How the drug industry distorts medicine and politics. America’s Other Drug Problem By Arnold S. Relman and Marcia Angell

he american health care Drug Costs tures is growing among all the purchasers, system cannot live without the and the media is full of critical stories pharmaceutical industry, but he rising costs of drugs are the and commentaries. So far, however, none it may not be able to live with immediate public issue. Expendi- of this has had a noticeable impact on ris- it either, unless the industry T tures on prescription drugs—now ing drug expenditures. The pharmaceuti- Tis greatly reformed. For better and for roughly $170 billion per year—constitute cal industry has been fighting effectively worse, this enormous and hugely prof- a rapidly growing fraction of our $1.4 tril- against all efforts to control prices or to itable enterprise has become a dominating lion health care bill. Greater overall use limit the markets for its expensive new presence in American life. It uses its great of drugs, higher prices for new drugs, brand-name drugs. It channels these wealth and influence to ensure favorable and steady increases in the prices of exist- efforts and most of its public relations and government policies. It has also, with the ing drugs all contribute to an annual infla- lobbying activities through its trade asso- acquiescence of a medical profession ad- tion in drug expenditures of 14 percent ciation, the Pharmaceutical Research and dicted to drug company largesse, assumed (down from a high of 18 percent in 1999). Manufacturers of America (PhRMA). a role in directing medical treatment, clin- Within a few years, this surge in costs will PhRMA’s membership includes virtually ical research, and physician education that probably make drugs the second largest all American manufacturers of brand- is totally inappropriate for a profit-driven component of our national health care name drugs, and many foreign manufac- industry. Like most other for-profit cor- budget, after hospitalization. According to turers as well. With a full-time staff of porations, drug companies are impelled statistics kept by the Center for Medicare 120 in its Washington offices and hun- primarily by the financial aspirations of and Medicaid Services, American expen- dreds of lobbyists working the halls of their investors and executives. This incen- ditures on prescription drugs, expressed federal and state government, and with a tive may serve useful social purposes in the as a percentage of GDP, were virtually core budget of some $60 million and distribution of ordinary goods in most steady between 1960 and 1980 but large additional subsidies from the indus- markets, but prescription drugs are not increased rapidly soon thereafter, and by try for special projects, PhRMA conducts like ordinary goods, and the market for 2000 they had almost tripled. an extensive, virtually nonstop campaign drugs is not like other markets. The mis- Last year, a prescription for one of the on behalf of its clients. This is in addi- conception that drugs and their market twenty top-selling brand-name drugs— tion to the millions spent in Washington are like other goods and markets explains which is usually for a one-month supply— by individual pharmaceutical firms pro- most of the serious problems with the cost on average about $100. Prices for moting their own business objectives. pharmaceutical industry today. prescription drugs are on average much PhRMA adamantly opposes any regu- higher in the United States than any- lation of expenditures for brand-name Arnold S. Relman is professor emeri- where else in the world. Many patients, drugs. It argues that high prices simply tus of medicine and social medicine at particularly the elderly, take several drugs, reflect the very high costs of discovering Harvard Medical School and is writing so drug costs have become a heavy bur- and developing new drugs. Any form of a book on health care reform. Marcia den for them; but the costs of prescription price control, it claims, would eat into the Angell is senior lecturer in social medi- drugs are now a major problem for all who industry’s research and development bud- cine at Harvard Medical School and is must pay for them. That includes govern- get, and thereby choke off the pipeline that writing a book on clinical trials. Both ment and private insurance plans, and brings the public important new drugs. served as editor-in-chief of The New uninsured and partly insured individuals. Generic drugs are different, it points out, England Journal of Medicine. Resistance to escalating drug expendi- because they are merely copies of brand-

the new republic : december 16, 2002 : 27 H E REPUBLIC THE NEW name drugs whose exclusive marketing Third, while there is no doubt that the tory animals to determine how the drug rights have expired, and therefore their best of the new drugs have greatly im- is absorbed, metabolized, and excreted, manufacturers do not have high research proved or saved many lives, this is cer- and to learn about its toxicity. According costs. Moreover, PhRMA contends that tainly not true of all of them; most add to PhRMA’s annual report, approximately high profits are a necessary incentive for little or no medical value. The use of some one-quarter to one-third of all pharma- undertaking the risky and arduous busi- drugs has saved money by reducing hospi- ceutical R&D expenditures are involved ness of discovering innovative drugs. talizations or the need for expensive pro- in finding or acquiring a new drug candi- These drugs are vital to the health of cedures, but whether prescription drugs date and taking it through the pre-clinical Americans, according to the industry, reduce total expenditures for health care screening phase. The industry claims that and it would be disastrously shortsighted in the long run is an imponderable ques- only about one in one thousand screened to lessen the incentives to find them. tion. As expenditures on drugs continue to compounds makes it through the pre- PhRMA also maintains that, whatever the rise, the answer becomes more uncertain, clinical phase to the clinical phase—that expenditures for prescription drugs, we the industry’s insistence to the contrary is, to testing in human subjects. get more than our money’s worth. Accord- notwithstanding. To begin clinical testing, a drug must ing to this argument, the output of the Far from being a “research-based indus- be registered with the Food and Drug industry’s research laboratories not only try,” as it likes to call itself, the pharma- Administration (FDA), which by law must cures disease and extends and improves ceutical industry now devotes most of its ultimately approve all drugs for safety people’s lives, but probably even saves resources to functioning as a vast mar- and effectiveness before they can be sold. money by avoiding hospitalizations and keting and advertising enterprise whose There are four phases of clinical testing. other more expensive kinds of treatment. best products were discovered and often In Phase I, the new drug is given to a few In sum, the industry portrays itself as an partially developed elsewhere—usually at human volunteers to establish safe dosage exemplar of science-based free enterprise, public expense. And this industry is hardly levels and to study its metabolism and primarily dedicated to discovering— a model of free enterprise. It may be free to side effects. If the drug looks promising, through costly and risky research—new decide which drugs to develop and to set it moves into Phase II, which involves treatments for disease. It wants the public its own prices, but its lifeblood is govern- small clinical trials at various doses in to believe the catchy slogan of the phar- ment-granted monopolies—in the form patients with the relevant medical condi- maceutical giant Pfizer: “Life is our life’s of patents and FDA-approved exclusive tion. Finally, if all goes well, Phase III clin- work.” marketing rights. Drug companies appar- ical trials are undertaken. These evaluate ently see no contradiction in manipulat- the safety and the effectiveness of the he rhetoric is stirring, but the ing existing laws and regulations to stave drug in much larger numbers of patients arguments simply do not hold up. off competition from generic and foreign (hundreds or thousands of them), with the T First, research and development manufacturers and lobbying for even expectation of gaining FDA approval if (R&D) constitutes a relatively small part of more governmental protections while at the trials are successful. No more than one the budgets of the large drug companies. the same time using free-market rhetoric in five drug candidates entering clinical Their marketing and advertising expendi- to demand less government involvement testing make it through to FDA approval tures are much greater than their invest- in the pricing and the marketing of drugs. and reach the market, so the chances ment in R&D. Furthermore, they make The industry wants to obscure a basic that a drug candidate, once selected, will more in profits than they spend on R&D. fact: there is not and there cannot be any- ever get to the market are said to be less In fact, their profits are consistently much thing like a free market in prescription than one in five thousand. higher than those of any other American drugs. The pharmaceutical business is, for The total time from the beginning of industry. Prices (which bear little relation many reasons, critically dependent on pre-clinical testing of a candidate drug to the costs of developing and manufactur- government help. That is why it spends so to FDA approval ranges from about six ing a drug) could be lowered substantially much on lobbying. Moreover, its sales are to ten years. That includes the time the without coming close to threatening the not determined primarily by price or by FDA spends on review of the application R&D budgets of drug companies, much consumer choice, but by the physicians for approval (called a new drug applica- less their economic survival. who prescribe drugs. And that is why it tion, or NDA), which averages about 16 Second, the pharmaceutical industry is spends so much more to influence the months. But these times are quite vari- not particularly innovative, and it is grow- behavior of doctors. able, and in special cases they can be ing less so each year. The great majority of greatly shortened. After approval of a new drugs coming to market these days, R&D Costs: drug, the FDA requires the manufacturer although patented, are not new at all. How High Are They Really? to continue its surveillance of the drug They are variations on older drugs already and to report unanticipated side effects. on the market. These are called “me-too” efore discussing the costs of The company may also want to do addi- drugs, and they represent attempts to bringing a new drug to market, we tional clinical studies to gain approval capitalize on the success of “blockbuster” Bmust first explain the steps in that for new uses or formulations of the drug. drugs. (Blockbusters are defined here as process. The discovery of a drug candidate All clinical studies after the initial ap- drugs with over $500 million in annual is usually the result of research into the proval are designated as Phase IV trials. sales.) The few drugs that are truly innov- molecular basis of disease, which is done According to PhRMA’s annual report, ative have usually been based on taxpayer- primarily in academic or government lab- the large drug companies last year spent supported research done in nonprofit aca- oratories. The next step is the pre-clinical approximately 15 to 17 percent of their demic medical centers or at the National phase of the R&D work, which is usually income on R&D (before adjustment for Institutes of Health. In fact, many drugs done by industry—although not necessar- tax deductions and credits). This figure is now sold by drug companies were licensed ily by the company that ultimately sells necessarily soft, since in general the in- to them by academic medical centers or the drug. This involves biological screen- dustry’s accounting for its R&D expenses small biotechnology companies. ing and pharmacological testing in labora- leaves a lot to be desired, and there are

28 : december 16, 2002 also differing estimates of total income. was released last year by Public Citizen, but what the authors call the “capitalized” Much R&D information is considered the Washington-based consumer watch cost—that is, it includes the estimated proprietary. Individual companies report group. Among Public Citizen’s objections revenue that might have been generated total R&D expenditures in their Securities to the work of DiMasi’s group, we consider over the long development period if the and Exchange Commission (SEC) filings, the following to be most important. money spent on R&D had instead been and PhRMA’s annual report gives First, the analysis concerns the costs invested in the equity market. This theo- industry-wide averages for total R&D as only of new molecular entities (NMEs), retically lost revenue is known as the well as average figures for the breakdown sometimes called new chemical entities “opportunity cost,” and it is added to the of expenses by general R&D functions. (NCEs). These are drugs whose active industry’s out-of-pocket costs of R&D. But the companies do not make available ingredients are newly discovered or syn- The authors seem to justify this interest- most of the really interesting details, such thesized molecules. The analysis was also ing accounting maneuver on the grounds as what each company spends, and for restricted to NMEs developed entirely that from the perspective of investors, a what purposes, on the development of within the drug companies. The 68 drugs pharmaceutical company is really just each drug. We also do not know how much selected for study are never named; nor one kind of investment, which they chose marketing is concealed under the rubric of are the manufacturers or the individual among other possible investment options. “development,” particularly in Phase IV costs. But NMEs are only a minority of But while this may be true for investors, post-approval studies. Still, one financial the drugs that are newly approved. As we surely it is not true for the pharmaceu- detail of R&D expenses has been widely already noted, most are new dosage forms tical companies themselves. The latter publicized by the industry: the esti- have no choice but to spend money mated average total R&D cost of on R&D if they wish to be in the each new drug brought to market. pharmaceutical business, so they That figure is currently said to be have no “opportunity costs.” To add $802 million (in year 2000 dol- the investors’ opportunity costs to lars), including the amount spent the company’s out-of-pocket cost on the many failures and false of developing a drug seems rather starts. This huge outlay, which we odd. DiMasi assures us that this are told is rising rapidly with the calculation conforms with stan- growing expense of clinical trials, is dard economic thought and said to justify—indeed to require— accounting practice, but recent the high prices of new drugs. events on Wall Street make such Pre-clinical and clinical testing reassurance less comforting than and the other tasks required before it might once have been. In any a drug can be brought to the FDA case, when DiMasi and his col- for approval can be long, difficult, leagues add the “opportunity cost” and very expensive. But $802 mil- to their calculated out-of-pocket lion apiece? To put it in the kind- cost of pharmaceutical R&D ($403 est terms, that is an imaginary million per drug), the final esti- number. It is based on debatable mate is approximately doubled. accounting theory and it is prem- Finally, the Public Citizen analy- ised on blind faith in the confiden- sis points out that since R&D ex- tial information supplied by the penses are deductible from a firm’s industry to its economic consul- tax base, calculation of the cost of tants at the Tufts Center for the R&D should be reduced by the Study of Drug Development, the amount of corporate tax avoided. University of Rochester Graduate This tax saving would reduce the School of Business Administration, net cost of R&D by a percentage and the Department of Economics ORVIDAS KEN equal to the corporate tax rate at Duke University, who arrived at this or combinations of drugs already on the (currently about 34 percent). DiMasi says number. Over the years, these consultants market. Moreover, an increasing number that the corporate tax applies to net in- have analyzed the costs of new drug devel- of drugs are simply licensed from aca- come, and since the latter is already opment, and the $802 million estimate demic medical centers or biotechnology reduced by the R&D expenditures, there represents an updating of their work. companies, and are not entirely devel- is, properly speaking, no tax saving and Although this latest analysis has not oped in the drug companies. So, despite no need to adjust the calculation of the yet been formally published, it was an- the implication by the industry that the R&D cost that he and his colleagues are nounced at a forum and a press conference DiMasi calculations tell us the average making. We are not qualified to debate the last year in Philadelphia. PhRMA, leaders cost of the R&D needed for all the new accounting terminology, but it seems to of the industry, and its defenders in the drugs sold, these estimates seem to be us only common sense that were it not for media have been trumpeting the results based on sampling from a highly selected the full deductibility of R&D from the tax ever since. Joseph DiMasi of Tufts Uni- group of drugs. Full disclosure of the data, base, the pharmaceutical industry’s taxes versity, the senior author of this work, including the identity of the drugs selected would be higher and its after-tax income kindly sent us a draft of the manuscript for study and the costs for each, would would be lower. Why is it not reasonable, describing the analysis, and he discussed have been important for the evaluation of therefore, to deduct this difference— his views with us in several telephone con- the significance of this economic analysis. whether it is called a “tax saving” or not— versations. He also shared his opinions Second, the final estimate of the cost per from the out-of-pocket expenditures on about a critical analysis of this work that drug is not the actual out-of-pocket cost, R&D when calculating the net cost of

the new republic : december 16, 2002 : 29 H E REPUBLIC THE NEW R&D to a pharmaceutical firm? The Office despite their expenses, they are im- ous other public and nonprofit institu- for Technology Assessment, whose report mensely profitable. The ten American tions. Remember that these are patent on this subject in 1993 is often cited in- pharmaceutical companies in the Fortune applications for all new drugs and medical correctly as supporting the DiMasi analy- 500 list last year ranked far above all other innovations, not simply for those ulti- sis because it also considers opportunity American industries in average net return, mately judged to be clinically important. costs, agrees with Public Citizen’s position whether as a percentage of revenues (18.5 Had the data been limited to only major on tax deductions. percent), of assets (16.3 percent), or of breakthrough drugs, the industry’s role shareholders’ equity (33.2 percent). (For would undoubtedly have looked even n sum, we believe that Public Citi- comparison, the median net return for smaller. zen’s criticisms are substantially cor- other industries was only 3.3 percent of The relatively small contribution of Irect, and we agree with the group’s revenues.) And this has generally been industry is also clear from an unpublished conclusion that even if one were blindly to the case for the past two decades. A busi- internal document produced by the NIH accept the reliability of the unrevealed ness consistently this profitable cannot by in February 2000, which was obtained by data used in the calculations, the $802 any stretch of language be described as Public Citizen through the Freedom of million estimate of “capitalized” cost pro- “risky” or as needing special protection of Information Act. The NIH had selected duced by the industry’s economic consul- its revenues. the five top-selling drugs in 1995 (Zantac, tants should be reduced to an after-tax net Zovirax, Capoten, Vasotec, and Prozac) of less than $266 million. But remember, How Innovative Is the and found that 16 of the 17 key scientific that would be the average out-of-pocket Pharmaceutical Industry? papers leading to the discovery and devel- R&D cost only for the new molecular enti- opment of these drugs came from outside ties developed entirely in-house, not the he pharmaceutical industry the industry. Looking at all the relevant average cost of all of the drugs approved justifies its extraordinary profits published research, not just at the key each year. Most approved drugs enter- T largely by the claim that they are studies, 85 percent came from American ing the market are not really new, or they necessary as an incentive to continue its taxpayer-supported laboratories or for- are licensed from other sources, or both. vital research. The implication is that if eign academic laboratories. While it is Such drugs probably have lower R&D the public wants new cures for diseases, it true that academic scientists may have costs, although there are no good data on should give the industry free rein. It is more incentive to publish their research this point. We conclude that the average important, then, to ask just how innova- results than do their colleagues in indus- out-of-pocket, after-tax R&D cost of most tive the pharmaceutical industry really try, these data are persuasive: publicly of the drugs upon which the industry’s is. We think the answer is not very. Drug funded medical research is by far the revenue now depends was probably much companies greatly exaggerate their role in major source of pharmaceutical innova- lower than $266 million (in year 2000 the scientific work leading to the discovery tion—not the industry itself. dollars). Tax credits for certain types of of new drugs. As we have already noted, R&D would probably reduce that estimate the development of important new drugs more concrete appreciation even more. is usually the culmination of many discov- of the relative contributions of The suspicion that average R&D costs eries in basic science laboratories outside A outside scientific laboratories and per drug are not nearly as high as claimed the pharmaceutical industry. This work the drug industry can be gained by con- is further supported by other data pro- increases the understanding of the molec- sidering the histories of three impor- vided by Public Citizen. If one divides the ular basis of disease and thereby identifies tant, groundbreaking drugs that have industry-supplied estimates of total R&D promising targets and models for the de- appeared on the market during the past expenses by the total number of drugs sign of new drugs. Most of this ground- two decades. entering the market, making appropriate breaking research, done with support Zidovudine, commonly known as AZT, allowances for the lag time between ex- from the National Institutes of Health was first marketed in the United States penditures and the date of entrance into (NIH) or other institutions, appears in in 1987 by the company then called Bur- the market, the resulting net out-of- scientific journals before the big compa- roughs Wellcome Co., which is now part pocket, after-tax costs would probably be nies become involved. The industry is cer- of a much larger firm called Glaxo- less than $100 million for each drug that tainly not the major engine of discovery SmithKline. AZT, sold under the brand was approved between 1994 and 2000. and medical progress that it would have name Retrovir, was the first drug shown That, admittedly, is only a rough approxi- the public believe. Public investment in to be effective in suppressing HIV infec- mation, but the general conclusion seems research has been primarily responsible tion. It has recently been joined by sev- inescapable: that the $802 million esti- for the great medical advances society is eral other effective drugs, but it usually mate now being promoted by the industry enjoying, and this is likely to be so in the remains part of the combination drug and its partisans is much too high. future as well. therapy still in use. The AZT molecule was Whatever the cost of bringing each new A general idea of the relative contribu- first synthesized at the Michigan Cancer drug to market, the total R&D expendi- tion of the pharmaceutical industry to the Foundation in 1964 as a possible treat- tures of the pharmaceutical industry— underlying medical research that leads ment for cancer and was studied in many according to PhRMA, now about $30 to the development of new drugs can be laboratories for that purpose. In 1974, in a billion for all its members in the United gained from a recent study published German basic science laboratory, it was States and abroad—are indeed large. But in the journal Health Affairs. The study found to be effective against experimental they should be compared with reported reported that in 1998 only about 15 per- viral infections in mice. In 1983–1984, expenditures on marketing and adminis- cent of the scientific articles cited in patent U.S. government–supported research at tration, which are more than twice as applications for clinical medicine came the NIH and at Duke University showed much as R&D expenditures. Moreover, from industry research, while 54 percent that this molecule also suppressed the the most important financial fact about came from academic centers, 13 percent AIDS virus in human cells in test tubes the major pharmaceutical firms is that, from government, and the rest from vari- and, later, that it was effective in patients.

30 : december 16, 2002 Encouraged by the Stevenson-Wydler in annual sales—mainly from Medicare, different laboratories showed that this and Bayh-Dole Acts of 1980 (more about which pays for the treatment of kidney rejoining creates a new gene that directs Bayh-Dole later), NIH-supported scien- failure. Thus, it turns out that taxpayers the production of an abnormal enzyme, tists began to collaborate with Burroughs pay whatever Amgen charges for a drug which causes white blood cells to become Wellcome. By 1985, the company was able discovered largely through taxpayer- malignant. Other work had shown that to obtain a patent on the use of AZT in the supported research. For license of its similar types of enzymes were probably treatment of AIDS and to proceed with recombinant gene patent, Columbia re- involved in a variety of other cancers, clinical trials that enabled it to receive ceives 1 percent of all sales from Amgen. although not as directly; so chemists in FDA approval after an expedited review Israel and in the laboratories of Novar- that required only four months—one of matinib mesylate, marketed as tis independently set about synthesizing the shortest on record. This history shows Gleevec, is a new molecule that was molecules that would inhibit the action that the drug treatment of AIDS, certainly Isynthesized in the early 1990s in the of these abnormal enzymes. Novartis one of the major public health advances chemistry laboratories of the Swiss phar- patented several such inhibitor molecules in our time, began with basic pre-clinical maceutical firm Novartis and has recently in 1994 and added them to its collection of work conducted almost entirely outside been shown to be spectacularly successful potentially useful drug candidates. the drug industry and largely supported in the treatment of a type of blood cancer There was apparently no immediate in- by taxpayers. called chronic myeloid leukemia (CML). terest at Novartis in determining whether This form of leukemia affects about any of these new inhibitors might be clini- rythropoietin, which is mar- 20,000 adults in the United States at any cally useful in the treatment of CML until keted by Amgen under the name given time, and it is usually fatal after Dr. Brian J. Druker, a clinical research E Epogen, is a protein hormone nor- about three to five years. The story of ima- physician in hematology at the Oregon mally produced in healthy kidneys that tinib is particularly instructive and worth Health Sciences University in Portland, stimulates red blood cell production. telling in some detail. became interested in their possible use Technically, it is a “biological,” not a “drug,” The long trail of basic scientific research for this purpose. Much of the rest of this because it is a natural substance made in leading to the development of this drug story we learned from Druker. Working the body. We include it in our discussion began back in 1960 with the discovery of a with a scientist at Novartis, he obtained a because Amgen is an important member characteristic abnormal-looking chromo- small supply of several of the company’s of PhRMA, and because many pharma- some in patients with CML. Subsequent most promising enzyme inhibitors. He ceutical firms sell biologicals as well as work showed that the abnormal-looking found that imatinib was the most potent drugs. Erythropoietin was discovered chromosome is due to the breakage and in suppressing the growth of malignant through a long series of investigations the subsequent rejoining of parts of two CML blood cells in culture, and further- in academic laboratories that began in chromosomes. Later studies from many more that it had no effect at all on normal the 1960s and was largely supported by the NIH. This work established that the severe anemia characteristic of chronic kidney disease was largely caused by the failure of the damaged kidneys to manu- facture erythropoietin. The isolation and the definitive chemical identification of the substance was finally accomplished by a scientist at the University of Chicago in 1976, but the university did not patent the molecule or initiate any efforts to develop it for clinical use. To use erythropoietin in the treatment of anemia requires a safe, efficient method of biosynthesis, and this was Amgen’s contribution. The task of the company’s scientists was facilitated by a recombinant gene technique that was developed and patented at Columbia University (again with NIH support). Amgen, then a small biotechnology start-up company, licensed the technique from Columbia, used it to develop a practical method for recom- binant synthesis of erythropoietin, and patented the biosynthetic molecule. By 1987, Amgen had completed its first clini- cal trials and was able to show that Epogen was safe and effective in treating anemia in patients with kidney failure—a major medical advance in the field. With FDA approval, Epogen has been widely and successfully used, and now generates for Amgen more than $2 billion

the new republic : december 16, 2002 : 31 H E REPUBLIC THE NEW blood cells. Such specific action is almost medicine, it is the doctor, the patient, and cians, even many of these drugs would be unheard of in cancer treatment, and those paying for our medicines who will more accurately described as modest, in- Druker urged the company to explore this determine its true value.” Since those who cremental improvements.) All the others exciting lead. But there was little corpo- pay for a drug are not usually able to judge were classified as appearing to have “ther- rate enthusiasm for undertaking further its value in comparison with other drugs apeutic qualities similar to those of one or clinical work on imatinib. Druker never- or other forms of treatment, and since more already marketed drugs.” Moreover, theless persisted, and Novartis finally those who can make that judgment—the just 15 percent of the approved drugs were agreed to support cautious, limited tests doctors—do not pay for the drug, we do classified as both a significant improve- of the drug in Druker’s clinic and two not understand Gilmartin’s comment. ment and an NME. Last year, the FDA other sites. By 1999, Druker was able to Taken literally, it would mean that the approved 66 drugs for the entire drug report spectacularly successful prelimi- high prices of today’s me-too drugs reflect industry. The agency classified only ten as nary results before a large national meet- their medical value—which seems very a significant improvement, and only seven ing of American hematologists. The news unlikely. Could he really be saying that of these were NMEs. So the already small about imatinib’s remarkable effectiveness the price is simply determined by what- percentage of newly marketed drug prod- in CML quickly became public, and it ever the market will bear? ucts that are really novel and important aroused great interest. The company then seems to be dropping still further, with decided to proceed with large-scale clini- hese three stories about drug me-too’s becoming the rule. This trend cal trials to determine whether the drug development could be multiplied has continued during the current year. was safe enough and effective enough to T many times and all the stories warrant FDA approval and general use in would make the same point: the discovery ndustry spokespeople some- CML. Last year, once the positive clinical of the important and innovative drugs in times justify the growing profusion of evidence was in hand, the FDA quickly the past few decades usually began with Ibrand-name me-too drugs by arguing gave its approval. basic scientific work at NIH or academic that they increase market competition and research laboratories, supported by gov- keep prices down. For this reason, they o novartis’s r&d investment in ernment grants. There have been excep- object to the term “monopoly” as applied testing imatinib for the treatment of tions, but the pharmaceutical industry has to the exclusive marketing rights con- SCML was made several years after so far devoted most of its R&D resources ferred by patents or FDA approval. But there was already good scientific evidence not to scientific discovery, but to the prac- me-too drugs are not promoted on the to suggest that it might be useful. Druker tical application of discoveries generated basis of price. Instead, they are marketed told us that he did not know how much the at taxpayer expense and to the develop- as being especially effective—usually in company’s initial reticence was due to its ment of variations on or new uses for total disregard of the facts. There is little finding that the drug had toxic effects in drugs already on the market. evidence of price competition. Thus, dogs at high doses; but given the relatively All of this makes good business sense for although the availability of multiple simi- small number of patients with CML, he the pharmaceutical industry if, like most lar brand-name drugs may have some believes that a purely business calculation industries, it is primarily interested in im- modulating effect on prices, it is certainly of the size of the likely market also played mediate profits. The kind of wide-ranging, not nearly as great as the price competi- a role. In any case, the great initial success open-ended, and relatively undirected tion that results when unpatented generic of this new drug in CML has sparked basic research into the molecular biology drugs enter the market. exploration, in clinical centers and labo- of disease that is done mainly with NIH Other apologists claim that in drug ratories around the world, of a similar support is very expensive, and its results therapy one size does not fit all. Very simi- approach to the treatment of other can- are unpredictable. Whether a given line of lar drugs, they say, may vary in their cers. In the meantime, clinical studies to investigation will quickly (or ever) lead to effects from patient to patient, so it is im- determine imatinib’s long-term effects on the development of a new drug cannot portant to have choices among them. But CML continue. For most patients start- be known in advance. But this kind of there is a paucity of evidence to support ing on Gleevec, Novartis now charges research is the only way in which genuine the notion that if a particular drug does $25,000 for a year’s supply of the drug, medical progress is made. Pharmaceuti- not work for a patient, a virtually identical and the current expectation is that these cal companies, pressured by investors to one will. It might occasionally be useful to patients will have to be on treatment for keep delivering profitable new products— have a new, long-acting version of an iden- at least several years, with or without whether they are medically important or tical short-acting drug that is already on supplemental therapy. not—must use less risky strategies. They the market. But we think most experts How did the company decide on Glee- use their R&D dollars to imitate top- would agree that there is little or no ratio- vec’s walloping price? We do not know, selling drugs already on the market or to nale for having four or more me-too drugs, but in this connection it is interesting find new uses for their own blockbusters. as is now the case in many fields. There to consider the comment made last year That me-too’s have come to dominate are now five patented statins (a type of by Raymond V. Gilmartin, the influential the new drug market is documented very cholesterol-lowering drug) on the market, chairman and CEO of Merck, at the press clearly by the FDA, which classifies drugs four patented anti-depressants of the conference announcing the latest R&D under review by their likely therapeutic so-called SSRI (selective serotonin reup- cost estimate by DiMasi and his col- value and by whether they are NMEs or take inhibitor) type, and seven patented leagues. Referring to the $802 million per simply re-formulations and combinations angiotensin blocking agents (drugs to drug estimate, Gilmartin remarked: “The of old drugs. Over the twelve-year period treat high blood pressure and heart fail- price of medicines isn’t determined by beginning in 1990, 1,035 drugs were ure). We are aware of no good studies their research costs. Instead, it is deter- approved, and of these only 23 percent establishing the clinical need for so many. mined by their value in preventing and were classified as likely to be a “significant Blockbusters have one thing in com- treating disease. Whether Merck spends improvement” on products already on the mon besides their high sales: they are usu- $500 million or $1 billion developing a market. (In our own judgment as physi- ally treatments for very common lifelong

32 : december 16, 2002 conditions. The conditions are not so seri- although part of their salary might have financial ties of clinical faculty with the ous that they are lethal, but they do not been paid from the grant as compensa- pharmaceutical industry. Almost every go away either. Sometimes they are little tion for the time that they invested in the academic expert who might be qualified to more than annoyances, like hay fever. trial. direct a clinical trial now is paid by one or Consequently, large numbers of people As the number and the size of clinical more firms as a consultant or a speaker. may take drugs for these conditions for trials have grown and the industry’s need Some medical schools have policies limit- years, and that is why the markets are so for faster results and access to large num- ing these ties and preventing faculty with large. People with uncommon or acute bers of patients has rapidly increased, financial connections to a company from diseases are generally not of much interest more and more trials (over half of them) doing clinical research on that company’s to drug companies. The major difficulty in have been shifted to private-practice set- drugs, but many medical schools do not, launching a me-too blockbuster, however, tings outside the academic centers, where and virtually all of them allow exceptions is in persuading doctors and patients that pharmaceutical firms or their contractors to their generally lenient rules. The conse- it is better than the others, since the evi- have assumed direct responsibility for the quence is that the public can no longer dence is at best marginal. Unfortunately, conduct of the clinical studies. A large assume that clinical reports from acade- the FDA will approve a me-too drug on new industry has arisen to serve the phar- mic centers are written by physicians who the basis of clinical trials comparing it not maceutical firms’ needs. It consists mainly have no vested interests in the results. with an older drug of the same type, but of companies called contract research About the best to be hoped for is that these with a placebo or a drug of another type. organizations (CROs), which are hired by interests will be disclosed in the published Drug companies would rather not have a the drug companies to organize and to reports, and that any bias resulting from head-to-head comparison, because they conduct clinical trials. Often working these financial connections will be bal- might lose. To launch a me-too drug suc- through other companies, they employ anced by reports from other companies cessfully, then, requires a lot of market- physicians in private practice to recruit and researchers with competing interests. ing, which largely explains the industry’s patients as subjects for the studies. There But the point is that the public can no mammoth marketing expenditures. are reportedly now over one thousand longer be confident that the testing of new CROs worldwide, and they generated an drugs is unbiased. Testing Drugs on People estimated $7 billion in revenues last year from their contracts with the pharmaceu- he pervasive connections be- he only way to determine a new tical and biotechnology industries. Al- tween the pharmaceutical industry drug’s safety, effectiveness, and—if though the physicians they hire to recruit T and academia are not limited to T this important question is asked— patients also help with the conduct of clin- clinical trials. Virtually every research- its relative efficacy compared with existing ical trials, the results of the studies are ana- intensive medical center in the country drugs is through properly designed and lyzed and interpreted by the companies. now has contractual ties with one or more conducted clinical trials, that is, tests on Control over most clinical trials is now drug firms, usually involving subsidies for people. These trials represent the third largely in the hands of the pharmaceutical or collaborations with particular research phase of the R&D process that we have industry, and the influence of the acade- programs and faculty. In return, the firms described, and they are the most expensive mic centers and their clinical faculty is gain information about new findings part of clinical development. Before the greatly reduced—even in trials conducted before publication, hands-on laboratory FDA will consider approving a new drug at those centers. These dramatic changes education for their research personnel, for marketing, the manufacturer must have transformed the entire system for the and rights of first refusal on patents for the present the results of at least one (and development and the marketing of new products of this research. Drug companies usually more) Phase III trials for review drugs, with troubling consequences. are even beginning to locate their new by the agency as part of the new drug In an effort to recapture income from research laboratories near academic cen- application. Although the FDA usually the pharmaceutical industry, most of the ters to facilitate such relationships. Merck reviews the results of the trials submitted leading academic centers have set up is now building a large new research facil- to it very carefully, it cannot guarantee clinical-trials offices to provide the indus- ity on land in Boston immediately adja- the integrity of the work, so it is essential try with the same quick, comprehensive cent to the Harvard Medical School (the that clinical trials be well designed and services that the drug firms have been get- first such facility in an area previously executed without bias or manipulation of ting from the CROs and other private reserved for academic and clinical insti- the results. research businesses. These centers now tutions), and Novartis has leased two Until the past decade, around 80 per- openly court the pharmaceutical industry, research facilities in Cambridge close to cent of clinical trials were conducted on offering the services of their clinical fac- MIT, joining several biotechnology com- patients at academic medical centers and ulties, access to patients, and help with panies already there. teaching hospitals under the direction of the design, the conduct, and the analysis We do not doubt that collaboration in medical faculty, who usually initiated the of clinical trials. Although some of the basic research between academic centers application for support of the trial. Most stronger academic institutions still insist and industry, with appropriate safeguards of these trials were supported by grants on faculty control of the studies and the to preserve the integrity and the indepen- from a pharmaceutical company to the reporting of results, the pendulum of dence of academic institutions and their academic institution, although some were power has shifted. Drug companies have faculties, can be very useful. Yet physical funded by the NIH. The design and exe- increasing control over the evaluation of proximity and close economic ties be- cution of the studies and the collection, their own products. A very recent increase tween the industry and the academy have interpretation, and reporting of the data in NIH support of clinical trials may now a serious drawback. They can involve aca- were all the primary responsibility of the be starting to reduce the dependence of demic centers and their faculty too deeply academic team, made up of experts in major academic centers on contracts with in commercial enterprises, at the expense the field. They had no financial ties to the the pharmaceutical industry. of their traditional missions of education, company or to the drug being tested, Adding to the problem are the growing patient care, and free-ranging research.

the new republic : december 16, 2002 : 33 H E REPUBLIC THE NEW They also threaten the objectivity that is is the effect of the industry’s marketing to prepare teaching programs and procure the essential hallmark of good scientific and advertising money on the indepen- medical speakers. The drug companies research and medical education. Recently dence and the trustworthiness of the offer these programs to hospitals or med- the Association of American Medical Col- medical profession. As a learned profes- ical groups that are accredited to provide leges (AAMC) suggested guidelines for sion, medicine has a fiduciary responsibil- CME. Many MECCs are also officially managing financial conflicts of interest, ity to patients in particular and to society approved by the medical profession’s CME but these guidelines are not binding, and in general to provide expert, unbiased accrediting body to award education cred- they do not address the fundamental issue advice on the use of drugs, based on the its on their own. The MECCs are candid of whether medical schools and their fac- best available scientific information. Also, in their advertising to their drug indus- ulties should have such extensive ties with the profession has an obligation to edu- try clients. They say their purpose is to industry in the first place. cate its own practitioners about the selec- increase their clients’ sales through pro- tion and discriminating use of the best fessional “education”—and that is what Marketing: Where the Action Is and most cost-effective drugs—old and they do. If any further demonstration were new, patented and generic. This should needed of the true purpose of what the ccording to data published be largely the responsibility of medical industry calls “medical education,” it was in their SEC reports for 2001, the schools, resident training programs in clearly supplied by a recent front-page A big drug companies spent on aver- hospitals, and the postgraduate or con- article in The New York Times, with an age about 35 percent of their income on tinuing medical education (CME) courses accompanying report on the PBS pro- what most of them call “marketing and organized by professional societies, gram Now with Bill Moyers. According to administration.” At least one major com- schools, and hospitals. The latter are re- these sources, three of the largest advertis- pany, Novartis, separates these two func- quired for renewal of doctors’ licenses. ing agencies handling pharmaceutical tions in its report, assigning 36 percent But the professional bodies that ought accounts are now investing in companies of total income to “marketing and dis- to be responsible for CME have been that do contract research and prepare tribution” and 5 percent to “administra- more or less co-opted by the pharmaceu- “educational” packages for the drug indus- tion and general overhead.” It is unlikely tical industry. There are guidelines, agreed try. This astonishingly incestuous arrange- that other companies differ very much to by the industry and the professional ment makes it clear that research and from Novartis in this relative weighting. institutions, that are supposed to protect education have both become subordinate Still, not much is known about the exact against commercial influence on the con- to sales promotion. distribution of expenditures within the tent of this education, but most of these “marketing” category. Whatever the exact guidelines are general and vague. They he largest single piece of the figures, it seems clear that marketing and require that the medical institutions known drug-marketing budget is related activities account for the largest accepting industry support merely ap- T spent on the direct promotion of part of the industry’s expenses. They cer- prove the CME programs, although the drugs to doctors by representatives of drug tainly are far greater than the expenses company paying the costs usually recom- firms. (This is called “detailing.”) There for R&D or manufacturing. By following mends the speakers—who, more often are some 88,000 sales representatives the money, we conclude that marketing, than not, are consultants for the company. throughout the country, who are paid more not the search for new drugs and their The softness of the guidelines is hardly than $7 billion per year by the drug compa- development for clinical practice, is the surprising, given the fact that they were nies to visit doctors in hospitals and offices most important focus for the industry. drafted in 1992 by a task force consisting to pitch their employers’ products. The This conclusion is also supported by the almost equally of representatives of indus- number and the ubiquity of these salespeo- distribution of employees as reported by try and of the medical profession. They ple have increased greatly over the past few PhRMA. More than one-third of the in- were adopted with only minor changes years. They roam the halls of almost every dustry’s workforce is employed in mar- by the American Medical Association sizable hospital in the country seeking keting, much more than in R&D, manu- (AMA) and the national professional orga- opportunities to talk with the medical staff facturing, or administration. nization responsible for regulating CME. and offering gifts (such as books, golf If the industry argues that drug prices The drug companies pay the piper, and balls, and tickets to sporting events), drug necessarily reflect its high costs for R&D, by one means or another they call the samples, and free meals. In many teaching then what can it say about its much higher tune; and the tune is keyed to their sales hospitals, drug representatives regularly costs for sales promotion? Those who pay pitch. The results are clearly demon- provide lunches for the resident staff in for prescription drugs are paying for mar- strated by published studies showing that order to gain their ear. They attend confer- keting, too. But if the current crop of new industry sponsorship of CME is usually ences, they are invited into operating and drugs were as valuable as the industry followed by increased prescribing of the procedure rooms, and sometimes they are would like us to believe, and if there were sponsor’s products. Were there not clear even present when physicians examine not so many me-too drugs, surely it would marketing and sales benefits for the spon- patients in clinics or at the bedside. not be necessary to spend so much money soring companies, they would not spend Sales representatives also regularly visit pushing them. A genuinely important the huge sums that they do on supporting doctors in their offices, often armed with new drug, such as Gleevec, does not have these activities. Most companies pay for information about the doctor’s prescribing to be marketed widely. Cancer doctors medical education from their marketing habits obtained from local drugstores. treating patients with CML will know budgets: this fact should speak for itself. (There are firms that buy this information about this drug and use it. No sales pitch Perhaps the clearest indication that from pharmacies and sell it to drug com- is needed. what the industry calls “education” is really panies.) They make themselves welcome Still, the extravagant expenditures on intended to promote sales is the growth of by taking practitioners to dinner in fine drug marketing and their effect on drug “medical education and communication restaurants, where company-selected and prices are not the worst part of this story. companies,” or MECCs. MECCs are for- -paid experts sometimes give talks, and What should be of even greater concern profit businesses hired by drug companies they distribute favors and gifts of all kinds

34 : december 16, 2002 to doctors and their office staffs. Free sam- ings resembles a bazaar, dominated by prefers to keep these matters secret. ples of drugs for physicians to give to their the presence of garish drug company This kind of promotion masquerading patients are a major gift item provided by exhibits and friendly salespeople eager to as “education” is what largely accounts for representatives of large drug companies. ply physicians with samples, gifts, and the market success of new and expensive Industry sources say they spend about $8 services while they pitch their company’s drugs that are not significantly different or billion per year on free samples. These drugs. In the exhibit areas adjacent to better than less expensive existing drugs. samples are an effective way to get doctors the meeting rooms, physicians wander And for this both the industry and the and patients committed to the continued through a carnival-like scene. Many carry medical profession must take responsibil- use of the sampled product—usually an large canvas bags, bearing drug company ity. Although there has been criticism expensive, newly approved drug, with a logos, stuffed with goodies. To some senior from some members of the profession, long period of exclusivity ahead of it. physicians who have watched the atmos- medical societies and associations have Sometimes doctors are even paid to pre- phere at these meetings evolve from the taken no effective steps to oppose these scribe the product and to report on the sober professionalism of a few decades practices. Most of the profession, it seems, results, under the guise of participating in ago to the trade-show hucksterism of finds it difficult to break the habit of tak- a company’s continuing “Phase IV” re- today, it is a dispiriting spectacle. ing money and gifts from the drug indus- search. How much of this kind of drug The cumulative effect of all of this is to try. Over a decade ago the AMA issued promotion masquerades as R&D is an blur the crucial distinction between drug guidelines on accepting gifts from indus- interesting but unanswered question. marketing and professional education. try, but they were voluntary and quite Recently, according to an article in permissive. They have not been American Medical News, at least observed in practice nor monitored two new businesses in the Cin- by the AMA. PhRMA recently cinnati area have been established issued guidelines of its own, which to broker meetings between drug closely follow those of the AMA, representatives and physicians in but, not surprisingly, they are also office practice. One such business voluntary and permissive. It re- charges drug firms $105 for each mains to be seen whether this lat- ten-minute meeting with a doc- est effort will have any significant tor—of which $50 goes to the doc- effect on drug-industry practices tor and $5 to a charity selected by or will prove to be just another the doctor from a list of five. public relations ploy. An effective marketing tech- The Office of the Inspector Gen- nique used by many drug firms is to eral (OIG) of the Department of focus on so-called “opinion leaders” Health and Human Services in a particular medical specialty. recently placed in The Federal Reg- These are prominent experts, ister for comment a draft of pro- usually on medical faculties and posed guidelines for ethical and hospital staffs, who write papers, legal relationships between the contribute to textbooks, and give pharmaceutical industry on the talks at medical meetings—all of one hand and physicians, pharma- which influence the use of drugs in cists, and various purchasers of their fields. Companies shower spe- drugs on the other. The OIG notes cial favors on these physicians, offer that many of the existing practices them honoraria as consultants and involving gifts and payments to speakers, and often pay for them to physicians are intended to influ- attend conferences in posh resorts ence the prescribing of a drug ostensibly to seek their advice or to company’s products and may coach them in public speaking. In potentially violate federal anti- many medical specialties these days, it is Medical education worthy of the name kickback laws. It urges drug companies to almost impossible to find an expert who is requires an unbiased analysis of all the review existing laws and regulations to not receiving payments from one or more available evidence, led by experts who have avoid civil and criminal penalties. The drug companies in the field. Disclosure of no vested interest in the drugs that they are code recently adopted by industry, to these arrangements is said to be an ade- discussing. That is how medical meetings which we have already referred, is a mini- quate remedy for the conflicts of interest, used to be, and that is how they ought to be, mum standard that certainly ought to be but many observers worry about the loss of but it is most assuredly not what the com- met, the OIG says, but mere compliance professional objectivity and independence panies want to support. They are not phil- with that code does not guarantee pro- that such financial ties produce, regard- anthropists. They need to sell their drugs; tection against persecution for illegal less of whether they are disclosed. and experience has shown that when they conduct. Although they are only general At medical meetings, drug companies organize “educational programs,” when recommendations, not regulations, the are allowed to present symposia or other they pay for sales representatives to tone of these proposed guidelines from types of educational programs—with free shower favors on physicians while touting the OIG is stern. It remains to be seen lunches or dinners—to supplement the the company’s products, and when they what will happen to them when the drug programs presented under the sponsoring spend huge sums on creating trade shows industry and other interested parties society’s auspices. The latter are them- at medical meetings, the sales of their weigh in. In any event, the introduction of selves often supported by drug firms. The products increase. We would like to know such guidelines suggests a rising concern atmosphere at many large medical meet- how much all of this costs, but the industry about the influence of the industry on the

the new republic : december 16, 2002 : 35 H E REPUBLIC THE NEW prescribing behavior of physicians and the with the effect of DTC advertising on their exclusivity for certain drugs to compen- costs of prescription drugs. sales. Advocates like to describe this obvi- sate for long FDA-approval times, and it About the only organized sector of the ous form of selling as “education,” just as also provided for three years of additional medical profession that seems genuinely they describe their advertising to doctors. exclusivity for introducing changes in concerned about this issue is the national But drug companies, owing to their clear drugs already on the market, such as new organization of medical students, the conflict of interest, are not the ones to dosage forms, new indications, or switches American Medical Student Association. educate people about the drugs that they from prescription to over-the-counter Last spring, this group voted for a total are selling. DTC ads mainly benefit the status. In a misguided attempt to encour- ban on the acceptance of all drug- bottom line of the drug industry, not the age generic manufacturers to enter the industry gifts and favors to medical stu- public. They mislead consumers more market as soon as possible, the act con- dents. It was a brave and laudable ges- than they inform them, and they pressure tained two other provisions. First, it made ture, but its impact on practicing physi- physicians to prescribe new, expensive, the FDA approval process simpler for cians and their organizations is doubtful. and often marginally helpful drugs, al- generic companies, but it also stipulated Recently we attended the annual meet- though a more conservative option might that if a brand-name company sued a ing of the state medical society of Massa- be better for the patient. That is probably generic company for patent infringe- chusetts, where student delegates urged why DTC ads are not permitted in other ment, FDA approval of the generic drug their elders to pass a similar resolution advanced countries less in the thrall of would automatically be delayed for 30 that would apply to physicians. It was the pharmaceutical industry. months—whatever the merits of the law- decisively defeated in favor of a resolu- suit. Second, it said that the first generic tion that recommended further study of Market Exclusivity: company to challenge a patent would have the issue. Gaming the System six months of exclusivity after it finally reached the market, free from competition ne of the most important de- s we emphasized earlier, the by other generics. velopments in the marketing of lifeblood of the pharmaceutical O prescription drugs is the recent A industry is government-granted atch-waxman has been a explosion in direct-to-consumer (DTC) monopolies, in the form of patents and bonanza for the big drug com- advertising. In 1997, the FDA changed its FDA approval for exclusive marketing. Hpanies. While it was meant to policies to allow DTC advertising without The two forms of exclusivity operate stimulate generic competition, it has often the requirement that it include medical largely independently, almost as backups had exactly the opposite effect. Since the details on the side effects of drugs. Since for each other. Both make it illegal, for a act was passed, brand-name drug compa- then, DTC advertising has burgeoned and specified time, for competitors to sell the nies routinely file not just one patent on is now estimated to be a nearly $3 billion same drug. Stretching that privileged time their drugs, but a series of them spread industry. Drug firms now spend about as by a variety of stratagems is arguably the throughout the life of the first patent. much on this advertising as they do on most innovative activity of today’s drug These secondary patents are on every advertising to physicians in medical jour- companies. For blockbuster drugs, it is conceivable attribute—never mind useful- nals and other professional media. Adver- certainly the most lucrative. Once a com- ness, novelty, or non-obviousness. The tisements for blockbuster drugs that are pany loses its exclusive marketing rights result is that generic companies are rou- prescribed for common complaints such and opens itself to competition from tinely charged with patent infringement, as allergy, heartburn, arthritis, “erectile generic drugs, prices often fall rapidly to which immediately triggers 30 months dysfunction,” depression, and anxiety are about one-fifth of what they were. For of additional exclusivity. When a generic seen everywhere. Often celebrities—for- blockbusters, that can mean a yearly sales company challenges a secondary patent, mer politicians, famous athletes, movie loss of hundreds of millions of dollars. the brand-name company sometimes stars—endorse the product. Consumers Patents are supposed to be granted only strikes a deal with it that defers entry of the are urged to “ask your doctor” if a certain for discoveries or inventions that are use- generic product into the market. Owing to drug “would be right for you,” and to “be ful, novel, and not obvious. In the past two the six-month exclusivity given to the first sure to tell your doctor if you have kid- decades, however, these three standards generic company that challenges a patent, ney or liver problems” or some other have been considerably relaxed, so that other generic companies are also stopped. medical condition—something we would now nearly anything can be and is Through such shenanigans, exclusivity can hope doctors already knew or could find patented—including new uses, dosage be prolonged for years. out for themselves. forms, combinations of old drugs, even This sort of gaming of the system is not A variant on the use of celebrities for the coating of pills. In addition, as a result supposed to be possible. Under the law, the promotion of brand-name pharma- of a number of industry-friendly laws and only challenges to certain patents may ceuticals recently attracted much com- regulations passed during the same two trigger the 30-month stay on generic ment in the news. It seems that celebri- decades, the period of exclusivity has entry into the market. These are the ties are being paid by drug companies to become stretched to the breaking point. patents on approved drugs that compa- appear on television news and talk shows In 1980, exclusivity lasted for the stan- nies list with the FDA in a publication and enthusiastically mention their use dard 17-year patent term (minus the time known as the Orange Book, available on of a particular drug. Audiences are not for clinical testing and FDA approval). the FDA website. To be listed in the informed about the financial arrange- Now, given the ingenuity of the industry’s Orange Book, patents are supposed to ment, and are thus allowed to assume legions of patent lawyers, it can be ex- apply only to the drug itself and the use that the celebrities are simply volunteer- tended for many more years. for which it was approved. Other patents ing their personal experience. Embar- In 1984, Congress passed the Drug Price related to the drug—such as those for rassed by these revelations, networks are Competition and Patent Term Restora- new dosage forms or uses—are not sup- now scrambling to require full disclosure. tion Act, commonly known as the Hatch- posed to be listed in the Orange Book. Drug companies have been delighted Waxman Act. It added up to five years of But the FDA does not even attempt to

36 : december 16, 2002 hold drug companies to that restriction. hree stories are illustrative Instead, drug companies list any patents of the many ingenious, often they choose, no matter how remote from Near Morning T questionable tactics that are the originally approved drug and no used to extend exclusivity. The first con- matter how frivolous its use. Sometimes Cow’s breath warms his swaddling cerns the blockbuster Claritin—an anti- they list virtually the same patent twice. a brood mare snuffles her foal histamine said to cause less drowsiness And the secondary patents can be listed crumbs of prayer than cheaper over-the-counter drugs at any time, even years after the original caught up in the mouse’s paws such as Benadryl. (Claritin costs $80 to approval. This means that there is the shadows of the guests $100 for one month’s supply, compared nearly always some patent in effect that linger along the wall with about one-tenth that for Benadryl.) can be used as an excuse for suing though the guests have gone It was patented by Schering-Plough in generic companies, thus triggering the 1981, but not approved by the FDA until 30-month additional exclusivity. By fil- A leather drawstring pouch 1993 (after much scientific controversy ing new patents even after the first law- embroidered with dialect about whether it was really effective at suit and then suing for infringement of bulges with drachmas the low doses necessary to prevent them, it is even possible to obtain suc- the scent of sandalwood drowsiness). Last year Claritin had sales cessive 30-month stays. In the case a costly porcelain jar of about $2.7 billion and brought in of GlaxoSmithKline’s anti-depressant rolled up in the rug on the back about one-third of Schering-Plough’s drug Paxil, five lawsuits against the of the little mule Ham revenues. The 17-year patent should same generic company resulted in five sleepily nibbling her fetlock have expired in 1998, but, according to a 30-month stays, staggered so that, alto- hock-deep in snow story last year in The New York Times gether, GlaxoSmithKline extended its Magazine by Stephen Hall, Hatch- exclusivity by over five years. The man has lain down Waxman added two years, and GATT In a damning report issued in July with the woman at last added 22 months, and pediatric testing 2002, the Federal Trade Commission It is nearly dawn added another six months. These three (FTC) documented the widespread For a moment extensions added four and a half years anti-competitive activities within the there is a stillness to the drug’s exclusivity—worth billions pharmaceutical industry. And it implic- so absolute of dollars. Starting in 1998, Schering- itly took the FDA to task for failing to even the stars don’t blink Plough sued eight generic drug compa- enforce legal restrictions on the listing nies for infringement of one or more of secondary patents in the Orange The infant beginning of its four patents listed in the Orange Book. The FTC found evidence that to inhabit his body Book. Hall reported the company’s Hatch-Waxman is regularly exploited to is startled by the cold legal costs to be about $5 million per prevent generic competition, and it has kiss of air on his cheek case—still a pittance compared with taken antitrust action against several by an ember falling into ashes the stakes. brand-name and generic drug compa- a sound as soft as the step Back in 1987, Schering-Plough, with nies that colluded to keep generic drugs of a friend in the garden great foresight, patented the active off the market. a serry of torches metabolite of Claritin—that is, the In addition to the Hatch-Waxman marching across the wall. molecule into which the body converts Act, other congressional actions have Claritin, which accounts entirely for the also added to the time during which Melissa Green action of the drug. In December last companies can sell brand-name drugs year, it received FDA approval to market without generic competition. In accord the Claritin metabolite under the name with the international GATT agreements FDA approval. The companies extend Clarinex, and began a massive promo- of 1994, Congress increased the basic their exclusivity by using every possible tional campaign to switch Claritin users to patent term from 17 years after issuance to stratagem simultaneously, so that if one the new drug before Claritin was sched- 20 years after filing—which is usually fails another might work. First, the big uled to lose its exclusivity in December longer. And the Food and Drug Adminis- drug companies change their top-selling 2002. To that end, it also priced Clari- tration Modernization Act (FDAMA) of drugs in ways that will add three years’ nex slightly below Claritin. Clarinex was 1997 added six more months of patent exclusivity, in accord with Hatch- approved for the treatment of year-round protection if drug companies test their Waxman. Second, they stagger multiple indoor allergies as well as seasonal out- drugs on children. One might think that secondary patents, which serve as the pre- door allergies. That means Schering- drugs that would be used by children text for routine lawsuits to trigger a 30- Plough can market it as an improvement, should be tested on them as a condition month extension. Third, nearly every even though it is simply what Claritin of FDA approval, but Congress seems to blockbuster is tested on children to get the turns into after it is swallowed. prefer the legislated bribery route. The extra six months of patent protection. This year Schering-Plough petitioned effect of all this is much longer periods of That is true whether the drugs are likely to the FDA to change Claritin from a pre- exclusivity for brand-name drugs. be used by children or not. Fourth, brand- scription drug to an over-the-counter In 1980, the average time in which a name companies sometimes collude with product. By law, the same drug at the same drug could be marketed without com- generic companies to delay their entry dose cannot be sold both ways, so the move petition was about eight years: the patent into the market. And fifth, when all else will stop generic companies from com- term of 17 years minus the time it took has failed, they can get a new patent on a peting in the prescription market when for clinical trials and FDA approval. Now trivial variation of their blockbuster and the patent expires. Last month the switch it is nearly twice that, and not just be- promote it as an “improved” version of was approved. Claritin will probably be on cause of shorter times for testing and the original. drugstore shelves by the end of this year

the new republic : december 16, 2002 : 37 H E REPUBLIC THE NEW and Clarinex will be the only prescribed co-founded by Richard Wurtman, which is how better, even though there is every sci- Schering-Plough allergy drug. We can see now called Indevus Pharmaceuticals. In entific reason to expect that a double dose from the Claritin story that drug compa- 1997, Lilly, faced with the imminent loss of Prilosec would be equivalent to Nexium. nies leave nothing to chance. They work of Prozac’s exclusivity, decided to license (This was never tested.) Very quickly, ac- simultaneously on every angle that might its use for premenstrual syndrome from cording to Harris, Nexium became the extend the exclusive marketing life of Interneuron—reportedly for $2 million most heavily advertised drug in the United their blockbusters. plus a percentage of sales. Lilly renamed States. The media were blanketed with Prozac “Sarafem,” colored it pink and lav- Nexium ads: “Today’s purple pill is Nex- ext, the prozac story. Pro- ender, and got FDA approval to market ium. From the makers of Prilosec.” To help zac, made by Eli Lilly, was the first it for “premenstrual dysphoric disorder,” with the switch, AstraZeneca priced Nex- N of a new type of anti-depressant which is not yet officially recognized as a ium slightly below Prilosec, gave discounts called SSRIs. It was developed mainly on distinct disorder in the psychiatric diag- to managed-care plans, barraged doctors the basis of research done outside the nostic manual. The Wurtmans and MIT with free samples, and even offered cou- company. In 1987, the FDA approved get a portion of Indevus’s royalties. pons in newspapers. The campaign re- Prozac for the treatment of depression; Sarafem’s exclusivity was supposed to portedly cost the company $500 million in 1994, for the treatment of obsessive- last until July 2003, but Lilly received a in 2001. compulsive disorder; in 1996, for bulimia; six-month extension because it tested the and in 1999, for geriatric depression. It drug on children—which cannot have Influencing Government rapidly replaced other types of anti- been scientifically very illuminating, since depressants because of its milder side these “children” must have been beyond one of these maneuvers to effects. Prozac soon accounted for one- the age of menarche and therefore very lengthen the lives of blockbuster quarter of Lilly’s revenues, with annual nearly adults. Sarafem was priced slightly N drugs—all of which add to drug sales reaching $2.6 billion. higher than the identical drug when it was costs—could have occurred without the Like other companies in the same posi- called Prozac. Now that generic Prozac is help of Congress. The drug industry has tion, Lilly sued generic makers who hoped on the market, Sarafem costs three and a the largest lobby in Washington. In 2000, to enter the market. One of them, Barr half times as much—$8.70 per pill at our according to Public Citizen, it employed Pharmaceuticals, charged that Lilly had local drugstore, compared with $2.50 for 625 lobbyists (more than one for each listed essentially duplicate patents in the the generic. member of Congress) at a cost of $92.3 Orange Book. In 2000, the Court of Ap- million—including 460 hired from 134 peals for the Federal Circuit, which han- inally, consider the heart- Washington lobbying firms. These lobby- dles all patent appeals, agreed. It said burn drug Prilosec, made by the ists were extremely well connected. They Lilly had “double-patented” Prozac, and FBritish pharmaceutical firm Astra- included 21 former members of Congress changed the expiration date from Decem- Zeneca. This story was recently told in and others of no doubt equal or greater ber 2003 to February 2001. The Supreme great detail in an article by Gardiner Har- influence, such as Haley Barbour, the for- Court refused to hear an appeal, but Lilly ris in The Wall Street Journal. Prilosec was mer chairman of the Republican National used pediatric testing to extend the time the number-one drug in the world, with Committee; Linda Daschle, the wife of to August 2001. Generic forms of Prozac sales of about $6 billion per year, until its outgoing Senate Majority Leader Tom are now on the market, and the price has patent expired in October 2001 after a Daschle; Scott Hatch, son of Senator Orrin come down accordingly. Usage has also six-month extension for pediatric testing. Hatch; and Anthony Podesta, former dropped, as people respond to advertising Like Schering-Plough and Lilly, Astra- counsel to Senator Ted Kennedy and for similar brand-name (and now more Zeneca looked ahead. It sued generic brother of President Clinton’s former chief expensive) SSRIs such as Paxil and Zoloft, companies for infringement of its layers of of staff. while advertising for Prozac has essen- patents—eleven are listed in the Orange In addition, the industry made gener- tially stopped. In June 1999, however, Lilly Book. To date, there is still no generic drug ous political contributions in the 1999– patented Prozac Weekly, a new formula- on the market: a delay worth billions to 2000 election cycle, including $20 mil- tion that can be taken less often. It was the company. At our local drugstore, lion in direct campaign contributions plus approved by the FDA six months before Prilosec continues to sell for a whopping $65 million in soft money. Most of that the Prozac patent expired, and Lilly has $6 per pill. And, like Schering-Plough, money went to support Republicans, but exclusive marketing rights until 2004. AstraZeneca patented a spin-off of its these companies have cash enough to The most ingenious move to extend the blockbuster drug. Prilosec consists of a spread around. The top recipient in the life of Prozac was the creation of Sara- mixture of two forms (or isomers) of the past decade, according to government fem—which is the identical drug in the same molecule, only one of which is active. ethics watchdog Common Cause, was identical dose, but colored pink and laven- The company patented the active form, Hatch, a Republican, but powerful Dem- der instead of green, and taken for a new named it Nexium, and got FDA approval ocrats from states that are home to major indication. In 1990, Dr. Richard Wurtman, to market it just in time to switch people drug companies, such as New Jersey Sen- the director of MIT’s Clinical Research over to it before Prilosec’s exclusivity ran ator Robert Torricelli and Connecticut Center, and his wife, Dr. Judith Wurtman, out. This maneuver is very similar to Senator Joseph Lieberman, also did well. took out a patent on SSRIs for the treat- Schering-Plough’s Claritin story, except As just one example of the industry’s in- ment of premenstrual syndrome. This is that users were switched to an isomer fluence, in 1999 Torricelli introduced a called a “method of use” patent. According rather than a metabolite. (Lilly was even bill to give Claritin and six other drugs a to a CNN report on July 13, 2000, they more audacious, since Sarafem is identical chance to lengthen their patents. Accord- tried to license the use to Eli Lilly, but the to Prozac.) ing to Common Cause, this bill was intro- company was not interested—then. So AstraZeneca launched a massive adver- duced a day after Schering-Plough made they licensed it to Interneuron Pharma- tising campaign to persuade Prilosec users a $50,000 contribution to the Democratic ceuticals, a small biotechnology company and their doctors that Nexium was some- Senatorial Campaign Committee, which

38 : december 16, 2002 Torricelli chaired. Hatch held hearings on In the past year or so, public dismay industry’s payroll. In 1992, Congress the bill, despite the fact that Schering- with high drug prices has begun to have passed the Prescription Drug User Fee Act Plough is one of the companies that an effect in Congress. In July, the Senate (PDUFA), which required drug compa- employed the lobbying firm for which his passed a bill introduced by Charles Schu- nies to pay user fees to the FDA, but stip- son worked. As it turned out, the bill was mer and John McCain that would prevent ulated that they would be used only to apparently too embarrassing even for many of the abuses of Hatch-Waxman. It speed up approval of drugs. These fees Congress, and nothing came of it. Drug also included an amendment to permit the now account for about half the budget of companies also influence political cam- commercial re-importation of prescrip- the FDA’s Center for Drug Evaluation and paigns by funding and sometimes creat- tion drugs from Canada. (Congress passed Research. This makes the FDA depen- ing supposed grassroots organizations, a re-importation bill during the Clinton dent on the industry it regulates. such as Citizens for Better Medicare, to administration, but it was not signed by For the industry, the fees are easily out- promote drug company interests in media the president.) It did not pass the House, weighed by the increased sales that come ads and on websites. and there is every reason to doubt that from getting faster approval, and by its One of the most important congres- anything like it will, given the implacable greater clout with the agency. PDUFA has sional actions affecting not only the phar- opposition of the drug industry. to be renewed by Congress every five years. maceutical industry, but also the academic In this year’s version, which was tacked medical centers and the biotechnology he trickiest issue for Congress onto a bioterrorism bill, the fees were in- industry, was the Bayh-Dole Act of 1980. concerning the pharmaceutical in- creased substantially. Although a small According to this act and related legisla- T dustry has to do with growing pub- fraction can be used to monitor drug tion, academic institutions could patent lic pressure for a Medicare drug benefit. safety, the lion’s share is earmarked to fur- the fruits of government-funded research Everyone agrees that something has to be ther speed drug approval. Yet the faster and license them to private industry for done to relieve senior citizens of the heavy the approval, the more likely that danger- royalties. The law applied not just to bio- burden of paying for prescription drugs ous drugs will reach the market. Indeed, medical research, but that is where it saw out-of-pocket, and everyone, including over the decade since PDUFA was en- its greatest application. Virtually over- the pharmaceutical industry, is on record acted, 13 prescription drugs have had to night, Bayh-Dole made drug companies as favoring some sort of extension of be withdrawn from the market because and academic institutions partners, both Medicare to cover outpatient prescription they were found to be dangerous—but not benefiting from taxpayer subsidies. The drugs. Widely differing versions of bills to before they caused hundreds of deaths. original purpose of Bayh-Dole was to en- provide such coverage passed the House The FDA is also subject to industry courage “technology transfer,” the trans- and Senate this year, but could not be rec- pressures through its 18 standing advi- lation of basic discoveries into practical onciled. The House version (the one sory committees on drug approvals. use. Accordingly, it stipulated that the favored by the pharmaceutical industry) These committees, which consist of out- products of the research must be made proposed that coverage for prescriptions side experts in various specialties, are “available to the public on reasonable be paid in part by a set contribution from charged with reviewing new drug appli- terms.” It also stipulated that the govern- Medicare administered through private cations and making recommendations to ment agency that funded the research insurers. The Senate version was more the agency about approval. Many mem- (usually the NIH) should be informed by generous, and provided for direct reim- bers of these committees have financial or grantee institutions of all such patent and bursements by Medicare—without the other connections to interested compa- licensing arrangements. These provisions intermediary of a private insurance plan. nies. For example, three of the eight were never enforced. Last year, at the Political posturing on both sides ob- members of the FDA’s Psychopharmaco- behest of Senator Ron Wyden, the NIH scured a critical question in this debate: logic Advisory Committee, which recom- attempted to account for its contributions how much influence should the agency mended approval of Sarafem, reportedly to a list of 47 blockbusters on the market. administering the program have on the had ties to Lilly. The fact that four of them (Taxol, Epogen, approved list of covered drugs and on the The influence of the pharmaceutical Procrit, and Neupogen) were developed prices paid to the manufacturers? A pro- industry on government clearly reaches largely with public funding was widely gram administered directly through Med- into the Bush administration. Defense publicized. What was not so widely publi- icare would probably drive harder bar- Secretary Donald Rumsfeld was CEO, cized was the fact that the NIH did not gains and involve more regulations than a president, and chairman of G. D. Searle, a seem to know one way or the other about program contracted out to private insur- major drug firm that recently merged with many of the other 43 drugs. ers, and these policies would very likely Pharmacia, which is now in the process of Whether the Bayh-Dole Act has been spread to drug benefit programs in the pri- merging with Pfizer. Mitchell E. Daniels, an overall success is controversial. Cer- vate sector as well. This is a prospect that White House budget director, was senior tainly the number of biomedical patents the drug industry, understandably, greatly vice president of Eli Lilly. Bush père was increased rapidly after it was passed. But fears, and that is undoubtedly why drug on Lilly’s board of directors before be- many critics say that the effect of the legis- companies contributed an estimated coming president. When added to the lation has often been opposite to its pur- $30 million in the recent campaign, most industry’s large contributions to the Bush pose. By encouraging thickets of licenses of which went to Republican candidates campaign in 2000, these connections on every aspect of new technologies and and Republican-leaning special-interest could well have had something to do with producing a proprietary culture of secrecy, groups. The Republican victory now en- the last-minute withdrawal of Dr. Alas- it may actually have slowed technology sures that if a Medicare prescription-drug tair Wood’s nomination as FDA commis- transfer and the exploration of new scien- benefit ever does emerge from the 108th sioner earlier this year. tific leads. And it has certainly done noth- Congress, it will certainly be much more Wood, a widely respected professor of ing to ensure that drugs licensed from to the industry’s liking than the version clinical pharmacology at Vanderbilt Uni- academic institutions are available “on that passed the Senate earlier this year. versity in Nashville (and a former col- reasonable terms.” Like Congress, the FDA is also on the league of ours on the editorial staff of

the new republic : december 16, 2002 : 39 H E REPUBLIC THE NEW The New England Journal of Medicine), socially useful behavior? First, the laws should be changed to require that new reportedly was warmly recommended by and regulations relating to the patenting drug applications include evidence not Senator Bill Frist and Health and Human of drugs and the granting of exclusive only of the safety and the efficacy of a new Services Secretary Tommy Thompson. marketing rights need to be changed. The drug, but also of the drug’s effectiveness in But he was also known as a supporter of U.S. patent system is based on Article I, relation to existing products of the same strong regulatory action by the FDA and section 8, of the Constitution: “Congress type. Approval should depend in part on had evidently ruffled feathers among drug shall have power . . . to promote the whether the new drug adds something industry executives and other champions progress of science and useful arts, by useful in terms of greater effectiveness, of a “free market” for drugs, including the securing for limited times to authors and greater safety, fewer side effects, or sub- editors of The Wall Street Journal. inventors the exclusive right to their re- stantially greater convenience. The FDA According to an article last May in The spective writings and discoveries.” Patents should be allowed reasonable flexibility Boston Globe, the result was behind-the- were supposed to protect the intellectual in its judgments, of course; but it should scenes pressure on the White House, property rights of inventors while en- not approve drugs that on balance offer which led to an abrupt change of heart. abling them to share information that oth- trivial advantages or no advantages at all Frist was quoted as saying that “there was ers might use to advance the field, all in the over products already available, and may a great deal of concern that he [Wood] put public interest. But in the modern phar- even be worse. That policy change alone too much emphasis on [drug] safety.” And maceutical business, as we have shown, would dramatically improve the medical Dr. Raymond Woosley, also a distin- the system is being grossly abused to allow value of new prescription drugs, since guished clinical pharmacologist and an companies to patent drugs that cannot drug companies would have no incentive earlier candidate for the post (who opted reasonably be called new inventions, and to turn out me-too drugs and would have instead for a major academic position), to permit extensions of exclusivity on the to shift their R&D emphasis to finding remarked, “It is pretty clear that anyone flimsiest of legal pretexts. more innovative ones. who has said anything that industry The system has allowed the companies The requirements for membership on doesn’t like isn’t going to make it.” to flood the market with expensive me-too FDA advisory committees, upon which Dr. Mark McLellan, the newly con- drugs and absurdly trivial variations on the agency depends for advice in the eval- firmed commissioner, evidently was not existing products. The system has also uation and approval of new drugs, should opposed—he may even have been sup- been used by the companies to delay, and be strengthened to avoid conflicts of inter- ported—by industry, but he has not taken sometimes to prevent altogether, competi- est. Given the pervasiveness of the finan- public stands on any of the critical issues tion from generic drugs. There is no ques- cial ties with the drug industry that now discussed here that might have influenced tion that modifications of Hatch-Waxman exist among clinical experts in most fields, the views of the pharmaceutical compa- are needed. The FTC and Schumer and it is admittedly difficult to find qualified nies. He is both a physician and an econo- McCain are correct in their criticisms of consultants without such conflicts. But mist who has served recently on the the system, and we certainly support the the task is not impossible, and the agency president’s Board of Economic Advisers, general thrust of their proposals for should be required to show that it is mak- but he has no experience in drug regula- reform. But more is needed. The whole ing every reasonable effort. Without un- tion or clinical pharmacology, so he has patent system needs a new look, in view biased experts, the FDA cannot get the much to learn about his new job. Morale of the recent relaxation of standards for help it needs to withstand the pressures at the FDA is said to be very low, and it both usefulness and originality. The issues from industry to approve drugs that really remains to be seen whether the young are technical and complicated, and the ought not to be allowed on the market or commissioner can improve it with the details of the needed changes will re- to keep drugs on the market that ought to policies and management style he will quire careful consideration by experts to be withdrawn. bring to this critical task. Only time will avoid making a bad situation even worse. We have already explained why we be- tell whether he intends to stand up to the We suggest study by a commission of lieve that direct-to-consumer ads are not pressures from the industry and from a experts (free of industry control) before in the public interest. The FDA should Congress that is now more friendly to the any legislative or regulatory action is reverse its policy and prohibit such ads industry than ever before. taken, but the completion of the study in the future, or at least greatly restrict and the enactment of reforms deserve a their use. The drug industry and the What Should Be Done? high congressional priority. advertising agencies, which have a finan- cial interest in such ads, will strongly he pharmaceutical industry trengthening the fda and resist, so any such action would probably dominates just about every aspect improving its operations also should require a congressional mandate. For rea- T of the American health care system Sbe a high priority for Congress. The sons of public health and safety, however, that is related to its business interests. It FDA needs more help from congressional the FDA is acknowledged to have pur- uses its wealth and its political clout to appropriations in meeting its growing view over pharmaceutical advertising, so influence all who might check or monitor responsibilities. Its dependence on user there is no question of an unfettered “right its activities—including physicians, pro- fees from industry should be replaced by to commercial free speech” in this case. fessional and academic institutions, Con- adequate government support. This is an The issue is how, and how much, it should gress, and the FDA. Hiding behind a agency with an agenda of enormous im- be regulated. screen of public relations and advertising, portance to the public health, and it should Reforms are also needed in the current it expects consumers to sit still for its ex- not have to depend on the industry it is system for conducting clinical trials. The cesses, with the clearly implied threat that supposed to be regulating, any more than drug industry should not control the med- otherwise it will be forced to stop produc- the SEC, for example, should have to ical evaluation of its own products. The ing its medical miracles. depend on contributions from publicly industry has a legitimate interest in seeing What reforms might remedy the situa- traded corporations. that these clinical trials are carried out, tion and direct the industry toward more Of crucial importance, FDA regulations and it should pay for most of them. But the

40 : december 16, 2002 design and the conduct of the trials, and and the discrimination with which they ceutical industry. the collection, the analysis, and the inter- are prescribed. Most would probably also Prescription drugs are an essential part pretation of the results, should be the reduce expenditures. But the greatest con- of modern medical care. Americans need responsibility of the independent clinical tribution to the control of prescription- good new drugs at reasonable prices. Yet investigators who do the work—not of the drug costs could come from the bargain- the pharmaceutical industry is failing to sponsoring drug companies. This will re- ing power of large purchasers. The largest meet that need. There is a widening gap quire stringent oversight or elimination of potential purchaser is the government— between its rhetoric and its practices. Nei- the hired businesses that conduct clinical through Medicare, Medicaid, and the ther the medical profession nor govern- trials for the drug companies, as well as Veterans Affairs System. If payment for ment has so far done much to remedy the substantial reforms at the academic cen- all the drugs used by the patients in these situation, but sooner or later they will have ters and teaching hospitals that would programs were to be negotiated by the to act. The increased conservative com- then carry out most of the studies. Perhaps government, there is no doubt that major plexion of the new Congress and the grow- drug-company trials might best be moni- savings would be achieved, particularly ing dependence of physicians on pharma- tored through some centralized, not-for- if physicians were also to use formularies ceutical money will probably delay such profit institution that could be a repository that limit the routine use of me-too drugs. action. Nevertheless, the public is aroused for contract proposals from the companies Such measures would undoubtedly spread and some kind of reform seems ultimately and an intermediary for the distribution of to the private insurance system. How- inevitable. The consequences of continu- funds. What should be avoided in any case ever, with Republicans now in control of ing to allow an essential industry to put is the market competition among acade- Congress, federal policies will probably profits above the public interest are simply mic centers for drug-company business. become even friendlier to the pharma- too grave. This threatens to transform our medical centers into commercial enterprises, with the inevitable weakening of their com- mitments to education, clinical care, and unrestricted research. Guidelines such as those recently promulgated by the AAMC will be helpful in preventing this trans- formation, but the outright elimination of a commercial market for clinical trials would probably be most effective.

n devising remedies for the problems described here, we must I not lose sight of the fact that the prescription-drug industry can sell only the drugs that doctors are willing to pre- scribe. We have noted the costly and excessive lengths to which drug compa- nies go to influence the prescribing behav- ior of physicians. But this is done only with the acquiescence of the doctors and their professional associations and educa- tional institutions. If the drug industry presumes to take responsibility for the “education” of physicians, it is because the profession allows—or even invites—the industry to do so. In so doing, the profes- sion abdicates its responsibility to act as fiduciaries and advisers for patients. The profession must take the necessary steps to end its financial and intellectual re- liance on the pharmaceutical industry. We believe that many physicians (including medical educators) share this view but hesitate to voice it publicly. The public should be able to get trustworthy expert advice from physicians on what drugs are safe and effective and which of these, if any, are needed for optimal and cost- effective treatment. This is unlikely if much of the profession and its institutions are in the industry’s pocket. Finally, we note that most of the re- forms we have suggested are intended to improve the quality of prescription drugs

the new republic : december 16, 2002 : 41