Marcia Angell "The Truth About Drug Companies"

Marcia Angell "The Truth About Drug Companies" 2004 The New York Review of Books

Preface to the Paperback Edition

AS YOU WILL DISCOVER, THIS BOOK IS VERY Critical of the pharmaceutical industry. I show that, contrary to its public relations, the industry discovers few genuinely innovative drugs, spends less than half as much on research and development (R&D) as on marketing and administration (these two items are inexplicably combined in drug company annual reports), and consistently has profit margins far above those of most other Fortune 500 industries. The argument that it needs to charge ever-higher prices to cover its research costs is simply not true. I also show how drug companies put most of their efforts into turning out higher-priced versions of existing medicines (calkd "me-too" drugs) and persuading us to take more and more of them. And I describe how the pharmaceutical industry uses its immense wealth and power to co-opt nearly every institution that might stand in its way-including the U.S. Congress, the Food and Drug Administration (FDA), and the medical profession itself. Finally, I propose reforms that might restore this industry to its original purpose of discovering innovative drugs and making them available at reasonable prices.

Predictably, the industry was not happy with my book when it was published in August 2004. The Pharmaceutical Research and Manufacturers of America (PhRMA), the industry's trade association, promptly prepared a long response, which it posted on its website. It contained the usual rhetoric about how the industry works day and night. to discover miracle cures, arid the usual thinly veiled threats that if we try to regulate it further we will cut off those miracles. But it disputed very few of the essential facts I presented. One that it did dispute was the contention that the industry spends much more on marketing than on R&D. However, the industry's rebut.ta! depended on ignoring the billions of dollars drug companies spend on "educating" doctors-expenditures that come out of their marketing budgets and are probably their most effective means of promotion.

By happenstance, around the same time this book was published, several other books appeared that were also critical of the industry. They included Merrill Goozner's The $800 Million Pill, Jerry Avorn's Powerful Medicines, John Abramson's Overdo$ed America, and Jerome Kassirer's On the Take. Although our books focus on different aspects of drug company behavior, the facts in them are remarkably consistent, and it is clear that we are all talking about the same industry. Anyone wishing to delve deeply into the subject might want to read all of them.

With few dissents, public respoiise to my book has been positive. I was invited to appear on a large number of radio and television shows, many with call-ins, and it was clear that I ~ad touched a deep well of resentment among ordinary people. They were angered by drug-company price-gouging, incessant television ads urging them to "ask your doctor" about this or that drug, and the fact that the same brand-name drugs are much cheaper in Canada but it is illegal for Americans to buy them there. They were clearly skeptical about drug company protestations that all this was for their own good. These people reflected a growing public restiveness about the pharmaceutical industry that is starting to show itself in Congress and, even more, in state capitals, although it has yet to yield any important legislative reforms.

Since this book was published, two events concerning prescription drugs captured front-page attention--one dealing with drug safety, the other with c:osts. In September 2004, the drug giant Merck suddenly withdrew its blockbuster arthritis drug, Vioxx, from the market, because it was found to double the risk of heart attacks and strokes. (Blockbusters are drugs with sales of over a billion dollars a year.) Vioxx is one of a class of drugs, called COX-2 inhibitors, that includes two other blockbusters, Celebrex and Bextra. The withdrawal of Vioxx, and subsequent indications that Celebrex and Bextra were also unsafe, led to a widely publicized hearing by an FDA advisory panel.

The panel ultimately recommended that all three COX-2 inhibitors be allowed on the market. The FDA, however, did not take the panel's advice. Instead, it decided that Bextra should be withdrawn and Celebrex should carry a strong warning, and left open the question of whether Merck would be allowed to resume selling Vioxx. I tell this story in detail in an Epilogue added for this paperback edition, because it illustrates in a nutshell most of the problems discussed in. the book.

The second event was the spectacular upward revision of the estimated cost of the Medicare prescription drug benefit, passed into law in late 2003 and described ip. Chapter 11. When Congress passed the bill, the price tag was said to be about $400 billion over ten years. Within weeks, it was upped to $534 billion. Then, in February 2005, the White House released budget figures that revealed a new estimate of over $1.2 trillion (which would drop to $720 billion if projected offsets were r,ealized.)* Despite administration assurances that this wasn't quite as bad as it looked, because the new estimate was for a later ten-year period, not many people were mollified. This was, in the immortal 'words of the late Senator Everett Dirksen, "real money"-real money that the government doesn't have, nor is likely to have anytime soon, given its huge deficits.

* Ceci Connolly and Mike Allen, "Medicare Drug Benefit May Cost $1.2 Trillion," Washington Post, February 9, 2005, Al.

This situation underscores the utter foolishness of Congress in creating a drug benefit that explicitly forbids Medicare from using its purchasing power to negotiate prices with drug companies. And there is no better illustration of the fact that Congress is so beholden to the pharmaceutical industry that it will do its bidding at nearly any price. As I predict in the book, it is virtually certain that, unless the benefit is sharply limited or the prohibition against negotiating prices is repealed, the money will be squeezed out of Medicare in other ways-by increasing premiums and deductibles and reducing other medical services. The irony is that a bill that was claimed to expand Medicare will probably lead to its dismantlement.

Despite the Medicare windfall, there are still signs of trouble in the industry. According to the American Association of Retired Persons (AARP), prices for the brand-name drugs most prescribed for senior citizens rose twice as fast as the inflation rate in 2004. Not only are individuals finding it impossible to keep up, but so are employers who offer drug benefits to their workers, and state governments that need to pay for Medicaid recipients. As drug companies experience push-back on their prices, they are trying to make up for it in volume-by attempting to convince more people that they need more drugs. Still, someone has to bear the costs, and no one is stepping up to the plate on that.

The most serious problem drug compames face is their dwindling pipelines. They are now turning out very few innovative medicines, and that situation is growing steadily worse. Many of today's top-selling drugs are variations of innovative drugs that came on the market in the 1980s or earlier. In the seven years 1998 through 2004, only 22 percent of new drugs were judged by the FDA to offer improvements over drugs already on the market to treat the same condition, and most of those were not made by major American drug companies.* In 2004, for example, of the twenty-five drugs classified as likely improvements, only four came from one of the top nine American drug companies.

Since stock prices reflect the promise of an industry, not just its current performance, it should be no surprise that pharmaceutical stock prices are generally lower, despite some blips here and there. Clearly, the industry's future is uncertain. There is growing talk of mergers and acquisitions involving some of the more troubled companies, such as Merck, Bristol-Myers Squibb, and Schering-Plough. Increasingly, this is how the big drug companies acquire new drugs-by buying the smaller companies that develop them. Many of the latter are start-up biotechnology companies. Mergers between giants accomplish much the same thing-they combine marketing forces and permit some economies of scale, but mainly they combine pipelines of new drugs.

*See www.fda.gov/cder/rdmr/pstable.htm and www.fda.gov/~der/rdmt/ ndaa ps04cy.htm.

Nevertheless, despite its difficulties, this industry remains hugely profitable.•· In 2004, Pfizer, the largest drug company, had a profit margin of nearly 22 percent of sales (which were $53 billion). The same year, it spent 32 percent of sales on marketing and administration and only 15 percent on R&D. Altogether, the nine U.S. drug companies listed in the Fortune 500 had a median profit margin of 16 percent of sales in 2004, compared with just over 5 percent for all the industries listed.

Sadly, there is little sign that the pharmaceutical industry is responding to its current difficulties by changing its behavior. It continues to make me-too drugs as its major product, to use its massive marketing muscle to promote them relentlessly, to charge prices as high as it can get away with, and to act as if it puts short-term profits ahead of everything. It doesn't have to be that way. Drug companies could be what they once werebusinesses that were quite profitable, yes, but also sources of cutting edge research that produced real medical miracles. For this reason, my book was intended to show the pharmaceutical industry as it actually is, in the hope that I can contribute constructively to its much-needed reform.

,. "The Fortune 500," Fortune, April 18, 2005, F28.

Introduction: Drugs Are Different

Every day Americans are subjected to a barrage of advertising by the pharmaceutical industry. Mixed in with the pitches for a particular drug—usually featuring beautiful people enjoying themselves in the great outdoors—is a more general message. Boiled down to its essentials, it is this: “Yes, prescription drugs are expensive, but that shows how valuable they are. Besides, our research and development costs are enormous, and we need to cover them somehow. As ‘research-based’ companies, we turn out a steady stream of innovative medicines that lengthen life, enhance its quality, and avert more expensive medical care. You are the beneficiaries of this ongoing achievement of the American free enterprise system, so be grateful, quit whining, and pay up.” More prosaically, what the industry is saying is that you get what you pay for.

Your Money or Your Life

Is any of this true? Well, the first part certainly is. Prescription drug costs are indeed high—and rising fast. Americans now spend a staggering $200 billion a year on prescription drugs, and that figure is growing at a rate of about 12 percent a year (down from a high of 18 percent in 1999).1 Drugs are the fastest-growing part of the health care bill—which itself is rising at an alarming rate. The increase in drug spending reflects, in almost equal parts, the facts that people are taking a lot more drugs than they used to, that those drugs are more likely to be expensive new ones instead of older, cheaper ones, and that the prices of the most heavily prescribed drugs are routinely jacked up, sometimes several times a year.

Before its patent ran out, for example, the price of Schering-Plough’s top-selling allergy pill, Claritin, was raised thirteen times over five years, for a cumulative increase of more than 50 percent—over four times the rate of general inflation.2 As a spokeswoman for one company explained, “Price increases are not uncommon in the industry and this allows us to be able to invest in R&D.”3 In 2002, the average price of the fifty drugs most used by senior citizens was nearly $1,500 for a year’s supply. (Pricing varies greatly, but this refers to what the companies call the average wholesale price, which is usually pretty close to what an individual without insurance pays at the pharmacy.)

Paying for prescription drugs is no longer a problem just for poor people. As the economy continues to struggle, health insurance is shrinking. Employers are requiring workers to pay more of the costs themselves, and many businesses are dropping health benefits altogether. Since prescription drug costs are rising so fast, payers are particularly eager to get out from under them by shifting costs to individuals. The result is that more people have to pay a greater fraction of their drug bills out of pocket. And that packs a wallop.

Many of them simply can’t do it. They trade off drugs against home heating or food. Some people try to string out their drugs by taking them less often than prescribed, or sharing them with a spouse. Others, too embarrassed to admit that they can’t afford to pay for drugs, leave their doctors’ offices with prescriptions in hand but don’t have them filled. Not only do these patients go without needed treatment but their doctors sometimes wrongly conclude that the drugs they prescribed haven’t worked and prescribe yet others—thus compounding the problem.

The people hurting most are the elderly. When Medicare was enacted in 1965, people took far fewer prescription drugs and they were cheap. For that reason, no one thought it necessary to include an outpatient prescription drug benefit in the program. In those days, senior citizens could generally afford to buy whatever drugs they needed out of pocket. Approximately half to two thirds of the elderly have supplementary insurance that partly covers prescription drugs, but that percentage is dropping as employers and insurers decide it is a losing proposition for them. At the end of 2003, Congress passed a Medicare reform bill that included a prescription drug benefit scheduled to begin in 2006, but as we shall see later, its benefits are inadequate to begin with and will quickly be overtaken by rising prices and administrative costs.

For obvious reasons, the elderly tend to need more prescription drugs than younger people—mainly for chronic conditions like arthritis, diabetes, high blood pressure, and elevated cholesterol. In 2001, nearly one in four seniors reported that they skipped doses or did not fill prescriptions because of the cost. (That fraction is almost certainly higher now.) Sadly, the frailest are the least likely to have supplementary insurance. At an average cost of $1,500 a year for each drug, someone without supplementary insurance who takes six different prescription drugs—and this is not rare—would have to spend $9,000 out of pocket. Not many among the old and frail have such deep pockets.

In the past two years, we have started to see, for the first time, the beginnings of public resistance to rapacious pricing and other dubious practices of the pharmaceutical industry. It is mainly because of this resistance that drug companies are now blanketing us with public relations messages. And the magic words, repeated over and over like an incantation, are research, innovation, and American. Research. Innovation. American. It makes a great story.

Rhetoric Versus Reality

But while the rhetoric is stirring, it has very little to do with reality. First, research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind “mining, crude oil production,” and “commercial banks.”) The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R&D.

Second, the pharmaceutical industry is not especially innovative. As hard as it is to believe, only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). The great majority of “new” drugs are not new at all but merely variations of older drugs already on the market. These are called “me-too” drugs. The idea is to grab a share of an established, lucrative market by producing something very similar to a top-selling drug. For instance, we now have six statins (Mevacor, Lipitor, Zocor, Pravachol, Lescol, and the newest, Crestor) on the market to lower cholesterol, all variants of the first. As Dr. Sharon Levine, associate executive director of the Kaiser Permanente Medical Group, put it, "If I’m a manufacturer and I can change one molecule and get another twenty years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less certain endeavor, which is looking for brand-new drugs?"4

Third, the industry is hardly a model of American free enterprise. To be sure, it is free to decide which drugs to develop (me-too drugs instead of innovative ones, for instance), and it is free to price them as high as the traffic will bear, but it is utterly dependent on government-granted monopolies—in the form of patents and Food and Drug Administration (FDA)–approved exclusive marketing rights. If it is not particularly innovative in discovering new drugs, it is highly innovative—and aggressive—in dreaming up ways to extend its monopoly rights.

And there is nothing peculiarly American about this industry. It is the very essence of a global enterprise. Roughly half of the largest drug companies are based in Europe. (The exact count shifts because of mergers.) In 2002, the top ten were the American companies Pfizer, Merck, Johnson & Johnson, Bristol-Myers Squibb, and Wyeth (formerly American Home Products); the British companies GlaxoSmithKline and AstraZeneca; the Swiss companies Novartis and Roche; and the French company Aventis (which in 2004 merged with another French company, Sanafi Synthelabo, putting it in third place).5 All are much alike in their operations. All price their drugs much higher here than in other markets.

Since the United States is the major profit center, it is simply good public relations for drug companies to pass themselves off as American, whether they are or not. It is true, however, that some of the European companies are now locating their R&D operations in the United States. They claim the reason for this is that we don’t regulate prices, as does much of the rest of the world. But more likely it is that they want to feed on the unparalleled research output of American universities and the NIH. In other words, it’s not private enterprise that draws them here but the very opposite—our publicly sponsored research enterprise.

Getting It Straight

This book will expose the real pharmaceutical industry-an industry that over the past two decades has moved very far from .....

Bayh-Dole gave a tremendous boost to the nascent biotechnology industry, as well as to big pharma. Small biotech companies, many of them founded by university researchers to exploit their discoveries, proliferated rapidly. They now ring the major academic research institutions and often carry out the initial phases of drug development, hoping for lucrative deals with big drug companies that can market the new drugs. Usually both academic researchers and their institutions own equity in the biotechnology companies they are involved with, Thus, when a patent held by a university or a small biotech company is eventually licensed to a big drug company, all parties cash in on the public investment in research. (Marcia Angell "The Truth About Drug Companies" 2004 p.7)

2 The Creation of a New Drug

BRINGING A NEW DRUG TO MARKET IS A lo~g haul. The industry is right about that, but wrong about its role in the process. Drug companies do not play anywhere near as large a part in research and development (R & D) as they would have us believe. It is not my intention to describe pharmaceutical R & D in any detail here, because that is not the focus of this book. But to help show how drug companies are selling us a bill of goods, I need to sketch the highlights. Most of what I will describe applies just to the few innovative drugs that come to market each year. For the many more "me-too" drugs-minor variations of drugs already on the market-the R & D process is much faster, since a great deal of it has already been done.

R & D Lite

You can't just randomly test chemicals to see if one will turn up that might be helpful in treating a disease. That would take an infinitely long time and be dangerous as well. Instead, most of the time you first have to understand the nature of the disease you want to treat-what has gone wrong in the body to cause it. That understanding needs to be fairly detailed, usually·at the molecular leve~, if there is to be any hope of finding a drug that will safely and effectively interfere with the chain of events responsible for the disease. What researchers hope to find is some specific link in the chain that a drug will target.

So learning about the disease or condition is usually the beginning of the ‘research’ part of R&D, and it can take a very long time – sometimes decades. There is no question that this is the most creative, and the least certain, part of the R&D process. Contrary to industry propaganda, it is almost always carried out at universities or government research labs, either in this country or abroad. In the United States, most of it is supported by the National Institutes of Health.

Once the basic research has reached a critical point-that is, the disease is fairly well understood and so are the possible means to cure or ameliorate it-the search is on to discover or synthesize a molecule that will do the job and be safe to use. That is the "development" part of R & D, and it is here that drug companies usually get involved-sometimes early, sometimes not until very late.

The development part of R & D is itself divided into two stages-preclinical and clinical. The preclinical stage has to do with finding promising drug candidates and then studying their properties in animals and cell cultures. Companies keep vast libraries of drug candidates-molecules that can now be screened very rapidly by computerized methods to see if they will target the Achilles' heel found by the basic research. In addition, new molecules can be synthesized or extracted from animal, plant, or mineral sources. Only the small fraction of drug candidates that make it through preclinical development go on to be tested ·in humans-the all-important clinical stage (more on that later).

According to the pharmaceutical industry, only one in five thousand candidate drugs make it to market 2 -one in one thousand survive preclinical testing, and of those, ·one in five make it through clinical testing. Paradoxically, although it is the least creative part of the process, clinical testing is the most expensive. The great majority of drug candidates are thus weeded out very early on, before there has been a great deal of money invested in them.

Research and development in biotechnology companies is similar in many ways to R & D in big drug companies. But instead of producing small molecules by chemical means, biotech companies focus primarily on making or modifying very large molecules, like proteins or hormones, by using living biological systems--often with recombinant DNA technology. Moreover, there is as yet no industry that makes generic biotech products, so monopoly rights are essentially unlimited. The distinctions between pharmaceutical and biotechnology companies are blurring, however, and the largest biotechnology companies are now members of the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

This is a bare-bones outline of R & D, and as in all bare-bones stories, things are rarely so clear-cut and there are many variations and exceptions, But the general point is that the longest, most difficult part of R & D is the front end-the research part-where the basic discoveries are made that identify how and where a disease or condition can be successfully at- . tacked by a new pharmacological agent. Big drug companies usually contribute very little to that effort. Where they are important in the R & D for most drugs is at the development end, particularly in clinical testing. (Marcia Angell "The Truth About Drug Companies" 2004 p.22-3)

An Example-The AZT Story

A good illustration of the R & D process for an innovative drug is the story of .AZT (also called zidovudine), the first drug on the market to treat HIV/AIDS. Sold under the brand name Retrovir, it was originally manufactured by the drug company Burroughs .Wellcome, which was later swallowed up by the much larger British firm GlaxoSmithKline. Despite the f~ct that the profits went at first to Burroughs Wellcome and now to GlaxoSmithKline, the research and most of the development was done in government and university laboratories. This is a story worth recounting in some detail.3

Acquired inununodeficiency syndrome, or AIDS, burst on the scene in 1981, with the publication of three papers in The New England Journal of Medicine about a handful of gay men in Los Angeles and New York City who had died of overwhelming infections. Their immune systems were virtually obliterated, but no one could say why. The mysterious outbreak spread quickly and gave rise to intense worldwide efforts to find its cause. Speculation ranged widely, from contaminants in illegal drugs to a strange toxin picked up in Haiti to an unknown fungus. Within two short years, however, researchers at the NIH and the Pasteur Institute in Paris had pinpointed the culprit-a type of virus called a retrovirus.

A long time before that, in 1964, the AZT molecule had been synthesized at the Michigan Cancer Foundation as a possible treatment for cancer, and it was studied in many laboratories for that purpose. It did not prove effective against cancer, but in 1974, workers in a German laboratory found it to be effective against viral infectiorts in mice. Burroughs Wellcome later acquired the molecule for possible use against the herpes virus.

Soon after the discovery of the cause of AIDS in 1983, Samuel Broder, head of the National Cancer Institute (NCI)-a part of the NIH-set up a team to screen antiviral agents from around the world as possible treatments for AIDS. Among the many he tested was Burroughs Wellcome's AZT. In 1985, his team, along with colleagues at Duke University, found that AZT was effective against the AIDS virus in test tubes and then in early clinical trials. Burroughs Wellcome immediately patented the drug to treat AIDS and carried out later trials that enabled it to receive Food and Drug Administration (FDA) approval in 1987, after a review of only a few months.

This was an extraordinary achievement. It took a mere six years from the first reports of a new disease for the cause to be found and an effective drug brought to market. But except for the speed, the story is not so different from countless other stories of how innovative drugs are discovered. It required bringing together many threads from many government, university, and other nonprofit sources, and only late in the process-in this case, very late-handing the drug off to a private company for further development, manufacture, and distribution.

As is also typical, the company claimed far more credit than it deserved, probably the better to justify its exorbitant pricesoriginally about $10,000 per year. After a · self-congratulatory letter to The New York Times by the company's CEO, Broder and four colleagues from the NCI and Duke University responded angrily, reciting the seminal contributions Burroughs Wellcome did not make:

The company specifically did not develop or provide the first application of the technology for determining whether a drug like AZT can suppress live AIDS virus in human cells, nor did it develop the technology to determine at what concentration such an effect might be achieved in humans. Moreover, it was not first to administer AZT to a human being with AIDS, nor did it perform the first clinical pharmacology studies in patients. It also did not perform the immunological and virological studies necessary to infer that the drug might work, and was therefore worth pursuing in further studies. All of these were accomplished by the staff of the National Cancer Institute working with the staff of Duke University.

And they added, "Indeed one of the key obstacles to tpe development of AZT was that Burroughs Wellcome did not work with live AIDS virus nor wish to rec~ive samples from AIDS patients. " 4

Testing Drugs on People-and Finding Volunteers

The clinical stage of drug development is regulated by the FDA.5 By law, before a company can sell a new drug, it must prove to this agency that· the drug is reasonably safe and effective. That proof usually requires a series of clinical trials, which are divided into three phases. Phase I entails giving the drug to a small number of usually normal volunteers to establish safe dosage levels and study its metabolism and side effects. (The exceptions are cancer and AIDS drugs, which are tested on people with the disease even in Phase I.) If the drug looks promising, it moves into Phase II, which involves as many as a few hundred patients with the relevant disease or medical condition. The drug is given at various doses, and the effects are usually compared with those in a similar group of patients not given the drug. Finally, if all goes well, Phase III clinical trials are undertaken. These evaluate the safety and effectiveness of the drug in much larger numbers of patients (hundreds to tens of thousands), and they nearly always involve a comparison group of patients. But not all drugs go through all phases. Sometimes the process is greatly truncated-to one or two trials. If the trials are successful, FDA approval follows.

Drug companies usually obtain a patent on a new drug before clinical testing begins, because it is difficult. to keep information about the drug secret after this point. Patents protect companies against competition during the testing period. But clinical trials usually take a few years, and during that time the drug cannot be sold. That means clinical testing eats into a drug's twenty-year patent life-the time it can be sold without competition. For that reason, drug companies are in a terrific rush to get the trials out of the way so they can start to market the drug. And that means they need to find human subjects in a hurry.

Drug companies don't have direct access to human subjects, nor do they employ their own physicians to conduct clinical trials. They need to rely on doctors in teaching hospitals and private offices to do the studies, using either their own patients or volunteers recruited through various kinds of solicitations. At one time, most trials were done at medical schools and teaching hospitals. Companies would give grants to faculty researchers to carry out clinical trials under institutional auspices. That is no longer the case. Because there are so many more trials nowadays, and because drug companies are so eager to get them done quickly, they have shifted much of their business to new, forprofit companies set up exclusively to organize and carry out trials for the industry. These are called contract research organizations (CROs). In 2001, there were about a thousand of them operating around the world, with revenues from their drug company clients of some $7 billion. They establish networks of physicians who, working under the organizations' supervision, are paid to administer the study drugs and collect information on their effects.

The number of clinical trials under way in any given year is staggering.6 In 2001, an estimated 80,000 of them were ongoing in the United States alone. That year, about 2.3 million Americans served as human subjects. These numbers are only approximate. Exact figures are hard to come by, since not all trials are registered with the FDA or NIH. The point is that the numbers are far larger than most people realize. In fact, it's quite likely that nearly everyone knows someone who has participated in a clinical trial.

Only some of the trials are to test new drugs to get FDA approval. Many are of drugs already on the market---called "postmarketing" or "Phase IV" studies. Often these are to find new uses for old drugs to expand their markets. A few are required by the FDA to look for unknown side effects. And a great many-perhaps most-are really, 'in the view of many critics, just excuses to pay doctors to put patients on a company's already-approved drug.

Even though the NIH spends nearly as much money on research as 'does the industry, it concentrates on basic research. Only about 10 percent of clinical trials are sponsored by the NIH, usually in academic medical centers.

All clinical trials cut into the limited supply of human vol~ unteers. In fact, the scarcity of human subjects-not FDA roadblocks, as is often claimed by the pharmaceutical industry-is the biggest cause of delay in getting new drugs to market. 7 Large drug companies have centralized patient recruitment offices, which outsource many of the tasks to a growing number of independent recruitment firms, as well as to CROs. Potential subjects are solicited in a variety of ways-postings on health related Internet sites; television, radio, and newspaper ads; individual mailings; and posters and flyers distributed throughout communities. Solicitations are often disguised as public service announcements. Drug companies also set up patient advocacy groups as magnets for people with specific diseases. These are rich sources of patients for clinical trials. Most human subjects are now recruited through these kinds of efforts, not referred by their doctors. They are usually paid from a few hundred to a few thousand dollars for participation in a trial.

Whatever they are paid, it is dwarfed by payments to doctors. To get human subjects, drug companies or contract research organizations routinely offer doctors large bounties (averaging about $7000 per patient in 2001) and sometimes bonuses for rapid enrollment. For example, according to a 2000 Department of Health and Human Services inspector general's report, physicians in one trial were paid $12,000 for each patient enrolled, plus another $30,000 on the enrollment of the sixth patient. 8 One risk of this bounty and bonus system is that it can induce doctors to enroll patients who are not really eligible. For instance, if it means an extra $30,000 to you to enroll a patient in an asthma study, you might very well be tempted to decide your next patient has asthma, whether he does or not ("Sounds like a little wheeze you have there .... "). Obviously, if the wrong patients are enrolled, the results of a trial are unreliable, and that is probably often the case. (More about biased research in Chapter 6.)

The FDA-Regulation and Reaction

As mentioned, the FDA's involvement with a drug begins at the clinical trials stage. B~fore trials can begin, a drug company must file an investigational new drug application with the FDA. It describes the proposed research in detail, including measures to protect the rights and welfare of human subjects. After all the trials are completed, which usually takes a few years, the company must file a new drug application to get FDA approval to go to market. With the help of eighteen advisory committees of outside experts, the agency reviews the application, which includes results of the clinical trials, along with other supporting evidence. Only if the drug passe~ this scrutiny_ny is it allowed on the market. Companies are permitted to promote drugs only for the uses and at the doses for which they were approved, although once they are on the market, doctors may prescribe them for any use and at any dose they deem appropriate.

Generic drugs, you will remember, are copies of brand-name drugs whose exclusive marketing rights have expired. They, too, need FDA approval, but their manufacturers have to demonstrate only that they are equivalent to the brand-name drugs they copy. Since the passage of Hatch-Waxman in 1984, generic companies don't have to do clinical trials to show safety and effectiveness, because the brand-name companies have already done that.

Before leaving the subject of generic drugs, I should mention a new hybrid called "branded generics." Their active ingredients are similar but not identical to those of the brand-name drugs they mimic, so they supposedly do not infringe on patents, but they are said to be similar enough that they don't have to undergo clinical testing. Neither big pharma nor traditional generic companies are happy about the competition from branded generics, and both are mounting legal challenges. Branded generics are priced somewhere between brand-name drugs and true generics, and their market share is growing rapidly. They are likely to become very important in the biotech industry, where there are no traditional generics because it is difficult to show they are equivalent to the originals.

The FDA is also supposed to review drug labeling for accuracy, as well as advertisements for accuracy and balance. Even the most casual observer would have to conclude the agency fails at the latter. For one thing, it just doesn't have the resources to do the job. In 2001, the agency had only thirty people to review 34,000 advertisements. 9 Additionally, the FDA is charged with ensuring safe manufacturing standards, but here again, it is woefully understaffed for that task. 10

The first regulatory agency in the country, the FDA was an outgr~wth of the 1906 Food and Drug Act, which prohibited interstate commerce in falsely labeled and adulterated foods, drinks, and drugs.11 That act, in turn, was a response to a series of magazine exposes of widespread filth in meatpacking plants, the use of poisonous preservatives and dyes in foods, and cureall claims for worthless and dangerous patent medicines. Upton Sinclair's sensational portrayal of the meatpacking industry in his 1906 book The Jungle was an added impetus. The FDA now consists of 9,000 people (still a fairly small agency by Washington standards), with the awesome responsibility of overseeing three gigantic industries-food; drugs, vaccines, blood products, and medical devices (such as artificial heart valves); and cosmetics. These industries consist of some 95,000 different businesses with more than a trillion dollars' worth of sales annually.

, In 1938, in the wake of a cluster of deaths from the use of a poisonous solvent in a new sulfa drug, Congress decided that the FDA should take more systematic steps to protect the public. Accordingly, the agency was given the specific task of requiring drug companies to prove that their products were safe before they could be sold. It wasn't until 1951, however, that prescriptions were required. In that year, Congress decided that doctors' prescriptions would be necessary to purchase drugs that could not be used safely without ~edical expertise. In 1962, another requirement was added. Drug companies had to prove their products were. not just safe but also effective. That mandate soon gave rise to rules for carrying out clinical trials -- the only way to show safety and ·effectiveness unequivocally.

The FDA is the pharmaceutical industry's favorite whipping boy. Drug companies and their acolytes in the media and Congress relentlessly berate the agency for putting bureaucratic obstacles in the way of getting "lifesaving drugs" to market. In particular, The Wall Street Journal and an organization called the Washington Legal Foundation hammer away at the agency incessantly. You would think, from reading their material, that the FDA is filled with capricious bureaucrats who spend all their days dreaming up ways to prevent Americans from getting vital medicines-with what motive, they're not clear. In one editorial, for example, The Wall Street Journal urged the FDA to "reform its slow and blinkered approach to potentially lifesaving therapies" and "view itself not as a gatekeeper but as a facilitator." 12 The Washington Legal Foundation warned in one of its advertisements in The New York Times, "Make no mistake, unnecessary approval delays have human costs. Rigid procedures, endless data requests, and the pursuit of absolutely risk-free products keep new treatments bottled up at FDA while radically ill patients wait, suffer, and often die. " 13

Sounds bad, but it just isn't true. The total time from the beginning of preclinical testing of a candidate drug to its coming on the market ranges from about six to ten years. But the time for FDA review accounts for only a small fraction of that-about sixteen months in 2002 and getting shorter. In fact, under pressure from the industry, the agency in the past decade has moved from being the slowest regulatory drug agency in the developed world to being the fastest. In special cases, approval time can be cut to weeks. Of course, the drug companies would like to cut the whole thing-testing and approval-down to virtually nothing, because the time comes out of the drug's patent life.

But except for libertarian extremists and The Wall Street Journal, who could possibly want that? Which of us would pretend that the free market can decide whether drugs and medical devices are safe and effective? Do you really want your doctor to rely on the word of drug companies that the antibiotic prescribed for your pneumonia will work? Doctors are not wizards, and they have no way to know whether drugs will work well unless they can rely on an impartial agency like the FDA to review the scientific data. Deciding simply on the basis of whether individual patients seem to respond is a notoriously unreliable and dangerous method. To be sure, doctors might be able to judge for themselves by assiduously keeping up with medical journals and textbooks, but the truth is most don't have the time to do that. Furthermore, without the pressure of the FDA to make companies do clinical trials, there would be far fewer informative reports published in the medical journals.

Discovering innovative drugs and bringing them to market is a long and difficult process, and there are no sho,rtcuts. It is crucial that new drugs be shown to be safe and effective, as judged by an impartial agency responsible for the public health and not a corporation responsible for the value of its shareholders' stock. The alternative is to go back to 1906, when anything and everything could be sold as a miracle cure and the watchword was caveat emptor. As for all the "me-too" drugs that now constitute the major output of the pharmaceutical industry, it's very hard to make the case that the world should be in any hurry for the next one.

How Much Does the Pharmaceutical Industry Really Spend on R & D?

Drug companies claim drugs are so expensive because they need to cover their very high research and development (R & D) costs. In 2001, they put these costs at $802 mil­lion (in 2000 dollars) for each new drug they bring to market. (Later, the consulting firm Bain & Company upped that to $1.7 billion per drug, but they included marketing expenditures.) Im­plicit in this claim is a kind of blackmail: If you want drug companies to keep turning out life­saving drugs, you will gratefully pay whatever they charge. Otherwise, you may wake up one morning and find there are no more new drugs. As Alan E Holmei president of the industry’s trade associa­tion, Pharmaceutical Research and Manufacturers of America (PhRMA), said in a radio interview, “Believe me, if we impose price controls on the pharmaceutical industry, and if you reduce the R & D that this industry is able to provide, it’s going to harm my kids and it’s going to harm those millions of other Americans who have life-threatening conditions.”

The industry admits that it charges Americans, particularly those without insurance, far more than it does people in other countries, but it insists it needs to do so in order to make up for the fact that other countries regulate prices. Americans must bear a disproportionate share of R & D costs, they say, because nobody else will or can. This argument is trotted out whenever there is the faintest whiff in the air that anyone is considering price controls in the United States. William Safire used it in a New York Times column where he warned, “The price of most new prescription drugs is high in the U.S. mainly because it in­cludes the producers’ huge investment in scientific research.”

The Black Box

Given that argument, it is crucial to ask how much it costs the industry to bring a new drug to market. Is it really $802 million? Getting an answer to that question is not as easy as it sounds, be­cause the industry will not supply the necessary data. Individual companies report total R & D expenditures in their Securities and Exchange Commission (SEC) filings, and PhRMA’s annual report gives industrywide averages for total R & D, as well as average figures for the breakdown of expenses by general R & D functions (where one of the biggest categories is “other”). But the companies do not make available the really important details, such as what each company spends, and for what purposes, on the development of each drug. They claim that that information is proprietary. As Representative Henry Waxman (D-Calif.) commented, “The basic problem is that all pharmaceutical costs, including research, are in a black box, hidden from view. There is no transparency.” This secrecy is odd for an industry that justifies its high prices by its high R & D costs.

We also don’t know what activities are included under the heading “R & D.” Much of it may really be marketing, which is counted as R & D because it looks better to have a large R & D budget than to have a large marketing budget. One clue that this may be the case is the fact that a growing fraction of clini­cal trials are Phase N studies. You will remember from Chapter 2 that these are studies of drugs already on the market—supposedly for the purpose of learning more about long-term effects and possible additional uses. But many Phase N studies are mainly ways to introduce doctors and patients to a company’s drug by paying clinicians to use it and then report some minimal information back to the company. In other words, they can be seen as promotional gimmicks.

Despite the fact that R & D is a black box, you can crudely calculate costs per drug simply by dividing the industry’s own figure for total R & D by the number of new drugs. That assumes, of course, a steady state—that about the same number of drugs enter the market each year and total R & D costs stay fairly constant. That is not quite the case. Nevertheless, this simple calculation is a way of making a very rough estimate. If you look at the year 2000, when the industry claims to have spent $26 billion on R & D and ninety-eight drugs entered the market, the average pretax cost for each drug was, under those assumptions, no greater than $265 million, and the after-tax cost about $175 million. (Research and development costs are tax deductible, and the corporate tax rate is now about 34 percent.) That would be the maximum, since it is likely that PhRMA’s total R & D figure is inflated by activities that many would regard as promotional, and the industry receives generous tax credits as well as deductions. If you take the next year, when the industry claimed it spent $30 billion and only sixty-six drugs entered the market, the pretax cost per drug would be higher— $455 million—and the after-tax cost $300 million. As you can see, any attempt to determine the cost per drug is highly dependent on the number of drugs—a subject I’ll come back to later.

The consumer advocacy group Public Citizen performed a much more sophisticated analysis using the same approach. They looked at all the drugs that entered the market between 1994 and 2000 (thus smoothing out the yearly variations), and made appropriate allowances for the long lag time between R & D expenditures and the dates the drugs came on the mar­ket. They found that after-tax costs were probably less than $100 million for each drug approved during that period. Other independent analysts have reached similar conclusions. Even using PhRMA’s own figures for total R & D costs for the decade of the 1990s, it can be calculated that the cost per drug came to around $100 million after taxes. That is a lot, but it’s a far cry from the much-vaunted $802 million.

The Imaginary Number

So where did the $802 million figure come from? And why has it been uncritically accepted? The number was the finding of a group of economists, headed by Joseph DiMasi of the Tufts Center for the Study of Drug Development, and it was an­nounced with much fanfare at a press conference in Philadelphia on November 30, 2001.6 The Tufts Center is largely supported by the pharmaceutical industry, and this was an updating of an analysis done by the same group over a decade ago. The results this time were about twice as high. Ever since the press confer­ence, PhRMA and leaders and defenders of the industry have trumpeted the findings as a justification for high drug prices. Kenneth I. Kaitlin, the director of the Tufts Center, said, “Bring­ing new drugs to market has always been an expensive, high-risk proposition, and our latest analysis indicates that costs have con­tinued to skyrocket.” The president of PhRMA, Alan F. Holmer, welcomed the study as confirmation that “drug development is staggeringly expensive.” The media seemed to accept it pretty much at face value. Under the heading “Research Cost for New Drugs Said to Soar,” for instance, The New York Times reported the next day, “A new round in the national debate over prescrip­tion drugs opened today with a study from researchers at Tufts University estimating that the average cost of developing a new drug has more than doubled since 1987, to $802 million.” The rest of the media carried similar stories.

It was not until a year and a half later that the Tufts group actually published their analysis and it became possible to see how it was done. What they did was to look at sixty-eight drugs developed at ten drug companies over about a decade. But the names of the companies and the names of the drugs were never revealed. Furthermore, all the data on the costs of those drugs were supplied by the companies to the Tufts group confidentially, and as far as I can tell, the authors were not able to verify the information. They were supposed to take the com­panies’ word, and we were supposed to take theirs. That situation is extremely unusual in scientific publishing, where it is understood that the salient data will be made available to read­ers so they can evaluate the analysis for themselves.

But one thing is clear from the paper. The $802 million fig­ure has nothing to do with the “average cost of developing a new drug,” in the words of The New York Times. It refers only to the cost of developing a tiny handful of the very most expensive drugs. Let’s look at this misunderstanding more closely, because it is crucial.

Every year the Food and Drug Administration (FDA) ap­proves a number of new drug applications, which means that those drugs can enter the market. That is what most people mean when they say “new” drugs. In 2002, for instance, the number was seventy-eight, as I mentioned in Chapter 1. But of the new drugs, only a minority are newly discovered or synthesized mol­ecules. The FDA classifies these as new molecular entities (NMEs). The others are just new versions of drugs already on the market. In 2002, only seventeen of the seventy-eight newly ap­proved drugs were NMEs. And of the NMEs, only a fraction are developed entirely by the drug companies themselves. Most of the rest are simply licensed or otherwise acquired from uni­versity or government laboratories or biotechnology companies.

The Tufts analysis was restricted to NMEs developed en­tirely within drug companies—what the authors called “self-originated NCEs” (the old term for NMEs). But these constitute only a tiny percentage of all new drugs. As you might expect, this handful of drugs cost companies more to develop than the others. It is cheaper to license a drug from someone else or make a new version of an old drug. In fact, the Tufts authors state that the drug companies they surveyed spent 75 percent of their R & D money (including the costs of Phase IV studies) on these few self-originated NMEs. I find this an almost unbelievably high percentage, and there is no way to verify it, but the point is the companies agree that they spend much more on self-originated NMEs than on other drugs.

Why didn’t the media catch on to the fact that the $802 mil­lion figure applied only to a sample of highly selected and very costly drugs? One possible answer is that the industry didn’t want them to. In their public relations, PhRMA and the drug companies strongly imply that $802 million is the average for all new drugs. Even the Tufts authors seemed to suggest that in the short summary of their paper, where they wrote, “The re­search and development costs of sixty-eight randomly selected new drugs were obtained from a survey of ten pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug development.” Nothing about which new drugs.

..... And Doubling It

There is a second problem with the Tufts estimate. It is not the actual out-of-pocket cost at all, even for the special group of drugs considered. That cost was $403 million per drug. The $802 million is what the authors call the “capitalized” cost—that is, it includes the estimated revenue that might have been generated if the money spent on R & D had instead been invested in the eq­uity market. It’s as though drug companies don’t have to spend any money at all on R & D; they could invest it instead. Or, in the author’s technical jargon, “the expenditures must be capitalized at an appropriate discount rate, [which is] the expected return that investors forego during development when they invest in pharmaceutical R & D instead of an equally risky portfolio of fi­nancial securities.” This theoretically lost revenue is known as the “opportunity cost,” and the Tufts consultants simply tacked it on to the industry’s out-of-pocket costs. That accounting maneu­ver nearly doubled the $403 million to $802 million.

The authors justified the maneuver on the grounds that, from the perspective of investors, a pharmaceutical company is really just one kind of investment, which they choose among other possible options. But while this may be true for investors, surely it is not true for the companies themselves. The latter have no choice but to spend money on R & D if they wish to be in the pharmaceutical business. They are not investment houses. So you can hardly look at the money spent on R & D as money that could have been spent on something else. The Tufts authors say adding opportunity costs is standard ac­counting practice, and that may be so, but in the context of pharmaceutical R & D, it simply makes no sense.

And there is a third problem with the estimate. It is in pre­tax dollars. But R & D expenses are fully tax deductible. On top of that, drug companies enjoy a number of tax credits worth bil­lions of dollars, including a SO percent credit for the costs of testing “orphan drugs”—those with an expected market of fewer than 200,000 people. As of the year 2000, the FDA had listed 231 orphan drugs since the tax credit was instituted in 1983. One of those is Retrovir, the first drug for HIV/AIDS, dis­cussed in the last chapter. With the worldwide HN/AIDS epi­demic, the market for Retrovir is far greater than 200,000, but it was considered an orphan drug nonetheless. In addition, the tax credit extends to other drugs if companies can make a case that they are unlikely to be profitable. (What other business gets such a deal?) Presumably, drug companies claiming these tax credits would have to share with the Internal Revenue Ser­vice information they are unwilling to share with anyone else— the R & D costs of individual drugs. One wonders whether and how often this information is audited.

In any case, when all the tax benefits are taken together, big pharma pays relatively little in taxes. Between 1993 and 1996, drug companies were taxed at a 16.2 percent rate, compared with an average tax rate of 27.3 percent for all other major industries. Many experts believe that the R & D cost estimate should therefore be lowered by the amount of corporate tax avoided. These tax savings would reduce the net cost of R & D by a percentage at least equal to the 34 percent corporate tax rate (not considering tax credits). You could argue about whether this adjustment is reasonable, but if one accepts that it is, it would reduce the Tufts estimate of $403 million (before adding “opportunity costs”) to an after-tax net of less than $266 million per drug.

But remember, that would be the average out-of-pocket, after-tax R & D costs for only the new molecular entities devel­oped entirely in-house, not the average cost of all the drugs approved. Most approved drugs entering the market are not really new, or they are acquired from other sources, or both. I would guess that the real cost per drug is well under $100 million. Were it anywhere near the claimed $802 million, the industry would not be so secretive about the data. (Marcia Angell "The Truth About Drug Companies" 2004 p.38-9)

(Marcia Angell "The Truth About Drug Companies" 2004 Executive Times book review

Let's return to big pharma's essential argument that curbing prices would cut into its R&D spending. Would that really be necessary? .....

In 2002, when the ten U.S. drug companies in the Fortune 500 list had combined worldwide sales of about $217 billion and spent just over 14 percent of that on R & D (about $31 billion), they had a profit margin of 17 percent ($36 billion). Thus profits were substantially more than R&D costs. Even more startling is the fact that they spent a walloping 31 percent of sales (about $67 billion) on marketing and administration. (Marcia Angell "The Truth About Drug Companies" 2004 p.48-9)

The real source of innovation

The meager output is bad enough. But the real scandal is the fact that the few innovative drugs that do come to market nearly always stem from publicly supported research. In this country nearly all of that is sponsored by the National Institutes of Health (NIH) and is carried out at universities, small biotechnology companies, or the NIH itself. .....

.... Sometimes the drugs are completely developed before they are licensed. We saw, for example, in Chapter 2 how AZT, the first drug to treat HIV/Aids, was developed and clinically tested by researchers at the National Cancer Institute (a part of the NIH) and Duke University before being licensed to what is now GlaxoSmithCline. (Marcia Angell "The Truth About Drug Companies" 2004 p.56-61)

So, as in the case of Taxol, the public gets to pay for Epogen twice -- first by having supported the research that discovered it, and second, by paying for it through Medicare. Goldwasser never received a penny of royalties for his seminal discovery.

The identical molecule is marketed under the name Procrit (as though it were a different substance) by the huge firm Johnson & Johnson (J & J). This unnecessary duplication was the result of a deal between Amgen and J & J.....

Here again, a trulyimportant new therapeutic agent was discovered and identified through basic research outside the drug industry. (Marcia Angell "The Truth About Drug Companies" 2004 p.60-61)

But, according to Drucker the company showed little enthusiasm for undertaking further clinical work on imatinib mesylate. Whether the reluctance was because of the small potential market or the finding that the drug was toxic to dogs at high doses is not clear. Drucker nevertheless persisted, and Novartis finally agreed to support cautious, limited tests in his clinic and at two other sites. By 1999, Drucker was able to report spectacularly successful preliminary results before a national meeting …. Thus most of Novartis’s R & D investment in Gleevec was made several years after there was good scientific evidence to suggest that the drug would be useful.

A 1997 report by the National Bureau of Economic Research found that of the twenty-one most effective drugs approved between 1965 and 1992, public research was responsible for fifteen. A Boston Globe review of the bestselling fifty drugs approved from 1992 to 1997 found that forty-five of them had received public funding. ......

There Oughta be a Law -- And There Is

This sort of exploitation is not supposed to happen. The Bayh-Dole and Stevenson-Wydler Acts, with subsequent amendments, contained a number of stipulations that would prevent it. First, under "exceptional circumstances," which are vaguely defined in terms of serving the public interest, the NIH may require that work it supports in medical schools, teaching hospitals, and small biotechnology companies not be patented but remain in the public domain. The same is true of its intramural research. Thus,, the right to patent or licence NIH-funded work is not automatically assured. Second, Bayh-Dole requires that work licensed to drug companies be made "available to the public on reasonable terms." That could certainly be interpreted as meaning that it should be priced reasonably. And, until 1995, the NIH explicitly required reasonable pricing for drugs stemming from collaborations like the one that lead to Taxol. Third, work patented and licensed under the terms of Bay-Dole must be reported to the NIH, so that the institute can keep track of which drugs originate in that way. If profits are very large, there is a requirement that some part of the royalties be returned to the government. The same is true of intramural research. Fourth, the government retains the right to "march in" and use a licensed drug itself or issue compulsory licences to other companies if the original company is not fulfilling its obligations. All these provisions have been pretty much ignored by both industry and academia.

The NIH, too, has been super casual about fulfilling the terms of legislation. The fact is that while the NIH represents, and is supported by, the public, it behaves more as if its constituency were the academic medical centers. And there is indeed a revolving door between them. Researchers at medical schools often receive part of their training at the NIH, and of course, NIH scientists and leaders emerge from, and frequently return to academia. It's a very tight community, with much inbreeding and a strong community culture. When there was talk of redirecting a small fraction of the royalties received by medical centers back to the government, the NIH actually argued against it.

The NIH has been friendly to big pharma as well. (As we will see, some senior scientists at the NIH have extensive financial dealings with drug companies.) Under considerable pressure from industry, in 1995, the agency completely abandoned its 1989 policy requiring “a reasonable relationship between the pricing of a licensed product, the public investment in that product, and the health and safety needs of the public." According to an NIH report, "Shortly after the policy of 'reasonable pricing' was introduced, industry objected to it, considering it a form of price control." And so it was! A well-intentioned but doomed effort to hold the industry accountable. As a result, companies like Bristol-Myers Squibb could charge whatever they liked for drugs like Taxol.

In 2001, at the behest of Senator Ron Wyden (D-Ore.), the NIH attempted to account for its contributions to a list of the top forty-seven drugs on the market. The fact that four of them (Taxol, Epogen, Procrit, and Neupogen) were developed largely with public funding was widely publicized. What was not publicized was the fact that the NIH did not seem to know one way of another about many of the other forty-three drugs. According to its report, "NIH encountered difficulty in being able to cross-reference NIH grants and contracts that gave rise to inventions with any patents (Marcia Angell "The Truth About Drug Companies" 2004 p.64-73)

The research and early development was done entirely by NIH-funded scientists, two of whom later left the university to start the company and exploit their work. (The major contributor to the early effort, Roscoe Brady, who discovered the cause of Gaucher's disease, remained at the NIH.) (Marcia Angell "The Truth About Drug Companies" 2004 p.67-73)

In fact, on the basis of placebo-controlled trials, drugs can be approved that are actually worse than drugs already on the market. ......

..... Tom Scully, the former head of the Centers for Medicare & Medicaid Services, told a group of doctors, “You should be embarrassed if you prescribe Nexium.” (Marcia Angell "The Truth About Drug Companies" 2004 p.76-9)

(Marcia Angell "The Truth About Drug Companies" cited in Psychiatryland: How to Protect Yourself from Pill-Pushing Psychiatrists and ... By Phillip Sinaikin, M.D.

Crestor is now promoted as the strongest statin, but that may be because the dose approved by the FDA was relatively high. A larger dose of the other statins might be just as good. ....

…. And in a move even more audacious than the switches from Prilosec to Nexium or Claritin to Clarinex, it renamed Prozac Sarafem, colored it pink and lavender, and got FDA approval to market it for “premenstrual dysphoric disorder,” ….. (Marcia Angell "The Truth About Drug Companies" 2004 p.82-3)

The results, reported in 2002 in The Journal of the American Medical Association, were startling. To nearly everyone’s surprise, the old-time diuretic turned out to be just as good for lowering blood pressure, and actually better for preventing some of the devastating complications of high blood pressure – mainly heart disease and strokes. Participants treated with the diuretic were much less likely to develop heart failure than those treated with Norvasc. And they were less likely to develop heart failure, strokes, and a number of other complications than those treated with the ACE inhibitor. As for Cardura, that part of the trial had to be stopped early, because so many people who received that drug developed heart failure. The director of the National Heart, Lung, and Blood Institute was unequivocal in his conclusion: ALLHAT shows that diuretics are the best choice to treat hypertension both medically and economically.”

Yet over the years the newer drugs had largely supplanted diuretics as treatment for high blood pressure. Diuretics were not promoted because generic manufacturers don't usually spend money on marketing. In contrast, when the new drugs came on the market, they were promoted incessantly. In 1996, for example, Norvasc was the most heavily advertised drug in The New England Journal of Medicine, but there was not a single ad for diuretics.4 As you might guess, the use of diuret­ics plummeted. Whereas in 1982 they accounted for 56 per­cent of prescriptions written for high blood pressure, ten years later, after ACE inhibitors and calcium channel blockers hit the market, they accounted for only 27 percent. In general, the newer the drug, the better it sells. If you look at the top fifty drugs used by senior citizens in 2001, Norvasc was number two. Three brand-name ACE inhibitors were also in the top fifty. But diuretics like the one that proved superior in ALL-HAT appeared nowhere on that list.5

And look at the costs. Diuretics were priced at about $37 a year in 2002 (among the cheapest drugs on the market), compared with $715 for Norvasc and $230 for a generic ACE in­hibitor.6 So people with high blood pressure who use Norvasc get to pay nineteen times more for the privilege of taking a drug that is no better, and probably worse, than a diuretic. The cost in health may be worse. High blood pressure is extremely com­mon—about 24 million Americans are now being treated for it. If the ALLHAT findings are correct, a great many people may have suffered serious complications that could have been avoided if they had been treated with diuretics. As Dr. Curt Furberg, the principal author of ALLHAT, put it, "We find out now that we've wasted a lot of money. In addition, [the current practice] has probably caused harm to patients."7 Why didn't we learn a long time ago that the new drugs were not as good as the old ones? Well, to begin with, no one tried to find out. The last thing drug companies want is a head-to-head comparison with older drugs. So the new drugs were approved mainly because—in accord with the minimal FDA re­quirements—they were shown to be better than placebos. With few exceptions, no one wanted to know how they compared with a diuretic—or with one another, for that matter. New drugs came to market because they were better than nothing, then were promoted as though they were great advances in med­icine. Since ALLHAT, industry apologists have protested that most people with high blood pressure need more than one drug, so new agents are indeed important. That is true but disingenu­ous. Drug companies tested and promoted their blood pressure drugs not as supplements but as first-line treatments. (Marcia Angell "The Truth About Drug Companies" 2004 p.96-7)

In an editorial in the Los Angeles Times that accompanied the Willman revelations, the paper got it exactly right: "The pharmaceutical industry is everywhere in Washington, all but writing the Medicare prescription drug bill, fielding more lobbyists than there are members of Congress, flinging gifts and trips at doctors and trying to prevent double-blind drug trials that pit one drug against another, instead of against a placebo." It concluded, "Willman's story, shocking as it is, is just one piece of an unwholesome picture. Congress helped make this system and can help unmake it. Start with high-level hearings. Repeal the most destructive portions of the Bayh-Dole Act. Above all, restore the integrity of the National Institutes of Health."14 In January 2004, the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education had begun to hold hearings on the matter, and the Department of Health and Human Services inspector general and the U.S. General Accounting Office launched their own inquiries. As might be anticipated under these circumstances, the NIH director appointed a Blue Ribbon Panel on Conflict of Interest Policies.

Bias—And Lots of It

Not surprisingly, bias is now rampant in drug trials.15 A recent survey found that industry-sponsored research was nearly four times as likely to be favorable to the company's product as NIH-sponsored research (despite the Willman revelations).16 That is in accord with a large body of evidence showing that researchers with industry connections are far more likely to favor company products. In the case of calcium channel blockers like Norvasc, for instance, one survey of seventy articles about their safety found that 96 percent of authors who were supportive of the drugs had financial ties to the companies that made them, whereas only 37 percent of authors who were crit­ical had such ties.17

I will not detail all the ways research can be biased.18 But a few are worth mentioning. Sometimes, bias is just a matter of spin—researchers extol a drug even though the results do not support their enthusiasm. One recent survey showed that authors of industry-funded studies were more than five times as likely to recommend the company drug as authors of studies funded by nonprofit organizations—regardless of the actual results. 19 But often, bias is built into the study design, as is the case with placebo-controlled clinical trials. Almost inevitably new me-too drugs seem to be effective. But in fact, as shown by ALLHAT, if they were compared with drugs already on the market, they might be revealed to be less effective. Researchers even in the most prestigious medical centers go along with loading the dice this way, because sponsors insist on it. The information from such trials may be of very little use to practicing doctors, who usually are not interested in whether a new drug is better than nothing. They want to know whether it is better than what they are already using.

Another way to load the dice is to enroll only young subjects in trials, even if the drugs being tested are meant to be used mainly in older people. Because young people generally experience fewer side effects, drugs will look safer in these trials than they would in practice. Another is to compare the new drug not just with a placebo but with an old drug given at too low a dose. In the last chapter, I described how this was done with the statins. This bias was also present in many trials of nonsteroidal anti-inflammatory drugs (NSAIDS). (These are drugs like Naprosyn that are taken mainly for arthritis.) The new NSAIDS looked better because the comparison drugs were given at lower doses. Or the old drug can be administered incorrectly. That was true of trials comparing fluconazole with an older drug, amphotericin B, to treat fungus infections in patients with AIDS. Amphotericin B was administered orally, which dramati­cally cuts down on its effectiveness. Not surprisingly, the trials were sponsored by the makers of fluconazole. Or trials can be designed to be too brief to be meaningful. That is true of many trials of drugs that need to be taken long term. Blood pressure trials usually last for just a few months, and antidepressant tri­als for a few weeks, yet patients may have to take these kinds of drugs for years. Some treatments look pretty good for a short time but are not effective and may even be harmful for long-term use.

One of the most common ways to bias trials is to present only part of the data—the part that makes the product look good—and ignore the rest. That happened in a clinical trial of the arthritis drug Celebrex. A study sponsored by the drug company that makes it, Pharmacia (since acquired by Pfizer), ostensibly showed that Celebrex caused fewer side effects than two older arthritis drugs. These results were published, along with a favorable editorial, in The Journal of the American Medical As­sociation. Not until after publication did the editors learn that the results were based on only the first six months of a yearlong trial. When the entire trial was analyzed, there was no advan­tage to Celebrex. The editorialist was understandably outraged. The Washington Post quoted him as saying, "I am furious. . . . I wrote the editorial. I looked like a fool. But... all I had avail­able to me was the data presented in the article." And the editor of the journal said, "I am disheartened to hear that they had those data [the second six months] at the time that they submitted [the manuscript] to us. We are functioning on a level of trust that was, perhaps, broken."20

Suppressing Things You Don't Like

The most dramatic form of bias is out-and-out suppression of negative results. That is easily done in privately run trials, but it also occurs in trials done at academic centers. There have been several widely publicized cases. It's instructive to look at one of them.21 In 1996, a biotechnology company called Immune Re­sponse Corporation contracted with Dr. James O. Kahn of the University of California at San Francisco and Dr. Stephen W. Lagakos of the Harvard School of Public Health to conduct a multicenter trial of its drug Remune. This drug was supposed to slow the progression of AIDS by boosting the immune system, and the company was seeking FDA approval to market it as a "therapeutic vaccine." Kahn and Lagakos undertook the trial, which was carried out in 2500 HIV-infected patients at seventy-seven medical centers. But the company held the data.

After three years, it became clear that Remune was not effective. But the company objected to Kahn and Lagakos pre­senting the results as negative (meaning that the vaccine had no effect). It wanted them to include in their paper an analysis of a subgroup of patients that it said showed positive effects. Kahn and Lagakos refused, saying that the company's analysis was not in accord with scientific standards. Immune Response then threatened to withhold the final 5 to 10 percent of data if the in­vestigators did not agree to include the company's analysis. Fi­nally, after much pulling and tugging, the company agreed to turn over the remaining data, but only on condition that it be given the right to approve the paper. Kahn and Lagakos again refused. On the basis of the data they already had (which was enough), they published a negative report in The Journal of the American Medical Association. Immune Response filed a multi­million-dollar claim against Kahn and his university, alleging harm to its business. (The company eventually lost.)

It is interesting to look behind the scenes in this dispute. The contract between the company and the researchers contained the seeds of the problems that developed. While it did not give Immune Response veto power over publication, it did involve the company in every detail of the work. It set up a five-person committee that included the company's medical director to write the paper; it stipulated that Kahn would keep the com­pany abreast of the progress of the trial; and it provided for the company to see the final paper before submission for publica­tion. When it became clear that the trial was negative, the com­pany asserted the right to do the analysis. The president and CEO of Immune Response later complained, "Just put yourself in my position. I spent over $30 million. I would think I have certain rights."22 He really seemed to think he had a "right" to favorable results.

Kahn and Lagakos showed courage and integrity in sticking to their guns. It is essential that clinical research be conducted with impartiality, which means sponsors must be kept at arm's length. Many researchers simply accept the will of sponsors or cave in under pressure. But the conditions of the contract were in a sense the camel's nose under the tent. By involving the com­pany in all aspects of the trial, even including the medical direc­tor as a coauthor, Kahn and Lagakos were virtually inviting the camel inside. The company had a clear conflict of interest. Yet by today's standards, the contract gave Kahn and Lagakos an unusual amount of independence. Many current contracts give companies far more control.

So What Do We Really Know?

When a drug company applies to the FDA for approval of a new drug, it is required to submit results from every one of the clinical trials it has sponsored. But it is not required to publish them. The FDA may approve the drug on the basis of minimal evidence. For example, the agency usually requires simply that the drug work better than a placebo in two clinical trials, even if it doesn't in other trials. But companies publish only the pos­itive results, not the negative ones. Often, in fact, they publish positive results more than once, in slightly different forms in dif­ferent journals. The FDA has no control over this selective pub­lishing. The practice leads doctors to believe that drugs are much better than they are, and the public comes to share this be­lief, on the basis of media reports. There is a general inflation in the notion of the good that drugs can do (and a deflation in concern about side effects). (Marcia Angell "The Truth About Drug Companies" 2004 p.106-11)

In 2001, Drug companies gave doctors nearly $11 billion worth of "free samples." These were always the newest, most expensive me-too drugs. The companies knew that when free samples ran out, you and your doctor would be hooked on them. The drugs weren't really free, of course. The costs were simply added on to drug prices (These firms are not charities). ..... p.114

You also pay for a nearly infinite variety of promotions directed at you, not your doctor. Here the expectation is that you will ask your doctor to prescribe the drugs for you. ....

Some ads are far less visible. In fact, they're stealth ads. Morley Safer, of CBS's 60 minutes, made hundreds of videos that resembled newscasts but were really promotional spots for drug companies. They were given to local public television ...

These are just a few examples of the pharmaceutical marketing that permeates our existence. No one knows how much of it there really is, because drug companies are even more secretive about their marketing expenditures than they are about their research and development costs. ......

According to Securities and Exchange Commission (SEC) and shareholder reports for 2001, the biggest drug companies spent on average about 35 percent of their revenues on "marketing and administration" .... (Marcia Angell "The Truth About Drug Companies" 2004 p.114-6)

According to Securities and Exchange Commission (SEC) and shareholder reports for 2001, the biggest drug companies spent on average about 35 percent of their revenues on “marketing and administration” p.119 (Marcia Angell "The Truth About Drug Companies" 2004 p.114-29)

The great majority of DTC ads are for very expensive me-too drugs that require a lot of pushing because there is no good reason to think they are any better than drugs already on the market. ..... As saturated as we are by DTC advertising, the main target for the industry's marketing efforts is not the public but doctors. After all, they are the ones who write the prescriptions. (Marcia Angell "The Truth About Drug Companies" 2004 p.124-9)

Free samples are the most effective gifts, they are an effective way to get doctors and patients familiar with an expensive, newly approved drug when an older, cheaper one might be better or just as good. For the same reason, companies often give hospitals and HMOs steep discounts on their new drugs. I was told, for ... (Marcia Angell "The Truth About Drug Companies" 2004 p.129)

We've accounted for the $19 .1 billion the pharmaceutical industry admits it spent on marketing in 2001, but we still need to account for the mysterious $35 billion the industry doesn't acknowledge-the elephant in the living room. Some of that probably goes to gifts and a variety of promotional activities not acknowledged by the industry. But in addition, a great masquerade takes place. The industry has somehow persuaded both the government and the medical profession that it is in the education business-big time. Education, it contends, is different from marketing, even though it comes out of the marketing budget and is perforce hardly impartial. How the pharmaceutical industry gets away with that masquerade is the subject of the next chapter.

Marketing Masquerading as Education

No one should rely on a business for impartial evaluation of a product it sells; yet the pharmaceutical industry contends it educates the medical profession and the public about its drugs and the conditions they treat, and many doctors and medical institutions-all recipients of the industry's largesse-pretend to beiieve it. So does the government. But "education" comes out of the drug companies' marketing budgets. That should tell you what is really going on. As in all other businesses, there is an inherent conflict of interest between selling products and assessing them. Pfizer, for instance, is hardly likely to provide impartial information about how its Zoloft compares with GlaxoSmithKline's Paxil to treat depression, or indeed, about whether either one of them is any good. Nor can it be relied on to teach us about depression itself. (Marcia Angell "The Truth About Drug Companies" 2004 p.134-7)

In the last chapter, we learned that in 2001 the pharmaceutical industry acknowledged it spent over $19 billion on marketing (leaving about $35 billion unaccounted for). Like all businesses, drug companies claim their advertising is also educational. They claim, for instance, that people learn about diseases they didn't even know they had by watching direct-to-consumer television ads. ("Omigosh, this Clarinex ad makes me realize I have hay fever!") But drug companies at least admit dfrect-to-consumer ads are primarily promotional. That is not what I will be talking about in this chapter.

At issue in this chapter is the probably much larger amount spent on what drug companies contend are purely educational activities. Most of those are directed toward doctors. Although no outsider knows for sure, they probably account for the lion's share of the missing $35 billion of the marketing budget. It is crucial for big pharma to maintain the fiction that these expenditures are for education, not promotion, because by doing so it can evade legal constraints on its marketing activities. It is also good public relations.

Let's start by looking at two of these constraints. First, it is illegal for drug companies to market drugs for unapproved uses. When the Food and Drug Administration (FDA) approves a new drug, it approves it for a particular use. And that makes sense. If a drug is shown to be useful for treating a certain kind of infection, it may not work against another kind of infection. To stop drug companies from broadening their claims without evidence, they are not allowed to market drugs for "off-label" uses-that is, uses not approved by the FDA. Doctors, however, are not constrained by this law. They are permitted to prescribe drugs for whatever uses they want. So if drug companies can somehow convince doctors to prescribe drugs for off-label uses, sales go up. The problem is how to get around the law prohibiting marketing for those uses.

That is where "education" comes in. If drug companies pretend they are merely informing doctors about other potential uses, they can circumvent the law. And that is what they do. They sponsor make-believe education, and often buttress it by references to flimsy research studies they sponsor.

Second, it is illegal to offer doctors kickbacks (essentially bribes) to prescribe drugs. In the last chapter, we saw how TAP Pharmaceuticals got into trouble for that. In the wake of the TAP case, there has been increasing scrutiny of big pharma's lavish gift giving to doctors and medical facilities. The American Medical Association and the Pharmaceutical Research , and Manufacturers of America (PhRMA) issued voluntary guidelines suggesting limitations on outright gifts, and the Department of Health and Human Services Office of the Inspector General warned that even adhering to those guidelines would not necessarily protect against prosecution for violating anti-kickback laws.

But what the guidelines and warnings.have in common is an exemption for educational or research activities. If drug companies can plausibly construe their blandishments as having an educational or research purpose, they can get away with almost unlimited gifts to promote sales. Furthermore, it is largely left to them to decide what is education or research and what is marketing. As the inspector general's office said in its 2003 warning notice, "The manufacturer should determine whether the funding is for bona fide educational or research purposes." 1 The greater the scrutiny of outright gifts, the more the industry shifts to educational and research support as a substitute. Continuing Medical Education

Luckily for the industry, the demand for physician education is enormous. That is because in most states doctors are required to receive continuing medical education (CME) throughout their professional lives to maintain their licenses. The requirements are substantial, and the education must be provided through accredited institutions. Most doctors earn the necessary credits by attending meetings and lectures-as many as a hundred a year. That means CME meetings are an integral part of doctors' lives. Every day, all across the country, hundreds, maybe thousands, of them take place. Doctors stream into hospital auditoriums, as well as convention centers and vacation spots, to hear about the latest in medical advances. A professional.organization called the Accreditation Council of Continuing Medical Education (ACCME) is responsible for accrediting the organizations that provide the educational programs. They include medical schools, hospitals, and various professional societies.

But who pays for these programs? You might assume doctors pay for their own postgraduate education, just as other professionals do, but you would be wrong. In 2001, drug companies paid over 60 percent of the costs of continuing medical education, and that fraction has increased since then.2 Formerly, they directly supported the accredited professional organizations; but now they usually contract with private medical education and communication companies (MECCs) to plan the meetings, prepare teaching materials, and procure speakers. Oddly enough, the ACCME has accredited about a hundred of these new firms to offer continuing medical education programs themselves-even though they are for-profit firms hired by the drug companies. So here .we have firms working for big pharma who are supposed to be providing impartial instruction about their clients' drugs. People pretend not to notice this flagrant conflict of interest. But the way MECCs advertise themselves to drug companies tells the real story. One pitched its services by observing, "Medical education is a powerful tool that can deliver your message to key audiences, and get those audiences to take action that benefits your product." 3 In other wordsi hire. us, and we will get doctors to prescribe your drug. Some MECCs are even owned by large advertising agencies, making the connection between continuing medical education and drug marketing still more obvious.

Now why should MECCs, which are paid by drug companies, be accredited by the ACCME? Well, the answer may have something to do with the makeup of the Task Force on IndustryP~ofessional Collaboration in Continuing Medical Education, which was created to help the ACCME formulate policies on conflicts of interest. About half the members of the task force are representatives of educational institutions and professional organizations, but the other half are from the pharmaceutical industry or MECCs themselves. So it should come as no surprise that the ACCME has accredited not only MECCs but even one of the large pharmaceutical companies-Eli Lilly. The task force evidently never even considered requiring that drug companies have no role in the preparation or presentation of educational programs.

There is a certain amount of obligatory hand waving to make it appear that continuing medical education is not influenced by drug company sponsors. There is a certain amount of obligatory hand waving to make it appear that continuing medical education is not influenced by drug company sponsors. For instance, support by the pharmaceutical industry is nearly always stated to be "an unrestricted educational grant," which implies that drug companies don't influence the content of the programs. And speakers, who are often paid consultants for the companies, ~re usually required to disclose their financial ties-and that disclosure is supposed to make it acceptable that they have them. But drug companies or their agents, the MECCs, often suggest the topic and speaker and put together the graphics and other educational materials. That medical schools and hospitals have the final say does not change the fact that if they want to continue to get the support, they will go along with the sponsors. Continuing medical education gives drug companies an unparalleled opportunity to influence doctors' prescribing habits, and it seems to work. It's been shown that doctors prescribe more of the .sponsors' drugs after these meetings. If it were otherwise, the industry would not spend the huge sums it does on these programs. The adage is right. He who pays the piper usually does call the tune, regardless of efforts to make it appear otherwise.

Bribing Doctors-or Nurturing Consultants?

Drug companies are extremely generous to doctors in their "educational" activities. The education is often said to go in both directions. The companies provide information to d,octors, and the doctors provide feedback to the companies. But the money goes in only one direction-from industry to doctors. Doctors are invited to dinners in expensive restaurants or on junkets to luxurious settings to act as "consultants" or "advisers." The doctors listen to speakers and provide some minimal response about how they like the company drugs or what they think of a new advertising campaign. That enables drug companies to pay doctors just for showing up. As one doctor told The Boston Globe, "The companies used to call it coming to dinner. Now it's called consulting."4

Participants may also receive training to serve on speakers' bureaus, so· that they, too, can become company shills.5 The work on junkets is not too onerous. Lectures usually occupy just a few hours in the morning, with plenty of time left for golf or skiing in the afternoon and elegant meals and entertainment in the evenings. By calling it education or consulting or market research or some combination of those things, but not marketing, companies needn't worry about antikickback laws. But doctors are no less beholden to the companies that lavish such attention on them, and they are no more immune to the sales pitches. It's been estimated that the industry hosted over 300,000 pseudo-educational events in 2000, about a quarter of which offered continuing medical education credits. 6

Drug companies pay particular attention to wooing so-called thought leaders. These are prominent experts, usually on medical school faculties and teaching hospital staffs, who write papers, contribute to textbooks, and give talks at medical meetings-all of which greatly affect the use of drugs in their fields. Thought leaders have influence far beyond their numbers. Companies shower special favors on these doctors, offer them honoraria as consultants and speakers, and often pay for them to attend conferences in posh resorts, ostensibly to seek their advice. In many drug-intensive medical specialties, it is virtually impossible to find an.expert who is not receiving payments from one or more drug companies. As I said in Chapter 7, drug companies sway doctors with "food, flattery, and friendship." 7 In the case of thought leaders, flattery is key. They are told their expertise is invaluable in helping companies, to develop new drugs. But in fact, thought leaders are usually clinicians, who study drugs after they are developed. What they really have to offer drug companies is the ability to sway large numbers of other doctors.

I mentioned in Chapter 6 that the head of Brown University's Department of Psychiatry reportedly made over $500,000 in one year consulting for drug companies that make antidepressants. When The New England journal of Medicine, under my editorship, published a study by him and his colleagues of an antidepressant agent, there wasn't enough room to print all the authors' conflict-of-interest disclosures. The full list had to be put on the website. In a footnote, I wrote, "Our policy requires authors of Original Articles to disclose all financial ties with companies that make the products under study or competing products. In this case, the large number of authors and their varied and extensive financial associations with relevant companies make a detailed listing here impractical. Readers should know, however, that all but one (B.A.) of the twelve principal authors have had financial associations with Bristol-Myers Squibb-which also sponsored the study-and, in most cases, with many other companies producing psychoactive pharmaceutical agents. The associations include consultancies, receipt of research grants and honorariums, and participation on advisory boards." I also wrote an accompanying editorial, titled "Is Academic Medicine for Sale?" in which I expressed my concern about the merging of commercial and academic interests. In response, a reader sent a letter to the editor asking rhetorically, "Is academic medicine for sale? No. The current owner is very happy with it. " 8

Professional Meetings

The meetings of professional societies, like the American College of Cardiology or the American Society of Hematology, are now partly supported by drug companies. This is where much of the ongoing education of doctors takes place. At annual meetings, which may be attended by thousands of doctors, drug companies present their own satellite symposia-with free lunches and dinners. A few years ago, I attended one such symposium. It took place over a four-course meal at a hotel near the main meeting, and about two hundred doctors were there. The topic was osteoporosis-thinning of the bones. At first, I did not know which of the several types of drugs to treat osteoporosis the sponsor made, but I soon guessed. In slide after slide, this ~as the drug at the top of the list of drugs to consider, even though it is probably the least effective. And in most of the hypothetical patients discussed; there was some reason not to give one of the more effective drugs. For example, one patient was said to have an ulcer as well as osteoporosis. That would have been a reason not to use the most effective treatment, but it would also have been an unusual situation. In short, the whole symposium was slanted to promote a third-choice treatment. The main speaker was a distinguished endocrinologist from a major medical school. He later told me that the company had given a grant of $10,000 to his department, as well as paid his expenses and an honorarium. The company had also made his slides.

Many big professional meetings resemble bazaars, dominated by garish drug company exhibits and friendly salespeople eager to ply doctors with gifts while they pitch their companies' drugs. Doctors wander the vast exhibit halls carrying canvas bags displaying drug company logos and brimming with goodies, munching on free food, and partaking of all sorts of free services, such as cholesterol screening and putting green practice. Instead of sober professionalism, the atmosphere of these meetings is now trade-show hucksterism.

In a vivid article on the subject, a reporter from The Boston Globe described her encounter with one psychiatrist at the annual meeting of the American Psychiatric Association (APA):

Ivonne Munez Velazquez, a psychiatrist from Mexico, rooted through her goody bag like a child on Halloween. As a reward for attending the APNs annual meeting, she had received a small egg-shaped clock from the makers of the antidepressant Prozac; a sleek thermos from Paxil, also an antidepressant; and an engraved silver business card holder courtesy of Depakote, an anticonvulsant [often prescribed off label for a variety of psychiatric disorders]. She got a neat:little CD carrying case from Risperdol [sic], an antipsychotic; a passport holder from Celexa, an antipsychotic [actually, an antidepressant]; a neat green paperweight from Remeron, an antidepressant; and a letter opener, representing what drug she could not remember. For the duration of the weekend, though, Velazquez's loyalty belonged to Pfizer, which had paid her airfare from Mexico City (along with thirty of her colleagues and her eighteen-year-old nephew) and put them all up in hotels near the APA meeting. That night, also courtesy of Pfizer, she would attend a glittering banquet at the Philadelphia Academy of Fine Arts. 9

(The new PhRMA guidelines would prohibit this, but they are voluntary, and even if followed could probably be evaded by calling her a consultant.)

Membership dues for the APA are dropping. And well they might. According to the Boston Globe story, drug companies spent between $200,000 and $400,000-plus a $60,000 direct payment to the association-for each of fifty-plus "industrysponsored symposia." Without the drug company money, officials said, the annual meeting would lose educational benefits along with amenities. "How much are you willing to pay for that, if we don't accept drug company money?" asked Anand Pandya, an APA official. "Are you willing to pay $3000?" · (Dues are now $540.) That is an excellent question. How much are these meetings worth? And how many "amenities" are necessary? Perhaps members should pay exactly what the meetings are worth to them. The meetings might then assume a more serious tone and a more modest dimension. By allowing drug companies to foot the bill for carnival-like meetings, doctors are really passing the costs along to people who buy prescription drugs.

Pretending Drug Companies Are Educators

Why do doctors pretend they believe drug companies are interested in education? (Some of them may actually believe it.) The answer is: It pays. Membership dues would be far higher if professional societies were not supported by industry. Doctors would also have to pay for their own continuing medical education. In addition, they would lose the travel and entertainment and other emoluments too many of them have come to believe are entitlements of their profession. Many doctors become indignant when it is suggested that they might be swayed by all this industry largesse. But why else would drug companies put so much money into them? As Stephen Goldfinger, chairman of the APNs Committee on Commercial Support, said, "The pharmaceutical companies are an amoral bunch. They're not a benevolent association. So they are highly unlikely to donate large amounts of money without strings attached. Once one is dancing with the devil, you don't always get to call the steps of the dance." 10

Big pharma, for its part, insists that it has an educational mission that can be separated from its commercial interests. The 2002 PhRMA Code on Interactions with Healthcare Professionals begins with the statement that "relationships with healthcare · professionals ... should be focused on informing healthcare professionals about products, providing scientific and educational information, and supporting medical research and education." 11 ln other words, big pharma insists it is in the education business. (Marcia Angell "The Truth About Drug Companies" 2004 p.146-7)

Marketing Masquerading as Research Suppose you are a big pharmaceutical company. you make a drug that is approved for a very limited use -- say, it treats a condition that affects only 250,000 people. How could you turn it into a blockbuster? There are essentially two ways. First, you could test it for other conditions in clinical trials. If the trials showed it w.as safe and effective, you could apply for Food and Drug Administration (FDA) approval to market it for additional uses. That is what Bristol-Myers Squibb did with Taxol, for instance. It was originally approved to treat cancer of the ovary, but the company immediately launched additional trials to see if it also worked for cancer of the breast and cancer of the lung-which it did. That greatly expanded the market.

Alternatively, you could simply market the drug for unapproved ("off-label") uses-despite the fact that doing so is illegal. You do that by carrying out "research" that falls way below the standard required for FDA approval, then "educating" doctors about any favorable results. That way, you could circumvent the law. You could say you were not marketing for unapproved uses; you were merely disseminating the results of research to doctors-who can legally prescribe a drug for any use. But it would be bogus education about bogus research. Ii: would really be marketing.

The Neurontln Case

Parke-Davis apparently took the second approach with its epilepsy drug Neurontin. Parke-Davis was a division of WarnerLambert, which in 2000 was swallowed up by the drug giant Pfizer . .In 1996, David P. Franklin, a Parke-Davis sales repre~ sentative (called a "medical liaison" because of his additional technical training), brought suit against the company for defrauding Medicaid and other government health programs. (As a whistle-blower, he would be entitled to a portion of any fines.) Franklin had thousands of pages of internal documents. He charged that the company had carried out a massive illegal scheme to promote Neurontin for off-label uses-mainly by paying academic experts to put their names on flimsy research papers that purported to show the drug worked for these other conditions. 1

Eventually, federal prosecutors filed a brief in support of Franklin and launched both criminal and civil investigations of their own. Parallel actions were filed by forty-seven states and the District of Columbia. Court documents were originally sealed at the company's request, but many of them were released in 2002 in response to media petitions. They showed a well-coordinated plan of staggering dimensions. What appears here is drawn from newspaper reports of Franklin's complaint and of the company records released by the court.

Neurontin had been approved by the FDA in 1994 for a very narrow use-to treat epilepsy as an add-on when other drugs failed to control seizures. (Later it was approved to freat shingles as well.) There wasn't much money in that, and the company wanted to expand the drug's market. But there was no time to do proper clinical trials that might allow it to get FDA approval for other uses, because the patent was due to expire in 1998 (later eXt:ended to 2000). So the company apparently devised a plan to get doctors to prescribe Neurontin for unapproved uses-mainly common but vague conditions like pain and anxiety of various forms, and also as the sole treatment for epilepsy. If the campaign were successful, huge markets would be opened up.

Parke-Davis reportedly called its plan a "publications strategy." It would sponsor minimal research, prepare journal articles based on it, and pay academic researchers to put their names on those articles. The studies themselves were so small or poorly designed that few valid conclusions could be drawn from them. Some of the articles contained no new data at all, just favorable comments about Neurontin. Medical education and communication companies were hired to prepare the articles and find authors. One of these firms, for instance, was to be paid $12,000 for each of twelve journal articles it prepared.2 It in turn paid academic "authors" $1000 to sign them. Apparently it wasn't always easy. In a progress report to ParkeDavis, the education company lamented, "Author intereste~; still playing phone tag." Then in caps, "[OUR COMPANY] HAS DRAFT COMPLETE, WE JUST NEED AN AUTHOR." 3

The second part of the publications strategy was to see that the articles and the information in them were widely disseminated to practicing doctors, so that they would be persuaded to start prescribing Neurontin for off-label uses. It doesn't do any good to create favorable articles if nobody hears about them. Parke-Davis "medical liaisons," who are purported to have more of an educational mission than ordinary sales representatives, would visit doctors' offices to answer questions about the _ research. One company manager was said to have been recorded by Franklin haranguing liaisons in what sounded like a pregame pep rally: "When we get out there, we want to kick some ass. We want to sell Neurontin on pain. All right?" 4

Parke-Davis also sponsored educational meetings and conferences all over the country. At these meetings, the "authors" of the papers and other experts would describe the success of the drug for off-label uses. Dozens of doctors were allegedly paid tens of thousands of dollars each to speak to other physicians about using Neurontin for more than a dozen unapproved uses. Not only were the speakers paid for their services but often the doctors in the audience were also paid. They were called "consultants" -which had the effect of circumventing antikickback laws. Consultant meetings were sometimes little more than vacations for potential high prescribers of Neurontin. The company tracked doctors' prescriptions to see if they prescribed Neurontin more after the meetings or after they were hired to speak about the drug. According to a New York Times story, the company found an increase of about 70 percent in prescriptions after dinner meetings. 5

One thing about this research-education one-two strategy is that the speakers and the audience are essentially interchangeable. In essence, they are all being persuaded to prescribe a drug for off-label uses; it doesn't really matter who is doing the talking and who is doing the listening. As we learned in the last chapter, it is simply a matter of getting a message out to thought leaders and potential high prescribers, while skirting both antikickback laws and laws against off-label marketing.

As a result of these efforts, Neurontin did become a blockbuster, with sales of $2.7 billion in 2003. About 80 percent of prescriptions that year were for unapproved uses--conditions like bipolar disorder, post-traumatic stress disorder, insomnia, restless legs syndrome, hot flashes, migraines, and tension headaches.6 In fact, Neurontin has become a sort of all-purpose restorative for chronic discomfort of almost any type-yet there is almost no good published evidence that it works for most of these conditions. In May 2004, eight years after the case began, Pfizer pleaded guilty to illegal marketing and agreed to pay $430 million to resolve the criminal and civil charges against it. As whistle-blower, Franklin will receive nearly $27 million of that. That sounds like a lot of money, but it is small potatoes compared with the $2.7 billion in Neurontin sales.7

Phase IV Clinical 'Irials-Real and Bogus

This case may have been unusual in its scope and in the fact that a whistle-blower brought it to court, but I suspect it is a. fairly standard way of doing business. The common denominator is the use of flimsy Phase IV clinical research for marketing purposes. As you will recall.from Chapter 2, Phase I through III clinical trials are directed toward getting initial FDA approval, and they must meet the agency's scientific standards. Phase IV trials, in contrast, are studies of drugs already on the market, and many of them don't have tQ meet any standards at all. It was estimated in 2002 that Phase IV studies, sometimes called "post-marketing" studies, accounted for at least 25 percent of all clinical trials, and their number is growing much faster than that of Phase I through III trials. 8

There are two legitimate reasons for Phase IV studies. The first is to see whether a drug is effective for an additional use and, if so, to get FDA approval to market it for that use-as in the case of Taxol. It is analogous to getting approved in the first place, in the sense th~t the research must meet the same scientific standards as the origin.al Phase III trials. By getting FDA approval for new uses, companies not only expand the size of a drug's market but can also get an additional three years' exclusive marketing rights.

The second legitimate reason for Phase IV trials is to look for side effects or other properties of the drug that were missed in the earlier clinical trials. Even large, well-designed Phase III trials may not reveal side effects if they are very rare or no one thought to look for them. They may also miss other effects that show up only in patients different from those previously studied. After the drug comes on the market and is used widely in the general population, those properties may be discovered in large Phase IV studies.

These latter sorts of studies are more important than they once were, because until a decade ago, drugs were usually first approved in Europe. That meant serious side effects would probably show up there, before a drug was used in the United States. But now, most drugs are approved first in the United States. Furthermore, an increasing number of them are given accelerated review by the FDA, which means they come ~o market on the basis of less evidence. Thus, a drug may cpme into widespread use with very little research to back it up, and no experience in another country.

As a condition of accelerated approval, and sometimes even with regular approval, the FDA requires companies to conduct Phase IV confirmatory studies just to make sure the new drug is safo. In fact, about two-thirds of all new molecular entities approved in 2000 were supposed to, undergo Phase IV studies.9 These are called "commitment studies," because companies have a commitment to do them. But in fact, they don't want to do them. They have nothing to gain, and everything to lose if a serious side effect turns up. So th~y drag their feet. As of 2003, only half of all drugs that had undergone ·accelerated approval had been fully investigated in "commitment studies." Thomas Fleming, a biostatistician at the University of Washington and an adviser to the FDA, observed, "Sponsors, particularly industry sponsors, have a keen sense of urgency to develop an agent in a timely fashion, but once the agent is approved, there is almost a reverse motivation-you'll market the product until it's shown not to work." 10 Theoretically, the FDA has the authority to pull a drug from the market if the company reneges on its commitment, but it has never done so.11

However, the majority of Phase IV Studies fall into neither of these categories. Their purpose is not to get FDA approval for a new use. Nor is it to fulfill a commitment. Instead they are mainly gimmicks to increase sales-as in the Neurontin case. 12 The most common Phase IV trials are so-called surveillance studies. Here sponsors pay doctors to put patients on drugs and answer a few simple questions about how they fared. There is no randomization and no comparison,_ group, so it is usually impossible to draw any reliable conclusions. Center Watch, a company that serves as a clearinghouse for information about the clinical trials industry, recently ran an article titled "Phase IV Market Steams Ahead." In it, the aim of surveillance studies was made clear: "The primary purpose of this type of postmarketing research is to familiarize physicians and patients with new drugs." And the article pointed out that such research does indeed influence doctors' drug choices and formulary recommendations.13 How many Phase IV studies are funded out of drug company research and development budgets and how many out of marketing budgets is impossible to know. Probably both contribute.

A few years ago, a doctor sent me an invitation he received to participate in a study sponsored by Salix Pharmaceuticals. It asked him to start five patients with active ulcerative colitis on the company's drug Colazal. Airer eight weeks, he would fill out a form and return it to Salix, which would then pay him a $500 "honorarium." The company would also provide free samples for the patients, plus coupons to cover part of the costs of the drug. The clinical summary to be filled out was short and simple. In fact, it was so short and simple it could have no real scientific value. The first question, for instance, asked, "Overall, how was your experience with Colazal?" and you could check one of three boxes: "extremely pleased," "pleased," or "not pleased." It is hard to believe that this was anything but an excuse to pay doctors to prescribe Colazal. But as CenterWatch observed, "Sponsors must sometimes simplify study protocols to meet their marketing needs and thus limit the scientific validity of the studies." Anything to get doctors to prescribe your drug.

A "Sweet Spot"

You may remember that I mentioned in Chapter 2 the growth of a large industry to perform clinical trials for drug companies. It consists mainly of private contract research organizations (CROs). These firms run clinical trials for drug companies, using networks of private doctors in their offices. They concentrate particularly on Phase IV studies. "Phase IV studies are the fastest growing segment of clinical spending," CenterWatch wrote. "This sweet spot in the market is being actively pursued by CR O's and offers unique opportunity for experienced, community-based clinical investigators." 14 It's a "sweet spot" for the doctors, too. They usually make more working for CROs than spending the same time caring for patients. There are now tens of thousands of private doctors doing this work-many of them essentially being paid to prescribe a company drug.

Since the majority of Phase IV studies will never be submitted to the FDA, they may be totally unregulated. Few of them are published. In fact, like all industry-sponsored trials, they are not likely to be published at all unless they show something favorable to the sponsor's drug. If they are published, it is often in marginal journals, because the quality of the research is so poor. CenterWatch described Phase IV studies this way: "Whereas companies generally prefer [phase I through III] studies to be done by experienced research investigators, phase IV programs offer sponsors the opportunity to initiate and develop strategic relationships, especially with high-volume prescribers." 15 In other words, it isn't really research, so don't worry too much about its scientific validity.

Some of the largest advertising agencies. in the world have gotten into the pharmaceutical research. and education business on behalf of their clients in the drug industry. They include the three Madison Avenue giants-Omnicom, WPP, and Interpublic. To provide their clients with more integrated service, they have purchased or invested in CROs and medical education and communication companies (MECCs). Take Omnicom. It is part owner of SCIREX-a CRO. That relationship enables the .marketers to direct research toward drugs they think could be big sellers. One advertising executive said, it is "getting closer to the test tube." Omnicon also owns Proworx-a MECC accused of ghostwriting articles in the N eurontin case. 16

The ad agency WPP owns lntramed-another MECC apparently in the ghostwriting business. The New York Times obtained a transcript of a conference call in which an Intramed vice president reportedly told doctors, "We would like to help draft this manuscript, and then submit it to you for your-for your editing and for approval." According to the account, a representative of WPP's client Novartis was also on the phone. He added that the company wanted "a quick, down and dirty" article. One of the doctors responded, "I think we're quite clear on what you want the next manuscript to look like." 17 The fact that these huge advertising agencies own or employ research and education companies shows clearly just what is subordinate to what in this business. "Clinical research" and "education" are just tools of the marketers.

One of the more convoluted examples of research that at least in part serves marketing purposes is the story of Eli Lilly's drug Xigris. 18 In 2001, Xigris was approved to treat severe sepsis, blood-borne infections that are a common cause of death in intensive care units (ICUs). Its approval was not a sure thing. In the key clinical trial submitted to the FDA, 25 percent of patients taking Xigris died, compared with 31 percent of those on standard treatment. That is not a big difference, although it was statistically significant. The FDA advisory panel split evenly on whether to recommend approval, with soi:ne saying another clinical trial was needed. Lilly priced Xigris at $6800 per treatment and expected it to become a blockbuster and make up for the sales the company would lose when Prozac's patent protection ran out that year. But because of the high cost, many hos- . pita1s decided that the drug was not worth it. They could get more bang for the buck, they thought, by putting that money to other uses. By the spring of 2002, it was clear that sales of Xigris were not meeting expectations.

So Lilly hired a new advertising firm, Belisto & Co., to handle the Xigris account. The company pitched a campaign it called “The Ethics, the Urgency and the Potential.” The idea was not to do more research on the drug’s effectiveness but instead to do research on whether ICU patients were generally being deprived of treatments because of cost. That approach could be used to convince people that it was unethical not to use Xigris, because it was tantamount to rationing lifesaving treatment. To that end, Lilly gave a $1.8 million grant for a comprehensive study of rationing in ICUs. Dr. Mitchell Levy, head of the medical ICU at Rhode Island Hospital, who pronounced the data behind Xigris "damn good," was tapped to lead a twentyperson committee called the Values, Ethics & Rationing in Critical Care Task Force. (It has its own website, www.vericc.org.) Other members include prominent ethicists, hospital directors, and ICU specialists from all over the country.

Lilly also managed to get a new federal diagnostic code for severe sepsis, so that the incidence could be tracked. That way they would have a better idea of the size of the potential market and how to promote Xigris better. More important, it got the Centers for Medicare & Medicaid Services to agree to reimburse half the charge for Xigris, up to $3,400 a treatment. That kind of deal is unheard of. The standard way Medicare reimburses hospitals is according to the diagnosis-so much for a heart attack, so much for a stroke, so much for pn~umonia, and so forth. It does not pay for a specific drug or other treatment. What Lilly got for Xigris is unique. In case you are wondering, Lilly told The Wall Street Journal it has no intention of lowering the drug's price. And the profit margin? The company isn't telling.

The Xigris story shows how throwing money at academics can shift the focus from where it should be in this case – the exorbitant price of a drug of uncertain effectiveness – to the ethics of rationing. One clinical trial is usually not enough to prove benefit conclusively. The FDA asked Lilly t
Consequences of the Masquerades

This chapter and the last have been about marketing masquerading as education and research--often coupled together. First, faux research yields a faux answer to a clinical question. Then faux education assures that doctors everywhere hear about it, so they can write millions of prescriptions based on the faux information. Bribes and kickbacks sometimes grease the skids.

Well, you might ask, what is really wrong with that?' The process is admittedly deceptive, but if it means that more people get prescription drugs, isn't there a net benefit? After all, the drugs are probably on balance helpful, or the FDA wouldn't have approved them and doctors wouldn't prescribe them. Shouldn't we pay more attention to the outcome and less to the process?

I find it hard to imagine that a system this corrupt can be a good thing, or that it is worth the vast amounts of money spent on it. But in addition, we have to ask whether it really is a net benefit to the public to be taking so many drugs. In my view, we have become an overmedicated society. Doctors have been taught only too well by the pharmaceutical industry, and what they have been taught is to reach for a prescription pad. Add to that the fact that most doctors are under great time pressure because of the demands of managed care, and they reach for that pad very quickly. Patients have also ·been well taught by the pharmaceutical industry's advertising. They have been taught that if they don't leave the doctor's office with a prescription, the doctor is not doing a good job. The result is that too many people end up taking drugs when there may be· better ways to deal with their problems.

This conclusion was underscored by a larger trial sponsored by the National Institute of Health of ways to prevent adult-onset diabetes in people at high risk for the disease. One group in the trial received placebo, and 29 percent of patients in that group developed diabetes over a three-year period. The second group received a drug called metformin (the generic form of Bristol-Myers Squibb's blockbuster Glucophage), and they did somewhat better-22 percent developed diabetes. But the third group did much better than either of the other two. They were placed on a moderate diet and exercise program, and only 14 percent got diabetes. In other words, diet and exercise were better than the drug. But trying diet and exercise instead of a drug is not likely to happen in real life. Drenched as we all are in prescription drug promotions, both doctors and patients are far more likely to go for the Glucophage. Besides, insurers don't usually pay for diet and exercise programs.

More serious is the fact that many of us are taking a lot of drugs at once-often five, maybe ten, or even more. This practice is called "polypharmacy," and it carries real risks. The problem is that very few drugs have just one effect. In addition to the desired effect, there are others. Some are side effects doctors know about, but there may also be ones we are not aware of. When several drugs are taken at once, those other effects may add up. There may also be drug interactions, in which one drug blocks the action of another or delays its metabolism so that its action and side effects are increased. When the function of an organ, for instance the liver or the kidneys, is even slightly impaired, the probability of complications from one or more medications increases. And the more medications taken, the more likely it is that one of them will interfere with the normal function of some organ.

Recently, The Boston Globe carried a story about polypharmacy.20 The case in point was a fifty-year-old woman who was taking eighteen prescription drugs at a cost of nearly $16,000 per year. Nearly all of them were expensive brand-name drugs. They were meant to treat a variety of ailments, including diabetes, depression, anxiety, allergies, migraines, and pain (for which she was taking the ubiquitous Neurontin). Four of the drugs were for psychiatric problems-donazepam for anxiety, Lexapro for depression, Trileptal for depression (not approved for this use), and Elavil for depression an~ sleeplessness. Reportedly, she could barely get around, and her roommate said that she was sometimes dizzy or fell or couldn't stand up. No wonder! Most psychiatric drugs cause some degree of drowsiness, and so does Neurontin. I can only imagine what all of them together do. It would be virtually impossible to sort out which of her complaints were caused by illness and which by all the drugs. What she probably needed was less medication and more medical attention. Experienced specialists are familiar with this phenomenon of overmedication and often start their evaluation of a patient who is not doing well on multiple drugs by eliminating most or all of the medications. Frequently, the patient improves.

This is not to gainsay the vital role of good prescription drugs in health care. There is no doubt that many people live longer, better lives because of them. As I said in Chapter 6, we need them. But they should be prescribed carefully and only when necessary, and doctors' judgment about their prescription should be based on real research and education, not on the marketing that passes for it. (Marcia Angell "The Truth About Drug Companies" 2004 p.170-1)

For blockbuster drugs, it is certainly the most lucrative.

Once a company loses exclusive rights to a drug, FDA permit generic versions to come on the market. When that happens sales of the brand-name drug plummet ...

Exclusivity conferred by the FDA is different from patents. It is granted at the time a drug is approved for marketing, which is usually much later than the primary patent is obtained. “… you may market it for a certain period of time, during which we won’t approve the same drug made by anyone else.” (Marcia Angell "The Truth About Drug Companies" 2004 p.174-7)

Subsequent congressional actions have added still more exclusive marketing time.” In accord with 1994 international trade agreements, Congress increased the ... (Marcia Angell "The Truth About Drug Companies" 2004 p.182-3)

The most ingenious move to extend the life of Prozac was the creation of Sarafem - the identical drug in the identical dose, but colored pink and lavender instead of green, and taken for a new indication ... (Marcia Angell "The Truth About Drug Companies" 2004 p.188-95)

In a damning report issued in July 2002, the Federal Trade Commission (FTC) documented the widespread anticompetitive activities within the pharmaceutical industry. And it implicitly took the FDA to task for failing to enforce legal restrictions on the listing of secondary patents in the Orange Book. ...In sum, the FTC found evidence that Hatch-Waxman is regularly exploited to prevent generic competition, and it has taken antitrust action against several brand-name and generic drug companies that colluded to keep generic drugs off the market. .... But look what Congress did. They passed a bill that explicitly prohibits Medicare from using its enormous purchasing power to bargain for low prices. Medicare will have no say in what drug companies are paid, as it will have to cover expensive me-too drugs as well as more cost-effective ones. p.194 .....

.... About a quarter of that was explicitly earmarked for what can only be called bribes -- billions to keep employers from dropping retiree benefits, billions to private insurers to get them to cover seniors, billions to increase fees to doctors and payments to rural hospitals to get the American Medical Association and the American Hospital Association on board, and so forth. That left about $30 billion a year to pay for drugs. How far would that ahve gone? Not far. in fact, at the current rate of increase, in just a couple of years, rising drug expenditures would have canceled it out altogether. Furthermore, the benefit is so complicated and the scheme of administering it through multiple private payers so daunting that the overhead costs will quickly consume much of what is left.

Within a few weeks of the bill's passage, the White House upped the estimated cost to $530 billion. Later it was reported that the chief actuary of the Centers for Medicare & Medicaid Services had pegged at about $550 billion five months before the bill was passed -- in plenty of time for Congress to ahve second thoughts. But the administration reportedly kept this more realistic estimate from Congress until the bill was safely passed.

The fact is that this benefit will provide very little relief for seniors. Even at the outset, many seniors will pay more in monthly premiums and deductables than they will receive. As costs rise (and surely they will), the deficit-ridden Congress will try to pay for the benefit by wringing it out of the rest of the Medicare program. Seniors may see their monthly part B premiums (taken out of their social security checks) increase, whether they sign up for the drug benefit or not. Deductibles and co-payments will rise. And it is even possible that other Medicare services will have to be curtailed to pay for the drug benefit. But remember, Congress agreed to postpone the implementation of the benefit until 2006, when the Bush administration would not have to answer for the consequences. Let the chickens come home to roost then.

(Marcia Angell "The Truth About Drug Companies" 2004 p.190-5)

All this is not to say we don't need a Medicare prescription drug benefit. We do. But it should be administered through the Medicare program. (Marcia Angell "The Truth About Drug Companies" 2004 p.196)

Big pharma makes its influence felt through a variety of well-worn methods and a few new ones. Lobbying is tried and true, but big pharma employs it on a new scale. In addition, big pharma contributes money to nearly every political campaign that may affect its fortunes. And recently, the industry has put increasing resources into the formation and support of ostensibly "grassroots" organizations to promote its interests in the media. Let's look at these methods in more detail.

Special Lobbyists

The pharmaceutical industry has by far the largest lobby in Washington -- and that's saying something. In 2002 it employed 675 lobbyists (more than one for each member of Congress) -- many drawn from 138 lobbying firms -- at a cost of over $91 million. The job of these lobbyists is to prowl the coridors of power in Washington to promote drug companies interests. The industry's trade association PhRMA, also maintains it offices in Washington, where it had a full-time staff of 120 in 2002, and accounted for $14 million of the lobbying expenditures and 112 of the lobbyists. According to the consumer advocacy group Public Citizen, from 1997 through 2002, the industry spent nearly $478 million on lobbying.

Drug company lobbyists are extremely well connected. In 2002, they included 26 former members of Congress, and another 342 who had been on congressional staffs or otherwise connected with government officials. Twenty had been congressional chiefs of staff, serving such influential members as House Ways and Means Committee Chairman Bill Thomas (R-Calif.) and Senate Judiciary Committee Chairman Orrin Hatch (R-Utah). the lobbyist Nick Littlefield had been chief councel for Edward Kennedy (D-Mass.), of the Health Education, Labor and Pensions Committee. Some lobbyists were actually related to members of Congress, including Scott Hatch, son of Senator Orrin Hatch, and former Senator Birch Bayh, father of Senator Evan Bayh (D-Ind.) and also father of the Bay-Dole Act. Two former chairmen of the Republican National Committee (One now Governor of Mississippi) also joined the ranks of lobbyists. You get the idea. Even without the political contributions (which I will describe next), this revolving door between government aqnd lobbyists guarantees that the industry will have attentive and sympathetic ears in Washington.

No one seems to be concerned about the obvious conflicts of interests. Look at Senator Hatch. From 1991 through 2000, he was the number-one recipient of campaign contributions from the pharmaceutical industry, and has steadfastly championed its causes in the Senate. His son Scott, worked for many years for a lobbying firm called Parry, Romani, which counted pharmaceutical companies among its clients. In 2002, he opened his own firm -- Walker Martin & Hatch -- which proved remarkably successful, even in its first year. According to the Los Angeles Times most of its business comes from companies that count on Orrin Hatch for support. Among its clients are PhRMA and GlaxoSmithCline. Now hear what the Hatches have to say about all this. According to the times, the son said, "I don't think I get treated any different in the offices. I don't get a sense that they're saying, 'Oh, this is Senator Hatch's son.' I think they see three hard-working gentlemen and respect that." ("A Washington Bouquet: Hire A Lawmaker's Kid" 06/22/2003) Really? The father, in contrast, seems to live in the real world. He told the Times, "Scott is my son, so naturally I would expect him to have clients that are interested in what I do."

Generous Contributions

The industry also gives copiously to political campaigns. In the 1999-2000 election cycle, drug companies gave $20 million in direct campaign contributions plus $65 million in "soft" money. Although big pharma used to give roughly equal amounts to both parties, about 80 percent of its contributions now go to Republicans. But there is enough left for key Democrats. The Citizens group common Cause looked at the top recipients of drug company donations during the 1990s. It found, not unexpectedly, that Senator Hatch led the Senate, followed by Senator Billy Frist (R-Tenn.), who became the Senate majority leader. In the House, Representative Bill Thomas was number one, followed by Representative nancy Johnson (R-conn.).

But powerful Democrats from states that are home to major drug companies, such as former Senator Robert Torricelli (D-N.J.) and Senator Joseph Lieberman (D-Conn.), also enjoyed substantial industry favors. As just one example, in 1999, Torricelli introduced a bill to make it easier to extend the patents of Schering-Plough's blockbuster Claritin and a few other drugs. According to Common Cause, this bill was introduced a day after Schering-Plough made a $50,000 contribution to the Democratic Senatorial Campaign Committee, which Torricelli chaired. Senator Hatch held hearings on the bill. he was then a candidate for the Republican presidential nomination and was reportedly being flown around the country on campaign stops in Schering-Plough's Gulfstream executive jet. The company also hired the lobbying firm that employed Scott hatch. As it turned out, the bill was apparently too embarrassing even for the U.S. congress, and nothing came of it.

The pharmaceutical industry supports a variety of front groups that masquerade as grassroots organizations. One of these is Citizens for Better Medicare, supposedly a coalition of senior groups. The name sounds like a collection of groups of old folks who came together to try to improve Medicare, yet it is anything but that. formed in 1999, the group spent an estimated $65 million in the 1999-2000 election campaign fighting against any form of drug price regulation. (Drugmakers Launch Campaign on Medicare 07/28/1999) Its executive director, Tim Ryan, had been PhRMA's advertising director. Members of the "coalition" also had ties to big pharma. United Seniors Association (USA-get it?), for instance, spent about $18 million on "issue ads" in the 2002 election, all of which supported PhRMA positions. reportedly, its ads were put together by none other than Tim Ryan. As more people become skeptical about the industry itself, drug companies are increasingly hiding behind front groups. The political groups are the counterparts of the petient advocacy groups I discussed in Chapter 8. they are effective precisely because they are not what they seem.

The influence of the pharmaceutical industry on government clearly reaches into the Bush administration. Defense Secretary Donald Rumsfeld was CEO, president and chairman of G. D. Searle, a major drug firm that merged with Pharmacia, which in turn was bought by Pfizer. Mitchell E. Daniels, Jr., former White House budget director, was a senior vice president of Eli Lilly. The first President Bush was on the Eli Lilly board of directors before becoming president. The connections are so close that annual meetings of PhRMA look like Washington power conclaves. The 2003 meeting, for instance, featured the first President Bush, Secretary of Health and Human Services Tommy Thompson, former food and Drug Administration (FDA) Commissioner Mark McClellan, and the chairman of the Republican Senatorial Campaign Committee, Senator George Allen (R-Va.).

What It Buys

In earlier chapters I discussed some of the many pieces of congressional legislation that have benefited the pharmaceutical industry, beginning with the Bayh-Dole and Stevenson-Wydler Acts of 1980. these, you will remember, enabled drug companies to licence, and profit from, research supported by the National Institute of health (NIH). Whether the Bay-Dole Act, which was supposed to encourage the translation of basic discoveries into practical use, is an overall success is debatable. Certainly the number of biomedical patents increased rapidly after it was passed. But many critics say the effect has often been the opposite of its purpose. .....

I will not enumerate all the favors big pharma has extracted from a compliant Congress. But a few are worth highlighting. As we learned in the last chapter, some of the most lucrative (Marcia Angell "The Truth About Drug Companies" 2004 p.198-203)

.... So here is a company with close ties to the pharmaceutical industry that single-handedly determines coverage for about half of all prescriptions written for Medicaid recipients. And all at tax payer expense. That's quite a gift. furthermore, since this arrangement bypasses FDA approval, it seems to make the agency's scientific scrutiny almost irrlevant. What ever the industry can get Drugdex to put in the directory is apparently okay.

An International Embarrassment

Both the Clinton and Bush administrations carried water for the pharmaceutical industry when Third World countries complained that big pharma was pricing HIV/AIDS drugs out of reach. When the World Trade Organization was formed in 1995, members were required to honor twenty-year patents on drugs. At the time, many countries did not even consider drugs patentable. Exceptions were to be allowed for public health emergencies. (In that case, governments could issue 'compulsory licenses' to have needed drugs produced by other manufacturers.) Poor countries were given until 2005 to comply. It was in this context that in the late 1990s South Africa — desperate to control its HIV/AIDS epidemic — threatened to produce or import generic drugs to fight it. The pharmaceutical industry adamantly opposed any such move and the Clinton administration, no doubt reflecting the industry's influence in Washington, warned of trade sanctions. Subsequently, the administration was so embarrassed by the public outrage that it backed off. A few drug companies, also embarrassed, announced they would lower prices in parts of Africa, but the reality appears to have fallen far short of the promises. Even the discounted drugs are priced higher than generic drugs made in India, and they have been difficult to obtain.

Later, the Bush administration stood alone among 143 World trade Organization countries in opposing the relaxation of patent protection in the Third World. ......

"at 92 percent of the meetings, at least one member had a financial conflict of interest," and "at 55 percent of meetings, half or more of the FDA advisers had conflicts of interest."

Members of FDA advisory committees are said to command unusually high consulting fees from drug companies. they are certainly in a strong position to do so. .... the close connections between the Bush White House and the pharmaceutical industry quite probably had something to do with the last-minute withdrawal of Dr. Alastair Wood's nomination as FDA commissioner in 2002. (Marcia Angell "The Truth About Drug Companies" 2004 p.206-13)

(Marcia Angell "The Truth About Drug Companies" 2004 p.211-3)

In reply, Senator Rick Santorum (R-Pa.) claimed he had initiated the letter but acknowledged that PhRMA had indeed circulated it. "I don't have time to run around and get all these people to (Marcia Angell "The Truth About Drug Companies" 2004 p.226-7)

Let's look a little more at the benefits of requiring new drugs to be compared with old ones. First, few me-too drugs would be approved, since it is highly unlikely that each new one is better than the last at comparable doses. Second, as mentioned, drug companies would be forced to concentrate on innovative drugs. Third, they could trim their vast marketing budgets, since most of those expenditures are to convince doctors and the public that one me-too drug is better than another in the absence of ev­idence. If evidence were required, there would be far less need for marketing, and we wouldn't have to pay the steep markup in prices it adds. Fourth, there would be far fewer clinical trials. A great many clinical trials are now designed to get FDA approval for me-too drugs, to find new uses for them, or (in the case of most Phase IV studies) to jockey for position in a crowded me-too market. In other words, these trials are really marketing tools. If drugs were approved only when they were clearly supe­rior in some way to drugs already on the market, the number of clinical trials would plummet, but each one would be far more important. They would serve the purpose that they are intended to serve and that human subjects are led to believe they serve— to answer a medically important question: Does this drug add something of value to our ability to treat this condition? Not, "Can I create a big market for this drug?"

Strengthen the Food and Drug Administration

The FDA needs to be strengthened as an independent agency. It is now so dependent on the pharmaceutical industry that it has become big pharma's handmaiden. Industry apolo­gists and antiregulatory conservatives still beat up on the FDA publicly (check The Wall Street Journal's editorials on the sub­ject), but that is mainly just an ideological gesture. In fact, the FDA has become extremely accommodating to the industry, as evidenced by the former commissioner's speech (discussed in Chapter 11) urging other countries to allow drug prices to rise. I once heard another high official in the agency say publicly that the job of the FDA's Center for Drug Evaluation and Research is to "facilitate" drug development—something quite different from regulating it. It would seem that the industry, not the pub­lic, has become the FDA's client. What should be done to restore the FDA's proper role?

First, the Prescription Drug User Fee Act should be re­pealed—or allowed to expire in 2007. This act, you will re­member, authorizes drug companies to pay "user fees" to the FDA for every drug reviewed. That practice puts the FDA on the industry's payroll, drug by drug. The more drugs the agency reviews, the more money it gets from industry. It's analogous to the incentive of the U.S. Patent and Trademark Office to grant patents. This arrangement creates a powerful conflict of interest for the FDA. Moreover, the very notion that private companies "use" a public regulatory agency is wrong, since the FDA is there to serve the public, not drug companies.

Second, public support should be increased—not just to make up for the loss of user fees but over and above that amount. The FDA is vital to public health, and it needs to be adequately funded. Giving it the resources to do its job properly would pay for itself many times over. Public funding would also restore balance within the FDA. The Prescription Drug User Fee Act required the agency to put too much of its resources into speeding up drug approvals, at the expense of other important functions, like monitoring drug safety, inspecting manufactur­ing plants, and ensuring truthful advertising. Furthermore, in the rush to approve drugs, the agency is taking shortcuts that lower the standards for safety and effectiveness. Shortcuts may be justified in certain cases—as at the beginning of the HIV/ AIDS epidemic—but they should be rare. There is now far too much emphasis on speed at the FDA.

Third, the FDA's advisory committees should not include experts with financial ties to industry. The notion that they are somehow indispensable is not credible. No one is indispensable. The truth is that experts are being co-opted by these deals, just as the FDA is co-opted by user fees.

Create an Institute to Oversee Clinical Testing of Drugs

Drug companies should no longer be permitted to control the clinical testing of their own drugs. There is too much evi­dence that this practice biases the research in favor of the spon­sor's drug. It also distorts the type of research done, since companies are more interested in increasing sales than in ob­taining medical knowledge. We really don't need one more study of whether a new drug is better than a placebo for some slightly different use, but drug companies sponsor them because they help to expand the market.

To ensure that clinical trials serve a genuine medical need and to see that they are properly designed, conducted, and re­ported, I propose that an Institute for Prescription Drug Trials be established within the National Institutes of Health (NIH) to administer clinical trials of prescription drugs. Drug companies would be required to contribute a percentage of revenues to this institute, but their contributions would not be related to partic­ular drugs (as is the case with the FDA user fees). The institute would then contract with independent researchers in academic medical centers to conduct drug trials. The researchers would design the trials, analyze the data, write the papers, and decide about publication. The data would become the joint property of the NIH and the researchers, not be controlled by the sponsor­ing company. The FDA now assigns responsibility for the con­duct of clinical trials to sponsors. That practice would end. Responsibility would lie exactly where it should—with inde­pendent researchers and their institutions.

Others have also called for a special NIH institute to evaluate prescription drugs, but they have generally suggested that it would compare drugs that are already on the market (as was done in the ALLHAT study discussed in Chapter 6). While that would be helpful, it would address only the effects of the under­lying problem, not the cause. There would be nothing to stop the FDA from continuing to approve large numbers of me-too drugs that were compared with placebos. My proposal is different. It would have the Institute for Prescription Drug Trials oversee clin­ical trials before FDA approval, not afterward. Since drugs would have to be compared with older treatments, many fewer drugs of dubious benefit would come to market in the first place. Impor­tant comparisons of drugs already on the market could be done within existing NIH institutes, as was true of the ALLHAT study.

How the institute would administer the trials would have to be worked out carefully. It might prioritize trials on the basis of unbiased expert advice, just as the other institutes at the NIH have expert panels to decide which research to give priority. But the expectation would be that all trials of scientific merit would be carried out, and there would have to be some mechanism to appeal decisions not to carry out a proposed trial. This is not a perfect process, and there may be better alternatives, but the point is that an independent, public agency should administer all clinical trials to ensure that they are properly conducted— both scientifically and ethically. This is too important a matter to leave to private contract research organizations, whose only clients are the drug companies.

Because of reductions in the number of me-too drug trials, there would be many fewer trials altogether, and they could eas­ily be conducted entirely in nonprofit academic settings. There would be no need for a private research industry, which inher­ently has a conflict of interest. But if academic centers perform the trials, it would be essential that they and their faculty re­searchers be free from their own financial conflicts. To receive funding, academic institutions should not have equity interest in the pharmaceutical industry, and researchers should have no financial ties to companies whose drugs they evaluate. Simi­larly, expert advisers to the Institute for Prescription Drug Trials should have no conflicts of interest.

These reforms would eliminate most of the abuses I de­scribed in Chapter 6. Unfavorable research results could no longer be suppressed, and papers could not be manipulated to emphasize favorable findings. All clinical trials would be pub­licly registered, and their results available to everyone.

Curb Monopoly Marketing Rights

The period of exclusivity for brand-name drugs is too long and too easily stretched. That is a major reason for the high costs of prescription drugs and the inordinate profits of big pharma. There is no legitimate reason for generic competition to be delayed so long.

Paradoxically, the first reform I would suggest to curb mo­nopoly marketing rights allows drug companies more time to complete their clinical trials. / propose that even if patents are granted before clinical testing starts, the clock on the patents should not begin ticking until the drugs come to market. In other words, a company could patent a new drug before launch­ing clinical trials to protect it from competition, but only after the drug is approved by the FDA and comes to market would the patent's time line begin. Then it might have a duration of, say, six years from the time the drug came to market, instead of twenty years from the time the patent was filed. That way, clin­ical testing would not eat into sales time, so companies would not be in such a rush to complete it and the research could be done more carefully and thoroughly. (Here I'm assuming there is no National Institute for Prescription Drug Trials.) I am aware that such a change would be difficult to achieve, given the current move to harmonize patent law internationally. But as I said earlier, I am sketching an ideal system, and this change would certainly be an improvement.

The law granting drug companies an extra six months of ex­clusive marketing rights for testing drugs in children should be repealed. That law is virtual bribery, and it doesn't even accom­plish its stated purpose. Drug companies take advantage of the law to test blockbuster drugs in children whether the drugs are meant for this age-group or not. For an investment of a few mil­lion dollars or less, they can increase their revenues by hundreds of millions. But, they can opt not to test less profitable drugs in children even though they are more likely to be used in this age-group. The FDA now has the authority to require pediatric test­ing as a condition of approval. But it rarely uses it. It should. Imagine the uproar if the FDA let drug companies get away with testing drugs just in men, even though they would probably be used in women as well.

The loopholes in the Hatch-Waxman Act should be closed so that exclusivity cannot be stretched out for years. You will re­member from Chapter 10 that drug companies may file for many additional patents on an already patented and approved drug. By suing generic companies for infringement of these sec­ondary patents, they can trigger successive thirty-month stays on generic competition. This should not be possible. The way to stop it is clear. First, Hatch-Waxman restrictions should be en­forced. Only patents listed in the FDA Orange Book can be the basis for such lawsuits, and these are supposed to be restricted to patents that pertain to the original drug and its approved use. The FDA completely ignores that restriction and permits drug companies to list whatever secondary patents they wish—no matter how frivolous or far removed from the original drug. That should be stopped, as the Federal Trade Commission urged. It should be the FDA's responsibility to make sure patents are eligible for listing in the Orange Book. Of course, if patent law were strictly enforced, so that patents were granted only for discoveries or inventions that are truly useful, novel, and non-obvious, there wouldn't be so many secondary patents.

There is no reason for a thirty-month stay on generic com­panies entering the market just because brand-name companies sue them. Even if a brand-name company genuinely believes that a relevant patent would be violated, it could sue the generic company without an automatic extension of exclusive market­ing rights. Generic companies would be very wary of violating a valid patent, since they would be liable for the brand-name company's loss of sales. Hatch-Waxman should also be re­formed to make it impossible for brand-name companies to make sweetheart deals with generic manufacturers to delay entry into the market. The first generic company to win approval after a lawsuit is given six months' exclusive marketing rights. That exclusivity should be contingent on the generic company bringing a drug to market as quickly as possible. The 2003 Medicare prescription drug benefit law contained some provisions for modifying Hatch-Waxman, but how they will work is still unclear.

Get Big Pharma Out of Medical Education

We need to end the fiction that big pharma provides medical education. Drug companies are in business to sell drugs. Period. They are exactly the wrong people to evaluate the products they sell. I am not saying that all of the information drug companies provide to doctors is false. Some of it is useful and valid. But in­formation from companies comes mixed with hyperbole, bias, and misinformation, and there is often no way to tell which is which. Good education about prescription drugs, like all educa­tion, needs to be as objective and critical as possible.

Yet drug companies pour money into medical schools and teaching hospitals, they support most continuing medical edu­cation, and they subsidize professional meetings. Wherever clin­icians are educated, big pharma is there to help. There is no question that it influences educational content. The result is that doctors not only receive biased information but learn a very drug-intensive style of medicine. They come to believe that there is a drug for everything and that new drugs (of which they have many free samples) are always better than old ones. Once and for all, we should clarify a simple fact: Drug companies are not providers of education, and they cannot be. No laws, regula­tions, or guidelines should be based on the idea that they are.

The medical profession needs to take full responsibility for educating its members. There are a few simple steps to make this happen. First, medical schools should teach students about drugs, not leave such education to industry-sponsored pro­grams and teaching materials. Many of our best schools have virtually eliminated the pharmacology courses that used to teach the basic principles of drug actions and uses. Second, teaching hospitals should regard drug company representatives just as they do other salespeople, who are not allowed to traipse around at will, promoting their wares and offering gifts and meals to medical students and doctors in training. Third, the profession needs to take responsibility for continuing medical education. Just as there should be no private clinical research industry, there should be no private medical education industry hired by the drug companies. This would mean that continuing medical education would be less well financed, but it can be made much less expensive without any loss of quality. Finally, professional associations should be self-supporting. If breaking their dependence on drug companies means increased member­ship dues, so be it. Meetings would benefit by being more mod­est, serious, and purposeful. But if doctors want to go to a resort in Hawaii for a meeting, let them pay for it.

Many doctors would agree that drug companies should have no input into the content of medical education but argue that it is acceptable for them to support it at arm's length. I disagree. The industry's immense marketing expenditures are tacked on to the prices of prescription drugs. Much of that increased sales in­come goes toward "education"—remember the missing $35 billion (see Chapter 8)? I believe the public, if asked, would not want to provide such handsome subsidies to doctors. Of course, if educational grants from industry really had to be completely at arm's length, such grants would soon largely disappear. These companies are not charities. They expect a return on investment, and they get it—precisely because what they call education is designed to increase sales. As concern grows about marketing masquerading as education, some companies may create sepa­rate education budgets. But no matter what you call it, the overall purpose is the same—to sell drugs.

Drug companies sometimes contend that direct-to-consumer advertising is also educational, but it is even less educational than company-sponsored meetings for doctors in Hawaii. There is no way consumers can evaluate clinical claims in a thirty-second TV advertisement. The purpose and the effect of these commercials is to increase pressure on doctors to prescribe the latest, most expensive me-too drugs. Direct-to-consumer advertising should be prohibited in the United States just as it is in other advanced countries. At the very least, it should be regulated more stringently. Big pharma and the advertising agencies, which have a huge financial stake in the ads, would strongly re­sist, so any such action would probably require a congressional mandate. For reasons of public health and safety, however, the FDA is acknowledged to have authority over pharmaceutical advertising, so there is no question of an unfettered "right to commercial free speech" in this case. The issue is how, and how much, it should be regulated.

Open the Black Box

Big pharma badly needs some transparency. It gets away with exploiting the public in part because of its extraordinary secrecy. Drug companies reveal very little about the most crucial aspects of their business. Yet, unlike other businesses, they are dependent on the public for a host of special favors—including rights to NIH-funded research, long periods of market monopoly, and multiple tax breaks that almost guarantee a profit. Because of these special favors and the importance of its products to public health, as well as the fact that government is a major purchaser of its products, the pharmaceutical industry should be regarded much as a public utility. Its books should be open.

We ought to know exactly what drug companies spend on R & D and how it is broken down, not only by function but by individual drugs once they are patented and enter clinical trials. We should know the relative amounts spent on preclinical, clin­ical, and market research. Expenditures on clinical trials for each drug should be separated into their various phases, including Phase IV studies. And we should know how much drug companies spend on marketing research, and where that money is budgeted.

The enormous black box known as "marketing and administration" also needs to be opened. Where do those tens of billions of dollars really go? How much for top executive com­pensation? How much for lawyers? How much for "educating" doctors and the public? All of these categories should be broken down into their components. These expenditures produce a huge markup on drugs, and the public is entitled to know the details about them. (Marcia Angell "The Truth About Drug Companies" 2004 p.242-53)

Afterword

CLEARLY, THE PHARMACEUTICAL INDUSTRY AND the medical profession need thoroughgoing reform, and Congress and the Food and Drug Administration need to be reminded that they exist to serve the public, not drug companies. In the meantime, what can you as an individual do to protect your interests? Here are a few specific suggestions.

1. When your doctor prescribes a new drug, ask him or her these questions:

What is the evidence that this drug is better than an alternative drug or some other approach to treatment? Has the evidence been published in a peer-reviewed medical journal? Or are you relying on information from drug company representatives? Insist on getting a straight answer and, if necessary, a reference to a journal article or a medical textbook.

Is this drug better only because it is given at a higher dose? Would a cheaper drug be as effective if it were given at an equivalent dose? Sometimes the best course is simply to increase the dose of an older drug. Remember, there is usually no reason to think new drugs are better than old ones, and the older the drug, the better its safety record is likely to be.

Are the benefits worth the side effects, the expense, and the risk of interactions with other drugs I take? Every drug has side effects, and it may be better not to treat self-limited or trivial ailments.

Is this a free sample? If so, is there a generic drug or an equivalent drug I can use that is cheaper when the free samples run out? Free samples are a false economy. They are designed to get you and your doctor hooked on the newest, most expensive drugs.

Do you have any financial ties with the company that makes this drug? For example, do you consult for the company? Other than free drug samples, do you receive gifts from drug companies? Are you being paid to put me on this drug and enroll me in a drug company study? Do you make time for visits from drug company representatives? If the answer to any of these questions is yes, you should consider changing doctors. You need to know your doctor's decisions are based solely on what is best for you. And doctors need to be weaned from their dependence on drug company largesse.

2. And ask your senators and representatives in Congress this question:

Do you receive campaign contributions from the pharmaceutical industry, and if so, how much are they? There is no doubt that this industry largely writes its own ticket in Washington, and you have to put a stop to that.

3. Pay no attention to direct-to-consumer ads for prescription drugs.

These are meant to sell drugs, not educate consumers, and they only add to the prices you pay.

Finally," remember the admonition of the Washington Post editorial, quoted on page 215, to question those arguing big pharma's case about their sources of income. I can think of no better advice. Nowadays, even the most distinguished and apparently unbiased academics may be on the pharmaceutical industry's payroll. If they are, you need to be especially skeptical about their pronouncements. (Marcia Angell "The Truth About Drug Companies" 2004 p.261-3)

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