- The Truth About Drug Companies: How They Deceive Us and What To Do About It
- Random House, 336 pp.
Behind Drug Company Profits
When AstraZeneca was on the verge of losing its patent to manufacture exclusively the $6 billion a year heart burn drug Prilosec, it put in place a bold strategy: it patented and gained approval for a new heartburn medication, Nexium, that was, in reality, the active ingredient in Prilosec without the inactive ingredient. AstraZeneca then spent more than a half billion dollars in 2001 to market Nexium as superior to Prilosec—despite a lack of medical evidence to make such a claim—and managed to get the great bulk of its patients to switch to Nexium just as generic Prilosec was on the verge of becoming available.
While AstraZeneca’s re-branding of Prilosec might seem callous, it is just one of the ways pharmaceutical companies gouge the public to inflate their profits, according to Marcia Angell in her new book The Truth About the Drug Companies: How Hey Deceive Us and What to Do about It. Using her years of experience as an editor at the New England Journal of Medicine, Angell offers a well-researched and often astute indictment of an industry that innovates far less and relies on others’ work in discovering breakthroughs far more often than it would care to admit.
In fact, between 1998 and 2002, the Food and Drug Administration approved 415 new drugs, only 58 of which Angell calls innovative, meaning drugs that use previously unused ingredients to provide some sort of clinical benefit beyond previously available medication.
And what were the rest of these medications?
Me-too drugs, for the most part, Angell says, virtually identical copies of expensive, existing drugs, such as Nexium to Prilosec or the six, largely comparable statin drugs used for treating heart disease. Other examples include Eli Lilly’s Sarafem, an exact copy of its blockbuster drug Prozac with a different color coating, which the company began to sell after losing its Prozac patent to treat “premenstrual dyphoric disorder” instead of depression at three and a half times the cost of the generic version.
Changing the color of a drug and touting it as a medical breakthrough is much more profitable than researching and developing new medication, Angell notes. This may help explain why marketing accounts for approximately 30 percent of most pharmaceutical company’s budgets, but less than 15 percent of their budgets on research and development.
Research costs are so low that in 2002, the 10 U.S. drug makers on the Fortunate 500 list spent $5 billion less in research and development than it made in profits, giving those companies a walloping average profit margin of 17 percent.
Moreover, when pharmaceutical makers do actually produce truly beneficial drugs, they do so by relying on academic and government-sponsored research, Angell says.
Take AZT, the first drug found to be useful in treating HIV and AIDS. Physicians at the Michigan Cancer Foundation developed the AZT molecule in 1964, but found it to be ineffective for cancer treatment. In the mid-1980s, Duke University researchers working under a government-sponsored grant from the National Cancer Institute discovered AZT’s potential to slow AIDS in test tubes and in early tests of AIDS patients.
Only after these first human trials did Burroughs Wellcome, which had purchased the rights to the molecule before the HIV/AIDS test but never used it for treatment, get involved in testing AZT, which it eventually sold for $10,000 a year to desperate patients.
Angell takes care in noting that pharmaceutical companies do conduct useful and occasionally groundbreaking research for new medicine development, which adds critical weight to her argument.
Angell provides this AZT example not to dismiss drug companies entirely, but to shatter the industry-purported myth that companies like Burroughs Wellcome, now a subsidiary of GlaxoSmithKline, are themselves entirely responsible for creating new drugs.
Instead, she asks quite reasonably, when taxpayers fund research to prove a drug’s effectiveness, shouldn’t they be protected from exorbitant drug prices like $10,000 a year for AZT?
Angell’s case is weaker when she examines the relationships between doctors and drug makers. She notes the variety of methods—including providing doctors with $11 billion of free samples for patients and flying doctors to conferences as “consultants” when the extent of their consulting activities might mean watching and rating an advertising campaign—but understates physician responsibility for such practices.
While drug makers are, in essence, bribing doctors to at least consider their products by paying them as “consultants,” doctors are accepting these payments. Doctors accept free samples of Sarafem, say, and distribute them to patients, even though they could instead prescribe generic Prozac.
Though physicians may be too busy to stay abreast of every new drug in development, they bear a greater degree of responsibility than Angell allows for the success of drugs like Nexium.
At the same time, Angell makes a strong, lucid case that, despite industry claims, the high and rising cost of prescription drugs fund not a new round of breakthrough medicine but phenomenal profits on the backs of taxpayer research.