What to do with your feelings?

August 4th, 2007 by Ben Goldacre in bad science | 59 Comments »

This week Alan Johnson announced that he wasn’t going to stick by the Pharmaceutical Price Regulation Scheme that lines the pockets of the drugs industry. You only have to say those words to trigger to my favourite 3 minute dinner party package: how evil is big pharma?

In the UK, the pharmaceutical trade is the third most profitable activity after finance and – this will surprise you if you live here – tourism. We spend £7 billion a year on pharmaceutical drugs, and 80% of that goes on patented drugs, that is, medicines which were released in the last 10 years. In 2002, the 10 US drug companies on the Fortune 500 list had combined international sales of $217 billion, which is a lot of money. To people like you and me, that much money is probably just evil on its own terms.

They spent only 14% of that money on R&D, while spending 31% on marketing and administration. They are very careful not to let anyone see how much goes separately on marketing and on administration, because the reality is, they spend twice as much on marketing as they do on developing new drugs, and this is embarrassing for them to admit. Whenever you hear the drug companies explaining why they have to charge so much for their products – perhaps as they are denying their lifesaving AIDS drugs to the 20 million HIV positive people in Africa – the plea is that they need money to develop new drugs. That’s not true if they spend twice as much on marketing as they do on research and development. This unhappy collision of facts makes them look very evil indeed.

They also charge this money in slightly evil ways. When your drug comes out, you have ten years “on patent” as the only person who is allowed to make it. Loratadine is an effective antihistamine drug that does not cause the unpleasant antihistamine side effect of drowsiness. It was a pretty unique molecule for a while, and highly in demand. Before the patent ran out, the price of this drug, by Schering-Plough, was raised 13 times in the US in just 5 years, increasing by over 50%. This is not a price rise in keeping with inflation. This is evil.

But it’s also an industry in trouble. The golden age of medicine has creaked to a halt, and and the number of new drugs, or “new molecular entities” being registered has dwindled from 50 a year in the 1990s to about 20 now. At the same time, the number of “me-too” drugs has risen, making up to half of all new drugs.

Me-too drugs are an inevitable function of research driven by a market: they are rough copies of drugs that already exist, made by another company, but they are different enough that a manufacturer can claim its own patent. They take huge effort to produce, and need to be tested and trialled and refined and marketed just like a new drug; but for all that effort they generally don’t represent a significant breakthrough in human health. They are a merely a breakthrough in making money. Again, you have to admit, that is reasonably evil.

But what really interests me is what we do with our feelings about this evil: because it is entirely predictable, market driven venality, which can be found in every market sector, but we find it uniquely distressing when we are sick and needing healthcare. Somewhere, deep down, it’s as upsetting as thinking our parents were paid hard cash on a per diem sliding scale with performance bonuses to love and look after us.

This moral discomfort and resentment leaks out in delusional anti-MMR beliefs, or bizarre acts of faith in the vitamin pill industry, as acts of misguided and wasteful political rebellion. Why? Because everybody is a socialist when it comes to healthcare, but nobody knows what to do with those feelings any more.

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59 Responses

  1. Robert Carnegie said,

    August 8, 2007 at 12:14 am

    I think Nike are mostly audited now for the most egregious exploitation of workers in the developing world. I think even companies producing Beijing Olympics merchandise have been given the boot. It’s the nameless, brandless imports without the high markup of Nike – who actually do (Nike) have some technologically innovative products, too – it’s the cheap goods that you have to search your soul over. Mind you, I got the shoes I’m now wearing dirt-cheap.

    Some BBC radio show – I think World Service’s [One Planet] – investigated cotton production. Someone claimed that an organic, fair-trade cotton T-shirt would cost £50 to cover its costs.

    And I suppose Nike do good by encouraging sport and physical activity, improving fitness.

  2. Dr Aust said,

    August 8, 2007 at 10:32 am

    Ayup wrote:

    “Glaxo is evil, Nike is cool, when in fact Glaxo, for all it’s faults saves lives every day, something I doubt Nike ever have done once.”

    Yes, I agree to some extent. Most of my friends who work for Big Pharma R&D are very committed to the idea of “doing something with value for humanity” and feel this way, and a number of them have contrasted it with doing research in Unis where they felt they were pressured to do “whatever was most likely to get funded”.

    So many of the people in Pharma have undoubtedly good motives. But the more one gets into the managerial levels the more the “it’s a jungle and we can’t afford to be less focused on The Bottom Line (i.e. money) than the competition” red-in-tooth-and-claw logic of corporate profitability being the only valid endpoint seems to take over. Or perhaps individual responsibility is diffused. Joel Bakan’s book on The Corporation is a sort of key text for this sort of view.

  3. gadgeezer said,

    August 8, 2007 at 11:06 am

    NYT article claims that More Generics Slow the Surge in Drug Prices.

    The [USA] currently spends $275 billion a year on prescription medicines. But over the next five years, analysts forecast a golden era for generic drugs, as patents begin to expire on brand-name medications with more than $60 billion in combined annual sales. That will open the door to copycats that may be 30 percent to 80 percent cheaper…

    The rise of generics has helped slow spending increases for prescription medications over all, even though an aging population is consuming more drugs and even as new medicines enter the market — including cancer drugs costing tens of thousands of dollars…

    Generics already account for 60 percent of prescriptions in this country. And that portion is expected to rise, as cheaper substitutes arrive to treat many chronic conditions.

    [NYT requires (free) registration or BugMeNot.]

  4. Arthur Dent said,

    August 8, 2007 at 1:02 pm

    re 59 You misunderstood me, most of the billions of dollars spent in pharmaceutical R&D is wasted in that no useful product emerges. It doesn’t matter who spends it, the outcome is the same, although the liklihood is that the drug companies are likely to be more efficient.

    I doubt if the Treasury would be very keen on seeing this amount of taxpayers money disappearing so directly. AstraZeneca is currently sending ca. $5 billion a year on R&D and is only half the size of GSK.

  5. Dr Aust said,

    August 8, 2007 at 4:49 pm

    I wouldn’t agree that Pharma is “more efficient” with R&D spending in a general way, Arthur. In running trials I could well believe it, as the PharmaCo trials machinery is well worked-out. But in the way they do basic basic research drug companies are typically far less “thrifty” than University labs, which in the UK have a long-standing tradition of ekeing the most productivity out of thin resources.

    One could write a whole book (or two) about the differences in the ways academia and Pharma do research. But they are different, which is one reason why it is important that both exist doing overlapping, and different, and complementary things.

  6. Arthur Dent said,

    August 10, 2007 at 11:05 am

    Eva, Pharma may well waste 75% of its revenue on marketing (got any figures to support such a claim?) but that doesn’t change the fact that it still spends enormous amounts of money on drug development, most of which does not suceed in producing any new drugs.

    I agree that we need a better business model, but a partnership between pharma and governemnt is unlikley to deliver anything better, and with history to guide us anyone who thinks that governemnt research or expenditure is either effective or efficient is deluding themselves.

  7. Dr Aust said,

    August 10, 2007 at 9:42 pm

    I didn’t say “government” research of expenditure, Arthur. I quote agree that governments are notorious wasters of expenditure.

    The people who can be most relied on not to waste money, in my experience, are the people in research and development who actually do the research and development, especially in cash-strapped Univs. This is because they know that money saved on one project goes to support another one.

    How you harness this “thriftiness” to do drug development is another question, but I think the basic principle is sound.

  8. Arthur Dent said,

    August 10, 2007 at 10:06 pm

    I think we need to differentiate between Research & development, Big Pharma’s core skills are in the development phase, where university scientists show no interest whatsoever.

    A lot of the fundamental research is already done in universities and in small companies. However, the big money, the major costs and thus the drievr for cost recovery by high prices is not in research it is in development. Development costs are rising fast as the public and regulators become ever more risk averse.

    Even if you outsource all research to universities you don’t solve the funadamental problem that drug development is extremely expensive and that most potentially promising drugs sourced from these exceelent universities don’t actually succeed as marketable products.

  9. Arthur Dent said,

    August 10, 2007 at 10:08 pm

    Apologiews for a second post: When we talk about money being ‘wasted’. we do not mean thrown way willy nilly by inefficiencies. By wasted I mean that money invested in a potential new chemical entity does not result in a commercial product. Usually because of lack of sufficient efficacy or the appearance of unacceptable side effects. This will occur regardless of who is doing it.