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The Pharmaceutical Industry Facts, Fiction, Policy and Ethics Martin Donohoe. Outline. Economics Influences on Physician Prescribing Academia-Industry Connection Ethical and Policy Issues. Prescription Drugs. 10,000 FDA-approved drugs 70% of all office visits lead to prescriptions

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The Pharmaceutical Industry Facts, Fiction, Policy and Ethics Martin Donohoe

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  • Economics
  • Influences on Physician Prescribing
  • Academia-Industry Connection
  • Ethical and Policy Issues
prescription drugs
Prescription Drugs
  • 10,000 FDA-approved drugs
  • 70% of all office visits lead to prescriptions
  • 1.5 - 2.0 billion prescriptions/year
prescription drugs and health care costs
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 industry
Economics of the Pharmaceutical Industry
  • Sales revenues tripled over last decade
  • Prices increased 150% (versus 50% CPI)
  • Spending up 17% from 2000 to 2001
economics of the pharmaceutical industry6
Economics of the Pharmaceutical Industry
  • 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 billion)

-Largest of any industry-4 times greater than average return of all fortune 500 companies-8 out of 25 most profitable U.S. companies are pharmaceutical companies

economics of the pharmaceutical industry8
Economics of the Pharmaceutical Industry
  • Greater than 5000 companies worldwide
  • Less than 100 companies account for over 90% of worldwide market
mergers and acquisitions
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
Drug Industry Lobbying
  • Pharmaceutical Research and Manufacturers’ Association powerful lobby
  • 623 lobbyists for 535 members of Congress
drug industry lobbying11
Drug Industry Lobbying
  • $38 million donated to Congressional campaigns in the 1990s
  • $84 million in 2000 election (2/3 to Republicans)
    • 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
Drug Costs
  • U.S. highest in the world55% > Europe35% to 80% > Canada (drug companies still among the most profitable in Canada)
  • Cross border pharmacy visits increasingly common
    • Canada vs. Mexico
drug costs13
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
Drugs: Who Pays?
  • 55% out-of-pocket
  • 25% private insurance
  • 17% medicaid
  • 3% Other (VA, Workman’s Comp, IHS, etc..)
where prescription dollars go
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 - 12%
  • Taxes - 9%
  • Net profit - 17%
the elderly and prescription drug coverage
The Elderly and Prescription Drug Coverage
  • 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 coverage17
The Elderly and Prescription Drug Coverage
  • 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
Consequences of No Prescription Drug Coverage for the Elderly

Noncompliance, partial compliance

Increased ER visits and preventable hospitalizations, higher rates of disability, and greater overall costs

consequences of no prescription drug coverage for the elderly19
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 coverage20
The Elderly and Prescription Drug Coverage
  • Universal outpatient drug coverage cost-saving

-pharmaceutical industry strongly opposed

-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
Delaying Generic Competition
  • Nuisance lawsuits against generic manufacturers
  • 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 Daschle)
influences on physician prescribing habits
Influences on Physician Prescribing Habits
  • Texts
  • Journals
  • Colleagues
  • Formularies
  • Samples
  • Patient requests
  • Personal experience
  • Cost
influences on physician prescribing habits25
Influences on Physician Prescribing Habits
  • Gifts
  • Drug advertisements
  • Pharmaceutical representatives
gifts from pharmaceutical companies
Gifts from Pharmaceutical Companies
  • Pens, toys and puzzles
  • Household gadgets
  • Food
  • Books
  • Event tickets
  • Travel and meeting expenses
  • Cash
patients attitudes toward pharmaceutical company gifts gibbons et al
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 gifts
  • 1/3 felt costs passed along to patients
  • Patients felt gifts less appropriate then did physicians
ama guidelines re gifts to physicians from industry
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 industry29
AMA Guidelines Re Gifts to Physicians from Industry
  • No cash gifts
  • No gifts with strings attached
ama guidelines re gifts to physicians from industry30
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 advertising
Pharmaceutical Company Advertising
  • $15 billion in 2000
    • up to $15,000/U.S. physician
    • over $6 billion - advertising and marketing
    • over $7 billion - sales reps’ salaries
      • 50,000 salespersons: 1/10 prescribing physicians
pharmaceutical company advertising drug samples
Pharmaceutical Company Advertising – Drug Samples
  • $8 billion/year in samples
  • Dispensed at 10% - 20% of visits
drug samples
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
Truthfulness in Drug AdsWilkes et al.Ann Int Med 1992:116:912-9
  • 10 leading medical journals
  • 109 ads and all available references (82%)
  • 3 independent reviewers
truthfulness in drug ads fda requirements
Truthfulness in Drug Ads: FDA Requirements
  • True statements-effectiveness-contradictions-side effects
  • Balance
  • Instructions for use
  • Approved uses only
truthfulness in drug ads data
Truthfulness in Drug Ads: Data
  • 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 prescribing
truthfulness in drug ads
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 marketing
Doctors are Influenced by Pharmaceutical Advertising and Marketing
  • 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
Doctors are Influenced:Formulary Requestsby 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 – 3.9X
  • Accepted money to attend symposia – 7.9X
  • Accepted money to perform company-sponsored research – 9.5X
pharmaceuticals sales reps techniques
Pharmaceuticals Sales Reps’ Techniques
  • Appeal to authority
  • Appeal to popularity
  • The “red herring”
  • Appeal to pity
    • Dryden - “Pity melts the mind”
pharmaceuticals sales reps techniques41
Pharmaceuticals Sales Reps’ Techniques
  • Appeal to curiosity
  • Free food/gifts
  • Testimonials
  • Relationship building/face time
pharmaceutical sales reps techniques
Pharmaceutical Sales Reps’ Techniques
  • Active learning – reinforcement / change
  • Favorable but inaccurate statements
  • Negative comments re competitors’ products
  • Reprints not conforming to FDA regulations
relating to pharmaceutical reps
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
Sources of Accurate and Reliable Drug Information
  • The Medical Letter
  • Peer-reviewed studies and reviews
  • Micromedex
  • Prescribers’ Letter
  • Large databases-The Cochrane Collaboration
sources of accurate and reliable drug information45
Sources of Accurate and Reliable Drug Information
  • Textbooks
  • Facts and Comparisons
  • AHFS Drug Evaluations
  • AMA Drug Evaluations
  • Conn’s Current Therapy
  • The FDA (sometimes)
  • Not PDR
direct to consumer advertising
Direct to Consumer Advertising
  • Began in 1980, briefly banned 1983-85
  • Expenditures:

$155 million—1985

$356 million--1995

$1 billion--1998

$2.8 billion--2000

direct to consumer advertising47
Direct to Consumer Advertising
  • US and New Zealand only countries to allow prime time TV advertising
  • 1989 - one drug achieved >10% public recognition
  • 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 products
direct to consumer advertising use of celebrities
Direct to Consumer Advertising:Use of Celebrities
  • Micky Mantle – Voltaren
  • Bob Dole – Viagra
  • Joan Lunden – Claritin
  • “Newman” - Relenza
effects of direct to consumer advertising
Effects of Direct to Consumer Advertising
  • Better educated/informed (?misinformed?) patients
  • Discovery of unrecognized illnesses: diabetes, hypertension, hep C, ED
  • More proactive patients
  • Diversion from important health issues; wasted time
pet pharmaceutical industry
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 arthritis
  • Pet superstores and websites sell multiple antibiotics
pharmaceuticals on the farm agricultural antibiotic use
Pharmaceuticals on the Farm:Agricultural Antibiotic Use
  • Agriculture accounts for 70% of U.S. antibiotic use
    • Use up 50% over the last 15 years
    • Due to explosion in factory farming
consequences of agricultural antibiotic use
Consequences of Agricultural Antibiotic Use
  • CDC: “Antibiotic use in food animals is the dominant source of antibiotic resistance among food-borne pathogens.”
    • Campylobacter fluoroquinolone resistance
    • VREF (poss. due to avoparcin use in chickens)
the fda current issues
The FDA: Current Issues
  • Nicotine/Cigarette regulation
  • Policies re transgenic foods (GMOs, Frankenfoods)
    • Biopharming
  • Pharmaceutical industry involvement in research and production of chemical and biological warfare agents and drugs used to facilitate executions
policy issues related to women s health care drugs
Policy Issues Related to Women’s Health Care Drugs
  • OCPs available OTC
  • Pharmacist-prescribed emergency contraception
    • reduce number of unintended pregnancies
    • cost saving to patients and health care system
concerns re research in the u s
Concerns Re Research in the U.S.
  • 22% of new drugs developed over the last 2 decades new molecular entities
    • Most are “me too” drugs
    • Examples
concerns re research in the u s56
Concerns Re Research in the U.S.
  • Insurance coverage of clinical trials decreasing
    • Low enrollment causing delays in evaluating cancer medications
  • Clinical trials a stop-gap source of care / meds for poor and uninsured
unethical placebo controlled trials
Unethical placebo-controlled trials






pharmaceutical company research
Pharmaceutical Company Research
  • 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 profitable
pharmaceutical company experimentation
Pharmaceutical Company Experimentation
  • Third World experimentation with inappropriate placebo-controls: AIDS drugs/Africa; Sulfazyme/Brazil
    • Results more beneficial to First World patients
anti aids drug availability in africa
Anti-AIDS Drug Availability in Africa
  • 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 africa61
Anti-AIDS Drug Availability in Africa
  • 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 pharmaceuticals
Third World “Donations” (Dumping) of Pharmaceuticals
  • Genuine gifts
  • Dubious “gifts”
    • clear out stocks of nearly-expired drugs/poor sellers
    • tax write-offs (up to 2x production costs)
third world donations dumping of pharmaceuticals63
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
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 growing65
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 agreements
Exclusive university - corporate agreements
  • 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
Problems Consequent to Increased Academia-Industry Partnerships
  • Impaired sharing of knowledge, materials
    • Difficulties in repeating/verifying important research
  • 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’ research
educational concerns regarding industry funded research
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
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
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 researchers
Proliferation of Physician “Researchers”
  • 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
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 trials74
Seeding Trials
  • Study design poor
  • Results rarely published
  • Disproportionate amount paid for “investigator’s” work (writing a prescription)
recommendations for industry sponsored research
Recommendations for Industry-Sponsored Research
  • Written agreements with university, not researcher
  • 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 research76
Recommendations for Industry-Sponsored Research
  • Full disclosure of conflicts of interest
  • No gag clauses regarding publication
  • Investigator not to act as consultant during study
  • National/international database of clinical trials
the pharmaceutical industry and medical ethics
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 ethics78
The Pharmaceutical Industry and Medical Ethics
  • Ethics consultants serving on corporate boards
    • 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 education
Increasing Involvement of Industry in Provision of Continuing Medical Education
  • 1/2 of the $1.1 billion spent on CME in 1999 from industry
  • Medical Education and Communication Companies
    • Sponsored/paid mainly by drug companies
    • Provide “educational” materials gratis
guidelines for speakers at industry sponsored events
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 surveillance/guideline enforcement *
enhancing cooperation between physicians and the pharmaceutical industry
Enhancing Cooperation Between Physicians and the Pharmaceutical Industry
  • 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 health-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 companies
  • Advocate locally and nationally for solutions
contact information
Contact Information

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