Learning Center
Plans & pricing Sign in
Sign Out

Pharmaceutical Slides


Facts, Fiction, Policy and Ethics

       Martin Donohoe
• Economics
• Influences on Physician
• Academia-Industry Connection
• Ethical and Policy Issues
           Prescription Drugs

• 10,000 FDA-
  approved drugs

• 70% of all office
  visits lead to

• 1.5 - 2.0 billion
   Prescription Drugs and Health
             Care Costs

• >10% of U.S. medical costs

• The fastest growing component of the $1.3
  trillion US health care bill
Economics of the Pharmaceutical
• Sales revenues tripled over last

• Prices increased 150% (versus
  50% CPI)

• Spending up 17% from 2000 to
Economics of the Pharmaceutical
• Worldwide sales > $145 billion/year
• US = Largest market
   »40 % of worldwide sales

• Average CEO compensation = $20
  million (1998)
• 16.4% profit margin in 2000 ($24

 -Largest of any industry

 -4 times greater than average
 return of all fortune 500

 -8 out of 25 most profitable U.S.
 companies are pharmaceutical
Economics of the Pharmaceutical
• Greater than 5000 companies
• Less than 100 companies
  account for over 90% of
  worldwide market
   Mergers and Acquisitions

• Drug company mergers
  - Pfizer-Warner-Lambert
  - Upjohn-Pharmacia

→Pfizer acquired Pharmacia in 2002 for
 $60 billion to become the world’s
 most powerful drug conglomerate
     Drug Industry Lobbying

• Pharmaceutical Research and
  Manufacturers’ Association
  powerful lobby
• 623 lobbyists for 535 members of
       Drug Industry Lobbying

• $38 million donated to Congressional
  campaigns in the 1990s
• $84 million in 2000 election (2/3 to
  » Orrin Hatch (R-Utah) - $169,000 in 2000 - #1
  » John Ashcroft (Atty. Gen’l) - $50,000 in losing
    2000 Senate bid
• GW Bush received $456,000 during his
  2000 election campaign
             Drug Costs

• U.S. highest in the world
  55% > Europe
  35% to 80% > Canada (drug companies
  still among the most profitable in Canada)
• Cross border pharmacy visits increasingly
   »Canada vs. Mexico
             Drug Costs

• U.S. only large industrialized country
  which does not regulate drug prices

• Single payer system would
  dramatically decrease drug costs
   »Single purchaser able to negotiate
    deep discounts
      Drugs: Who Pays?
• 55% out-of-pocket

• 25% private insurance

• 17% medicaid

• 3% Other (VA, Workman’s Comp, IHS,
   Where Prescription Dollars Go

• Research and development - 12%
  -preclinical testing - 6%
  -clinical testing - 6%
• Manufacturing and distribution - 24%
• Sales and marketing - 26%
• Administrative / miscellaneous expenses -
• Taxes - 9%
• Net profit - 17%
The Elderly and Prescription Drug
• Elderly represent 12% of U.S. population,
  yet account for 33% of drug expenditures

• Almost 2/3 of elderly Medicare enrollees
  have no coverage for outpatient drugs
   »sicker and poorer then their counterparts
    with supplemental insurance.
The Elderly and Prescription Drug
• Drug expenditures increasing up to 10
  times as fast as SS and SSI benefits

• 1 out of 6 elderly Medicare patients
  are poor or near poor (incomes less
  than $7,309 or $9,316 respectively)
Consequences of No Prescription
 Drug Coverage for the Elderly
 Noncompliance, partial
 Increased ER visits and
  preventable hospitalizations,
  higher rates of disability, and
  greater overall costs
Consequences of No Prescription
 Drug Coverage for the Elderly
 Elderly, chronically ill individuals
 without coverage are twice as
 likely to enter nursing homes
The Elderly and Prescription Drug
• Universal outpatient drug coverage cost-
   -pharmaceutical industry strongly
  -Citizens for Better Medicare (pharmaceutical
    industry front group) $65 million ad campaign to
    defeat a Medicare prescription drug plan in 2000
• Bush/Congressional prescription drug
  benefit proposals woefully inadequate

• Increased market share
  -1983 = 15%
  -1993 = 40%
  -2000 = 42%
• Average cost 1/3 of comparable
  name-brand drug

• Brand name manufacturers acquiring
  generic producers
   »E.g., Merck-Medco

• Prices rose almost twice as rapidly as
  those of brand-name drugs in 2002
   Delaying Generic Competition

• Nuisance lawsuits against generic
• Lobbying for Congressional Bills
  Extending Patent Protection
   »Schering Plough / Claritin - $20 million
    lobbying campaign
   »Big-name lobbyists (Howard Baker, C
    Everett Koop, Dennis Deconcini, Linda
         Influences on Physician
            Prescribing Habits
•   Texts
•   Journals
•   Colleagues
•   Formularies
•   Samples
•   Patient requests
•   Personal experience
•   Cost
      Influences on Physician
         Prescribing Habits
• Gifts

• Drug advertisements

• Pharmaceutical representatives
       Gifts from Pharmaceutical
•   Pens, toys and puzzles
•   Household gadgets
•   Food
•   Books
•   Event tickets
•   Travel and meeting expenses
•   Cash
    Patients’ Attitudes Toward
  Pharmaceutical Company Gifts
         (Gibbons et al.)
• 200 patients, 270 physicians
• 1/2 of patients aware that doctors
  receive gifts
• 1/4 believe their doctor(s) accepted
• 1/3 felt costs passed along to patients
• Patients felt gifts less appropriate
  then did physicians
    AMA Guidelines Re Gifts to
     Physicians from Industry
• Gifts of modest value which benefit
  patients O.K.
   »Pens, notepads, modest meals,
    textbooks acceptable
   »Film, videos, CDs; ―Dinner to Go‖
    (Merck); ―Look for a Book‖
    GlaxoSmithKline PLC); Palm Pilots
    (Dupont) – may be acceptable
    AMA Guidelines Re Gifts to
     Physicians from Industry
• No cash gifts

• No gifts with strings attached
   AMA Guidelines Re Gifts to
    Physicians from Industry
• CME sponsorship money to
  conference sponsor, not
  participating physicians

• Meeting expenses for trainees
  funneled through institution
     Pharmaceutical Company
• $15 billion in 2000
   »up to $15,000/U.S. physician
   »over $6 billion - advertising and
   »over $7 billion - sales reps’ salaries
     »50,000 salespersons: 1/10
      prescribing physicians
    Pharmaceutical Company
   Advertising – Drug Samples
• $8 billion/year in samples

• Dispensed at 10% - 20% of
           Drug Samples

• Only ½ of samples go to patients
   »60% of pharm reps self-medicate
   »50% of residents self-medicate,
    often using samples
     »early 1990s - benzos
     »2000 - SSRIS for depression,
       antihistamines for sleep
 Truthfulness in Drug Ads
               Wilkes et al.
       Ann Int Med 1992:116:912-9

• 10 leading medical journals

• 109 ads and all available references

• 3 independent reviewers
 Truthfulness in Drug Ads:
    FDA Requirements
• True statements
  -side effects
• Balance
• Instructions for use
• Approved uses only
    Truthfulness in Drug Ads:
• 57% little or no educational value
• 40% not balanced
• 33% misleading headline
• 30% incorrectly called drug the ―agent
  of choice‖
• 44% could lead to improper
  Truthfulness in Drug Ads
• Higher percentage of ads misleading
  in Third World
   »Many agents available OTC

• Increased FDA oversight and
  enforcement needed
   Doctors are Influenced by
 Pharmaceutical Advertising and

• Prescribing patterns
    »e.g., Calcium channel blockers
• 1998: Trovan most promoted drug
  in US; sales most ever for an
  antibiotic in one year; use since
  limited by FDA due to liver toxicity
        Doctors are Influenced:
              Formulary Requests
        by P and T Committee Members
            (JAMA 1994;271:684-9)
• Met with drug rep – 3.4X more likely to
  request company’s drug
• Accepted money to speak at symposia –
• Accepted money to attend symposia – 7.9X
• Accepted money to perform company-
  sponsored research – 9.5X
    Pharmaceuticals Sales Reps’
• Appeal to authority

• Appeal to popularity

• The ―red herring‖

• Appeal to pity
  » Dryden - ―Pity melts the mind‖
    Pharmaceuticals Sales Reps’
• Appeal to curiosity

• Free food/gifts

• Testimonials

• Relationship building/face time
Pharmaceutical Sales Reps’
• Active learning – reinforcement /
• Favorable but inaccurate statements
• Negative comments re competitors’
• Reprints not conforming to FDA
 Relating to Pharmaceutical Reps

• Awareness of sales tactics
• Learn about new agents/formulations
  being developed and tested
• Question them, ask for references
   »Evaluate quality of references
 Sources of Accurate and Reliable
        Drug Information
• The Medical Letter
• Peer-reviewed studies and
• Micromedex
• Prescribers’ Letter
• Large databases
  -The Cochrane Collaboration
 Sources of Accurate and Reliable
        Drug Information
• Textbooks
• Facts and
• AHFS Drug
• AMA Drug Evaluations
• Conn’s Current
• The FDA (sometimes)
• Not PDR
Direct to Consumer Advertising
 • Began in 1980, briefly banned 1983-
 • Expenditures:
      $155 million—1985
      $356 million--1995
      $1 billion--1998
      $2.8 billion--2000
  Direct to Consumer Advertising

• US and New Zealand only countries to
  allow prime time TV advertising
• 1989 - one drug achieved >10% public
• 1995 - 13 of the 17 most-heavily marketed
• 2000 – Schering-Plough spent more to
  market Claritin than Coca-Cola Enterprises
  and Anheuser Busch spent to market their
 Direct to Consumer Advertising:
         Use of Celebrities

• Micky Mantle – Voltaren

• Bob Dole – Viagra

• Joan Lunden – Claritin

• ―Newman‖ - Relenza
  Effects of Direct to Consumer

• Better educated/informed (?misinformed?)
• Discovery of unrecognized illnesses:
  diabetes, hypertension, hep C, ED
• More proactive patients
• Diversion from important health issues;
  wasted time
     Pet Pharmaceutical Industry

• $3 billion market
• Examples:
   » Clonicalm (clomipramine) for separation anxiety
     in dogs
   » Anipryl (seligeline) for canine Cognitive
     Dysfunction Syndrome
   » ―Sea pet‖ shark cartilage treats for doggie
• Pet superstores and websites sell multiple
  Pharmaceuticals on the Farm:
   Agricultural Antibiotic Use
• Agriculture accounts for 70% of
  U.S. antibiotic use
  »Use up 50% over the last 15
  »Due to explosion in factory
   Consequences of Agricultural
         Antibiotic Use

• CDC: ―Antibiotic use in food animals
  is the dominant source of antibiotic
  resistance among food-borne
   » Campylobacter fluoroquinolone
   » VREF (poss. due to avoparcin use
     in chickens)
      The FDA: Current Issues

• Nicotine/Cigarette regulation
• Policies re transgenic foods (GMOs,
  » Biopharming
• Pharmaceutical industry involvement
  in research and production of
  chemical and biological warfare
  agents and drugs used to facilitate
Policy Issues Related to Women’s
        Health Care Drugs

• OCPs available OTC

• Pharmacist-prescribed emergency
   »reduce number of unintended
   »cost saving to patients and health care
Concerns Re Research in the U.S.

• 22% of new drugs developed over
  the last 2 decades new molecular
   »Most are ―me too‖ drugs
Concerns Re Research in the U.S.

• Insurance coverage of clinical trials
   »Low enrollment causing delays in
    evaluating cancer medications
• Clinical trials a stop-gap source of
  care / meds for poor and uninsured
Unethical placebo-controlled
     Pharmaceutical Company
• 90% of health research dollars are
  spent on the health problems of 10%
  of the world’s population
   »research on major diseases of the
    developing world under-funded, not
     Pharmaceutical Company
• Third World experimentation with
  inappropriate placebo-controls:
  AIDS drugs/Africa;
   »Results more beneficial to First
    World patients
   Anti-AIDS Drug Availability in
• 36 million infected with HIV; 2/3 in
  sub-Saharan Africa (1.3% of
  global pharmaceutical market)
   »Only 1/1000 S. African AIDS
    patients getting anti-HIV drugs
   Anti-AIDS Drug Availability in
• PHRMA lawsuit vs South Africa (supported
  by US govt)
   »parallel importing
   »compulsory licensing
   »dropped after activist campaign
• PHRMA continues to lobby against parallel
  importing and compulsory licensing
  through governments and the WTO
Third World ―Donations‖ (Dumping) of

• Genuine gifts

• Dubious ―gifts‖
   »clear out stocks of nearly-expired
    drugs/poor sellers
   »tax write-offs (up to 2x production
Third World ―Donations‖ (Dumping)
        of Pharmaceuticals

• Egregious Examples:
  -Expired Ceclor to Central Africa
  -Garlic pills and TUMS to Rwanda
  -50% of donations to Bosnia expired or
  medically worthless
• Donation recommendations from WHO:
  -WHO list of essential drugs
  -Expiration date at least 1 year away
Academia/Pharmaceutical Industry
     Links Strong/Growing
• Industry funds 8-40% of
  university research (a 7-fold
  increase since 1970)
• ¼ of scientific investigators have
  industry affiliations
Academia/Pharmaceutical Industry
     Links Strong/Growing
• 2/3 of academic institutions hold
  equity in start-ups that sponsor
  research at the same institutions
• Up to 80% of science and
  engineering faculty perform
  outside consultations
Exclusive university - corporate

» MIT – 5 yr, $15 million deal with Merck and Co.
  for patent rights to joint discoveries
» DFCI – Novartis
» UC Berkeley – Novartis
» Wash U. in St Louis - Pharmacia
» Univ. of CO – Ribazyme
» BIH - Pfizer
» MGH - Shiseido

• Majority of authors of Clinical Practice
  Guidelines published in major journals
  have industry ties

• Authors of NEJM reviews and editorials
  can accept up to $10,000/year in speaking
  and consulting fees from each company
  about whose products they are writing
Problems Consequent to Increased
 Academia-Industry Partnerships
• Impaired sharing of knowledge, materials
   » Difficulties in repeating/verifying important
• Impaired collaboration
   » Driven by usual academic competitive
     jealousies, fears of contract violations and
     subsequent litigation, and desire to protect
     financial interests and keep stock prices high
• Patents used to inhibit other investigators’
 Educational Concerns Regarding
   Industry-Funded Research

• Diversion of faculty away from teaching,
  towards more remunerative consultations
• Faculty change research direction
• Fellows/post-docs diverted to industry-
  related topics
• Patent- and profit motive-related-
  publication delays affect trainee and junior
  faculty career development
   Withholding of Data / Publication
  Delays / Harassment of Researchers
• JAMA Celebrex (Pharmacia) study: fewer
  ulcers than ibuprofen at 6 months, but no
  difference at one year (only 6 month data
  submitted and published
• Synthroid study: Betty Dong, UCSF,
  Boots/Knoll Pharmaceuticals
• Deferipone: Nancy Oliveri, University
  of Toronto, Apotex
Issues in Drug Company Research

60% of industry-sponsored trials
are contracted out to for-profit
research firms, which in turn may
contract with for-profit NIRBs for
ethical review
   *Conflict of interest
     Proliferation of Physician
• 3-fold increase in the number of
  physicians conducting ―research‖ in
  the last decade

• ―Investigators‖ can make from $500
  to $6000 per enrolled subject
   »Active recruiters can make from
    $500,000 to $1 million per year
          Seeding Trials
• Sponsored by sales and marketing
  dept., rather than research division
• ―Investigators‖ chosen not for their
  expertise, but because they prescribe
  competitor’s drug
• Up to 25% of patients enrolled in
  clinical trials
          Seeding Trials

• Study design poor
• Results rarely published
• Disproportionate amount paid for
  ―investigator’s‖ work (writing a
Recommendations for Industry-
    Sponsored Research
• Written agreements with university, not

• Alternatives therapies selected based on
  clinical relevance

• Stepwise project results not provided to
  sponsor until study is funded and open
  publication guaranteed
  Recommendations for Industry-
      Sponsored Research

• Full disclosure of conflicts of interest

• No gag clauses regarding publication

• Investigator not to act as consultant during

• National/international database of clinical
 The Pharmaceutical Industry and
         Medical Ethics
• Funding of conferences, Centers of
  Ethics, individual investigators
   »E.g., $1 million gift from SmithKline
    Beecham to Stanford University
    Center for Biomedical Ethics
• Rapid growth of for-profit non-
  institutional review boards (NIRBs)
  » Ethicists for hire
 The Pharmaceutical Industry and
         Medical Ethics
• Ethics consultants serving on corporate
   »E.g., Harold Shapiro continued to draw
    annual director’s salary from Dow
    Chemical while serving as Chair of NBAC
• Loss of appearance of independence;
  damage to credibility
• Most bioethics journals do not require
  conflict of interest disclosures
 Increasing Involvement of Industry in
    Provision of Continuing Medical
• 1/2 of the $1.1 billion spent on CME in 1999
  from industry
• Medical Education and Communication
   »Sponsored/paid mainly by drug
   »Provide ―educational‖ materials gratis
      Guidelines for Speakers at
     Industry-Sponsored Events
• Educational, not promotional
• Content based on scientific
  data and clinical experience
• Full disclosure of
  relationship with company
  and honoraria
• Travel expenses not lavish
• *Few mechanisms for
  enforcement *
   Enhancing Cooperation Between
  Physicians and the Pharmaceutical

• Improve compliance
• Decrease adverse events
• Promote and fund of open, freely-
  shared basic science and clinical
  research, with appropriate but not
  excessive compensation to the
  sponsoring investigator, institution
  and company

• Pharmaceuticals and
  Biotechnology Industries
  -Tremendous contributions to
  -Motivation = ―alleviate suffering‖
  -Primary responsibility = ―make
  money for shareholders‖

• Be aware of worrisome trends in the
  business of drugs, research and
  health care
• Thoughtfully consider your
  relationship with pharmaceutical
• Advocate locally and nationally for
    Contact Information

Public Health and Social Justice

To top