Does Big Pharma Really Need Big Profits?
All I can say is, those had better be damn good ads.
This eliminates an area in which real cost savings could have been made. The savings in the area of pharmaceuticals has been capped at $80 billion over the next ten years. Many believe the government could have used its purchasing power to bring drug prices down.
The argument is that, yes, the U.S. pharmaceutical industry makes big profits, but they need those big profits to pay for research.
But the fact is that in recent years the pharmaceutical industry hasn't been putting that much effort into research for shiny new drugs. The bigger effort has been research into "me too" drugs -- drugs that are close copies of other drugs that are making big profits. It is far more profitable for the drug companies to make a little research effort into tweaking an existing popular drug (and getting a new patent thereby) than to do a lot more research that is genuinely innovative but which may or may not pan out.
In an article published in The New Republic in 2007, "Creative Destruction: The Best Case Against Universal Health Care," Jonathan Cohn demolished Big Pharma's argument.
As books like Marcia Angell's The Truth About the Drug Companies and Merrill Goozner's The $800 Million Pill point out, a lot of the alleged innovation we get from private industry just isn't all that innovative. Rather than concentrating on developing true blockbusters, for the last decade or so the pharmaceutical industry has poured the lion's share of its efforts into a parade of "me-too" drugs-close replicas of existing treatments that offer little in the way of new therapeutic advantages but generate enormous profits because they are patented and because companies have become exceedingly good at promoting their sales directly to consumers.
Oh, about those direct-to-consumer prescription drug ads? The pharmaceutical industry spend $11 million a day on those ads. That $11 million a day counts as part of the cost of health care in America.
As an antidote to the corporate-sponsored propaganda from Miller and Stier, see this interview by Ezra Klein of Dr. Jerry Avorn, chief of the division of pharmacoepidemiology and pharmacoeconomics at Brigham and Women's Hospital in Boston. Dr. Avorn called the argument that pharmaceutical companies need big profits for research "specious" for three reasons.
First, it turns out that the big pharmaceutical companies spend only 15 cents of every dollar on research, according to their own SEC filings. They spend twice that much on marketing and administration. "I think any venture capitalist would say a company spending 15 percent on research is not a robust innovation engine," Dr. Avorn said.
Further, "the amount of really good science you get for your drug dollar is even less than the 15 percent I mentioned before, because that 15 percent also includes the development of me-too drugs. That's one aspect of the answer. We are not getting that much drug innovation for our dollar at present."
Second, the big pharmaceutical companies really haven't been generating as many new drugs as they used to. "There have been 20 or fewer drugs approved by FDA in recent years, which is lower than in past periods. It's sort of an open secret that innovation isn't working that efficiently," Dr. Avorn said.
Third, for many years most of the breakthrough research has not been done at private pharmaceutical companies but at federally funded research labs, usually universities or academic medical facilities. The for-profit drug companies then take that basic research and use it to create and manufacture their products. The research done by drug companies does take time and money, but they aren't doing the innovation by themselves.
Let's look at some other ways Bit Pharma spends its profits.
Mercenary science. Dr. David Michaels, a research professor at George Washington University, recently has been nominated to be head of the Occupational Safety and Health Administration (OSHA). In the June 2005 issue of Scientific American, Dr. Michaels published an article called "Doubt Is Their Product," in which he described the way pharmaceutical and other companies pay scientists to cast doubt on studies that show a drug is dangerous. This allows profitable drugs such as Vioxx to stay on the market months and years after independent research has shown the drugs are putting people's lives at risk.
This issue goes far beyond just the pharmaceutical industry, of course. The petrochemical industry is paying scientists to cast down on global climate change, for example. Industry also uses mercenary science to avoid safety regulation. Dr. Michaels has personally conducted research into the health effects of toxins such as asbestos and beryllium, both of which cause deadly lung diseases (such as mesothelioma) if breathed, and both of which are often workplace hazards.
Junk Studies. The pharmaceutical industry hires ghostwriters to generate "academic" papers favoring their products. The company solicits well-known physicians to sign their names to the papers, which are submitted to medical journals. Doctors reading the journals have no way to know the articles touting the virtues of this or that drug amount to paid advertisements.
Advertising. $11 million a day for direct-to-consumer advertising isn't making anyone healthier.
Some argue that the profit motive is actually hindering innovation. As I've said, much product and development research is focused on incremental improvements in products that have made money in the past. In "Curing Cancer: Running on Vapor" in Genetic Engineering and Biotechnology News, the authors argue that cancer research is being compromised by the profit motive. They argue that too much money and effort is being put into tweaking some over-hyped -- but profitable -- treatments with limited clinical usefulness.
Of course, in Conservative World it's the pure and noble pharmaceutical industry, which labors long and selflessly on our behalf, that is being forced into a deal with the devil -- the "devil" being the Obama Administration, which managed to usurp power by getting itself elected. Let's get it straight, folks. We're not citizens any more; we're consumers.
