to limit "unnecessary" prescribing or steer prescribing to lower-cost products, or to control overall spending. One example of effects on costs in different countries is shown in Figure 1, where higher consumption is generally related to lower prices.

Figure 1: Correlation of pharmaceutical prices and consumption in the 1990s (UK in open circle) by county



A very brief summary of results showed that:

  • Countries with more market interventions did not have lower spending than countries with fewer interventions.
  • Market interventions have substantial impacts in the shorter, but not the longer term.
  • Policies limiting drug use (like limited formularies) often result in additional spending elsewhere (like hospital visits and admissions).
  • More competition, like off-patent generics, drives down prices effectively.
  • More market interventions result in delayed access of innovative pharmaceuticals.
  • There is an increasing trend for later entrants in markets (a new PPI, for instance) to drive down prices.
  • R&D investment by pharmaceutical companies is highly responsive to restrictive government interventions.

An educating read. There may be little individuals can do, but the message, as a famous economist once said, is that you "can't buck the market".


Reference:

Ensuring cost-effective access to innovative pharmaceuticals. Do market interventions work? Boston Consulting Group April 1999 at www.warner-lambert.com/pricecontrolstudy/study_cover.html
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