Fresh~Hors
Fri, Aug-13-04, 19:18
http://www.alternet.org/envirohealth/19537/
http://www.alternet.org/story/19537/
The Drug Profiteers
By Kelly Hearn, AlterNet
Posted on August 13, 2004, Printed on August 13, 2004
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.
© 2004 Independent Media Institute. All rights reserved. View
this story online at: http://www.alternet.org/story/19537/
http://www.alternet.org/story/19537/
The Drug Profiteers
By Kelly Hearn, AlterNet
Posted on August 13, 2004, Printed on August 13, 2004
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.
© 2004 Independent Media Institute. All rights reserved. View
this story online at: http://www.alternet.org/story/19537/