‘THE TRUTH ABOUT THE DRUG COMPANIES: How They Deceive Us and What to Do About It’

‘THE TRUTH ABOUT THE DRUG COMPANIES: How They Deceive Us and What to Do About It’ By Marcia Angell, MD. Random House, New York City, August 2004, 305 pages, $24.95. The coincidence that I read this book during the 2004 Republican National Convention caused me to reflect on how it might be received by the delegates in New York. A safe guess is that it would be viewed as an “anti-business” polemic that proposes to solve problems by more government control of the pharmaceutical industry (among other things), and that it would be dismissed out of hand or simply ignored. That would be a shame. Though it certainly blasts the practices of the pharmaceutical business, dismissing or ignoring this work would be a serious mistake for anyone interested in the health care system and the policies that govern it. I consider myself fairly well-informed on pharmaceutical industry issues, so I opened the book thinking I knew most of what Dr. Angell might say, but I was wrong. The systematic approach to key issues in a single volume and the inclusion of collected data on finances and other matters were eye-opening. Dr. Angell worked at the New England Journal of Medicine for two decades, part of that time as Editor-in-Chief. In her past writing she has criticized the pharmaceutical industry as well as the relationship of academic scientists to industry, calling for reform in each instance.FigureThe Truth About the Drug Companies is a more detailed dissection of the pharmaceutical industry that begins with a lengthy indictment of “big pharma” followed by a prescription for saving the industry “mainly from itself.” Her main assertions are summarized as follows: ▪The pharmaceutical industry is greedy and extracts exorbitant profits. This $200 billion industry (US sales only) was the most profitable US industry for two decades up to 2003. The top 10 pharmaceutical companies made more profit in 2003 ($35.9 billion) than the 490 other companies in the Fortune 500 combined. In that year the same top 10 made 18.5% net profit from sales compared with the Fortune 500 median of 3.3%. The top 10 earned a 33.2% return on equity for shareholders compared with 13.5% for banking, the next most profitable sector. ▪The avowed justification for these profits, the high cost of research and development, is based on incomplete, misleading, and patently false information. The claim that R&D costs per drug is $802 million is misleading, first, because $399 million of that is estimated revenue “lost” by not investing that money in the stock market, as if the company were an investment bank. The remaining $403 million was based on a study (done by industry-funded investigators) of 68 drugs from 10 companies over 10 years that were “New Molecular Entities” developed solely within the pharmaceutical company. In fact, few of the drugs introduced each year fall into that category (in 2002 only 17 of 78 newly approved drugs were NMEs); most are “me-too” variants of existing drugs already known to be effective or agents licensed from outside developers, both of which obviously cost far less in R&D. Furthermore, the $403 million is in pre-tax dollars; R&D is tax-exempt, lowering the estimated after-tax cost to $266 million per drug for these most expensive examples. Dr. Angell's estimate of the average R&D cost for all new drugs, including the “me-too” drugs and after all tax breaks, is about $100 million per drug. ▪Hard sell marketing, often disguised as support for education or research, amounts to bribes, lures, and kickbacks to promote sales. In 2000 pharmaceutical companies spent 14% of sales on R&D and about 36% on marketing and administration (details of these categories are not made available by the industry). In 2001 the industry distributed free samples to physicians worth $11 billion and spent another $5.5 billion to distribute samples, gifts and information by sales representatives. Companies routinely pay physicians as consultants to attend seminars, the content aimed at their products. “Me-too” variants are heavily promoted by providing doctors with free samples and by direct marketing to the public, even though there is usually no evidence that the drugs are better than existing agents. The industry has an enormous presence at annual association meetings, with many fancy dinners, conferences, and give-aways. Support of fellowships and substantial fees for rental of exhibit space are attractive to professional societies as a way to keep the cost of dues down. The industry also provides support to advocacy groups who have influence on consumers. ▪The pharmaceutical industry now has substantial influence or outright control of much of the clinical trials that test new agents. Only an estimated 10% of clinical trials today are sponsored by NIH. The average payment by industry to physicians per patient entered on one of their trials was $7,000 in 2001. Phase IV post-approval trials (now 25% of all clinical trials) have become nothing more than a means to promote sales for off-label use. Trials are sometimes developed by industry and the results written by industry, but authored by those paid by industry as consultants who had no intellectual input in the design or analysis of the study. In 1990, 80% of trials were done in academia; in 2000 it was 40%, and many academics are partners with industry and often cede to it control of the data. ▪The pharmaceutical industry flagrantly buys influence in Washington to stretch patent protection and to insert or retain favorable language in legislation. “The Pharmaceutical Research and Manufacturers of America (PhRMA) has a death grip on Congress”—Rep. Richard Durbin (D-IL). The pharmaceutical industry has the largest lobby in Washington: 675 lobbyists at a cost of $91 million a year. In addition, PhRMA has a staff of 120 in Washington, and it pays an additional $14 million annually to 112 lobbyists. Their most striking recent success was language in the 2003 Medicare Modernization Act that prevents Medicare from negotiating the price it pays pharmaceutical companies for drugs; HMOs, hospitals, and the Veterans Administration have no such restriction. I could go on with Dr. Angell's indictments, but you get the picture. It is a broad attack on the industry and, to a lesser extent, on the medical profession for being a party to aspects of these activities. She also takes on Congress and the FDA, the former for never saying no to the drug industry and the latter for being too compliant and now dependent on industry's user fees for reviewing new drug applications. What Are We to Make of This? My own assessment is that despite the sometimes strident and narrow focus, many of the core assertions ring true. Drugs are too expensive, as oncologists know very well. It is grossly unfair and, I believe, unethical, that drugs are sold to Canada and other countries at huge discounts while patients in the US, including my mother, have to pay a huge premium for drugs they must have. The avowed reason that patients in the US have to pay more to cover R&D seems disingenuous for so profitable an industry that depends for its life blood on research funded by the NIH. In fact, it is “whatever the traffic will bear” that determines the price of drugs in this country and the huge lobby in Washington sees to it that this country will bear a lot. This is true despite the fact that most of the new drugs, from AZT to Gleevec, basically were developed through support from US taxpayers' money. So I agree on this point with Dr. Angell: Americans pay twice for drugs, once for much of the basic research and development through NIH and again when they purchase the drugs at top dollar. Some of the pharmaceutical industry's actions criticized by Dr. Angell—extremely high profit margins, “me-too” drugs tested only against placebos, inflated R&D “costs,” aggressive marketing, buying Congressional acquiescence, etc.—might be justified as “capitalism at work,” or “market forces,” for much of commerce. However, these are not cosmetics or diet pills we are talking about. Prescription drugs are different: They are often essential for life and well-being; monopoly status is granted for new agents; and much of the R&D is done with public funds. This, in my view, imposes the same special responsibility on the industry as it does on medicine in general. Profits are essential, but the patients, all of them at all social levels, must come first even at the cost of some profits. Ambitious Set of Reforms So what is to be done? Dr. Angell has a prescription outlined in a chapter audaciously entitled, “How to Save the Pharmaceutical Industry—And Get Our Money's Worth.” She lays out an ambitious set of reforms, admitting that some may be very difficult, but worth stating as an ideal goal: 1. Shift the emphasis away from “me-too” drugs to innovative ones, primarily by requiring that newer versions of old drugs be tested against the old drug and not a placebo to qualify for approval. We mostly already do this in oncology, so it sounds quite reasonable to me. Why should any new drug that is meant to compete with one already on the market be tested only against a placebo? 2. Strengthen the FDA with more public support, make it independent of drug industry “user fees” and re-enforce the charge that it exists first and foremost to protect the public, not facilitate drug development. This is a tightrope that the FDA staff is always walking, and I think they do it pretty well in oncology. FDA is under-funded and understaffed for what it is expected to do, mainly due to Congress's unfocused aim to reduce government (which, despite the rhetoric, no administration of either party has done). 3. Create an Institute for Clinical Testing of Prescription Drugs at NIH to avoid bias. This is one of those I think very unlikely to come to pass, and I am not sure it is a good idea. The NCI, for example, can point to the cooperative group system that effectively does that for oncology. I believe providing sufficient earmarked federal funding for academic investigators could do the job as well and avoid another bureaucracy. 4. Curb monopoly marketing rights. Although changes in some aspects of this broad area are a good idea, especially the extensions not intended by Congress, I think this will be another tough one. Even if the administration were to change after the election, changing patent law is no easy task, and remember the industry's potent Washington lobby that supports members of both parties. (An interesting twist is that the drug industry was the single largest donor to Senator Orrin Hatch [R-UT], whose son is a Washington lobbyist.) 5. Get big pharma out of education. To me this is another hard one because I cannot see how to do it. The recommendation focuses mainly on the presence of drug representatives in medical schools and hospitals. Can one mandate by law that salesmen cannot go into hospitals? I think not, so one is dependent on each facility taking such action. And where does one draw the line? Is the New England Journal of Medicine willing to forego drug company ad placements? Will professional associations ban drug companies from annual association meetings and decline any financial support? Neither is likely, because both will claim, with justification, that their scientific activity is insulated from influence by the drug industry. 6. Open the “black box” of secrecy regarding finances and practices of the industry, especially regarding R&D. The rationale is that the US government is the largest purchaser of its products and the industry receives special treatment, such as patent extensions, so we have a right to know. What does AWP really mean? How is it set? I agree with this, especially details on R&D, since that is what is used to justify charging US patients the highest prices in the world for new drugs. But I'm not smart enough to know if it is legal, and if so, who would have the clout and the will to get it done? 7. Establish reasonable and uniform pricing. I like this a lot, and would at least like to see transparency of costs and pricing. The government, as the largest purchaser of drugs, could demand it, as it does when purchasing fighter planes. Canada and other countries regulate drug prices with pre-determined formulas (and the drugs are still quite profitable in those countries). However, I think the Congress is unlikely to act unless the groundswell of public anger over the cost of drugs continues and grows. This is not out of the question. The Medicare reform legislation of 2003 now seems unlikely to quell that anger and the trips to Canada, so some type of relief could happen. This is an informative and provocative book written by a distinguished and well-informed physician; I recommend it highly to my colleagues and the public. It provides some enlightening data and references. It also clearly presents the author's point of view, which one may agree with or not, but should not ignore.

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