Your Money or Your Life: The robber barons of Pharma

In 1997 the people of South Africa facing the growing epidemic of HIV and needing anti-HIV drugs for treatment faced a daunting obstacle, the price and availability of such drugs, Pharmaceutical Companies held the patents to most of the drugs. In South Africa, which has nearly 5 million people living with HIV/AIDS and represents half of the pharmaceutical market in Africa, 13 out of 15 antiretroviral treatments are patent protected so the country passed legislation allowing it to obtain generic (equivalent nonbrand) versions of patented drugs under two international trade provisions known as compulsory licensing and parallel importing. In 1998 a group of pharmaceutical companies sued to overturn the law. After three years--and a great deal of negative publicity--the companies withdrew the lawsuit in April 2001. In June 2001 the U.S. withdrew a complaint it had filed with the World Trade Organization (WTO) concerning a Brazilian law allowing generic drug production. (1) Affordable Drug Access

Generic versions of anti-HIV drugs produced in developing countries typically cost 5-25% of the market price of the brand-name equivalent. MSF estimates that the cost of highly active antiretroviral therapy (HAART) in the U.S. is $10,000-$15,000 per person per year. Treatment using generic equivalents costs about $500-$1,000 per person per year, which may be pushed lower with the use of new, simpler regimens using combination pills. Indian generic drug manufacturer Cipla has offered a triple combination regimen (d4T/3TC/nevirapine) to certain nongovernmental organizations (NGOs) and LDC governments for $350 per person per year.( 2) Doctors Without Borders                

But Research Costs So Much!

The drug companies say, "We need high prices to cover our staggering research and development costs, and if you do anything to squeeze our prices, it will stifle innovation." A group of economists - mainly funded by the drug companies - came up with the widely quoted figure on this. They said that it cost $802 million to bring a drug out. They, however, were looking at the most expensive drugs to develop: new chemical compounds developed entirely in house. Most new drugs aren't that at all. Most are what people call "me too" drugs, which are slight variations of older drugs already being sold.

According to these economists, the real cost of bringing out those rare original drugs is actually around $403 million. But they doubled it by factoring in how much money the companies might have earned if they'd invested that $403 million. Moreover, the economists did not figure into their total the many generous tax breaks these companies receive for doing research and development. This is a highly inflated figure.

In the past, drug discoveries made through government research by our tax dollars remained in the public domain. Laws passed in 1980 allowed those breakthroughs to be patented, even if their research was sponsored by our National Institutes of Health. As a consequence, patent shenanigans have reshaped the drug business, as have the recent government regulations that expedite direct-to-consumer drug advertising. " The Bayh-Dole Act of 1980 basically turned academic labs into farm teams for industry research, allowing publicly funded researchers in academic institutions (where much of the real enterprise and innovation occur) to patent their discoveries and license them to the private sector; the law has created a thicket of licensing and royalty relationships, wink-and-nod consultancies and conflicts of interest.

The Case Of Chronic Myelogenous Leukemia,

Several decades of dogged research by academic scientists -- much of it paid for by American taxpayers through the National Institutes of Health -- had teased out the molecular details of chronic myelogenous leukemia, a rare and fatal hematological cancer. Researchers at Novartis (then Ciba-Geigy) created several compounds that in theory might throw a monkey wrench into the process by which blood cells become cancerous. But these potential miracle drugs sat on the shelf untested, until

Brian Druker, a researcher at the Oregon Health and Science University, asked for the compounds and became the first to discern their anticancer properties in the lab dish. Even that wasn't enough. As Avorn tells it, ''Novartis had so little interest in committing resources to the drug's development that cancer researchers had to resort to the bizarre tactic of sending a petition to the company's C.E.O., signed by scientists in the Leukemia and Lymphoma Society of America, imploring him to make more drug available for clinical studies.''

Novartis has overcome its lack of enthusiasm -- it now charges $27,000 for a year's supply of Gleevec. But those heart-warming ads, now the centerpiece of the Novartis corporate identity, say more than intended about how today's pharmaceutical industry takes credit where little is due. As both Angell and Avorn lay out in painstaking, often enraging, detail, a self-serving mythology -- promulgated on a scale possible only in a business with annual worldwide revenues of $400 billion -- has enveloped the pharmaceutical industry. Angell and Avorn cut through the haze, arguing persuasively that Americans are paying an enormous amount of money for some very mediocre medicines  NYT "The Drug Lords"

On Our Dime

Me Too Clones

Schering-Plough's Clarinex is a "me too" variant of the same company's popular allergy drug Claritin. But Claritin's patent expired in 2002, so the new version had to be made and heavily marketed. What is different about the two, nothing but the name and the claim. Dr. Angell maintains that while Claritin was approved as a hay fever remedy, Clarinex is an improvement only because it has been approved for the treatment of both indoor and outdoor allergies. "It was approved for the additional use only  because the company decided to test it for that use," she says. And why all the advertising? "If prescription drugs are so good, why do they need to be pushed so hard?" she asks, citing Nexium, Lipitor and Paxil as other me-too products with whopping ad campaigns. As for Nexium, the new purple heartburn pill meant to replace Prilosec (which went off patent in 2001.

"The big drug companies are competing not so much to find new drugs but for the limited number of drugs to license," she argues. The enormous research-and-development budgets that are invoked to justify high drug prices, she claims, also pay for questionable forms of education for doctors and all manner of barely concealed incentives for them to prescribe certain drugs

Is the new pink and lavender pill called Sarafem really just Prozac in a different casing? Has the Eli Lilly company really tested it on children (one way of extending an exclusive patent) yet sold it as a remedy for premenstrual problems?

The fact is that for the last two decades the drug companies have been hugely profitable. Last year there was a little wiggle downward, but in 2002, the 10 biggest American drug companies had a median profit of 17 percent of sales compared to a median of 3 percent for the other Fortune 500 companies. In the 1990's, profits ran between 19 and 25 percent. Prices are high to keep profits high. They are not interested in the most needed drugs worldwide but only the most profitable, that means the poorer countries with diseases mostly isolated to that region are going to be ignored.

Pharma says "Hell No" to "Lets Negotiate? "

The main Medicare drug benefit that went into effect in 2006 was designed to funnel billions of dollars to the pharmaceutical industry. It's an absolute bonanza for it. The pharmaceutical industry's lobbyists made certain that the legislation contained a provision barring Medicare from negotiating drug prices. They are still fighting to keep negotiated prices out of the new health bill. Look at the record of how good negotiation works, the federal government negotiates drug prices for the Veterans Affairs system and gets very low prices because it is a bulk purchaser. Medicare would have been the biggest bulk purchaser of all - so it could have negotiated very low prices, this is also true of a public insurance option with negotiating power for cheaper drugs. Without this bargaining power the drug companies will continue raising their prices faster than the inflation rate, and the drug benefits will soon become unaffordable.

Why would we keep this system, if it is so bad? The drug companies have spent more than $3 billion on lobbyists and political "contributions" over the past decade in the US alone. They have paid politicians to make the system work in their interests. If you doubt how deeply this influence goes, listen to a Republican congressman, Walter Burton, who admitted of the last big health care legislation passed in the US in 2003: "The pharmaceutical lobbyists wrote the bill."

A Better Way

There is a far better way to develop medicines, if only we will take it. It was first proposed by Joseph Stiglitz, the recent Nobel Prize winner for economics(6) . He says: "Research needs money, but the current system results in limited funds being spent in the wrong way."

Stiglitz's plan is simple. The governments of the Western world should establish a multi-billion dollar prize fund that will give payments to scientists who develop cures or vaccines for diseases. The highest prizes would go to cures for diseases that kill millions of people, like malaria. Once the pay-out is made, the rights to use the treatment will be in the public domain. Anybody anywhere in the world could manufacture the drug and use it to save lives.

The financial incentive in this system for scientists remains exactly the same -- but all humanity reaps the benefits, not a tiny private monopoly and those lucky few who can afford to pay their bloated prices. The irrationalities of the current system -- spending a fortune on me-too drugs, and preventing sick people from making the medicines that would save them -- would end.

It isn't cheap -- it would cost 0.6 percent of GDP -- but in the medium-term, it would save us all a fortune, because our health care systems would no longer have to pay huge premiums to drug companies. Meanwhile, the cost of medicine would come crashing down for the poor -- and tens of millions would be able to afford it for the first time.

So you can see the battle for health care is not just with Big Insurance but big Pharma as well. Their weakness lies in the fact that they live in a secluded world that can not see real  people as anything other than copper  pennies which have no value or power to stop them.They can not grasp that if they were to win this battle they  would still lose. Like a man on a island who eats from the only coconut tree growing there, and having greedily shaken down and eaten every single coconut foolishly begins to eat the tree.