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Index A Abbott Laboratories, 76 Acquisitions by foreign firms, 47, 79-80 Acts: See Congressional Acts Adverse drug reactions testing, 16, 23, 27, 62, 74 See also Clinical testing Animal testing, 23, 61, 74 Anti-infectives, 9 Antitrust policy, 5, 79-80 Applied research, 23 See also Research and development (RED) Aspirin, 62 Basic research, 7, 8, 23 See also Research and development (RED) Bayer, AG (Germany), 79-80 Belgium, firm size, 41 Boots, Ltd. (Great Britain), 3 1 Brazil, foreign-owned firms, 11 Britain: See United Kingdom British Public Health Ministry, 35 Bureau of Drugs, 64, 65, 85 C Canada, drug industry drug approval process, time lapse, 65 foreign-owned firms, 11 Chemical industry patents granted, 59 production levels, 57, 60 RED, 8, 57, 61 sales, 58 Ciba-Geigy Limited (Switzerland), 79-80 Clinical testing adverse drug reactions testing, 16, 23, 27, 62, 74 amount of drug required, 67 costs, 27, 28 drug candidates, selection, 23-24, 28, 67 effectiveness testing, 58, 7k, 83 foreign data, 63~4, 84 human testing, requirements for, 82 phases, 24 planning, FDA involvement, 82-83 preclearance, 83 See also Food and Drug Administration (FDA) 93

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94 Clinical testing (continued) regulations, Investiga- tional New Drug (IND) exemptions, New Drug Applications (NDA) Clinical Trial Certificate (Great Britain), 24 Clinical Trial Exemption Great Britain), 24 Commission on the Federal Drug Approval Process, proposed FDA reforms, 6, 81 ~6 Competitive position, international: See the specific determinants Conflict of interest, drug approval, 86 Congressional Acts Federal Food, Drug, and Cosmetic Act (1938), 58,59,78 Food and Drugs Act (1906), 58 Freedom of Information Act, 62 Kefauver-Harris Drug Amendments (1962), 58, 59, 61, 62, 66-67 Congressional scrutiny, drug regulations, 62, 65 Consumer demands for drugs, 54 See also Sales Consumer scrutiny, drug regulations, 64-65 Cortisone, 67 Council for New Drug Development Promotion (Japan), 68 D Department of Justice, 86 Development: See Research and development (R&D) Drug approval process: See Food and Drug Administration (FDA) regulations; Investiga- tional New Drug (IND) exemptions; New Chemical Entities (NCE) introductions; New Drug Applications (NDA ~ Drug development: See Research and development (RED) E Economic decline, U.S. industry, 1, 4, 53, 55-57, 70, 77 Effectiveness testing, 58, 74, 83 See also Clinical testing ELF Aquitane (France), 80 England: See United Kingdom Europe, Western: See Western Europe Expert advisers/committees, 63, 83, 84, 86 Exports, 9 by country, 49, 50 GNP comparison, 48-49 percentage of domestic production, 47-49 restrictions, 5, 69, 78 (J.S. share of world, 3, 22, 47, 50 F Farbenindustrie, I.G., 9 Federal Drug Approval Process, Commission on the, proposed FDA reforms, 6, 81-86 Federal Food, Drug, and Cosmetic Act (1938), 58, 59, 78

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95 Federal Republic of Germany: See West Germany Firm size, effects, 40-41, 47 IND filings, 46 innovational output, 3, 40-41,45,47 mergers/acquisition, 5, 47, 79-80 NCE introductions, 45, 46 it&l) costs, 40-41, 47 sales concentration, 41 , 4 4 Food and Drug Administra- tion (FDA) regulations 53, 57-67, 81-86 Congressional scrutiny, 62, 65 consumer scrutiny, 64-65 cost/risk/benefit analysis, 16-17, 62 dispute resolution, 85 expert advisers/ committees, 63, 83, 84, 86 export restrictions, 5, 69, 78 foreign data, acceptance of, 63-64, 84 industry/FOA relation- ship, 65, 85, 86 innovation deterrent, 4, 16, 66-67, 70-71 OTC drug review, 12 personnel resources, 85 political pressure, 62 post-patent review, 79 p reposed reforms, 6, 81 -86 review process, tracking, 85 time lapse in approval process, 24, 65-66, 79 See also Investigational New Drug (INN) exemptions; New Chemical Entities (NC:E) introductions; New Drug Applica- tions (NDA) Food and Drugs Act ( 1906), 58 Food, Drug, and Cosmetic Act (1938), 58, 59, 78 Foreign data in drug approval process, 63-64, 84 F oreign -owned firms, 1 3 acquisition of U.S. firms, 47, 79-80 IND filings, 3, 31, 35, 36 NCE introductions, 30, 31, 32, 33, 35, 66, 76 NDA approvals, 33 patent filings, 28, 34, 76 production levels, 37 R&D expenditures, 26-27 sales, 35, 37, 42-43 U.S. subsidiaries, 48 See also Multinational . expansion France, drug industry exports, 49, 50 f oreign location of French firms, 1 1 f oreign -owned firms, 1 1 imports, 50 labor costs, 54 NCE introductions, 30, 32, 66 p reduction, percentage of worldwide, 37 R dcO expenditures, 25, 26, 57 sales, domestic, 55 IJ.S.-owned share, 4 0 sales, worldwide, by firm, 43 trade balance, 49 trade policies, 69 U.S. patent filings, 34 Freedom of Information Act, 62 Fuchs, Victor, 14-16 Fujisama (Japan), 76 G Gadsden, Henry, 8 Generic drugs, 12, 1 3 Genetic engineering, 19

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96 Germany, West: See West Germany Good laboratory practice regulations, 62 Good manufacturing practice regulations, 59, 61 Government health policy, 19 G overnm ent /industr y cooperation, drug regulation, 65, 85, 86 Government regulations: See Food and Drug Administration (FDA) regulations Government support for RED, 7, 8, 9, 55, 57, 68 Great Britain: See United Kingdom Green Cross Co. (Japan), 68 Gross National Product (GNP), 48-49 H Health insurance, 19 Health policy, 19 Health R&D expenditures, 55, 57 See also Research and development (RED), expenditures History of drug industry competition, 7-1 2 Hoechst AG (Germany), 79-80 Hoffman LaRoche dc Co., Ltd. (Switzerland), 21 Human testing: See Clinical testing Imports percentage of domestic consumption, 9, 50 restrictions, 68, 69 IND exemptions: See Investigational New Drug (IND) exemptions Industrial policy: See Anti- trust policy; Patent protection; Pricing policy; Tax policy; Trade barriers Industrial research and development: See Research and development (RED) Industry, general economic decline, 1, 4, 53, 55-57, 70, 77 Industry/government cooperation, drug regulation, 65, 85, 86 Influenza, 15-16 Innovation, 1, 3, 22, 27-31, costs, 27, 29, 40-41, 66-67 firm size/innovation relationship, 3, 40~1, 45, 47 I ND/innovation relationship, 29-30 lack in early drug industry, 7-8 N CE/innovation relationship, 27, 45 patent filingsp~nnovation relationship, 27-30 regulations as a deterrent, 4, 16, 66-67, 70-71 sales/innovation relation- ship, 13, 14, 32, 34, 37, 41 See also Research and development (RED) Internal Revenue Code, Section 1.861-8, 80 Investigational New Drug (IND) exemptions, 24, 29, 58, 59, 61 by firm size, 46 categories of, specific regulations, 82

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97 foreign-owned firms, 3, 31, 35, 36 IND/NDA time lag, 24, 79 innovation/IND relationship, 29-30 patents granted/lND ratio, 28, 29 proposed reforms, 82-83 U.S.-located firms, 31, 36 U.S.-owned firms, 3, 31, 35, 36, 46 See also Clinical testing Italy, drug industry exports, 49, 50 foreign location of Italian firms, 1 1 foreign-owned firms, 11 imports, 50 labor costs, 54 NCE introductions, 32 production, percentage of worldwide, 37 R3c D expenditures, 2 5, 2 6 sales, domestic, 55 U.S.-owned share, 35, 40 sales, worldwide, by firm, 43 trade balance, 49 U.S. patent filings, 34 J Japan, chemical industry, production levels, 57, 60 Japan, drug industry, 75-76 exports, 49, 50 foreign location of Japanese firms, 1 1 f oreign~wned firms, 1 1 imports, 50 joint ventures with U.S. firms, 76 labor costs, 53-54 multinational expansion, 10, 77 NCE introductions, 32, 76 patent protection, 75-76 pricing policy, 75-76 production levels, 32, 60 production, percentage of worldwide, 37 RED expenditures, 24, 25, 26, 68, 75 R&D, government support, 68 RED, tax policy, 67-68 sales, domestic, 55 U.S.-owned share, 35, 40 sales, worldwide, by firm, 43 trade balance, 49 U.S. patent filings, 34, 76 Japan, productivity growth, 56 Joint ventures, U.S./Japanese drug firms, 76 Journal articles, U.S. propor- tion of world's, 55, 56 Justice Department, 86 K Kaken Yakkako Co. (Japan), 68 Kefauver-Harris Drug Amendments ( 1962), 58, 59, 61, 62, 66-67 Keflin, 34 Kyoto University (Japan), 68 L Labor costs, 53-54 Laetrile, 62

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98 Laubach, Gerald, 73 Less developed countries, drug consumption, 18-19 Liability for drug products, 5, 6, 74, 81 Licensing of drugs foreign innovation, 3, 41, 47 foreign production, 10 Life cycle of drug products, 34 M Manufacturing wages, 53-54 Market growth, 54 See also Sales Mellaril, 34 Mergers of drug firms, 5, 79-80 Mexico, foreign-owned firms, 11 Morbidity rates, 17 Mortality rates, 15-16, 1 8 Motrin, 31 Multinational expansion, 3, 9, 10-11, 21, 47 See also Foreign-owned firms; U.S.-owned firms N NCE introductions: See New Chemical Entities (NCE) introductions NDA: See New Drug Applications (NDA) Netherlands, drug industry drug approval process acceptance of foreign data, 64 expert committees, 63 exports, 50 foreign location of Dutch firms, 1 1 RED expenditures, 25 sales, worldwide, by firm, 43 New Chemical Entities (NCE) introductions, 27, 28, 51, 72 by country, 30, 31, 32, 66 by firm size, 45, 46 costs of development, 27, 28, 66 foreign-owned firms, 30, 31,32, 33,35, 66,76 i nnovation/NCE relationship, 27, 45 marketing of, 30, 31 patent life, 80 R6cD/NCE relationship, 28, 31, 73 sales/NCE relationship, 14, 34-35, 37 time lag till approval, 24, 66 U.S.-located firms, 28, 41 U.S.-owned firms, 30-35, 46 New Drug Applications (NDA) 24, 58 approval, automatic vs. affirmative, 58, 59, 61 foreign data, acceptance of, 63-64, 84 foreign-owned firms, 33 IND/NDA time lag, ?4, 79 information necessary for, 82, 83-84 proposed reforms, 83-84 submissions, streamlining, 83-84 tracking system, 85 U.S.-owned firms, 33 See also Clinical testing New products development: See Innovation; Research and development (RED)

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99 N orway, drug approval process acceptance of foreign data, 64 expert committees, 63 time lapse, 65 Notice of Claimed Investiga- tional Exemption (IND): See Investiga- tional New Drug (IND) exemptions o O ver -~e-counter drugs, 1 2 p Parke-Davis & Co., 79 Parliamentary involvement in drug regulation, 64-65 Patent filings, 29 by country, 34 by industry, 59 foreign-owned firms, 28, 34, 76 IND/patents granted ratio, 28, 29 innovation/patent filing relationship, 27-30 U.S.-owned firms, 28, 31, 34, 59 Patent protection, 4 length of patent life, 5, 79, 80 to recoup R& D costs, 9, 13, 75 Patented drugs, 13 Unless otherwise specified, all entries concerning drugs refer to patented drugs. Penicillin, 9, 15, 62, 67 Pneumonia, 15-16 Political pressure on FDA, 6 2 Prescription drugs, 13 Pricing policy, 69, 75, 81 Product liability, 5, 6, 74, 81 Product life cycle, 34 Production levels, 22, 54 by branches of chemical industry, 60 by country, 37, 60 exports as a percentage, 4 7-49 U.S.-located firms, 3, 4, 32, 70 U.S.-owned firms, 7, 32, 70 See also Sales Proprietary drugs, 12 R Regulations: See Food and Drug Administration (FDA) regulations Research and development (R3c D), 22, 23-27 advantages of R&D abroad, 5, 67, 70 costs, 10, 12, 27, 29, 40-41, 66-67 determinant of competitive success, 7- 21, 23, 70 expenditures, 3, 31, 51, 57 by country, 25, 26, 57 by industry, 61 firm size/R8cD relationship, 40-4 1, 47 f oreign -owned 26-27 government, 7, 8, 9, 55, 57, 68 ndustrial, 7, 8, 24-27, 57, 61 NCE/R&D relation- ship, 28, 31, 73 i,

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100 Research and development (R&D) (continued) expenditures (continued) patent protection to recoup costs, 9, 13, 75 p ricing policy to recoup costs, 69, 75, 81 tax policy, 5, 67-68, 80-81 U.S.-located firms, 4, 8, 26-27, 70 U.S.-owned firms, 26-27,28,61,70 university, 57 phases, 23 productivity of, increasing, 73 search for new drug candidates, 23-24, 67, 73, 75 t ime lag, 1, 23-24 See also Clinical testing, Food and Drug Administration (FDA) regulations; Innovation Research base, 2, 55, 72-73 Research Development Corporation of Japan, 68 Roche Laboratories, 21 S Safety regulations: See Food and Drug Administra- tion (FDA) regulations Safety testing: See Clinical testing Sales, 22, 32-37, 38-39, 5 0 by country, 40, 42-43, 55 by drug, 38-39 bydrugtype,l2,13 by firm, 15, 42-43 by firm size, 41, 44 by industry, 58 foreign -owned firms, 35, 37, 42-43 innovation/sales relationship, 13, 14, 32,34,37,41 NCE/sales relationship, 14, 34-35, 37 p roduct life cycle, 34 U.S.-located firms, 12, 13, 34, 38-39, 41, 44 U.S.-owned firms, 3, 10, 34-35, 37, 40, 42-43, 48, 58 SANOFI SA (France), 80 Sarett, Dr. Lewis, 74 Schmidt, Alexander, FDA Commissioner, 62 Schriffin, Leonard, 66 Scientific capacity, 2, 55, 72-73 Size of drug firms: See Firm size, effects Small firms: See Firm size, effects Smith Kline Laboratories, 37, 72, 76 S octal benefits of drugs, 14-1 6 Spain, drug industry foreign-owned firms, 11 sales, domestic, 55 Streptomyicin, 9 Structure: See Firm size S ulfanilamide, 9, 15 Sweden, drug industry drug approval process, acceptance of foreign data, 64 expert committees, 6 3 time lapse, 65 firm size, 41 foreign location of Swedish firms, 11 ROD expenditures, 25 Switzerland, drug industry drug approval process, acceptance of foreign data, 64

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101 exports, 48-49, 50 foreign location of Swiss firms, 1 1 imports, 50 labor costs, 54 multinational expansion, 9, 10 NCE introductions, 32, 76 production, percentage of worldwide, 37 Rat D expenditures, 2 5, 5 7 sales, worldwide, by firm, 42 trade balance, 47, 49 U.S. patent filings, 34 T Tagamet, 37, 72-73 Takeda Chemical Co. (Japan), 68, 76 Tax policy, 5, 53, 67-68, 80-81 Teijin Co. (Japan), 68 Thalidomide, 59 "Therapeutic revolution," 8-9 Time lag in drug approval, 24, 29, 65-66, 79 Toxicology testing: See Clinical testing Trade balance, drug products, 47-49 See also Exports; Imports Trade barriers, 4, 5, 53, 68-69, 78-79 Tuberculosis, 15-16 U U.S.-located firms, 13, 22, 71 IND filings, 31, 36 N CE introductions, 28, 4 1 production levels, 3, 4, 32, 70 R&D expenditures, 4, 8, 26-27, 70 sales, 12,13, 34, 38-39, 41, 44 U.S.-owned firms, 13, 22, 71 IND filings, 3, 31, 35, 36, 46 NCE introductions, 30-35, 46 NDA approvals, 33 patent filings, 28, 31, 34, 59 production levels, 7, 32, 70 Rat D expenditures, 26-27, 28, 61, 70 reliance on sales rather than exports, 48 sales, 3, 10, 34-35, 37, 40, 42-43, 48, 58 See also Multinational expansion United Kingdom, drug industry clinical testing, 24 drug approval process acceptance of foreign data, 64 expert committees, 63 time lapse, 65 exports, 48-49, 50 foreign location of U.K. firms, 1 1 foreign-owned firms, 11 imports, 50 innovation concentration, 45, 47 labor costs, 54 NCE introductions, 30, 32, 45, 66 pricing policy, 69 production, percentage of worldwide, 37 RED expenditures, 25, 26, 57 sales, domestic, 44, 55 U.S.-owned share, 35, 40 sales, worldwide, 43 trade balance, 4 7, 4 9

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102 United Kingdom, drug industry (continued) U.S. patent filings, 34 University support for R6c D, 57 UpjohnCo.,31 W Wages, manufacturing, 53-54 Warner-Lambert Company, 37, 79 Weimar, David, 59 West Germany, drug industry exports, 49, 50 foreign location of German firms, 11 foreign-owned firms, 1 1 imports, 50 innovation concentration, 47 labor costs, 54 NCE introductions, 30, 32, 66, 76 production, percentage o f worldwide, 37 R6cD expenditures, 25, 26, 57 sales, domestic, 55 U.S.-owned share, 35, 40 sales, worldwide, by firm, 42 trade balance, 47, 49 U.S. patent filings, 34 Western Europe drug industry drug approval process expert committees, 63 politicization, 64 government/industry cooperation, 65 labor costs, 53-54 multinational expansion, 3, 10 p reduction levels, 32, 60 RED expenditures, 24 chemical industry, production levels, 57, 60 See also specific countries . World Health Organization, 18

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