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Pharmaceutical Industry

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Ryan Everett

on 1 June 2011

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Transcript of Pharmaceutical Industry

Prescribing Influence Between 2000 and 2004, the spending on prescription drugs annually increased from 8.2% to 15% (Kovner and Knickman, 2008, p. 311) In 2008, $234.1 billion was spent on prescription drugs in the United States by: Ryan Everett The number of Americans taking at least one prescription drug per month increased from 44% to 48% from 1999 to 2008 (Qiuping et al., 2010) In people 60 and over, 88.4% reported taking at least one prescribed drug within the last month Important! Background So.... Thesis: The pharmaceutical industry, headed by ‘Big Pharma’, utilizes financial leverage and intense lobbying in Washington in order to selfishly manipulate the health care system in a way that benefit its interests, often at the cost of consumers sulfa drugs --> penicillin
1930's up until the 1980's... zzzzzZZZZZ Over the next 20 years, though, the sales saw a 300% increase, placing it as the most profitable industry in the United States for many years (Angell, 2004, p. 3) zzzzzZZZZZ zzzzzZZZZZ zzzzzZZZZZ they found themselves as the third most profitable industry in 2009 with 19.3% of profits from revenue (CNN Money, 2009). Influence Legislation Ethical Implications Originally formed in 1958, and renamed in 1994, the Pharmaceutical Research and Manufacturers of America, known in short as PhRMA, is a trade group that represents many of the top pharmaceutical research and biotechnology companies in the United States. Headquartered in Washington D.C.. ‘Big Pharma’ is the term used to describe the largest companies in the pharmaceutical industry which are responsible for a considerable amount of the lobbying that seeks to influence government policies. A look at the top ten companies in 2004 shows that, through the merger of various other pharmaceutical companies, over 27 entities make up these top firms (Congressional Budget Office, 2006). $ R & D? United States’ pharmaceutical companies in 2005 spent $51.3 million in this field, holding claim as the leading location for research and development (Kovner and Knickman, 2008, pp. 304-305). Only acounted for 14% of spending. Even profits not biggest percentage. Rather, they were accounted to, what was often titled, “marketing and administration”, which collected 36% of the revenue streams (Angell, 2004, pp. 11-12). This ambiguous title could include things such as advertising, covering legal costs, lobbying, and pay for the hefty executive salaries Charles Heimbold Jr., the former CEO and chairman of Bristol-Meyers Squibb, earned over $15 million including his stock options (Angell, 2004, p. 12). Another need for such revenue focus in marketing can also be attributed to a $9.8 billion increase in spending for the top ten most advertised drugs to consumers between 1993 and 1998 (Kovner and Knickman, 2008, p. 308). The documents found by The New York Times also noted that in 2003 PhRMA intended to spend $73 million for lobbying the federal government, including $5 million to influence the U.S Food and Drug Administration (FDA) (Angell, 2004, p. 214). In 2006, pharmaceutical industries contributed $172.2 million to Congress and Federal Agencies, with $18.1 million coming from PhRMA (Steinbrook, 2007, p. 738). In 2002, there were 138 lobbying firms in D.C. which, at a cost of near $91 million, employed 675 lobbyists for a Congress that only has 485 representatives between the two houses. The influence of the pharmaceutical industry can be seen in the campaign contributions to the presidential elections as well. During the most recent election, within 6 months of campaigning in 2007, the top 17 candidates had totaled over $7 million in contributions from the health sector (Steinbrook, 2007, p. 736). Bayh-Dole Act of 1980 and the NIH In 2004, nearly one third of the new drugs put to market by ‘Big Pharma’ are discovered at these publically funded locations (Angell, 2004, pp. 7-8). 1984 --> Hatch-Waxman Act By the year 2000, the patent life had increased from eight years to 14. With some big-selling drugs, which can bring in over a billion dollars a year, these extended patent lives translate into huge revenue (Angell, 2004, p. 10). In 1992, Congress passed the Prescription Drug User Fee Act, which dealt with the relationship between ‘Big Pharma’ and the FDA. This bill allowed pharmaceutical companies to pay a fee, at the time $310,000, in order to speed up the process of getting drugs approved by the FDA. When the bill was passed again in 2002, the fee increased to $576,000. By 2004 the fees provided nearly $260 million a year, and made up a considerable amount of the budget for the FDA’s drug evaluation center (Angell, 2004, p. 208). The Food and Drug Administration Modernization Act of 1997 was another piece of Congressional legislation that modified the relationship between the FDA and the pharmaceutical industry. By lowering the standards for showing legitimacy and efficacy, the bill made it easier for companies to get new drugs approved by the FDA. It also allows for these new drugs to be marketed without ever having been compared to any standard other than placebo. me-too drugs An examination done by the USA Today of hearings by the FDA in 2000 showed significant conflict of interest. During 92% of the meetings reviewed, there was at least one member present who had a conflict of interest for financial reasons. In over half of the meetings examined, half or more of the present advisors had the same unethical issue (Angell, 2004, p. 210). This goes against character ethics which would cite that acting in a conflict of interest situation would not be a virtuous act. In the federal government, there exist just as many unethical practices. With the pharmaceutical industry spending nearly $478 million lobbying between 1997 and 2002 alone, there is bound to be a conflict of interest between the elected officials and the lobbies. This can be observed through the numbers of ex-federal officials and workers who go work for ‘Big Pharma’. In 2002, the lobby consisted of 26 individuals who had once been members of Congress (Angell, 2004, p. 198). When it comes to these products, though, they are often not quite what they seem. A scenario described by Angell in 2004 provides an example of this:
Of the seventy-eight drugs approved by the FDA in 2002, only seventeen contained new active ingredients, and only seven of these were classified by the FDA as improvements over older drugs. The other seventy-one drugs approved that year were variations of old drugs or deemed no better than drugs already on the market…Furthermore, of those seven, not one came from a major U.S. drug company. (pp. 16-17) While the corporations are making money off of these drugs, consumers are continuing to pay high prices, while not benefitting from the opportunity to purchase cheaper generic drugs. These generics often begin at 70%-80% of the brand-name drug on the market, eventually dropping down to 40% or lower as competition drives down costs (Kovner and Knickman, 2008, p. 306). While costs are already staying high, Congress passed a bill that went into effect in 2006 that prevented Medicare from bargaining for cheaper drugs. This would be viewed as very unethical from a duty-based ethics standpoint. This viewpoint believes that the collective good is more important than that of an individual or small group. In this case, the pharmaceutical industry would have a right to act in a manner that better service the whole populations, rather than their companies. Research completed in 2007-2008 showed the importance of prescription drugs in people’s lives. At the time of the study 48% of individuals had taken at least one prescription drug in the last month, with 11% having taken five or more. In people age 60 and over, 88.4% reported taking at least one prescribed drug within the last month (Qiuping et al., 2010). World Trade Organization passes policy for 2005 regarding patents. Many countries did not see medications as patentable. South Africa AIDS/HIV outbreak Clinton administration threatened sanctions against South Africa. Huge backlash led to change in policy and lowered pharmaceutcal costs to the area. Drugs are still more expensive than generics in the area, and they become much more difficult to obtain The Bush administration later showed their ties as well by having the U.S. be the only country opposed to lowering patent protections in third world countries. They later made a proposal promising $15 million to help treat HIV/AIDS in the Third World with generic drugs, but the money never came through. This can be seen, as stated in the book, “…that the United States is generally seen as siding with drug company interests against the needs of millions of HIV/AIDS victims in the Third World” (Angell, 2004, pp. 206-207). One major pharmaceutical company, a major producer of AIDS medication, was even charged by South Africa with violating laws regarding overcharging for medications and refusal to provide generic producers with licenses to patents (Angell, 2004, p. 207) Congressman Dan Burton stated once that “Every woman in America ought to be angry as hell at the pharmaceutical industry…”, referring to how breast cancer medications cost six times more in the U.S. than they did in Germany (Angell, 2004, p. 18). A large voting block of America, the elderly, are also seeing rising drug costs and wanting change. If Medicare were given the opportunity to bargain for drug prices, its massive purchase power could greatly help many Americans save money. Many citizens are illegally ordering drugs from Canada and elsewhere, which costs the country and the pharmaceutical industry to regulate and deal with. Charges against ‘Big Pharma’ for illegally imposing too high of fees to Medicare and Medicaid, providing bribes to doctors, promoting drugs for unapproved uses, as well as many other issues, further make the system look immoral (Angell, 2004, p. 19). As patents begin to end on brand-name drugs and dissatisfaction continues to grow amongst consumers, the pharmaceutical industry may need to reconsider how it does business if it hopes to keep making such large revenues. B I g Pharma
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