http://www.newint.org/issue362/contents.htm
New Internationalist Theme Issue November 2003
Big Pharma
The world's giant drug companies pursue profit above all else.
Dinyar Godrej inspects an industry that's more than a little sick.
‘I think there's some mistake,' I said, pushing the pack of pills back
across the counter.
‘Nope. It's the same drug, just a different name,' replied the
pharmacist with a patient smile.
It was high summer, the peak of the hay fever season and I expect
she'd been dealing with quite a few quizzical customers. I picked up
the pack again. Loratidine it read, instead of the expected Claritin –
and, as I soon discovered, it worked just as well. What I didn't know
then was that a battle royale had broken out to delay loratidine (the
generic drug) from reaching the market in any form apart from the
branded version that I, and millions of other allergy-sufferers, knew
by name.
Claritin is the golden goose for US pharmaceutical giant
Schering-Plough – a drug with global sales of three billion dollars a
year. It's an effective medicine with relatively few side effects, and
it soon dominated the anti-allergy market with nearly 40 per cent of
sales. Schering promoted Claritin vigorously and pushed to have its
patent monopoly extended beyond the standard 20-year limit, claiming
the US Food and Drug Administration (FDA) had unfairly delayed the
drug's clearance. It is true that the FDA did take six years to
approve Claritin for sale, largely because studies supplied by the
company were considered inadequate. The agency was also concerned
about data regarding carcinogenity in tests on animals. In addition,
Schering-Plough submitted 37 amendments to the FDA during the
application process, nearly four times the norm.
Eventually, Schering did receive two extensions on its patent,
totalling nearly four years. But with billions at stake, every day the
company could extend the patent was worth fighting for.
So it was that a certain Senator Torricelli introduced a bill in the
US Congress in 1999 that would give Claritin and six other drugs the
chance of a patent extension. The day before the bill was introduced
Schering had donated $50,000 to the Democratic Senatorial Campaign
Committee of which Torricelli was Chair. Later another Senator who
chaired the hearings on the bill was reported to have flown five times
with his staff on the Schering-Plough executive jet. The stories
leaked, public outrage ensued and the bill faltered.
Then in 2002, the year the patent was due to expire, US consumers were
bombarded by ads for Schering's Clarinex – a ‘new' product which is a
more potent derivative of Claritin. It's not necessarily better, but
is patented. Schering was also fighting in the courts to extend patent
protection to Claritin again – under the new patents granted to
Clarinex!1
My little pack of loratidine represented a victory of sorts. It meant
that Schering had failed to stop the generic competitors from
producing the drug and the price could be expected to fall by
two-thirds. There was, however, a further twist. Inspecting my
non-brand medication, I discovered it was manufactured by none other
than… Schering-Plough. The company was clearly dipping into both the
brand name and generics markets until the competition got serious.
But what if such wrangling had gone on around a drug that treats
something a bit more serious than allergies to pollen and cat hair?
The consequences could be deadly. They frequently are.
Free to die
In February this year, a delegation of South Korean leukaemia
patients, many in an obviously debilitated condition, protested in
front of the local offices of the Swiss drug transnational Novartis.
They were clutching at straws really.
Leukaemia patients in South Korea had taken part in trials for
Novartis' new drug Glivec (also marketed as Gleevec), helping to get
it approved in record time. Glivec is a genuinely life-prolonging
drug. But girded by patent exclusivity, the Korean leukaemia patients
found it was prohibitively priced. It sells for $19 a tablet – a
year's treatment of eight tablets a day costs over $50,000. In
desperation, a group of patients who had been part of the trials in
Korea decided to apply for ‘compulsory licensing'. This is a World
Trade Organization (WTO) provision from its warren of patenting rules
which allows governments faced with a ‘national emergency' or ‘extreme
urgency' to overrule patent rights and buy or produce a generic
version of a drug. (The US had invoked it during the anthrax scare
which followed 11 September 2001.) The Koreans soon found an Indian
manufacturer who could produce the drug for less than a dollar a
tablet.
While the South Korean Ministry of Health was considering the
application, the US Secretary of Commerce sent a written threat
warning against compulsory licensing of Glivec. The Korean Health
Minister favoured the proposal but soon lost his job in a cabinet
reshuffle. He denounced the role Big Pharma's influence had played in
his dismissal. That left the patients with little option but to talk
to Novartis directly – with disastrous results. Rough-handed by the
police, two sustained injuries that required hospitalization.2
These two dismal tales reflect Big Pharma's key obsessions – money
madness, ruthless suppression of competition, an ability to bend rules
to its own advantage, political clout and a contemptible disregard for
the consumer. All this from an industry that takes every opportunity
to crow about its noble mission to fight disease.
The fact is that Big Pharma has a captive market of consumers whose
comfort and lives depend on its products. Medications are usually
prescribed by a doctor; one cannot shop around for them. If a
particular drug is the only one that can treat what ails, it's either
pay up or suffer the consequences.
No wonder the pharmaceutical industry is such a money-spinner, coming
top of the profitability league. In 2001 when profits of the Fortune
500 corporations took a 53-per-cent dive, drug company profits shot up
by 32 per cent.3 Last year pharmaceutical sales raked in $400.6
billion.4 Even scandals don't seem to have an impact. Bayer has
fielded more than 10,000 claims for alleged damages from its recalled
cholesterol-lowering drug Lipobay, 1,200 of which have been settled at
a cost of $433 million. Despite this financial setback Bayer remained
buoyant – profits jumped 40 per cent.5
Drug companies are quick to point to the millions they spend on
research. The industry claims it takes $800 million to bring a new
drug to market. But this figure doesn't bear close inspection. And
drug companies themselves refuse to reveal how much they spend on
developing a drug, claiming it would give away trade secrets.6
They are equally shy about their marketing expenses, though they do
claim they're well below research and development (R&D) investment.
Industry observers consistently put them two to three times higher.
According to Pharmaceutical Executive, over $500 million was spent
promoting each of the six top-selling drugs last year.7
Building blockbusters
With big bucks shaping the industry, the emphasis shifts from drugs
that cure to those that sell. Well-heeled Western consumers account
for most of Big Pharma's sales. The companies race to produce
competing drugs for the same ailment. One US study found that fully
two-thirds of the new drugs approved by the FDA between 1989 and 2000
were ‘me-too' drugs – copies or slight modifications of existing
drugs.8 It's easy to see why: such drugs require lower levels of
research, can help retain market share and allow companies to hang on
to patents. This is not to deny that some second- and third-generation
drugs are genuine improvements.
Developing countries bear a disproportionate part of the world's
disease burden. But with 80 per cent of the world's population they
account for only 10 per cent of global drug sales. The whole of
Africa's drug bill is just one per cent of the world total.9
Take malaria, a disease which has developed several increasingly
virulent drug-resistant strains and which affects up to 500 million
people a year. In 2000 Glaxo Wellcome (now GlaxoSmithKline) launched
the first new anti-malarial developed by a drug company in 40 years.
However, it was aimed at prevention, not treatment. Its market was the
estimated seven million tourists and visitors who venture into
malarial regions, not the people who live in them.10 For meaningful
research on new malaria drugs we have to look to publicly and
charitably funded institutions.
If innovation isn't the industry's forte, adapting research to the
profit motive certainly is. The top drug companies tend to keep
management and marketing divisions well away from the researchers, who
may get carried away by the mere health benefits of a new drug. It is
management's job to spot the blockbusters (drugs with potential sales
of a billion dollars or more) and ruthlessly press for their
development – often axing significant discoveries that don't have the
same selling power. Once a blockbuster is identified, research must be
swift and show the best possible results. Industry critics argue that
trials are manipulated with these aims in mind and negative results
actively suppressed. Part of the fallout from this is a ‘dosing
regime' based on what was shown to work fastest in trials. This means
that often when a drug comes to market a single dose is specified for
all patients from 18 to 80 – regardless of individual sensitivities.
Doctors follow the drug company's dosing regimen and an epidemic of
side-effects follows. According to Jay S Cohen, a doctor who has been
campaignig for more ‘tailored' doses: ‘Medication reactions are the
fourth leading cause of death in the US, dwarfing the number of deaths
caused by automobile accidents, hiv/aids, alcohol and drug abuse,
infectious diseases, diabetes and murder.' 11
Once a new drug hits the market, a buzz is created through glitzy
advertising (in the US and New Zealand/Aotearoa companies can pitch
prescription drugs direct to the consumer) and favourable reports in
professional journals. Drummond Rennie, a deputy editor of the Journal
of the American Medical Association, suggests how such reports come to
be written: ‘I'm the advertising guy for the drug. I tell a journal I
will give them $100,000 to have a special issue on that drug. Plus
I'll give the journal so much per reprint and I'll order a lot of
reprints. I'll select the editor and all the authors. I phone everyone
who has written good things about that drug. I say, "I'll fly you and
your wife first class to New Orleans for a symposium. I'll put your
paper in the special issue of the journal and you'll have an extra
publication for your CV." Then I'll put a reprint of that symposium on
some doctor's desk and say, "Look at this marvellous drug."'12
But patents are the icing on the cake, giving the drug biz exclusive
control over a medication no matter how essential it is. Companies are
keen on global pricing and keeping prices high. They will rush to
punish patent violators with all the legal might at their disposal.
Both Washington and European governments jump in to protect
drug-company profits, threatening trade sanctions if violators don't
comply.
Why bother squashing minor-league competitors in the Majority World
when sales there are such a small slice of the pie and the industry
earns obscene profits anyway? Maybe it's because Western consumers
paying inflated prices may just realize they are being duped – and
start demanding cheaper drugs.
Priced out
Big Pharma is keen to push the US model of stringent patent protection
and no price regulation globally. And no wonder: American consumers
pay the highest prices in the world for their medicines, with rates
rising several times over inflation. US drug sales are equivalent to
the next nine biggest markets combined.10 The industry has been up in
arms recently fighting moves to import cheaper drugs from Canada for
US senior citizens, 12 million of whom have no insurance for
prescription medication. And earlier this year, during bilateral trade
talks with Australia, the US pressed the country to alter its
Pharmaceutical Benefits Scheme (PBS). Under the scheme the Australian
Health Ministry is the sole purchaser of drugs; the Government
searches for the best deals and then provides them to citizens at a
subsidized price. The pharmaceutical giants didn't give two hoots
about the subsidy aspect, but found the price comparisons disturbing.
Australia has, after all, the lowest drug prices in the rich world.13
But Big Pharma's influence has been most pernicious through the WTO,
where it has lobbied hard to try to impose a uniform global patent
regime and to prevent poor countries from buying or producing cheaper
generic drugs. All this despite a 2001 WTO commitment to allow
countries flexibility in responding to their public-health needs.
In Pakistan, patent laws have been made to comply with the WTO's TRIPS
agreement which fences off intellectual property. Drug prices have
shot up and there is a chronic shortage of essential medicines. The
transnationals can't be bothered supplying such a poor market.14
Meanwhile in neighbouring India, which doesn't allow drug patenting,
generic manufacturers have jumped in and competition is thriving,
driving down the prices of high-quality, locally produced medicines.
Countries like India and Brazil, which have the manufacturing capacity
to produce cheap generics, are a constant thorn in Big Pharma's side
and are on the receiving end of legal threats.
Cracking open the patents shell and promoting generic manufacturing
could be one way of breaking Big Pharma's stranglehold. But the fear
is that the big drug companies might then stop investing in critical
research. A far better solution would be to work towards publicly
funded research. This could lead to affordable patent-free drugs
produced by competing companies.
If this seems pie-in-the-sky, consider the alternatives. There's the
charitable model: drug donations by companies or countries. But
donations of branded drugs actually cost donor countries four times
more than buying generics. And the big drug companies are not noted
for their generosity. The best example of such generosity is Merck's
gift of Mectizan, a drug that prevents river blindness, to over 25
million people in Africa. But this philanthropic act was atypical.
According to Merck's CEO, Raymond Gilmartin: ‘Giving our medicines
away in general is an unsustainable and unrealistic answer because, at
the end of the day, we must earn an adequate return on our investment
in order to fund future research.' 15
Public-private partnerships are another option. The public partners
can run from small NGOs right up to the World Health Organization.
These projects are ends-focused – as long as drugs can be delivered to
a target audience, Big Pharma can carry on as usual.
The most ambitious of these partnerships is the recently launched
Global Fund to Fight aids, TB and Malaria. The Global Fund is an
international effort involving governments, charities and the private
sector to provide drugs for diseases which kill six million people
every year. But the Fund has run into a $1.6 billion funding shortfall
as the world's wealthiest countries continue to renege on their
commitments.16
It is in this gloomy context that we must take a stand against the
commodification of lifesaving drugs. Many of our world's citizens are
simply too poor to buy drugs, no matter how cheap they are, whether or
not they're controlled by Big Pharma. We need to ensure that no-one
goes without lifesaving drugs and their ability to pay should not
enter into the decision. The WHO's essential drugs programme piously
notes: ‘Confronted with [the] unacceptable burden of ill health, the
international community has become increasingly committed to reducing
health gaps between rich and poor.'17 But this doesn't go quite far
enough.
The list of what's needed for genuine reform is long: purging the
pharmaceutical lobby from the bastions of political power, rescuing
medical research from corporate control so it can focus on genuine
health needs, freeing up countries both to produce and buy generic
drugs. This would help to cleanse the production end of the drug biz.
Governments North and South could do much better in prioritizing
health needs. They could improve on drugs delivery and work out
policies to encourage the production of cheap, essential drugs,
possibly by public non-profit companies. And they could discourage
frivolous ‘lifestyle' medication. International institutions like the
WHO could work from a needs agenda – responding quickest to areas
suffering the greatest neglect – with sufficient funding to back up
their work. At present it is impossible for many of the humanitarian
health agencies who are doing invaluable work to think of solutions in
which Big Pharma does not play a part. When that becomes possible, the
real victory will have been won.
The selfless approach to public health is foreign to the bottom-line
myopia of corporate capitalism. But it's the only hope for tackling
problems like the global aids pandemic. Although important victories
have been won against Big Pharma to license generic antiretroviral
drugs (ARVs), the truth is that even with lower prices the drugs are
beyond the reach of the vast majority of people with aids. Of the six
million people in the developing world who need ARVs only five per
cent are currently receiving them.
But don't expect too much help from Big Pharma. As Bernard Lemoine,
director-general of France's National Pharmaceutical Industry
Association put it: ‘I don't see why special effort is demanded from
the pharmaceutical industry. Nobody asks Renault to give cars to
people who haven't got one.' 9
1 Jeffrey Robinson, Prescription Games (Simon & Schuster 2001); Common
Cause, ‘Prescription for power', June 2001, www.commoncause.org; Wes
Allison, ‘Ad blitz on for Claritin alternative', St Petersburg Times,
17 April 2002.
2 ‘Dying for drugs', Channel 4 TV UK, 27 April 2003;
www.cptech.org/ip/health/gleevec/korea-arrest.html
3 Julian Oram, ‘Addicted to profit', 2002, www.rarie.org
4 ‘2002 World pharma sales growth: slower, but still healthy',
www.ims-global.com
5 ‘Cholesterolmiddel brengt Bayer in nauwe schoentjes', Het
Nieuwsblad, 7 August 2003.
6 Russell Mokhiber and Robert Weissman, ‘Stripping away big pharma's
figleaf', 6 July 2002, www.zmag.org; Julian Oram, as above.
7 May 2003, www.PharmExec.com
8 ‘New US study underscores lack of industry innovation', HAI-Lights,
October 2002.
9 Martin Foreman, Patents, pills and public health: Can TRIPS deliver?
(The Panos Institute 2002).
10 Jeffrey Robinson, as above.
11 Over Dose: The case against the drug companies (Tarcher/Putnam
2001).
12 Sheldon Rampton and John Stauber, Trust us we're
experts!(Tarcher/Putnam 2001).
13 ‘Free trade and the PBS', Radio National, 25 May 2003,
www.abc.net.au/rn/talks/natint/stories/s863199.htm
14 ‘118 essential medicines missing on the market'. Daily Dawn, 18
September 2003.
15 Alain Guilloux with Suerie Moon, ‘Hidden price tags:
Disease-specific drug donations: costs and alternatives', MSF, October
2000.
16 www.fundthefund.org/gfatm.html
17 www.who.int/medicines/strategy/access/stacstrat.shtml