The Great Health Grab
The world's giant drug companies
pursue profit above all else.
by Dinyar Godrej
New Internationalist magazine,
'I think there's some mistake." I
said, pushing the pack of pills back across the counter. "Nope.
It's the same drug, just a different name," replied the pharmacist
with a patient smile. It was high summer, the peak of the hay
fever season, and I expect she'd been dealing with quite a few
quizzical customers. I picked up the pack again. Loratidine it
read., instead of the expected Claritin - and, as I soon discovered,
it worked just as well. What I didn't know then was that a battle
royale had broken out to delay Loratidine (the generic drug) from
reaching the market in any form apart form the branded version
that I, and millions of other allergy-sufferers - knew by name.
Claritin in the golden goose for U.S.
pharmaceutical giant SChering-Plough - a drug with global sales
of three billion dollars a year. It's an effective medicine with
relatively few side effects, and it soon dominated the anti-allergy
market with nearly 40 per cent of sales. Schering promoted Claritin
vigorously and pushed to have its patent monopoly extended beyond
the standard 20-year limit, claiming the U.S. Food and Drug Administration
(FDA) had unfairly delayed the drug's clearance. It is true that
the FDA did take six years to approve Claritin for sale, largely
because studies supplied by the company were considered inadequate.
The agency was also concerned about data regarding carcinogenity
in tests on animals. In addition, Schering-Plough submitted 37
amendments to the FDA during the application process, nearly four
times the norm.
Eventually, Schering did receive two extensions
on its patent, totalling nearly four years. But, with billions
at stake, every day the company could extend the patent was worth
So it was that a certain Senator Torricelli
introduced a bill in the U.S. Congress in 1999 that would give
Claritin and six other drugs the chance of a patent extension.
The day before the bill was introduced, Schering had donated $50,000
to the Democratic Senatorial Campaign Committee if which Torricelli
was Chair. Later, another senator who chaired the hearings on
the Hill was reported to have flown five times with his staff
on the Schering-Plough executive jet. The stories leaked, public
outrage ensued, and the bill faltered.
Then in 2002, the year the patent was
due to expire, U.S. consumers were bombarded by ads for Schering's
Clarinex - a "new" product which is a more potent derivative
of Claritin. It's not necessarily better, but is patented. Schering
was also fighting in the courts to extend patent protection to
Claritin again - under the new patents granted to Clarinex!'
My little pack of Loratidine represented
a victory of sorts. It meant that Schering had failed to stop
the generic competitors from producing the drug and the price
could be expected to fall by two-thirds. There was, however, a
further twist. Inspecting my non-brand medication, I discovered
it was manufactured by none other than... Schering-Plough. The
company was clearly dipping into both the brand name and generics
markets until the competition got serious.
But what if such wrangling had gone on
around a drug that treats something a bit more serious than allergies
to pollen and cat hair? The consequences could be deadly. They
Free to die
In February this year, a delegation of
South Korean leukaemia patients, many in an obviously debilitated
condition, protested in front of the local offices of the Swiss
drug transnational Novartis. They were clutching at straws really.
Leukaemia patients in South Korea had
taken part in trials for Novartis' new drug Glivec (also marketed
as Gleevec), helping to get it approved in record time. Glivec
is a genuinely life-prolonging drug. But girded by patent exclusivity,
the Korean leukaemia patients found it was prohibitively priced.
It sells for $19 a tablet - a year's treatment of eight tablets
a day costs over $50,000. In desperation, a group of patients
who had been part of the trials in Korea decided to apply for
'compulsory licensing'. This is a World Trade Organization (WTO)
provision from its warren of patenting rules which allows governments
faced with a 'national emergency, or 'extreme urgency' to overrule
patent rights and buy or produce a generic version of a drug.
(The US had invoked it during the anthrax scare which followed
11 September 2001.) The Koreans soon found an Indian manufacturer
who could produce the drug for less than a dollar a tablet.
While the South Korean Ministry of Health
was considering the application, the US Secretary of Commerce
sent a written threat warning against compulsory licensing of
Glivec. The Korean Health Minister favoured the proposal but soon
lost his job in a cabinet reshuffle. He denounced the role Big
Pharma's influence had played in his dismissal. That left the
patients with little option but to talk to Novartis directly with
disastrous results. Rough-handed by the police, two sustained
injuries that required hospitalization.
These two dismal tales reflect Big Pharma's
key obsessions - money madness, ruthless suppression of competition,
an ability to bend rules to its own advantage, political clout
and a contemptible disregard for the consumer. All this from an
industry that takes every opportunity to crow about its noble
mission to fight disease.
The fact is that Big Pharma has a captive
market of consumers whose comfort and lives depend on its products.
Medications are usually prescribed by a doctor; one cannot shop
around for them. If a particular drug is the only one that can
treat what ails, it's either pay up or suffer the consequences.
No wonder the pharmaceutical industry
is such a money-spinner, coming top of the profitability league.
In 2001 when profits of the Fortune 500 corporations took a 53-per-cent
dive, drug company profits shot up by 32 per cent. Last year pharmaceutical
sales raked in $400.6 billion. Even scandals don't seem to have
an impact. Bayer has fielded more than 10,000 claims for alleged
damages from its recalled cholesterol-lowering drug Lipobay, 1,200
of which have been | settled at a cost of $433 million. l Despite
this financial setback Bayer remained buoyant- profits jumped
40 per cent.
Drug companies are quick to point to the
millions they spend on research. The industry claims it takes
$800 million to bring a new drug to market. But this figure doesn't
bear close inspection. And drug companies themselves refuse to
reveal how much they spend on developing a drug, claiming it would
give away trade secrets.
They are equally shy about their marketing
expenses, though they do claim they're well below research and
development (R&D) investment. Industry observers consistently
put them two to three times higher. According to Pharmaceutical
Executive, over $500 million was spent promoting each of the six
top-selling drugs last year.'
Building blockbusters With big bucks shaping
the industry, the emphasis shifts from drugs that cure to those
that sell. Well-heeled Western consumers account for most of Big
Pharma's sales. The companies race to produce competing drugs
for the same ailment. One US study found that fully two-thirds
of the new drugs approved by the FDA between 1989 and 2000 were
'me-too' drugs - copies or slight modifications of existing drugs.
It's easy to see why: such drugs require lower levels of research,
can help retain market share and allow companies to hang on to
patents. This is not to deny that some second- and third-generation
drugs are genuine improvements.
Developing countries bear a disproportionate
part of the world's disease burden. But with 80 per cent of the
world's population they account for only 10 per cent of global
drug sales. The whole of Africa's drug bill is just one per cent
of the world total.
Take malaria, a disease which has developed
several increasingly virulent drug-resistant l strains and which
affects up to 500 million people a year. In 2000 Glaxo Wellcome
(now GlaxoSmithKline) launched the first new antimalarial developed
by a drug company in 40 years. However, it was aimed at prevention,
not treatment. Its market was the estimated seven million tourists
and visitors who venture into malarial regions, not the people
who live in them. For meaningful research on new malaria drugs
we have to look to publicly and charitably funded institutions.
If innovation isn't the industry's forte,
adapting research to the profit motive certainly is. The top drug
companies tend to keep management and marketing divisions well
away from the researchers, who may get carried away by the mere
health benefits of a new drug. It is management's job to spot
the blockbusters (drugs with potential sales of a billion dollars
or more) and ruthlessly press for their development - often axing
significant discoveries that don't have the same selling power.
Once a blockbuster is identified, research must be swift and show
the best possible results. Industry critics argue that trials
are manipulated with these aims in mind and negative results actively
suppressed. Part of the fallout from this is a 'dosing regime'
based on what was shown to work fastest in trials. This means
that often when a drug comes to market a single dose is specified
for all patients from 18 to 80 - regardless of individual sensitivities.
Doctors follow the drug company's dosing regimen and an epidemic
of side effects follows. According to Jay S Cohen, a doctor who
has been campaigning for more 'tailored' doses: 'Medication reactions
are the fourth leading cause of death in the US, dwarfing the
number of deaths caused by automobile accidents, HIV/AIDS, alcohol
and drug abuse, infectious diseases, diabetes and murder."'
Once a new drug hits the market, a buzz
is created through glitzy advertising (in the US and New Zealand/Aotearoa
companies can pitch prescription drugs direct to the consumer)
and favourable reports in professional journals. Drummond Rennie,
a deputy editor of the Journal of the American Medical Association,
suggests how such reports come to be written:
'I'm the advertising guy for the drug.
I tell a journal I will give them $100,000 to have a special issue
on that drug. Plus I'll give the journal so much per reprint and
I'll order a lot of reprints. I'll select the editor and all the
authors. I phone everyone who has written good things about that
drug. I say, "I'll fly you and your wife first class to New
Orleans for a symposium. I'll put your paper in the special issue
of the journal and you'll have an extra publication for your CV."
Then I'll put a reprint of that symposium on some doctor's desk
and say, "Look at this marvellous drug."
But patents are the icing on the cake,
giving the drug biz exclusive control over a medication no matter
how essential it is. Companies are keen on global pricing and
keeping prices high. They will rush to punish patent violators
with all the legal might at their disposal. Both Washington and
European governments jump in to protect drug-company profits,
threatening trade sanctions if violators don't comply.
Why bother squashing minor-league competitors
in the Majority World when sales there are such a small slice
of the pie and the industry earns obscene profits anyway? Maybe
it's because Western consumers paying inflated prices may just
realize they are being duped - and start demanding cheaper drugs.
Priced out Big Pharma is keen to push
the US model of stringent patent protection and no price regulation
globally. And no wonder: American consumers pay the highest prices
in the world for their medicines, with rates rising several times
over inflation. US drug sales are equivalent to the next nine
biggest markets combined. The industry has been up in arms recently
fighting moves to import cheaper drugs
from Canada for US senior citizens, 12 million of whom have no
insurance for prescription medication. And earlier this year,
during bilateral trade talks with Australia, the US pressed the
country to alter its Pharmaceutical Benefits Scheme (PBS). Under
the scheme the Australian Health Ministry is the sole purchaser
of drugs; the Government searches for the best deals and then
provides them to citizens at a subsidized price. The pharmaceutical
giants didn't give two hoots about the subsidy aspect, but found
the price comparisons disturbing. Australia has, after all, the
lowest drug prices in the rich world.
But Big Pharma's influence has been most
pernicious through the WTO, where it has lobbied hard to try to
impose a uniform global patent regime and to prevent poor countries
from buying or producing cheaper generic drugs. All this despite
a 2001 WTO commitment to allow countries flexibility in responding
to their public-health needs.
In Pakistan, patent laws have been made
to comply with the WTO's TRIPS agreement which fences off intellectual
property. Drug prices have shot up and there is a chronic shortage
of essential medicines. The transnationals can't be bothered supplying
such a poor market. Meanwhile in neighbouring India, which doesn't
allow drug patenting, generic manufacturers have jumped in and
competition is thriving, driving down the prices of high-quality,
locally produced medicines. Countries like India and Brazil, which
have the manufacturing capacity to produce cheap generics, are
a constant thorn in Big Pharma's side and are on the receiving
end of legal threats.
Cracking open the patents shell and promoting
generic manufacturing could be one way of breaking Big Pharma's
stranglehold. But the fear is that the big drug companies might
then stop investing in critical research. A far better solution
would be to work towards publicly funded research. This could
lead to affordable patent-free drugs produced by competing companies.
If this seems pie-in-the-sky, consider
the alternatives. There's the charitable model: drug donations
by companies or countries. But donations of branded drugs actually
cost donor countries four times more than buying generics. And
the big drug companies are not noted for their generosity. The
best example of such generosity is Merck's gift of Mectizan, a
drug that prevents river blindness, to over 25 million people
in Africa. But this philanthropic act was atypical. According
to Merck's CEO, Raymond Gilmartin: 'Giving our medicines away
in general is an unsustainable and unrealistic answer because,
at the end of the day, we must earn an adequate return on our
investment in order to fund future research.'
Public-private partnerships are another
option. The public partners can run from small NGOs right up to
the World Health Organization. These projects are ends-focused
- as long as drugs can be delivered to a target audience, Big
Pharma can carry on as usual.
The most ambitious of these partnerships
is the recently launched Global Fund to Fight AIDS, TB and Malaria.
The Global Fund is an international effort involving governments,
charities and the private sector to provide drugs for diseases
which kill six million people every year. But the Fund has run
into a $1.6 billion funding shortfall as the world's wealthiest
countries continue to renege on their commitments.
It is in this gloomy context that we must
take a stand against the commodification of lifesaving drugs.
Many of our world's citizens are simply too poor to buy drugs,
no matter how cheap they are, whether or not they're controlled
by Big Pharma. We need to ensure that no one goes without lifesaving
drugs and their ability to pay should not enter into the decision.
The WHO's essential drugs programme piously notes: 'Confronted
with [the] unacceptable burden of ill health, the international
community has become increasingly committed to reducing health
gaps between rich and poor."' But this doesn't go quite far
The list of what's needed for genuine
reform is long: purging the pharmaceutical lobby from the bastions
of political power, rescuing medical research from corporate control
so it can focus on genuine health needs, freeing up countries
both to produce and buy generic drugs. This would help to cleanse
the production end of the drug biz. Governments North and South
could do much better in prioritizing health needs. They could
improve on drugs delivery and work out policies to encourage the
production of cheap, essential drugs, possibly by public nonprofit
companies. And they could discourage frivolous 'lifestyle' medication.
International institutions like the WHO could work from a needs
agenda - responding quickest to areas suffering the greatest neglect
- with sufficient funding to back up their work. At present it
is impossible for many of the humanitarian health agencies who
are doing invaluable work to think of solutions in which Big Pharma
does not play a part. When that becomes possible, the real victory
will have been won.
The selfless approach to public health
is foreign to the bottom-line myopia of corporate capitalism.
But it's the only hope for tackling problems like the global AIDS
pandemic. Although important victories have been won against Big
Pharma to license generic antiretroviral drugs (ARVs), the truth
is that even with lower prices the drugs are beyond the reach
of the vast majority of people with AIDS. Of the six million people
in the developing world who need ARVs only five per cent are currently
But don't expect too much help from Big
Pharma. As Bernard Lemoine, director-general of France's National
Pharmaceutical Industry Association put it: 'I don't see why special
effort is demanded from the pharmaceutical industry. Nobody asks
Renault to give cars to people who haven't got one.
Transnational Corporations and Third World