March 29, 2002. ABC does an expose on the pharmaceutical industry:
ABC NEWS (Nancy's note: this ABC link is no longer available)
Bitter Medicine: Pills, Profit and the Public Health
May 29, 2002
Consumers spent $90 billion more on prescription drugs last year than the
$64 billion that was spent just six years ago. Are consumers getting their
money's worth from the pharmaceutical industry? (ABCNEWS.com)
˜ First there was aspirin to treat pain and inflammation, then came Advil,
Aleve, and 40 other similar drugs. By 1999, Celebrex and Vioxx were on the
scene, and they now outsell every other prescription pain reliever on the
market. Every year, $4 billion is spent on Celebrex and Vioxx alone.
"There's never been a study showing that they are more effective at
relieving symptoms of joint pain and inflammation than all these other
medicines that have been available for many, many years and are much more
affordable," said Dr. Matt Handley, a physician with Group Health
Cooperative, a nonprofit managed-care organization in Seattle.
On top of the $532 million spent every year on over-the-counter drugs,
consumers spent $90 billion more on prescription drugs last year than the
$64 billion that was spent just six years ago.
And yet, there is little evidence that the huge increase in spending is
dramatically improving the health of Americans. Are consumers getting their
$802 Million for One New Medicine
Why do prescription drugs cost so much money?
According to a Tufts University study, on average it costs $802 million to
bring one new medicine to market. The high cost of drug development is the
industry's justification for the high price of drugs.
"The $802 million figure is used by pharmaceutical firms, I believe, to help
explain the enormous challenge involved in bringing a new product to
market," said Ken Kaitin, who runs the Tufts Center for the Study of Drug
Development. "These are extraordinary costs to bring individual products to
While it is not possible to look at a breakdown of research costs ˜
companies aren't required to make this information public ˜ their profits
are public, and the drug industry is the most profitable industry in the
"Their R&D [research and development] costs could be $15 billion, $15
trillion, $15 gazillion, and it wouldn't matter if their profits are double
that," said Dr. Marcia Angell, a former editor of the New England Journal of
The drug industry claims its high profits are necessary in order to conduct
expensive research and development. It spends more on research than any
The federally funded National Institutes of Health may be the drug
industry's biggest benefactor. This government agency alone will spend more
than $23 billion on research this year. And much of the research benefits
the drug industry.
"There's no other industry in which you have so much public investment in
the fundamental knowledge that enables � the development of the commercial
industry itself," said Dr. Bernadine Healy, who used to run the NIH.
And how important is this publicly funded research to the industry? The NIH
looked at the five top-selling drugs of 1995 in a report. It found that
"NIH-funded research played a critical role" in discovering each one of
But however much it may actually cost to develop a drug, which drugs are
consumers getting for their money?
Similar to Existing Drugs
A closer look reveals that much of the profits from prescription sales are
not derived from breakthrough drugs, but rather from drugs that are similar
to already popular medications.
When a drug company submits a drug to the Food and Drug Administration for
approval, the agency tries to determine how important the drug may be. And
the FDA divides all drugs into two categories: "priority" drugs ˜ which are
believed to be a "significant improvement" over what already exists, and
"standard" drugs ˜ which are similar to what exists.
But, adding up all the drugs approved over the past six years, 80 percent of
all those drugs were deemed by the FDA to be similar to what already exists.
In other words, not a significant improvement.
"I think the level of innovation that we're seeing from the pharmaceutical
industry is really mixed," said Nancy Chockley, who runs an institute funded
by managed-care organizations. In a new report, NICHM found the percentage
of new, innovative drugs coming from the pharmaceutical industry is actually
"What we found is that over the last 12 years that there's really been a
shift in the type of new drugs being approved by the FDA," said Chockley.
"And we found that most of the growth was really in drugs that did not show
any significant clinical improvement."
Extending the Patent Life
The patent system gives companies an exclusive monopoly for the length of
the patent ˜ meaning they can make huge profits. That is the incentive drug
companies have to continually invent new drugs. Then, when the patents on
those drugs expire, other companies can copy the drug, make a generic
version, and the new competition in the marketplace lowers the price. The
FDA says the generic drugs are just as good as the original drugs.
That's the way the patent system is supposed to work, but that is not the
way it always works. The drug industry's lawyers and lobbyists have created
or found so many loopholes in the laws that some generic drugs are often
delayed or never get to market.
BuSpar is an anti-anxiety drug manufactured by Bristol-Myers Squibb. After
the company had had a monopoly on the drug for years, the patent on BuSpar
was set to expire on Nov. 21, 2000, which meant a cheaper generic version
was supposed to be approved by the FDA and available to consumers the next
And then, just hours before its patent on BuSpar expired, Bristol-Myers
Squibb got a new patent on what the drug becomes after you swallow it. And
the law is written in such a way that Bristol-Myers was able to then keep
the generic drug off the market, claiming that it would violate its new
patent. There was no innovation involved ˜ only an innovative legal
Dr. Carol Ben-Maimon, who has worked in the drug industry for 15 years and
is chairwoman of the Generic Pharmaceutical Association, believes that
Bristol-Myers was in this for profit and not public health. "I don't think
there's any question," she said. "They didn't do anything to the product to
improve it. "
Bristol-Myers was sued by the generic companies, which claimed that the
last-minute patent filed with the FDA should not keep the generic drug off
the market. It took four months for a court to rule in the generic
"During those four months, Bristol-Myers continued to have the exclusive
right to sell this product on the market, no generic competition, and I
believe this product is about, over a $700 million-a-year revenue product
for Bristol-Myers," said Rob Funston, an attorney for a company that
produced the generic version, Watson Labs. "So during those four months,
they made approximately $200 million."
When asked several times to discuss its strategy to extend the patents on
BuSpar and on other drugs, Bristol-Myers refused.
Many experts believe the industry, in general, is producing fewer innovative
"If I'm a manufacturer and I can change one molecule and get another 20
years of patent rights, and convince physicians to prescribe and consumers
to demand the next form of Prilosec, or weekly Prozac, instead of daily
Prozac, just as my patent expires, then why would I be spending money on a
lot less-certain endeavor, which is looking for brand-new drugs," said Dr.
Sharon Levine, the associate executive director and a pediatrician for the
Kaiser Permanente Medical Group. She is responsible for assessing the best
resources for the medical group, including helping decide which drugs are
But with so many drugs for each of these conditions, how are consumers
supposed to know which drugs are the best? Surprisingly enough, the FDA says
a new drug does not have to be any better than what already exists. "All you
have to be able to prove is that the drug is better than nothing," said
The rules by which this hugely profitable industry operates do not always
serve customers adequately. The Federal Trade Commission is investigating
whether drug makers illegally delay generic competition. Some members of
Congress are trying to close the loopholes in the law to make it easier for
generic drugs to become available.
However, the drug industry has enormous influence in Washington. The
pharmaceutical industry has more registered lobbyists than the number of
senators and congressmen combined.
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May 30, 2002, a link to the following is found on ALEC's web site.
Apparently their big pharmaceutical corporate members were not pleased at being outed.
ALEC OFFERS GREATER DISCUSSION OF ABC NEWS REPORT ON PRESCRIPTION DRUGS
FOR IMMEDIATE RELEASE
THURSDAY, MAY 30, 2002
FOR MORE INFORMATION CONTACT:
BOB ADAMS (202) 466-3800
WASHINGTON, DC --- Public policy experts with the American Legislative Exchange Council (ALEC), the nation’s largest bipartisan, individual membership organization of state legislators, are available to discuss last night’s ABC News special report on prescription drugs.
“It’s critical for America to know of the value, comfort, and lives saved by our nation’s pharmaceutical companies,” said Jim Frogue, director of ALEC’s Health and Human Services Task Force. “Because there’s a gathering storm of mass litigation on the horizon that threatens to destroy medicine research, while boosting the rich and famous lifestyles of millionaire trial lawyers. All at the expense of sick patients and tomorrow’s life-saving medicines.”
Available for media interviews, ALEC public policy experts can discuss the value of medicine, how our nation’s pharmaceutical companies save lives, and the way to reform.
Among the leadership of America's state legislatures, ALEC members hold an impressive presence: 32 Speakers and Speakers Pro Tem; 22 Senate Presidents and Senate Presidents Pro Tem; 22 Senate Majority and Minority Members; 30 House Majority and Minority Leaders. ALEC alumni include 9 sitting governors, 3 lieutenant governors, 2 senior-cabinet level positions, and more than 80 members of Congress.
For more information contact Bob Adams at (202) 466-3800.