“The Inordinate Power of Big Pharma” by Leslie Sekerka,
Debra Comer, and Lauren Benishek
from Business Ethics, 2nd edition, by Denis Collins (2019)
If you live in the United States, you have probably seen a commercial that describes how a pill can easily remedy chronic depression. The advertisement displays a collage of pleasant scenes: families playing football in the park, couples kissing, and friends enjoying outdoor adventures. The message, accompanied by a crescendo of uplifting music, is that this product—despite its many potentially problematic side effects—can give depressed people meaningful lives. This sort of direct-to-consumer advertising of prescription drugs and medical devices has been legal since 1997. In 2015, the American Medical Association (AMA) voted that the federal government should ban these advertisements. Yet, these ads continue to appear with disturbing regularity, and the United States remains just one of three countries that allow them, the other two being New Zealand and Brazil. In 2011, the average American household watched 111 televised prescription drug advertisements per month. The Nielson Company estimates that there are, on average, 80 drug ads every hour of every day on American television. Considering that viewers watch about 5 hours of television daily, this exposure to drug ads by far exceeds the amount of time most people spend with the physician annually (typically 13-15 minutes per visit, four times a year). Television is not the only means of reaching consumers. The U.S. Food and Drug Administration (FDA), the agency responsible for pharmaceutical regulation, has done little to address the AMA’s (American Medical Association) concern that these ads prompt consumers to believe there is a pill for every ill and to seek drugs even for conditions that would respond well to changes in diet and exercise. Firms that sell prescription drugs claim their ads merely educate patients, encourage doctor-patient dialogue, and move people to take more responsibility for their healthcare. It should be noted that the pharmaceutical industry (Big Pharma) contributes heavily to the FDA’s annual budget. Big Pharma is one of the few multi-billion-dollar profit industries in the world.
Big Pharma is the name of the consortium of the world’s largest drug companies. Drug companies such as Merck, Eli Lilly, and Roche and chemical companies such as Bayer, ICI, Pfizer, and Sandoz have been in business for more than 100 years, going back to when most medicines were sold without prescriptions and were compounded by local pharmacists. During the 1970s, 1980s, and 1990s, drug development was largely in the hands of multinationals, prompting the creation of “blockbuster drugs”—chemical compounds designed to become consumer staples as treatments for common chronic ailments. For example, the ulcer medication Tagamet quickly reached $1 billion in sales, followed by other blockbusters such as Eli Lilly’s Prozac (the first serotonin reuptake inhibitor) and Astra’s Omeprazole (the first proton pump inhibitor). Pfizer’s cholesterol drug Lipitor became the best-selling drug of all time, with $125 billion in sales over 15 years.
Prescription drugs are a massive market: Americans spent $329 billion on them in 2013. That works out to about $1,000 per person (for every person, including children) per year in the United States. By 2014, the global market for pharmaceuticals exceeded $1 trillion in sales, with the world’s largest drug companies generating $429 billion of that revenue. Big Pharma spends hundreds of millions of dollars annually to market its products. It is currently the seventh largest ad category in the U.S., with an investment of $6.4 billion in 2016, an increase of 64% since 2012. This includes direct-to-consumer marketing and paying for sales people to directly approach doctors. Pharmaceutical firms strategically promote products they expect to become the most profitable. For instance, Boehringer Ingelheim spent $464 million in 2011 advertising its blood thinner Pradaxa. The investment appears to have paid off: The drug passed the $1 billion sales mark the following year.
Government regulation can help ensure that pharmaceutical companies serve the public as well as their shareholders. Yet, since the antibiotic era of the 1940s, the development of pharmaceutical products (research and development or R & D costs) have become expensive, time-consuming, and cumbersome. In 1961, the discovery that giving thalidomide to pregnant women caused serious birth defects triggered new government regulations in the United States to attempt to ensure efficacy, purity, and safety, but there is evidence the FDA is not as effective as one might think.
Consider the following events, taken from Overtreated by Shannon Brownlee, 2007: In 1963, a Dr. John Wennberg noticed patients in his hospital dying unnecessarily. A middle-aged woman, for example, slipped into a coma in the dialysis unit at Johns Hopkins while under Dr. Wennberg’s watch. In her forties, the woman had undergone surgery for gallstones a few days before and was recovering normally, when her kidneys suddenly began to fail. Dr. Wennberg could find no reason for her to go into acute kidney failure, save one: Before her surgery, the woman had received a dose of the drug Orabilex, which was used to visualize her gallstones on an X-ray. Other drugs in the same class were known to have potentially harmful effects on the kidneys, yet the manufacturer, E. Fougera, neglected to warn doctors that Orabilex shared this drawback. In fact, the drug’s label claimed it had “spectacularly low” toxicity and a “notable absence of side effects.” To find out if his instinct about Orabilex was right, Wennberg set up a series of experiments in which he injected cats with escalating doses of the drug. After all the cats died of kidney failure, Wennberg went to the Johns Hopkins administrators, persuading them to take Orabilex off the formulary, the hospital’s list of approved drugs. But they ignored his suggestion that they put pressure on the FDA to withdraw the drug, saying it was not their responsibility (which is legally true). The administrator’s refusal to protect patients beyond the walls of Johns Hopkins was an “epiphany” Wennberg recalled, a moment that seemed connected both to his future as a doctor and to the political and social upheaval that was occurring with the United States invading Vietnam. Wennberg was still only 29 years old and unsure if he could challenge his employer. Wennberg decided it was his duty to ignore his superiors and act. He began canvassing physicians at other hospitals: the University of Maryland; Georgetown University; Sibley Memorial Hospital; George Washington University. Every hospital had seen patients suffer kidney failure after being given Orabilex, including more than 25 patients in the Washington, D.C. area alone. Wennberg wrote to the company producing and selling the drug, notifying it of his findings. He never received a reply. He later learned that the company had already received several reports of kidney failure and deaths associated with its drug, but had brushed them aside with the argument that physicians had administered too high a dose. The company never passed the reports on to the FDA. Wennberg then wrote to the FDA himself, detailing the cases he had uncovered and citing several papers in medical journals about the drug’s potentially lethal side effect. He urged the agency to remove Orabilex from the market. Again, Wennberg got no reply and the FDA did nothing. Wennberg continued to collect cases involving the drug, uncertain what to do next. The, in November 1963, President Kennedy was assassinated, an event that left Wennberg shaken yet more determined than ever to do what he believed was right, to stop other physicians from killing patients with Orabilex. In May 1964, he sent a letter to Senator Hubert H. Humphrey, urging him to speak to the FDA about the drug. Writing that he was “embarrassed a letter was necessary,” Wennberg told the senator that neither the company nor the FDA seemed willing to take the drug off the market in order to protect patients. Wennberg estimated that at least 100 people had died around the country from a drug that was still being touted by its manufacturer as entirely safe. Humphrey took Wennberg’s letter to the White House. When managers at E. Fougera learned that the Johnson administration was preparing to call a meeting with the FDA over Orabilex, the company voluntarily withdrew the drug.
Big Pharma today often gains an advantage in how federal and state laws are crafted or abandoned due to their huge profits and thousands of paid lobbyists. From 1998 to 2014, Big Pharma spent nearly $3 billion on lobbying, drowning out the voices of consumers and the interest groups that represent them. According to reports by the nonprofit MapLight, drug companies poured more than $70 million into fighting California’s Proposition 61, intended to limit the prices state agencies pay for prescription drugs. The industry backs legislators who favor their shareholder-driven profit approach. The trade group PhRMA has a reputation for hiring former government employees, who have connections to those in political office. Using these relationships to pursue industry goals, Big Pharma maintains a significant advantage it can use to override customer interests. U.S. citizens pay more for their pharmaceuticals than do citizens of any other country.
The history of how companies paid for their drug research is illuminating. First Congress enacted a series of laws to speed up tax-supported research on new products. One of these laws, the Bayh-Dole Act of 1980, enabled universities and small businesses to patent or license any discoveries from their tax-funded medical research sponsored by the National Institutes of Health (NIH). Before the Bayh-Dole Act, taxpayer-financed discoveries belonged to the public domain (i.e., new drugs were available to any company that wanted them). Because of this act, universities that carried out NIH-sponsored work could charge royalties, providing income for nonprofit institutions. Legislation also allowed the NIH to enter into deals with drug companies, transferring NIH discoveries directly to industry.
The cost of bringing a drug to market is somewhat vague. Developing a new prescription medicine that gains marketing approval can take longer than a decade and cost as much as $2.6 million, according to a study by the Tufts Center for the Study of Drug Development. To encourage drug development in the United States, laws permit pharmaceutical firms to set their own pricing and provide protections that are tantamount to limiting free-market competition. Other countries set a limit on what companies can charge, based on the benefit of each drug. It seems clear that drug companies could cut prices dramatically without threatening future investments in R&D or eroding profits. For every dollar spent on R&D, 19 dollars go to marketing.
Given its mega-profits, Big Pharma has become known for its ability to wield political power and social influence over the federal government and its agencies, health care systems, insurance firms, medical practitioners and administrators, hospitals, and consumers. Big Pharma has become one of the most profitable industries in the U.S., rivaled only by mining, crude oil production, and commercial banking. It has so much power that it has actually shaped how Western consumers think about their health and well-being.
Here is a leaked email in 2015 from Martin Shkreli, former chief executive officer (CEO) of Turing Pharmaceuticals, maker of Daraprim: “$1bn here we come. I think it will be huge. We raised the price from $1,700 per bottle to $75,000. So 5,000 paying bottles at the new price is $375,000,000 almost all of it is profit and I think we will get 3 years of that or more. Should be a very handsome investment for all of us. Let’s cross our fingers that the estimates are accurate.” Another example of drug companies: After purchasing two heart medications in early 2015, Valeant Pharmaceuticals hiked the price of one by 525% and the price of the other by 212%. In one year, Valeant garnered $351 million in pure profit (after research and marketing, all packaging and shipping) from these two pills.
Why isn’t this just smart, free market capitalism? If you have a product people want, you charge and make money, right? Isn’t this just the American Dream—getting rich from a product or service people want? Industry professionals argue that the market for medicine is unique. Drugs are nondiscretionary (people aren’t buying them because they want to, but because they have to). Exclusivity (closed distribution) also creates a barrier and pricing power. Both Turing and Valeant are examples of drug companies that trade in drugs that treat rare diseases/disorders. Because few patients need these drugs, there is little incentive for others to produce them and little or no competition. Further, Americans forget that the government (through Medicare) or the insurance carriers (through increased premiums to other insurance policy holders) often have to pay the price of the drug. Often people just go without the drug if it is too costly.
Big Pharma is well known for fraudulent behavior, and drug companies have settled many billion-dollar lawsuits. Here are three major settlements by drug companies: GlaxoSmithKline paid $3 billion to settle lawsuits involving its drugs Paxil and Wellbutin; Pfizer paid $2.3 billion to settle a lawsuit against its drug Bextra; Elli Lilly paid $1.4 billion to settle a lawsuit against its drug Zyprexa. Big Pharma paid over $13 billion between 2009 and 2014 to settle lawsuits it feared would go to court. Cases involved misbranding and off-label marketing, giving kickbacks to physicians for prescribing or recommending drugs, and strategically aligning with generic companies as a means to keep the overall cost of drugs higher than their justified benefits. There are claims that the government itself has become complicit in the illicit behavior. Pharmaceutical companies are undeterred by fines, legal fees, and settlement payouts, which they see as the cost of making billions. (Every year over the last decade higher insurance premiums and deductibles have contributed to lower coverage for most Americans.) The U.S. remains the only country with an unregulated pharmaceutical pricing market.
The anti-inflammatory drug Vioxx was finally withdrawn from the market in 2004. Vioxx is believed by experts to have caused some 60,000 deaths. Merck, the producer of the drug, is the second largest pharmaceutical corporation in the U.S. It profited tremendously from Vioxx, earning $2.5 billion in sales in 2003 alone. When the drug was pulled due in large part to evidence that it contributed to fatal heart attacks and strokes, analysts anticipated the judgment against Merck could run up to $25 billion. Yet the plea bargain reached in 2012 resulted in a fine of $321 million, hardly more than 10% of their profit for the drug’s sale from one year. (Merck paid for clinical studies from doctors and researchers which defended Vioxx.)
Doctors, scientists, research organizations, medical journals, teaching hospitals, and medical schools all accept money from the pharmaceutical industry. Medical researchers sometimes coauthor articles in concert with Big Pharma or receive funds for ghostwriting information that may ultimately appear in medical journals. In 1967 the sugar industry paid Harvard scientists to obscure a link between sugar and heart disease. The misleading information led to decades to research on the role of saturated fat—rather than sugar. The Journal of the American Medical Association benefits from Big Pharma’s advertising dollars. Drug companies sponsor clinical trials that researchers receive compensation to administer. Drug companies manage drug trials, showing the outcomes that put their products in the best light.
Risk of cardiovascular disease had been analyzed by the Framingham Heart Study project, which began in 1948. In a landmark 1961 paper the key risk factors were identified as high blood pressure, diabetes, and cholesterol. But what level of cholesterol constitutes risk? Scientists have only statistical breakdowns of thousands of people, who had heart attacks or didn’t (and what age they were), and what levels of cholesterol they had (in addition to other factors in life). If a disease or condition existed bigger than cancer, bigger than heart disease, and everyone had it, endless profit could be assured forever. In 1987 Merck launched Mevacor, a statin for cholesterol—which everyone has (everyone has cholesterol). The only issue is: How much do you have? All that had to be established was what was a risky level. In 1995 the NIH (the National Institutes of Health) said 13 million people in the U.S. were “at risk” from high cholesterol. Of sixteen publications between 2000 and 2013, ten proposed changes widening the definition for cholesterol level risk (75% of the researchers had ties to Big Pharma). May 16, 2001 then became the jumping off point. Dr. Claude Lenfant of the National Heart, Lung and Blood Institute said that “we can now say with certainty that lowering a high blood cholesterol...dramatically reduces a person’s risk.” Lower is better, BUT at what level does risk begin? NIH guidelines had previously stated that 200 milligrams per deciliter of total cholesterol was the “desirable” level, and 240 mgs was too high. In 2001, the NIH halved the cutoff point risk point: 100 mgs was not “desirable,” 130 to 159 mgs was now “borderline high,” 160 mgs was “high” and 190 mgs was “very high.” So, in light of these changes in cut-off points, in 2001 the number of Americans with “high” cholesterol went up to 36 million (and in 2004 the number went up again to over 40 million). The doctors adjusting the low and high levels were using the same data: the same statistical breakdowns of how many people had heart attacks, what levels of cholesterol they had, and what other factors they had (fat, drugs, age) if known. So they just lowered the levels of high and low, saying it helps. NIH defended itself by arguing lower is better and no physical harm is coming from using the pills since they help reduce cholesterol. “We have never said anything false and did not lie.” They claimed their goal was only to help people avoid heart attacks (from The Deals that Made the World, by Jacques Peretti, 2018). (Reported in The Deals that Made the World, by Jacques Peretti, 2018).
Doctors in the U.S. are usually required to complete accredited continuing medical education (CME) coursework. The pharmaceutical industry provides a substantial portion of the annual costs of CME, using this platform to market their products. Pharmaceutical companies also sponsor symposia and medical conventions (which doctors are not required to attend). Doctors are encouraged to go when the pharaceutical companies make the trip free: Free travel and food to attend the convention or symposia. At these events, drug company representatives educate doctors about their company’s new prescription drugs, pushing the newest and most expensive pills. Doctors are favorably inclined after such vacations toward the sponsoring firms that paid for the trips. It should be noted that there is 1 pharmaceutical sales representative for every 2.5 office-based physicians in the United States. Sales reps provide free samples of pills doctors can give to their patients. Big Pharma claims giving samples to patients improves patient care, fosters appropriate medication use, and helps millions of financially struggling patients. Critics counter, however, that “sampling” does not improve drug access for the poor, does not promote rational drug use, and raises the cost of care.
Heath care professionals today are encouraged to resolve patients’ concerns by prescribing medications. Given the pressure to see far more patients in far less time than 25 years ago, the system pushes physicians to provide quick prescription remedies. Big Pharma has also become a marketing machine. The goal is to have you take a pill for every trouble you encounter. But treating minor problems as illnesses requiring pills has toxic implications for society, including the unknown consequences of taking drugs for years when they are not necessary, draining family finances, and masking the true causes of some problems. Big Pharma claims it is just trying to help people become healthy while making money for its hard-working employees.
Reformers call for restructuring the industry itself, so that it is grounded in science and motivated to provide safe and effective drugs to people who need them. One plan for expanding access to drugs has emerged from the medical community is for the U.S. federal government to buy pharmaceutical firms outright, rather than merely buying the drugs these firms sell. For example, according to the Centers for Disease Control and Prevention, hepatitis C kills more Americans than any other infectious disease and often leads to a need for liver transplants. The virus has infected an estimated 2.7 to 3.3 million people in the United States. Gilead Sciences Inc. makes Sovaldi and Harvoni, the two drugs that can swiftly cure this disease, but sells them at prices so high that few can afford them (a 12-week course is $85,000) unless they are receiving Medicare from the U.S. government, in which the government pays). If a patient doesn’t have the appropriate medical coverage or the money in the bank, sometimes doctors or the patient’s insurer will tell patients they are not sick enough to justify the cost. (If you go to Canada or Mexico, it costs $850. That information may save your life!) Buying the company instead of the drugs would cut the cost of most treatments by two thirds. The government could then sell off the firm, but sustain the drug rights (and so regulate the profit the firm makes by selling the drug). Others suggest the government simply regulate Big Pharma, as it regulates public water and electricity. Others say shorten the patent rights on all the drugs to 1 year (instead of the current 10), so that any company can make the drug after that time, and as long as 2 or more drug companies make the drug, the price should be driven down to an affordable rate.
Essay II: Questions
1. Why do pharmaceutical companies spend so much money on marketing? Why don’t doctors just say no to patients’ requests? Explain. Why does Big Pharma spend so much on lobbying?
2. Subtract the amount it costs to develop a new prescription medication, advertize it, and bring it to market (our book’s quoted prices) from the profit generated for Pradaxa. How much did Boehringer Ingelheim make in profit?
3. Explain—described in layman’s terms—the kind of law that must be in place to protect the FDA from people like Dr. Wennberg.
4. What does Martin Shkreli’s email reveal? Is there anything illegal about that? Is there anything unethical about that?
5. How much did GlaxoSmithKline, Pfizer, and Elli Lilly each pay to settle lawsuits against them? Why would a company pay billions instead of proving their innocence in court (assuming they are innocent)?
6. “Doctors in the U.S. are usually required to complete accredited continuing medical education (CME) coursework.” The pharmaceutical industry pays for these training events for doctors and uses this platform to market their products claiming their representatives educate doctors about their new prescription drugs. Why does this increase sales of drugs to patients? Can’t doctors just say no? Give an example from your experience which shows people can’t just say no in such circumstances.
7. Why did doctors change the levels for high cholesterol? What were levels for high cholesterol before and after the change? How could an experiment be run to prove the original levels were just fine? Explain. Who would have to run such an experiment to change the legal levels back?
8. “According to the Centers for Disease Control and Prevention, hepatitis C kills more Americans than any other infectious disease and often leads to a need for liver transplants. The virus has infected an estimated 2.7 to 3.3 million people in the United States. Gilead Sciences Inc. makes Sovaldi and Harvoni, the two drugs that can swiftly cure this disease, but sells them at prices so high that few can afford them (a 12-week course is $85,000).” Doesn’t Gilead Sciences have the right, as all Americans do, to make as much money as they can legally? Give one plausible explanation for why they keep the price that high.
9. There are three suggestions at the end of the article for how to make things fair for patients who need drugs in the U.S. while still allowing for pill companies to make money. Pick one of the three suggestions, explain how it would work, then give one positive and one negative for that system. Do you favor it over our current system or not? Explain.
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