49 Singh S. This is goodbye. The Guardian. 2010 March 12.
50 Dyer C. Charity sets up fund to defend researcher being sued for libel. BMJ. 2008; 337: 1313.
51 Tanne JH. FDA places ‘black box’ warning on antidiabetes drugs. BMJ. 2007; 334: 1237.
52 Burton B. Diabetes expert accuses drug company of ‘intimidation’. BMJ. 2007; 335: 1113.
53 Cohen D. Drug study secrecy puts lives at risk. Index on Censorship. 2011 Nov 29.
54 DeAngelis CD, Fontanarosa PB. Ensuring integrity in industry-sponsored research. JAMA. 2010; 303: 1196–8.
55 Lenzer J, Brownlee S. Reckless medicine. Discover. 2010; 11: 64–76.
56 Gøtzsche PC, Hróbjartsson A, Johansen HK, et al. Constraints on publication rights in industry-initiated clinical trials. JAMA. 2006; 295: 1645–6.
57 Gøtzsche PC, Hróbjartsson A, Johansen HK, et al. [Constraints on publication rights in industry-initiated clinical trials: secondary publication]. Ugeskr Læger. 2006; 168: 2467–9.
58 Gornall J. Research transparency: industry attack on academics. BMJ. 2009; 338: 626–8.
20
Busting the industry myths
The drug industry’s myths about their activities and motives have been repeated so often that they are widely believed by doctors, politicians and the general public. As they are an impediment for creating a rational healthcare system, devoid of corruption, I shall debunk the worst of them before suggesting reforms in the next chapter.
Myth 1: Drugs are expensive because of the high discovery and development costs
The former CEO of Merck, Raymond Gilmartin, has admitted that this is a myth: ‘The price of medicines isn’t determined by their research costs. Instead, it is determined by their value in preventing and treating disease.’1 Gilmartin forgot to mention that prices of drugs not only reflect what society is willing to pay but also how good the companies are at keeping competition at bay. Anti-competitive activities are widespread,2,3 and price fixing is common.4,5,6
We often hear that is costs $800 million (in 2000 dollars) to bring a new drug to the market, but this is false. It is based on flawed methods, debatable accounting theory and premised on blind faith in confidential information supplied by the drug industry to its economic consultants at two universities who were paid by the same industry.1,3,7 The true cost is likely to be below $100 million.3
Zidovudine, the first AIDS drug, was synthesised at the Michigan Cancer Foundation in 1964.3 It cost Burroughs Wellcome very little to develop it, but the company nevertheless charged $10 000 per year for one patient in 1987.1 It was a clear abuse of a monopoly situation, with desperately ill patients demanding the drug, whatever its cost. When Abbott in 2003 suddenly increased the price of its AIDS drug, ritonavir, by 400%, the invention of which had been supported by millions of dollars of taxpayers’ money, it caused an outrage and hundreds of doctors decided to boycott all Abbott’s products whenever possible.8
A similar example is imatinib (Glivec or Gleevec), which is very effective against chronic myeloid leukaemia. Novartis had synthesised it but wasn’t interested in it until a haematologist researched it and found out it was highly effective. Again, development costs were minimal, but that didn’t prevent Novartis from charging $25 000 for a year’s treatment in 2002.3
Taxol is one of our most useful cancer drugs. It was derived from the bark of the Pacific yew tree and later synthesised by NIH-funded scientists.1 The drug was handed over to Bristol-Myers Squibb who, despite minimal development costs, took $10 000 to $20 000 for a year’s treatment in 1993. When the patent ran out, the company sued everyone that planned to market a cheaper generic.9 Twenty-nine US states sued Bristol-Myers Squibb for violating antitrust laws, but while all this went along before the case was settled at a cost of only $135 million for the company, it gained revenues of more than $5 billion.
After several companies marketing generic versions of citalopram for some reason had withdrawn their products from the Danish market in 2010, the price for the drug suddenly increased by a factor of 12. The companies that increased the price declined to comment.10
Another curious example was when all companies marketing generic simvastatin, used by about 6% of all Danes, suddenly multiplied the price of the 40 mg dose by eight.11 The 40 mg dose was the most commonly used one. The drug was also available at a 20 mg dose at only a fifth of the price, but according to the law, the pharmacies are not allowed to hand out the cheap dose and tell the patient to take two tablets instead of one. Although the five companies raised the price to exactly the same level, to the second decimal, they denied price fixing, and the authorities launched a trenching (investigation).12 This dirty trick would cost Danish taxpayers an additional €63 million annually for an off-patent drug.
Schering bought a hormone from another company for use in women with menopausal symptoms and sold the drug with a mark-up of 7000%,4 and when Librium and Valium were patented, Roche sold them in Colombia for 65 times the price on the European market.6 In 2006, the US Federal Trade Commission opened a court case against Lundbeck, alleging that the company had taken advantage of a monopoly situation to milk seriously ill infants.13 Lundbeck had bought a US company, which had increased the price of an old, life-saving drug, indomethacin, by 1300% after having bought it from Merck. There weren’t any development costs behind these price explosions.
For many years, the obstetricians had used a natural hormone for preventing premature birth, progesterone, which came on the market more than 50 years ago.14 The pharmacies prepared it for the doctors and it cost about $10–$20 per injection. When KV Pharmaceutical won US government approval to exclusively sell the drug, known as Makena, the price went up to $1500 a dose, an increase of 75 to 150 times. The company bullshittingly declared that ‘These moms deserve the opportunity to have the benefits of an FDA-approved Makena’, while doctors said that the deal was likely to lead to more premature births (and therefore also to more permanently brain-damaged children), as many women would be unable to afford the drug. Some doctors said they were happy getting the cheaper version from compounding pharmacies, but the company responded by sending cease-and-desist letters to compounding pharmacies, telling them they could face FDA enforcement actions if they kept making the drug.
We are jointly responsible for the complicated society we have created, where we depend on each other and benefit from specialisation. But when drug companies charge copious amounts for their drugs, they make a mockery of their obligations towards the patients, the taxpayers, our societies and our joint assets to such an extent that they out themselves outside society, just like street criminals do. It is theft.
Researchers have shown that the yearly cost per patient is inversely related to the prevalence of the disease. Italian researchers went a step further and developed a simple formula that fitted surprisingly well with the data they had for 17 cancer drugs:15
yearly cost per patient = €2 million ∙ e–0.004 ∙ number of patients + €10 000
Thus, the annual cost per patient for a drug where there are 900 patients in Italy will be about €60 000.
Accordingly, drugs for patients with rare enzyme deficiencies are monstrously expensive, e.g. $600 000 a year for treating Gaucher’s disease,16 although all research and early development was done entirely by NIH-funded scientists.1
A final blow to the myth that drug prices reflect the high research and development costs is: What can then be said about the much higher costs for sales promotion?3 Those who pay for the drugs also pay for this extravagant marketing. If new drugs were as good as the industry wants us to believe they are, there wouldn’t be much need for pushing them and for bribing doctors into using them.
Myth 2: If we don’t use expensive drugs, innovation will dry out
This myth is widely believed by politicians and doctors, although it is totally ludicrous. Would these believers be ready to pay 20 times more for their new car just because the car dealer tells them that by so doing, we’ll get
better cars in future?
According to Marcia Angell, former editor of the New England Journal of Medicine, the drug industry insists that they should be essentially left alone without societal control and they also threaten our societies: ‘Don’t mess with us. Do nothing about our obscene profits. Do nothing about these unsustainable increases in prices, or else we will not give you your miracle cures.’17 Usually, companies say: ‘If we don’t spend our money on research, we’ll die.’ Drug companies say: ‘If we don’t get your money to spend on research, you’ll die.’7
Only religious leaders are smarter. They promise we’ll be rewarded after we’ve died, which makes complaints impossible. The industry’s promises are also false, indeed so false, that the cause–effect relationship is the reverse. Since the 1980s, profits in the drug industry have skyrocketed (see Chapter 5), but in the same period, fewer and fewer innovative drugs have come onto the market.3 La Revue Prescrire gives an award every year to the most important breakthrough, la Pilule d’Or (the Golden Pill), but couldn’t find a worthy candidate for 2012. Or 2011. Or 2010.
In 2011, the Danish regions suggested to create an institute like the National Institute for Health and Care Excellence (NICE) in the United Kingdom, as we cannot afford everything on offer. However, a conservative speaker on health in Parliament didn’t want to prioritise drugs and argued it would slow down the development of new drugs if we introduced a maximum we would pay for the drugs.18 The regions furthermore suggested that new drugs should be tested against existing and often cheaper drugs before they could be approved. This enraged the director of The Danish Association of the Pharmaceutical Industry, Ida Sofie Jensen, who said it was ‘pathetic if not shameless that Danish regions again showed their industry-hostile attitudes. The regions blame the drug industry for their poor economy.’19 The chairman for the regions responded calmly that the drug industry is one of the most profitable of all industries, and that he hoped the industry’s ritual tribal dance would soon be over. The fact is that the cost of drugs at Danish hospitals trebled in just 8 years. The year before, the Danish government removed the reimbursement for some drugs that were far too expensive and not any better than cheap drugs of the same type. In response to this, Ida Sofie Jensen displayed another tribal dance: ‘The authorities refuse to pay for progress in medicines. We fear this will stop the development of new drugs.’20 In contrast, a health economist remarked that the move might give the industry an incentive to search for real breakthroughs instead of me-too drugs. That’s exactly the point. Innovation has dried out because it’s more lucrative for industry to develop me-too products than to do innovative research. Patients will benefit if we remove this incentive.
All over the world, apart from the United States under Republican rule, governments try to contain drug costs. An article from 2011 reported that the Czech Republic would introduce maximum prices for drugs that were reimbursed and limit the use of very expensive drugs at the university hospitals; in Germany, a price ceiling was introduced with the aim of saving €2 billion annually; in the United Kingdom, the government required that the industry reduce its prices, aiming at saving €6 billion annually; and in Australia, the government removed reimbursement for 162 drugs and planned to cut the prices for 1600 drugs by 27%.21 China, Hungary, Bulgaria and Slovakia also had cost-saving plans.
The way New Zealand has contained its spending on drugs is impressive and simple.22 In 1993, it was decided to subsidise drugs in the same class (e.g. NSAIDs or SSRIs) that had similar effect with the same amount, whatever the price of the drug was (reference pricing). In addition, drug companies negotiate with the drug agency over price and other conditions for access. The policy had dramatic effects. Statins were provided at half the cost compared to Australia, and the price of generic drugs was less than a quarter of the price in Canada. The community drug budget increased at an annual rate of only 2%, compared with 15% before the new policy, and at the same time, public coverage was improved. Although there are only 4.4 million inhabitants in the country, the annual savings amounted to about €1 billion.
Myth 3: Savings are greater than costs for expensive drugs
At a meeting with the drug industry where this argument was put forward, the director of the Danish National Board of Health said that it was curious that no matter how expensive a new drug was, the company was always able to provide a pharmacoeconomic analysis that showed that the savings in terms of less sick-leave, premature retirement, and whatever else, were greater than the costs for the drug. Economy is a very soft discipline, and you can get almost any result you want depending on the assumptions you put into the model. It is hard to imagine a greater conflict of interest than when a drug company concocts a pharmacoeconomic analysis of its own drug, or asks an economist to do it for hire. The outcome is never negative for the company.
Myth 4: Breakthroughs come from industry-funded research
An often-heard argument is that none of our drugs were invented by the former socialist countries east of the Iron Curtain. That proves nothing. There was so much else that didn’t work out in these countries under dictatorship rule. The misconception is huge. Virtually all the basic science that enables modern medicine to move forward takes place in the non-profit sector, at universities, research institutes and government laboratories.23 A US Congress report from 2000 noted that ‘Of the 21 most important drugs introduced between 1965 and 1992, 15 were developed using knowledge and techniques from federally funded research.’ Other studies have found the same, e.g. at least 80% of 35 major drugs were based on scientific discoveries made by public-sector research institutions.24 The National Cancer Institute played the lead role in the development of 50 of 58 new cancer drugs approved by the FDA between 1955 and 2001.7
Three of the most important discoveries in the 20th century – penicillin, insulin and the polio vaccine – all came from publicly funded laboratories. The NIH conducted an investigation on the five top-selling drugs in 1995, Zantac (ranitidine, for ulcers), Zovirax (acyclovir, for herpes), Capoten (captopril, for high blood pressure), Vasotec (enalapril, for high blood pressure) and Prozac (fluoxetine, for depression), and found that 16 of the key 17 scientific papers leading to the discovery and development of these drugs came from outside the industry.3
The picture is very consistent. The first breakthrough in AIDS also came from public research and the US government spent double as much on research as all the drug companies taken together.7 The typical story is that drug companies invest relatively little in the real breakthroughs, but when they take over from publicly funded research, they sell the drug at an exorbitant price, as they have a monopoly. In addition, they routinely lie about the research and often steal the credit for the drug and claim they found it themselves.7 The much-touted public–private partnerships fall totally apart when the private part constantly runs away with all the money and all the credit, making the rest of society look like a fool or a victim of robbery.
Drug companies spend only 1% of revenues on basic research to discover new molecules, net of taxpayer subsidies, and more than four-fifths of all funds for basic research to discover new drugs and vaccines come from public sources.25
An important reason why most breakthroughs come from publicly funded research is that capitalism and curiousness go very badly together. It takes time to be curious, and senior people in drug companies don’t have the patience. They want a quick return on their investments, which will help them advance to even more lucrative positions in other companies. Managers are therefore likely to shut down a particular line of research if there hasn’t been progress after a couple of years.
Psychologists have shown that money is a poor motivator, in contrast to giving people something meaningful to do, and scientists are radically different from managers. The salary isn’t important. What matters is solving the puzzles and contributing something of importance to the world. As an example, it took more than 20 years for an indefatigable scientist, Eugene Goldwasser, to find and purify
the first small vial of human erythropoietin.7
Myth 5: Drug companies compete in a free market
This myth is used successfully to decrease regulation in the mistaken belief that market forces will solve all problems. There can be no free market for products that are heavily subsidised by taxpayers’ money and when fraud and crimes are widespread.
When I worked in the industry, I was surprised to find out how the price of drugs is determined. Sales managers produced what they called a sales budget for the coming years, but I wondered how they could make a budget for money they didn’t have but only hoped to get. However, once it had been made, it was important to live up to it; otherwise, uncomfortable questions would be asked, and people would be unhappy. There is a simple solution when sales aren’t going well: to increase the price for the drug and agree with your main competitors to increase their prices by the same amount, which will make everybody happy. It’s illegal but very difficult to prove and therefore common. Even I have seen it happen, although I have never been responsible for a sales budget.
Myth 6: Public–industry partnerships are beneficial for patients
This myth never dies and we saw one of the most shameless examples in 2012. The Association of the British Pharmaceutical Industry (ABPI) issued a new guideline to promote collaboration with doctors.26,27 It talked about shared aims and objectives and urged healthcare professionals not to be ‘tempted to accept the negative myths about cooperating with industry’. Endorsed by many, including the British Medical Association, the Royal College of General Practitioners, the Academy of Medical Royal Colleges and the Department of Health, the Lancet’s logo was used to support outrageous claims such as ‘Industry plays a valid and important role in the provision of medical education’ and ‘Medical representatives can be a useful resource for healthcare professionals’.
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