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SELECTED SUMMARY Drug
deals Bashir
Mamdani
Angell M. Excess in the
pharmaceutical industry CMAJ 2004:171 (12): 1451.
This article provides an
overview of the excesses of the pharmaceutical industry in the US. Profits
While justifying
high prices by the high risk of failure of new drugs, the industry consistently
reports higher profits than any other industry, 17% vs 3.1% for all the other
industries on the Fortune 500 list - hardly a sign of high risk. The high
profits reflect the exorbitant prices, particularly in the US, where, unlike
most countries, there is no governmental mechanism to regulate drug prices.
Thus, all top 10 pharmaceuticals (5 European and 5 US); generate most of their
profits in the US. Moreover, in the US, while the majority of the patients who
are covered by some form of an employer-assisted insurance plan get lower prices
as insurance companies bargain for significant price reductions, the uninsured
poor pay the highest prices for drugs.
"Me-too" drugs
The main R&D
of the industry is targeted at manufacturing and selling "me-too" drugs that are
low-risk minor variations on successful drugs marketed by themselves or others,
sometimes "gimmicks" to extend their monopoly. These drugs are cheaper to
develop and, with an established market, less of a gamble to manufacture. Mostly
tested against placebo, these "me-too" drugs rarely offer an advantage over
existing drugs. Yet many me-too drugs are covered by patent and thus more
expensive than the older drugs that are no longer covered by patents. From 1998
through 2003, 379 of the 487 drugs approved by the US Food and Drug
Administration were "me-too" drugs.
The main industry justifications for
these me-too drugs are a) the drugs offer a choice to patients who do not
respond well to a drug already on the market; and b) competition reduces prices.
These claims have no merit. These new drugs are rarely tried against others in
the class and never in people who do not respond to other older drugs in the
same group.
Marketing
Drug companies spend
"35% of their sales on marketing and administration and ... only 11-14% on
R&D". A sizable part of the marketing is spent on "education of
medical professionals" which is really inappropriately persuading doctors to
prescribe their drugs. A significant portion also goes to persuade the affluent
that "they are suffering from conditions that need expensive long-term
treatment" such as "generalised anxiety disorder," "erectile dysfunction,"
"premenstrual dysphoric disorder", etc. As Dr Angell says, drug prices are
"high to cover their marketing costs - and their outsize
profits."
Influence on the medical
profession
Most continuing medical education activities are
primarily supported by drug companies who often use this opportunity to
influence the prescribing habits of doctors. These activities are paid for from
the advertising budgets of these corporations. "The industry also provides
students, house officers and physicians in practice with meals, trips to exotic
locations and many other blandishments." The industry and the medical profession
have developed guidelines to regulate this behaviour but there are enough
loopholes to get around them.
Political muscle
The drug
industry contributes heavily to political campaigns and maintains one of the
largest lobbies in Washington to assure that most of the laws passed promote the
industry's interests. This has paid dividends: law makers have legalised
manoeuvres to extend patent protection; industry uses data from publicly-funded
research at little or no cost; laws bar consumers from importing lower cost
name-brand drugs from other countries, and so on. Last year, as the Congress
passed a law that would provide prescription drugs to the elderly at a
subsidised rate, the drug industry managed to write into the law a clause that
prohibits the administrators of the programme from negotiating with the industry
for lower prices - something that all health insurance companies, the HMOs and
even the Veterans Administration in the USA do
routinely.
Commentary
During the second
half of the twentieth century, the western pharmaceutical industry, often using
research performed at universities and government institutions, revolutionised
medical therapy. With few exceptions (e.g. digitalis and aspirin), every drug we
prescribe today was introduced in the last 50 years. These new therapies have
contributed to an increase in our life span and have reduced pain and suffering.
It is only during the last 20 years or so that the corporate drive for profits
has overcome scientific endeavour and led to unethical practices in the
industry.
How is this article relevant for
India?
In the 1970s, after decades of debate, the government of
India restricted patents only to process and not products to encourage
development of an indigenous pharmaceutical industry. The nascent Indian
pharmaceutical industry, with low overhead, rapidly grew to be the third largest
in the world (1). Today, despite the low pricing, the profitability of the
Indian pharmaceutical industry is second only to that of information technology
(2). India has also exported its cheaper drugs to third world countries helping
their populations immensely.
The Indian pharmaceutical industry is not much
better than its western counterparts. For example, if Angell considers 14% of
sales allocation to R&D insufficient, how would we rate the 2-3% for the
Indian industry (3) and that too by just a handful of firms of the 30,000-plus
in the market? Even potentially profitable areas such as development of drugs
based on our indigenous systems of medicines (Ayurvedic, Unani, Siddha) remain
unexplored. There has been scarce basic research on indigenous plants with
medicinal properties. While the western pharmaceutical industry is criticised
for doing little research on diseases prevalent in poor countries such as
malaria, our pharmaceutical corporations have not done any better.
Unique to
the Indian pharmaceutical scene is the presence of a large number of irrational
drug combinations and substandard and spurious drugs. This reflects a lack of
coordination in licensing and regulatory oversight by the center and the state
authorities. The Mashelkar Committee report (4) calls for a thorough overhaul of
our drug regulatory structure to curb these shortcomings and to encourage drug
research but its recommendations are yet to be implemented.
The marketing and
lobbying tactics in the West are being duplicated in India (5, 6, 9). Whether
these tactics will succeed in influencing the decisions of the government to the
detriment of the people is an open question.
Are Trade-Related aspects of
Intellectual Property Rights (TRIPs) likely to have a major impact on drug
prices?
Diametrically opposite views have been expressed in the media.
Without data that the industry is reluctant to divulge, who do you believe? The
government claims that pharmaceutical prices are unlikely to change because 97%
of the drugs manufactured by the Indian pharmaceutical industry are generic
drugs. (7). On the other hand, Siddharth Narain (8) quotes D G Shah, secretary
of the Indian Pharmaceutical Alliance, "If the US pharmaceutical industry is
saying that 40% of the market is eligible for patent, on what basis is the
Minister saying that only 3% will be eligible?"
There are other factors that
will impact what the Indian patient will pay.
Ultimately, it is the doctor
who prescribes a drug to a patient and it is she/he who will have to keep the
costs in mind when writing prescriptions. Alas, the practicing doctor relies on
the medical representative to keep her/his medical knowledge current. And the
detail man is always going to push his drugs using incentives to encourage
prescription of his products (9).
Moreover, in India, it is often not the
doctor but the pharmacist who recommends a drug to the patient. Pharmaceutical
companies may offer more remuneration to a pharmacist for stocking only their
higher priced items rather than generics (9).
Undoubtedly, under TRIPs, the
cost of new drugs will increase markedly. However, when new drugs are essential
and life-saving (eg treatment of HIV or cancer), the government has the option
of enforcing mandatory licensing. India may find support for such an action even
in the USA (10). Will the Indian government withstand the pressures from western
pharmaceutical industry in the interest of its people? This remains to be
seen.
When liberalisation of trade began in early 1990s, the Indian
manufacturing industry was fearful that they would be swamped by competition and
many wanted protection for indigenous firms. We have seen that external
challenges forced Indian corporations to invest more to upgrade their products.
It is not inconceivable that TRIPs may stimulate our pharmaceutical firms to
their outlay on R&D and focus on diseases that affect our population. India
may have an edge particularly in biotechnology and may be able to exploit its
intellectual capital to develop new therapies (11).
To promote basic and
clinical research, to sustain quality drug manufacture, and to detect and
eliminate spurious and dangerous drugs from the market, the government of India
must implement the recommendations of the Mashelkar Committee Report (4)
forthwith and establish an overarching National Drug Authority.
References
1. Report of the
Pharmaceutical Research and Development Committee, November 1999http://chemicals.nic.in/pharma10.htm
2.
Francis PA. A Rs 40,000-crore industry. pharmabiz.com June 20, 2001
http://www.pharmabiz.com/article/detnews.asp?articleid=12357§ionid=47
3.
Confederation of Indian Industry. Drugs and pharma/research and
developmenthttp://www.ciionline.org/sectors/56/default.asp?Page=Research%20and%20Development.htm
4.
Interim report of the expert committee on a comprehensive examination of
drug regulatory issue, including the problem of spurious drugs. Ministry of
Health and Family Welfare, Government of India, August 2003.http://cdsco.nic.in/html/Interim%20Report.htm
5.
Francis PA. 'Advertising prescription drugs' pharmabiz.com August 7,
2002 http://www.pharmabiz.com/article/detnews.asp?articleid=12309§ionid=47
6.
Francis, PA Paswan turns soft. pharmabiz.com September 29, 2004
http://www.pharmabiz.com/article/detnews.asp?articleid=23900§ionid=47
7.
Medicine prices will not rise: Govt. January 5, 2005 http://inhome.rediff.com/money/2005/jan/05drug1.htm?zcc=rl
8.
Narain, S. 'A costly prescription' Frontline, February 12-25, 2005:
97-100
9. Roy N and Madhiwala. N Promotional Practices of
pharmaceutical firms in India. Forum for Medical Ethics, Mumbai, 2004.
10.
Editorial, New York Times, January 15, 2005.
11. Ramani SV and
Maria A. TRIPS: its possible impact on biotech segment of the Indian
pharmaceutical industry. Economic and Political Weekly 2005; 40:
675-683.
BASHIR MAMDANI, 811, N. Oak Park Avenue, Oak Park,
Illninois 60302, USA. E-mail:bmamdani@comcast.net
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