The New Republic (reg. req.), publishes a piece by Nicholas Thompson, a Markle Fellow at the New America Foundation, on the lack of innovation in the pharmaceutical industry (WHERE HAVE ALL THE NEW MEDS GONE?
Drug Abuse). Apparently, industry has been spending more on "me too" drugs (pharamceuticals that have characteristics very similar to existing drugs on the market) and marketing, instead of heavy duty research. [Hmmmm ... intellectual property laws sparking spending on marketing rather than innovation? Where have we heard that before?] The article concludes, however, that the real problem comes from too many patents mucking up (with lawyers and licensing) the ability to conduct basic research.
Read the National Institute for Health Care Management
Research and Educational Foundation report that is the basis for Thompson's article (Changing Patterns of Pharmaceutical Innovation [PDF]).
The Pharmaceutical Research and Manufacturers Association (PhRMA) has a rebuttal to the report, but it could not be accessed on their site when this article was written. Here is a mail list archive of the press release: ([Ip-health] PhRMA Rebuttal to NIHCM Report on Me-Too Drugs).
And the counter-rebuttal (Rebuttal to PhRMA's Response to the Report [PDF]).