The Drug Profiteers

[Guest guest]

http://www.alternet.org/envirohealth/19537/

 

The Drug Profiteers

 

By Kelly Hearn, AlterNet. Posted August 13, 2004.

 

t’s time to rein in the biggest drug peddlers of them

all — the pharmaceutical industry. Author Marcia

Angell talks about how to fight the other drug war.

 

Faced with exorbitant prescription drug prices and

contemptible marketing tactics, the American public

seems to be swinging back against major drug

companies. Marcia Angell, for two decades the

Editor-in-Chief of The New England Journal of

Medicine, is contributing boldly to that fight with a

front row expose of Big Pharma’s excesses and

neglects. In a disturbing new book, Angell, now a

Senior Lecturer in Social Medicine at Harvard Medical

School, spotlights the dubious tactics that garnered

big drug companies an estimated $400 billion in

worldwide sales in 2002.

 

Once tapped by Time magazine as one of America’s 25

most influential people, Angell uses her penetrating

new work, The Truth About the Drug Companies: How They

Deceive Us and What To Do About It, to propose reforms

that could bring the megacolossal industry under

control. Angell’s book will be published by Random

House later this month. She talked with AlterNet about

the excesses of the drug companies, the failure of the

government to rein them in and about what it will take

to turn things around.

 

Drug companies claim that high drug prices are needed

to offset research and development (R & D) costs. You

point out that this isn't particularly true in part

because of the industry's reliance on so-called " me

too " drugs. Can you explain?

 

A " me too " drug is a drug that's a minor variation of

a drug already on the market. Most of what big drug

companies turn out are " me too " drugs. There are, for

example, six statin drugs on the market. These are

cholesterol-lowering drugs of the Lipitor type.

Lipitor wasn't the first statin. The first statin to

come on the market was called Mevacor. It had such a

large potential market that other companies realized

that rejiggering the molecule a bit would allow them

to have a share of this very large market. Lipitor is

now the best-selling drug in the world. But it is a

" me too " drug.

 

Likewise, your analysis of SEC documents revealed that

R & D for many companies is a rather mysterious budget

category that could include what some would consider

to be marketing programs. How do R & D expenditures

generally rank when compared to expenditures for

marketing and administration costs? And to profits?

 

The pharmaceutical industry talks a lot about how much

R & D costs. But the R & D is consistently less than big

companies make in profits and far less than what they

spend on something they usually call " marketing and

administration. " Companies vary a little in the name

for this but it's a big category that includes all

kinds of promotional activities plus administrative

costs like executive salaries, legal fees and so

forth. This is by far the largest part of their

budgets, usually somewhere from two to two-and-a-half

times what they spend on R & D.

 

Medicare was enacted in 1965 with no provision for

outpatient prescription drug benefits for seniors. You

point out that drugs were cheaper, people took fewer

drugs and seniors could afford to buy what they

needed. Today, because many seniors don't have

supplemental insurance or collective bargaining power,

prices are highest for the people who most need drugs.

Will the recent Medicare reforms help?

 

The Medicare drug benefit that was just passed in late

2003 will do very little to help senior citizens

because it specifically prohibits Medicare from

bargaining with drug companies for lower prices. All

large private insurers already do this. So do some

government programs such as the Veterans Affairs (VA)

system. Medicare would be the biggest purchaser of

all. It would have enormous bargaining power. The

pharmaceutical industry did not want that to happen

and they made sure it would be explicitly prohibited.

And it was. What we are left with is a drug benefit

that is inadequate to begin with. It has this huge

donut hole for example. As prices increase at the rate

they are now, and they'll probably increase at least

that fast, [the benefit] will quickly be washed out by

rising prices.

 

Are there other potential reforms waiting in the

wings?

 

There are some. The most important reform in my view

would be for the Food and Drug Administration (FDA) to

require that new drugs be tested – not against

placebos, but against older treatments already on the

market for the same condition. If that were required,

most new drugs, which are " me too " drugs, wouldn't be

approved. That's because there's no reason to think

they are better. By default, that would force the

industry to put some real R & D efforts into genuinely

important novel drugs. They wouldn't get away with

this gigantic " me-too " industry.

 

That would be important but it wouldn't directly deal

with costs, although I think it would have ripple

effects that might. As I said, the biggest part of Big

Pharma's budget is marketing and administration. They

have to spend a lot to market " me too " drugs because

there is no particular reason to think that one is

better than the other at comparable doses. So it takes

a heap of marketing to convince doctors and patients

to buy one statin instead of another statin or one

SSRI antidepressant instead of another. If it were a

genuinely important new drug, if it were a cure for

cancer, you wouldn't have to promote it incessantly.

That would save a lot of money right there because

marketing budgets could shrink. That would take an act

of Congress and my understanding is that similar bills

have been introduced to look at how new drugs compare

with older ones. My proposal is a little different in

that I would see it as something the FDA would require

as a condition for approval. Others, I think Senator

Clinton for example, have suggested the National

Institutes of Health (NIH) might want to study " me

too " drugs already on the market. But, to me, that's

too late.

 

You call for breaking the dependence the medical

profession has on drug companies. As a reporter, I

constantly confront the trend of drug companies paying

doctors to evaluate their products. Those evaluations,

or at least the ones that are pleasing to industry,

are then fed to us as though they were the latest,

greatest scientific finding. How much does this erode

public confidence and what could be done to stop it?

 

It ought to erode public confidence. It's not so much

the fact that the drug companies are sponsoring

clinical trials as it is the terms of sponsorship.

Drug companies have always sponsored trials of their

own drugs. But they used to give a grant to an

academic medical center and the center would get a

faculty investigator to do the trial. The company

would stand back and wait for the results. Now they

don't do that. They are intimately involved in all

aspects of the trial. They design the trial. They

analyze the data. They write the paper. They even

decide whether the paper will be published. So now

they do have real control over the evaluation of their

own products. That's a terrible conflict of interest.

 

Also many of the researchers have other financial ties

with the same companies whose drugs they are studying.

They sometimes have equity interest in the company.

They get consulting fees. They are on speaker's

bureaus and so forth. So they are biased from the

get-go. I think the public ought to be very concerned

about this.

 

Recently we have heard calls for a registry of

clinical trials. This was in the wake of reports that

GlaxoSmithKline had suppressed negative information. I

don't think this is unique to GlaxoSmithKline at all

because, as you say, the companies are not very much

interested in publicizing their negative studies. Even

though they are supposed to provide the FDA with all

trials when they apply for approval, they don't have

to publish all of them and the FDA is prohibited from

making them public. So negative trials are suppressed

and I think the literature is very biased as result of

that suppression.

 

A registry would be a very good thing to have but it

has to be done the right way. It should be one

central, public registry, probably administered by the

NIH. All trials ought to be in that registry, not just

the ones the companies find meaningful. I would make

it a condition of enrolling human subjects in

research. As soon as a drug company enrolls human

subjects, it no longer is dealing with a purely

private matter. It is using people who rightly expect

they are contributing to scientific knowledge and have

a right to expect that the work will be publicly

accountable. The registry, then, would contain all

work on human subjects from the inception of that

piece of research. Before the study even begins, the

design of the trial should be placed in the register.

This should include the number of human subjects,

whether they are old or young, the drug that will be

tested, whether it will be compared to a placebo or an

older drug, how long the study is going to last, what

the endpoints will be, everything before the trial

starts. Then when the trial is finished they would add

the salient results to this registry.

 

It is terribly important that it be done this way. If

you wait until the trial is finished, you permit

companies to change the goalposts as the trial goes

along. There was a widely publicized case of a

one-year study of Celebrex. The company published the

first six months as though it were the complete study.

That's because the drug looked good in the first six

months but not so good in the second six months. In

the registry, they would have entered the design of

the trial at inception. It would say, " This is a

one-year study. " Then they wouldn't be able to shift

the goalposts.

 

Recently, big drug companies have been the target of

lawsuits alleging all kinds of wrongdoing including

fraud, burying research evidence, fraudulent

advertising and overcharging Medicare and Medicaid.

What are the most important kinds of cases, those that

can make the biggest dents?

 

I'm not sure these cases can make any dents in the

dubious practices. Even though the fines have been

huge, they are nothing compared with what the dubious

practices have garnered them in revenue. They are a

cost of doing business. Most of the big drug companies

are under investigation now for one thing or another.

Some of the pharmacy benefits management companies are

also under investigation. It is a constant thing,

involving charges of Medicare or Medicaid fraud, of

advertising for off-label uses, of giving doctors

kickbacks. But I'm not sure it has any real effect.

 

You quote an industry spokesman saying that the

pharmaceutical industry is facing " the perfect storm. "

Health insurers, for instance, are developing

formularies. Many profitable patents are nearing their

end. And consumers are buying cheaper drugs from

Canada over the Internet. What is the most intractable

problem for the pharmaceutical industry? Is it the

fact that very few blockbuster drugs are in the

development pipeline?

 

There are two problems. Number one, the pipeline is

drying up. Big drug companies are in serious trouble.

They are trolling small biotech companies all over

world. They are hovering around academic medical

centers hoping someone will come up with something

they can license and develop. Number two, there is

nobody left to pay the prices. The prices keep rising

but individuals can't afford it. The federal

government is running a huge deficit now, so that's

not going to be much help. The states are also

hurting. Medicaid is one of the biggest expenditures

for state governments and a big part of that

expenditure is the drug costs. So there's nobody left

who can keep paying these prices.

 

One reform you suggest is to require pharmaceutical

companies to open their books to the public. Why

shouldn't the pharmaceutical industry be able to

protect it's proprietary information just as other

industries do?

 

This is a well-protected industry that depends utterly

on government favors. It lives to a large extent off

taxpayer-funded research done in universities and

funded mainly by the NIH. It lives off

government-granted monopoly rights in the form of

patents and FDA-conferred exclusively. It also gets

huge tax breaks, both tax deductions and tax credits.

So although it talks the rhetoric of the free market,

it is on welfare big time. I think this industry owes

the public something for being treated so very well.

 

You have said that an " aroused and determined " public

can provide the political power needed to

counterbalance the influence of drug companies. What

are examples of groups that are helping to organize

public dissatisfaction?

 

I think the AARP is one. Their members were very

unhappy when the AARP leadership supported the

Medicare drug benefit without any provision for

bargaining for good prices. Many members quit. The

leadership has had a change of heart and now they want

to see this bill changed. Senior citizens are among

the most sophisticated people on this issue because

they pay for drugs out of pocket. Also, state

governments are getting fed up. The attorneys general

are among those who are legally challenging this

industry.

 

I think there is a general mood that holds, " They are

getting away with price gouging and they shouldn't be

allowed to do that anymore. " But many people still

respond to the blackmail that if anything is done to

contain prices, it will somehow cut into R & D and

innovation. That is one reason I wrote the book, to

show that is not so.

 

Kelly Hearn is a correspondent for The Christian

Science Monitor and a former science and technology

writer for UPI. Based in Washington DC and Telluride,

CO, he is currently investigating the political

influence of major pharmaceutical companies.