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The Truth About the Drug Companies

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Moriah Benton

on 11 February 2014

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Transcript of The Truth About the Drug Companies

Only a minority of the new drugs are newly discovered
Create a new market
treat aging as a diseases
providing women hormones for postmenopause symptoms
older men treated with testosterone patches for "testosterone deficiency"
They promote the drugs by using doctors
handing them free samples
expensive personal gifts
Use education as an excuse to advertise
convince doctors to prescribe drugs for "off-label" uses
the use of celebrities, telling people to get checked out for a certain disease
Guilt tripping people by saying that people are dying because they are not being treated with medication. However, the drug that was being used killed 25% of the patients (Xigris)
The Truth About the Drug Companies
The Patenting System
Lobbying and Politics
Public and Private Research
Publicly funded research is the major source of innovative drugs
Publicly funded scientists come up with ideas and early development; drug companies put to practical use
companies sponsor clinical trials, convert drugs to administered forms, produce/distribute products.
How accurate is this information?
Government Agencies involved with the pharmaceutical industry:
Food and Drug Administration (FDA)
Senate &
House of Representatives
United States Patent and Trademark Office
National Institute
of Health
Government Lobbying:
"Drug Companies have the largest lobby in Washington, and they give copiously to political campaigns."
In 2002:
675 Lobbyists
in Washington
at a cost of
$91 million
Research and Development
What the Drug Companies Say
In 2001, $802 million was spent for each new drug brought to market
Americans pay far more than people in other countries because we do not regulate prices
Investment in scientific research
The costs of drugs that never make it to market
This pie chart shows a 300% increase in marketing expenditures since 1996 ($10 billion), with the largest growth occurring in direct- to-consumer advertising (530%).

In the United States, spending for prescription drugs was $234.1 billion in 2008 and $307 billion in 2010
PhRMA is the largest lobby.
R & D is a relatively small part of the budgets
Bayh-Dole Act:
Gave universities and small businesses the power to patent research sponsored by the National Institutes of Health, the major distributor of tax dollars for medical research.
The patent for prescription drugs has a term of 20 years
This can apply to the drug's substance, method of use, formulation, or the process of making it
The FDA also provides terms of exclusivity, so companies are extra protected
Companies pile on patents and protections so that generic companies can be sued for even the slightest infringement-->therefore it takes much longer for people to have access to affordable medicine
If a generic company is sued for possible infringement, they are barred from selling their product for thirty months by the FDA, even before there is a settlement

The USPTO has an incentive to grant patents because examiners are paid bonuses based on the number of patents they process-->it's easier to grant patents than deny them, so it's more likely a patent will go through

Companies play the game in many ways:
Changing their top-selling drugs in ways that will add 3 years exclusivity
Filing for multiple patents, staggered over months or years (These serve as pretexts for lawsuits to trigger 30 month extensions
Testing in children to get an extra 6 months of exclusivity, regardless of whether the drugs are to be used by children or not (Nearly every company with blockbuster drug does it.)
Colluding with generic companies to delay their entry into the market or to keep prices high
Getting a new patent and FDA approval for a trivial variation of their blockbuster and promote it as an "improved" version of the original

minimized by vast expenditures on marketing and administration (31%)
Hatch-Waxman Act
Passed in the 1980s, this law extended the patent rights for brand name drugs, allowing drug companies to have larger profits.
variations of older drugs already on market
Food and Drug Administration Modernization Act of 1997
Added six months of additional patent protection for drug companies if they ran their clinical trials on children.
National Institutes of Health (NIH)
sponsors most publicly supported research
research at universities, small biotechnology companies, NIH
90% of NIH-sponsored research is extramural
Big PhRMA relies on publicly funded research
at least a third of big PhRMA's drugs are now licensed
21 most effective drugs 1965-1992, public research responsible for 15.
Decline in the number of new drugs, as well as their quality while R & D expenditures increased
Despite their expenses, the companies are extremely profitable
Marcia Angell provides the reader with concrete facts backed with credible citations.
spent on lobbying
$478 Million
Her statistics come from authentic sources such as IMS Health, FDA, and various other publications.
"The combined profits for the ten drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together. Over the past two decades the pharmaceutical industry has moved very far from its original high purpose of discovering and producing useful new drugs. Now primarily a marketing machine to sell drugs of dubious benefit, this industry uses its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself."
Important details such as what each company spends, and for what purposes, on the development of new drugs are not open to the public

The Truth About the Drug Companies

provides a coherent summary of the current role of
the pharmaceutical industry in drug development
and marketing, and a reminder to regulatory
authorities and the medical profession of their
obligation to ensure the licensing and prescription
of efficacious, cost effective medicines.
Are we getting our money's worth?
How can we entrust the development of medicines to an industry that is entirely accountable to investors and not to the public?
Scientific Articles Cited in Patent Applications for Clinical Medicine
other public &
non-profit org.
"The biggest single item in the budget is neither R&D nor even profits but something usually called 'marketing and administration' "

"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."

"In 2002, the average price of the fifty drugs most used by senior citizens was nearly $1,500 for a year's supply."

"State governments, too, are looking for ways to cut their drug costs."

"The top ten drug companies (which included European companies) had profits of nearly 25 percent of sales in 1990"

Statistics from the Book
Drug companies promote me-too drugs more than innovating new cures
usually target common, lifelong conditions (arthritis, depression and etc.)
not lethal nor does it go away
only interested in consumers that pay
would not be interested in uncommon disease (small market) nor diseases that only the poor gets (Third World disease)
Take advantage that people would mostly always take the easy way out
ex. high blood pressure
recommended by dieting and exercising
but most people reach for the pill
Do the protections companies are given promote scientific development or do they hinder it?
Should the 20 years of exclusive patent protection be changed?
Should an independent, public agency administer all clinical trials to ensure that they are properly conducted?
Currently, it is illegal for the government to negotiate prices for drugs purchased through Medicare/Medicaid. Should this law be changed?
Should the government regulate drug costs?
Is direct to consumer advertising something that should be allowed in the United States?
Should the pharmaceutical companies be able to give free samples and gifts to doctors?
Research and Innovation?
In just a handful of words in his State of the Union address in 2013, President Obama renewed a proposal to lower the amount that the federal government pays for drugs taken by low-income seniors

In 2012, the top 11 global drug companies made nearly $85 billion in net profits.

Americans pay nearly 50% more for comparable prescriptions in the United States than they would in the UK, France, Germany, Spain and a host of other developed nations.

The report also found, not surprisingly, that the total profits of America’s top pharmaceutical companies far exceed their research and development costs.
Are they true?
Full transcript