Techdirt. Stories filed under "pharma"

Despite Spending $50 Billion Per Year In R&D, Pharma's New Drugs Less Effective Than Drugs Developed 40 Years Ago

Tim Cushing — Thu, 6 Jun 2013 20:06:00 PDT

More bad news has arrived for consumers. The drugs don't work. Or, they don't work as well as they used to. Despite the exorbitant prices charged for new medications and despite the industry's claims that expensive R&D efforts are driving these prices up, the fact remains that newer drugs cost more and do less, riding a decades-long slide from peak potency.

Research published on Monday showed that the effectiveness of new drugs, as measured by comparing the response of patients on those treatments to those taking a placebo, has plummeted since the 1970s...

The new study in the journal Health Affairs examined 315 clinical trials that compared a drug to a placebo and were published in four of the world's top medical journals (BMJ, Journal of the American Medical Association, Lancet and New England Journal of Medicine) from 1966 to 2010. The drugs targeted the full range of human ills, from cardiovascular disease and infections to cancer, mental disorders and respiratory illness.

In the early years, drugs easily beat the placebo: They were, on average, 4.5 times as effective, where effectiveness means how well they lowered blood pressure, vanquished tumors, lifted depression or did whatever else they were intended to.

But the trend line was inexorably downhill, found Dr Mark Olfson of Columbia University and statistician Steven Marcus of the University of Pennsylvania. By the 1980s drugs were less than four times better; by the 1990s, twice as good, and by the 2000s just 36 percent better than a placebo. Since older drugs were much superior to placebo and newer ones only slightly so, that means older drugs were generally more effective than newer ones.

If this disappointing (albeit somewhat unsurprising) news wasn't damaging enough for an industry many people have developed a healthy distrust for, the passing of the national healthcare plan will make it even worse.

The law established an independent research institute to compare the effectiveness of different treatments for the same condition. That way, patients as well as private insurers and government programs such as Medicare can stop paying for less effective therapies. If the new analysis is correct, then "comparative effectiveness research" could conclude that older drugs, which are more likely to be generics, are better than pricey new brand names that deliver the most profits for drugmakers.

Well, this part is good news for consumers, or at least beneficiaries of the new health plan. If the most effective drug is also the cheapest, everyone wins... almost. Pharmaceutical companies won't be happy, but this really is their own fault. They often tout the (often inflated) high dollar cost of R&D but fail to mention this outlay is routinely outweighed by marketing and administration costs.

There are a few reasons effectiveness may have declined over the past forty years, not all of which are tied to self-interest and profit chasing. One possible factor is that the low-hanging fruit of the pharmaceutical world was plucked first, generating effective medications for simpler ailments. It also could be that those volunteering for clinical trials are increasingly people not having success with currently available drugs. Another factor mentioned in the article is the fact that the quality of clinical trials has increased over the years and the additional scrutiny to detail has narrowed the definition of success.

Despite these factors, many scientists feel there is an underlying truth to the overall claim that older drugs just work better.

While experts agree that tougher trials and similar factors explain some of the decline in drugs' reported effectiveness, "something real is going on here," said Olfson. "Physicians keep saying that many of the new things just aren't working as well," and therefore prescribe antidepressant drugs called tricyclics (developed in the 1950s) instead of SSRIs (from the 1980s), or diuretics (invented in the 1920s) for high blood pressure instead of newer anti-hypertensives.

Then there's this:

"The way the drug regulatory system is set up, even if you have just a small advance, if you market it right it can be very profitable," said [Dr. Aaron] Kesselheim.

The profits-over-effectiveness factor cannot be denied. Marketing budgets routinely meet or exceed R&D budgets because they have to. Pharmaceutical companies are not nearly as interested in breakthrough medication as they are in pushing minor variations or incremental advances. [See also: this "Brain Candy" clip.] Without a ton of marketing, these interchangeable drugs will never find purchasers.

From 2000-2007, 667 new drugs were approved by the FDA. Of those, only 75 (11%) were new molecules that were much better than what we already had. In fact, over 80% of all drugs approved were no better than what we already had. Those are "me-too" drugs. Why do the pharmaceutical companies spend so much on marketing? Because you have to really promote drugs that really have no benefit over others that already exist. You have to convince people to buy those.

You know what needs no promotion? Awesome new drugs that save lives. When was the last time you saw a commercial for chemotherapy? For epinephrine? For steroids? Those drugs need no promotion - doctors just know to use them. But I bet all of you know about Nexium. Or Cialis.

Taking this route has worked for years, at least in terms of profitability. There's no reason to change it now. The results of this research paint a rather unflattering picture of the pharmaceutical industry, but as usual, its representatives seem blithely unconcerned.

The drug industry says it isn't worried. "Our sector is not concerned about objective, high-quality patient-centered comparative effectiveness research," said PhRMA's Burkholder. "We believe the substantial value of our products will continue to be demonstrated."

Frankly, I'm inclined to believe that first sentence. The sector doesn't seem to care what research says about its new, expensive, ineffective drugs. It already has plenty of compliant doctors, paying customers and an exploitable patent system in its corner. That makes the second sentence extraneous. If the market's tied up, the industry doesn't really need to worry about demonstrating value. All it needs to do is maintain course.

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'Pay For Delay' Drug Deals Under Scrutiny In US, EU And UK

Glyn Moody — Mon, 22 Apr 2013 23:59:00 PDT

The last time Techdirt wrote about "pay for delay" deals, whereby a big pharma company essentially buys off manufacturers of generics so that the former can continue to enjoy monopoly pricing long after its patents have expired, things didn't look too good. Back in 2010, the Second Circuit had refused to re-hear a case on the issue after dismissing a lawsuit arguing these deals were anti-competitive. But now things seem very different, and not just in the US.

There the Supreme Court will be examining the practise in the case of Federal Trade Commission v. Actavis, Inc. As a long and helpful post on the SCOTUS Blog previewing this case explains:

The basic issue before the Court, for all of the complexity of the laws, can be stated simply: does a brand-name manufacturer, faced with a potential generic competitor, act illegally if it pays money -- sometimes a quite sizable sum -- to the generic in a deal that postpones for a period of years the substitute version's marketing. Popularly, this practice is known as "pay for delay." It also has been called a "reverse payment agreement." The FTC has been opposed to such deals for years under antitrust law, but until the Obama administration, the Justice Department did not share its opposition; it now does.

One analyst has suggested that the legality of such deals is "the most important unresolved problem in antitrust policy today."

The rest of the SCOTUS Blog post examines the background to this case, and the arguments made by both sides in their briefs to the court, in great detail. Here's an important point at the end of its analysis, about how the case relates to growing concern over the way the patent system is functioning: If there is a notable weakness in the industry's side of this case, it is that this Court does have its doubts about the soundness of a patent system that may, perhaps too often, grant monopolies. The briefs of the brand-name company and its settlement partners among the generic makers depend very heavily upon the Justices having a keen desire to protect exclusionary efforts by patent holders, and that simply may not exist.
The pharma industry's problems are not restricted to the US. The European Commission is investigating the negative impact that similar "pay for delay" deals may have had on Dutch consumers: The European Commission has informed the pharmaceutical companies Johnson & Johnson (J&J, of the USA) and Novartis (of Switzerland) of its objections regarding an agreement concluded between their respective Dutch subsidiaries on fentanyl, a strong pain-killer. The Commission takes the preliminary view that the agreement delayed the market entry of a cheaper generic medicine in the Netherlands, in breach of EU antitrust rules.
Specifically: Janssen-Cilag, the J&J subsidiary supplying the pain-killer fentanyl in the Netherlands, concluded a so-called "co-promotion agreement" with its close generic competitor Sandoz, a Novartis subsidiary, in July 2005. At the time there were no regulatory barriers to develop and market generic versions of the fentanyl patches and therefore for Sandoz to enter the Dutch market. The agreement foresaw monthly payments from Janssen-Cilag to Sandoz for as long as no generic product was launched in the Dutch market. Consequently, Sandoz abstained from entering the market with generic fentanyl patches for the duration of the agreement from July 2005 until December 2006. This may have delayed the entry of a cheaper generic medicine for seventeen months and kept prices for fentanyl in the Netherlands artificially high.
And as if that weren't enough, the UK's Office of Fair Trading has launched its own investigation into the practice: GlaxoSmithKline could face a multimillion-pound fine over allegations it paid other drug companies to slow down production of cheaper versions of its most profitable antidepressant, burdening taxpayers with inflated costs for NHS [National Health Service] medicines.

The Office of Fair Trading has launched an investigation into GSK, alleging it abused its market dominance by agreeing so-called "pay for delay" agreements between 2001 and 2004 to protect the position of its drug Seroxat.

The regulator claims Alpharma, Genetics UK and Norton Healthcare were paid by GSK to delay production of cheaper copycat versions of the drug which could have saved the NHS millions.
It looks like authorities around the world are finally waking up to the surprisingly cosy relationships between major pharmaceutical companies and some of their supposed rivals, the manufacturers of generic drugs. That's to be welcomed, since these "pay for delay" deals have allowed pharma companies to charge near-monopoly prices well beyond the expiry of their patents, at great cost to the public. As such, they offer yet another example of greedy corporations failing to keep the basic patent bargain with society.

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Indian Supreme Court Rejects Trivial 'Evergreening' Of Pharma Patents

Glyn Moody — Mon, 1 Apr 2013 15:13:00 PDT

Back in October last year, in the context of India showing itself increasingly sceptical about pharma patents that drive up drug prices beyond the reach of its citizens, we wrote about an important court battle over Novartis's drug Gleevec, sold as Glivec in India. The definitive judgement from India's Supreme Court was announced today, reported here by The Guardian:

The Indian supreme court has refused to allow one of the world's leading pharmaceutical companies to patent a new version of a cancer drug, a decision campaigners hailed as a major step forward in enabling poor people to access medicines in the developing world.

Novartis lost a six-year legal battle after the court ruled that small changes and improvements to the drug Glivec did not amount to innovation deserving of a patent. The ruling opens the way for generic companies in India to manufacture and sell cheap copies of the drug in the developing world and has implications for HIV and other modern drugs too.

The key issue at stake is a practice known as "evergreening": making small changes to a drug, often about to come off patent, in order to gain a new patent that extends its manufacturer's control over it. It's a way of cheating on the implicit bargain of patents: that a government-backed monopoly is granted in exchange for the invention entering the public domain at the end of the patent's lifetime.

That's what makes today's decision so important. It's not just about allowing Indian generics manufacturers to offer Glivec for a fraction of the Novartis price; it's equally about establishing the principle that "evergreening" patents won't be as easy in India as it is elsewhere, where the practice is common. This will allow India's pharma companies to produce a wide range of drugs at low prices that can then be sold to emerging countries unable to afford Western prices.

Doubtless, many lives will be saved as a result, but that doesn't seem to be any comfort to the head of Novartis in India, who is quoted in a press release as saying:

"We strongly believe that original innovation should be recognized in patents to encourage investment in medical innovation especially for unmet medical needs," said Ranjit Shahani, Vice Chairman and Managing Director, Novartis India Limited. "We brought this case because we strongly believe patents safeguard innovation and encourage medical progress, particularly for unmet medical needs. This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options."

That's pretty much what you'd expect him to say, since we've heard it here on Techdirt so many times before: without patents that allow monopoly pricing and big profits, there will be no investment in new drugs, and everyone will suffer etc. etc. But this simply isn't true. Much of the fundamental research that leads to important new drugs is done in public laboratories, paid for by taxpayers around the world, not by pharma companies.

Here, for example, is the story of how Novartis came to gain its highly-lucrative monopoly on Gleevec/Glivec, as told by the key researcher who actually developed it: Brian Druker, chair of Leukemia Research and professor of medicine at the Oregon Health and Science University Cancer Institute. He explained how the crucial initial research was carried out in an opinion piece published on the Livemint site in 2007:

The basic research that led to the identification of enzyme inhibitors for CML [Chronic Myeloid Leukaemia -- the main condition that Glivec is designed to treat] dates back to 1960 with the identification of the Philadelphia chromosome in patients with CML by researchers at the University of Pennsylvania, Peter Nowell and David Hungerford. In 1973, Janet Rowley at the University of Chicago determined that the abnormal chromosome was due to a translocation of genetic material.

No pharmaceutical companies seem to have been involved in this early work, and they were also minor players in the crucial move out of the laboratory, into product development, as Druker explains: In 1993, I moved to Oregon Health Sciences University in Portland and had a single goal of finding a company that had the best inhibitor for Bcr-Abl [the cancer-causing protein] and to bring it into clinical trials. My work in Oregon on a therapy for CML was primarily funded by public sources, particularly the National Cancer Institute. My persistence with scientists at Ciba-Geigy (now Novartis) helped to keep the development of imatinib on their agenda despite uncertainty from product managers.
So not only was the drug developed largely thanks to public funds, but the pharma company that ended up making all the profits from it wasn't even hugely enthusiastic about the project initially: it was only Druker's "persistence" that led to the drug being approved. And if you're wondering about his views on the current world of pharma, with its stratospheric prices and a habitual recourse to evergreening to extend patents way beyond their original life-span, here's what he wrote back in 2007: Pharmaceutical companies that have invested in the development of medicines should achieve a return on their investments. But this does not mean the abuse of these exclusive rights by excessive prices and seeking patents over minor changes to extend monopoly prices. This goes against the spirit of the patent system and is not justified given the vital investments made by the public sector over decades that make the discovery of these medicines possible.
The fact that many key drugs have only been possible thanks to those "vital investments made by the public sector" is nearly always overlooked by defenders of the pharma patent system. It's another reason why the Indian Supreme Court's decision is not only right, but just.

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Court Reverses: Paying Competing Drug Companies Not To Compete Is An Antitrust Violation

Mike Masnick — Thu, 19 Jul 2012 03:09:42 PDT

A few years ago, we wrote about a ridiculous situation in which big pharmaceutical companies were keeping prices artificially high by paying other drug companies to delay entering the market with generic drugs. The really scary part about this was that the big pharma companies would abuse patent law to force smaller drug companies into these deals. They'd file a patent infringement lawsuit, where they knew they had no leg to stand on, but the infringement filing forces the smaller generic maker into negotiations, where they often agree to a "license" which includes the delay -- but the money flows in the opposite direction of a typical license. In other words, the whole lawsuit and the license is basically a sham to try to hide the agreement to prevent competition in the market. And, of course, as you probably know, when there's no generic competition, drug makers are able to charge absurdly high prices for their drugs. As soon as there's competition, the price often falls by more than 90%. Thus, the big drug companies have plenty of incentive to buy off the competition like this.

Many people have believed that such deals are clear antitrust violations -- and a lawsuit against big pharma Schering-Plough (owned by Merck) tested this theory, only to be dismissed by the district court. That original ruling really twisted logic in a few knots to come to its conclusion -- and the good news is that, two years later, the 3rd Circuit appeals court has reversed the ruling. The ruling is long, but interesting. It starts out by noting that other court's ruling on this matter seem to take the concept of "patent validity" way too far. As we've discussed in other contexts, patent validity says that you have to assume a patent is valid -- but in these cases, the court notes that this unfairly biases the situation in which the bogus patent infringement lawsuits are filed to extract these "pay-for-delay" deals.

First, we take issue with the scope of the patent test’s almost unrebuttable presumption of patent validity. This presumption assumes away the question being litigated in the underlying patent suit, enforcing a presumption that the patent holder would have prevailed. We can identify no significant support for such a policy. While persons challenging the validity of a patent in litigation bear the burden of defeating a presumption of validity, this presumption is intended merely as a procedural device and is not a substantive right of the patent holder.... Moreover, the effectively conclusive presumption that a patent holder is entitled to exclude competitors is particularly misguided with respect to agreements – like those here – where the underlying suit concerned patent infringement rather than patent validity: In infringement cases it is the patent holder who bears the burden of showing infringement.

The court then discusses the Hatch-Waxman Act, which is at the heart of these disputes, noting that its intent (to increase availability of generics) seems to be the exact opposite of what happens with these pay-for-delay deals. But where it gets interesting is that the court says that having one company pay another to delay market entrance should be seen "as prima facie evidence of an unreasonable restraint of trade." This is definitely a big ruling -- though its potential disagreement with other courts may get this issue over to the Supreme Court before too long.

It's nice to see the court get it right after the lower court seemed so confused by the issue.

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EU To Open Up Secret Clinical Trial Data; TPP Looking Even More Retrogressive

Glyn Moody — Wed, 18 Jul 2012 23:34:11 PDT

Openness is really beginning to sweep through the European Union at all levels. Yesterday we wrote about the European Commission's ambitious plans to make the results of publicly-funded research freely available as open access; now comes news of a major opening up in the world of pharmaceutical data:

Europe's medicines regulator, criticised in the past for excessive secrecy, is opening its data vaults to systematic scrutiny in a move that will let independent researchers trawl through millions of pages of clinical trial information.

The change is a landmark in transparency that puts Europe ahead of the United States, according to critics of the $1 trillion-a-year global drugs industry, who have long argued for full access to trial data.

Such information is a treasure trove for scientists wanting to test drug company claims and potentially expose product deficiencies.

Pharma companies are keen to keep that data locked away for another reason: it acts as a very effective barrier to manufacturers of generics, who are unable to use existing clinical results in order to get approval for their drugs. Indeed, extending drug data exclusivity is one of the key proposals of the TPP agreement, as this analysis of two leaked US documents explains: If pharmaceutical companies can get substantially longer data exclusivity, especially if it contains mechanisms for evergreening exclusivity such as that involving biologics, they won’t have to rely on patent protections to obtain marketing monopolies. Data monopolies of sufficient length will be superior to patents from the perspective of pharmaceutical firms because data monopolies give the same or higher level of monopoly protection without the need and expenses of proving that the product meets the relatively high standards for patentability.
That makes the EU's planned move even more significant, since it would signal that TPP's proposal to extend data exclusivity is not the only approach when it comes to regulating medicines, and that greater openness is also an option.

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DailyDirt: Better Living Through Chemistry

Michael Ho — Tue, 5 Jun 2012 17:00:00 PDT

Occasionally, we talk about problems with big pharma companies and how they sometimes hinder innovation. There are lots of ways to develop new drugs, and apparently plenty of people out there are willing to ingest experimental drugs for fun (and then maybe eat other people's faces). Here are just a few examples of some innovative folks doing some chemistry.

Underground chemists are making synthetic versions of recreational drugs that are technically legal to possess and sell. This has been going on for years, but recently, there have been increasing political efforts to make these "chemically-similar" drugs illegal. [url]
Amateur scientists are working on all kinds of crazy biological experiments and ideas such as rewriting the DNA of an acorn so that it grows into the shape of oak furniture. The zombie apocalypse might not come from a megacorporation, but from biology experiment gone wrong in a garage... [url]
Albert Hofmann discovered LSD had interesting effects in the 1940s, and he said that it spoke to him: "Don't give me to the pharmacologist, he won't find anything." And lots of people have tried LSD since, including Steve Jobs and Aldous Huxley. [url]
To discover more interesting science-related stuff, check out what's currently floating around the StumbleUpon universe. [url]

By the way, StumbleUpon can recommend some good Techdirt articles, too.

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US Trying To Force Governments To Pay Much Higher Prices For Needed Drugs Through Secretive TPP

Mike Masnick — Mon, 24 Oct 2011 10:00:00 PDT

With ACTA now signed, and the US also pushing through a few more anti-free trade protectionist agreements with a few countries, the big focus is on the Trans Pacific Partnership (TPP) agreement, which Hollywood and the USTR are betting will allow them to sneak through everything they couldn't get into ACTA. That's why the negotiators for the TPP are trying to keep it even more secretive than ACTA. Of course, as with ACTA, you can expect some leaks.

And... one of the recent leaks was the section concerning pharmaceutical pricing, which pretty clearly demonstrates why this is an anti-free trade bill, rather than a free trade bill. That's because it not only looks to prop up monopolies (such as patents), but it even argues for blatant price fixing to avoid market pricing when governments are buying. That is, this section -- which is being pushed by the USTR -- basically takes the big pharmaceutical's position that foreign governments should not be allowed to bargain for discounts on drugs to keep their own citizens healthy. It mandates, instead, that governments have to buy at a much higher fixed prices, and actually is even more pro-big pharma than the previous administration, which sought to make it easier for developing nations to access necessary drugs.

Sean Flynn from American University has a detailed and useful critique showing how this plan, pitched by the Obama administration, only serves to help big pharmaceutical companies, while putting lives at risk in an extremely anti-free market way:

Although the provisions are styled as “transparency” provisions, in fact they regulate the substance of drug pricing programs. The heart of the proposal would require that countries establish new administrative and judicial appeal systems to contest whether public drug reimbursement rates “appropriately recognize the value” of pharmaceutical patents. Similar provisions have led to higher drug prices and more challenges by pharmaceutical companies in the one country to implement similar provisions – Australia.

At the core of this proposal is a false distinction between government reimbursement prices and “market” prices. Government reimbursement prices ARE market prices. Suppliers can refuse to supply to governments, just as they can with any private purchaser demanding a better deal. The fact that governments obtain better prices than atomized consumers does not make their roles as purchasers anti-market. Drug price restraint is a natural, inevitable and beneficial result of public health expenditure or any other form of pooled purchasing. Large purchasers in free markets obtain better prices; governments obtain better prices when they pool consumers and negotiate as a volume purchaser.

Furthermore, Flynn points out that this kind of backroom secret agreement, which is clearly a huge gift to the big pharmaceutical firms, should be much more open and transparent. He points out that pharmaceutical price fixing "is an inappropriate subject for closed door trade negotiations" since it's not so much a trade issue, as it is a public health policy. Furthermore, he notes that it would be contrary to current best practices within the US itself:

Ironically and ominously, US drug pricing programs do not comply with the standards that the US is proposing. In particular, the operation of preferred drug lists by the Federal Medicaid program would violate the terms of the agreement, including because they do not provide appeals for pharmaceutical companies on whether the prices achieved adequately value patents. Previous FTAs with Australia and Korea carefully exempted all U.S. programs from their coverage, including through a footnote defining the federal Medicaid program as a “regional,” rather than “central,” level government program. That footnote has been removed from the draft TPP proposal. This may indicate that the US has not decided whether to propose exempting Medicaid from the TPP requirements or to give in to demands of other countries for full reciprocity in the agreement.

No matter how you look at it, this is clearly the US government looking out for the best interests of the big pharmaceutical companies over pretty much all else. Well, perhaps not their own political careers.

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Is The Gates Foundation Really Looking At New Ways To Tackle Big Health Problems When It's Hiring Pharma Execs?

Mike Masnick — Fri, 23 Sep 2011 08:07:19 PDT

The Gates Foundation has plenty of opportunities to do some amazing things with the size of its fund and the ability of Bill Gates, in particular, to command attention. And, yet, hearing that it's now hired a former Big Pharma exec to run its Global Health Program has to make you wonder if the Gates Foundation is focused on increasing health in the world... or increasing the health of big pharmaceutical companies, which have been struggling lately. One of the biggest problems with healthcare today is making the debate pharmaceutical-centric, rather than health centric. Yes, drugs are a part of a comprehensive healthcare plan, but, too often, policymakers and groups let pharma firms drive the debate, when they're an (extremely) biased party that has a long history of not doing what's best for everyone's health, but what's best for their own profits. And, to be clear, I have no issue with pharmaceutical firms looking to maximize profit. But I do have issues when they use unfair or questionable means to do so, when that can create serious harm and limited access to medicines. The Gates Foundation could have totally changed the debate. But, instead, it seems to be doing the opposite.

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Priced Out Of Your Medication? Must Be All That 'Expensive' Big Pharma R&D

Tim Cushing — Tue, 28 Jun 2011 03:30:37 PDT

A few months ago, the pharmaceutical industry was throwing around careless numbers to justify the exorbitant price of its products. The "industry standard" of $800 million to develop a new drug had inflated to $1.3 billion (presumably thanks to non-existent inflation), but some digging around in the very same dataset produced a completely different number: $35 million. Sure, that's not exactly "walking around" money, but it's a lot easier to recoup your investment if you don't overstate it by $1.26 billion.

Some more damning numbers have emerged in a post at Rational Arguments, showing that even the drug companies' inflated R&D costs pale in comparison to what they really spend their money on. The first post pulls numbers from the Fortune 500 listing of top 10 pharmaceutical companies (by sales) and finds some (sadly) unsurprising results:

Those companies spent a whopping $41 billion on research and development. That's a lot of money. But it's significantly less than the $49 billion (18%) in profit they made. Just so you know, the average Fortune 500 company in 2008 made 0.9% of sales in profits. So in a recession, pharma did very, very well. [The] pharmaceutical companies spent $83 billion on marketing and administration. That's more than twice as much as they spent on research and development. That's an insane amount.
So it's a little disingenuous to claim that Americans must continue to spend so much to fund R&D when you could make cuts to either profits (which are big) or to marketing and administration (which is gargantuan). R&D just isn't that big a piece of the pie. There's plenty of fat to trim in there before research and development.

And why do pharmaceutical companies spend so much on marketing? It's simple, really. They're not creating new drugs. (Yes. That seems like a really moronic explanation, but read on...)

From 2000-2007, 667 new drugs were approved by the FDA. Of those, only 75 (11%) were new molecules that were much better than what we already had. In fact, over 80% of all drugs approved were no better than what we already had. Those are "me-too" drugs. Why do the pharmaceutical companies spend so much on marketing? Because you have to really promote drugs that really have no benefit over others that already exist. You have to convince people to buy those.
You know what needs no promotion? Awesome new drugs that save lives. When was the last time you saw a commercial for chemotherapy? For epinephrine? For steroids? Those drugs need no promotion - doctors just know to use them. But I bet all of you know about Nexium. Or Cialis.

Add to that the fact that drug companies are now helping themselves to medical records to help "guide" doctors' decisions and you've got a cyclical nightmare that increases costs while doing next to nothing for the health and well-being of their customers.

If you've managed to keep your incredulous rage (and whatever meal you last digested) suppressed, here's some more evidence dismissing pharma's everlasting claim to what's left in your wallet.

The Incidental Economist has a followup post by Aaron Carroll (who wrote the previous post at Rational Arguments), detailing even more evidence that the drug industry is blatantly lying when it claims its high prices are justified by its R&D investments. The twist here is that these companies, for the most part, aren't even doing their own R&D. (Click through for an informative and highly irritating graph. The colors are nice, though...)

The majority of research cited in patent applications was done in academic centers. Some more was done in other non-profit or government research centers. Only 15% of the research was done by industry. That's not a very compelling argument for the indispensable contribution of industry to research.

Carroll quotes another study, this one performed by Public Citizen in 2001, which showed that "U.S. taxpayer-funded researchers conducted 55 percent of the published research projects leading to the discovery and development of these drugs (and foreign academic institutions 30 percent)." In fact, drilling down even further into the data reveals that only one in seventeen papers come from the industry itself.

What we've got is an industry that uses the research (and money) of others to keep its profit margins right where it wants its. Even worse, it keeps going back to the government, fur-lined pimp hat in hand, looking for more funding, more patents, more patent extensions and more control over the medical community. Anyone looking to the pharmaceutical "community" for an answer to their health problems is in for a world of very literal hurt. The industry doesn't seem to mind if you're chronically ill. It just hates losing paying customers. To, like, death and stuff. And so it lowers its costs and raises its prices, trying to find the perfect balance between lifelong medical care and the local morgue.

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FDA's Pharma-First Focus Driving Medical Device Tech Away From The US

Mike Masnick — Wed, 8 Jun 2011 04:07:00 PDT

Five years ago, we wrote about Andy Kessler's excellent book, The End of Medicine, a book I still think about frequently. Kessler's book explores why medical innovation hasn't followed the same innovation curve as every other technology space, where the technology gets better while the prices get cheaper. There are many reasons described in the book, but one key hurdle? The FDA. And it's not just the FDA's process, but the entire concept of the FDA, which is set up to approve or disapprove drugs. That's it. It's not designed to help review what will make people healthy. And for that reason, it pretty much ignores medical devices and technology. This was a big problem described in the book, and a few FDA folks in the book suggested the FDA was working on solving that issue. But it's been five years, and new reports suggest nothing much has changed.

Reason has an article about how the FDA is driving medical device innovation to Europe and elsewhere because it's still not set up to even think about medical devices. The article focuses on the new X-Prize attempt to create a "tricorder." It's a great contest, but then the article points to the news that the FDA won't certify such things:

The regulatory environment could present problems for any such device. "The Food and Drug Administration has stated that it will not certify tech that makes a diagnosis directly," said Ross Mitchell, the author of a study published last week that shows that strokes can be diagnosed with the aid of a smart-phone application with the same degree of accuracy as with a hospital computer.

Bartholomew says that because of FDA restrictions, the contest could lead to innovations that might only be used outside the United States.

Indeed, the report points to many other examples of useful new technologies showing up elsewhere, but not in the US due to the FDA. So why is the FDA so bad at actually helping people get healthy? Take a guess. It seems like regulatory capture has taken hold of the FDA in a big bad way. Just recently, we discussed how the FDA has set up a system to limit competition in the medical field to just a few giant pharma companies, and has been actively banning cheaper drug competitors, in order to help big pharma companies jack up the prices on old medicines.

While the FDA is supposed to be keeping us healthy, it looks like its general focus is on keeping the profits of a few pharma firms healthy instead.

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FDA, KV Pharma Bend A Bit To Public Pressure; Lower Makena Costs, Allow Competing Drugs To Remain... For Now

Mike Masnick — Fri, 1 Apr 2011 13:55:41 PDT

We've been discussing how the FDA has been systematically banning drugs that have been on the market for years, and retroactively granting monopolies to particular pharmaceutical firms. The case that's drawn the most attention is that of Makena, a drug to prevent early childbirth which is provided on the market by a bunch of different firms, and was competitively priced around $10/dose. Yet, after the FDA stepped in and gave a monopoly to KV Pharmaceutical under the economically-clueless belief that this would help make the drug "more available," there was a massive public backlash when people discovered KV would increase the price of the drug from $10 to $1,500.

In response, it appears the FDA is backing down ever so slightly. Drew points us to the news that it has put out a statement that it will not stop other pharmacies from making and offering the drug. KV had been threatening others, but the FDA stepped in and said that, even though it's granted this monopoly to KV, it wouldn't enforce it against these other manufacturers. The FDA put up a statement explaining this:

In order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality, or are not being compounded in accordance with appropriate standards for compounding sterile products.

Of course, it also says it may change its mind on this at any time (i.e., after the attention and backlash die down) and appears to have no interest in revisiting its other new monopolies.

Not surprisingly, with this news in place, KV Pharmaceutical has also announced that it is dropping the $1,500 price down to $690. Of course, that's still a lot more than $10 per dose, and this seems in response to the fact that (a) the public is blasting it at every turn and (b) the FDA won't really enforce the monopoly... for now.

How about we try to fix the underlying problem of monopolies, rather than just focusing on this one case?

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Drug Firms Freaking Out Over Expiring Patents

Mike Masnick — Thu, 10 Mar 2011 04:11:57 PST

Glyn Moody points us to a discussion about how the big pharma firms are freaking out because their key patents are expiring, and they've failed to develop any new patentable drugs in a while. This is leading the usual patent supporters to worry and fret. Of course, the whole thing is backwards. As Moody points out, expiring patents should be a cause for celebration, not dismay. It means the public is getting access to all sorts of important medicines at much more reasonable prices. That's good news.

The real issue here is that for years patents massively distorted the healthcare market. It hasn't been about keeping people healthy at all. It's been about finding patentable drugs to extract monopoly rents (often at the expense of actually keeping people healthy). Perhaps, if we can get past this silly and short-sighted focus on patentable medicine as being the key component of healthcare, we can start seeing smarter companies develop smarter business models that actually align interests: firms that recognize there's tremendous value in actually keeping people healthy, rather than trying to sell them a tiny pill.

If you start looking at the economic research behind healthcare, you begin to realize that the economic incentives around healthcare are totally screwed up. The reports have shown that keeping people healthy for longer contributes billions, if not trillions to the economy. If firms can't figure out how to profit from keeping people healthy, they're not paying attention. But that's never been the focus of our healthcare policy, and it's a shame. If today's drug companies are felled by their overreliance on patents, perhaps we can finally move on to rethinking healthcare towards making people healthy and improving the economy at the same time... rather than the current structure that appears to do neither of those things all too often.

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Revolving Door Between Gov't And Industry Continues: Pharma Lawyer Goes To USPTO As Gov't Financial Regulator Goes To Wall St.

Mike Masnick — Tue, 22 Feb 2011 22:12:00 PST

The level of regulatory capture between the government and industry is really quite sickening these days. There's a revolving door where government officials go work for industry and vice versa, with plenty of back-scratching in both directions. Two separate stories crossed my desk at about the same time, highlighting this in both directions. First up, it's really no surprise that one of the pharma industry's favorite lawyers has just become deputy director of the US Patent Office. Of course, the pharma industry is one of the more aggressive ones when it comes to expanding the power of patents, and abusing them to block innovation in healthcare. Now they have another person on the inside to help.

Going in the other direction, a senior "dealmaker" and advisor to the government's FDIC program has jumped ship to Goldman Sachs. That article lists a bunch of other top government officials involved in dealing with the financial crisis and setting the new regulatory rules, who have wasted little time in taking new jobs in the private sector on Wall Street. As some have pointed out, this kind of revolving door makes bribes totally unnecessary. You don't need any form of bribery or overt corruption, when the corruption is entirely implicit in the nature of the revolving door.

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Indian Scientists Refuse To Patent Tuberculosis Genome, Encourage Anyone To Make The Drugs

Mike Masnick — Tue, 13 Apr 2010 03:43:00 PDT

We recently wrote about the pharmaceutical industry in India, noting that it had been thriving prior to foreign pharma lobbyists pressuring India through international trade agreements to change its patent laws to cover pharmaceuticals. As usually happens when we write about examples like this, some patent supporters in the comments insisted that no Indian research could possibly result in serious drug breakthroughs without patents (apparently those who write this are unfamiliar with Jonas Salk's opinions on patents in reference to the polio vaccine he created: "Could you patent the sun?")

So it's nice to see that even now that India does allow patents on pharma (and, as we noted in the original story, Indian patent laws have been abused by foreign pharma firms in order to jack up prices on commonly used medicines), some Indian scientists have mapped out the tuberculosis genome, which should help creating new drugs that can help respond to that disease.

But rather than rushing to the patent office, the scientists are freeing up the research through an open source effort:

"What we have not done so far has been achieved. I thank all those students who have helped it become a reality. We are doing this through open source drug discovery (OSDD) and anyone across the world is free to join the effort," [Council for Scientific and Industrial Research (CSIR) chief Samir] Bramhachari told IANS....

"OSDD is a completely new formula across the world. Here we are making all our progress available to public. Anyone can take advantage and develop a drug based on our research. The aim here is not patents but drug discovery for a neglected disease," said Rajesh Gokhle, a senior scientist associated with the project.

And I thought that no such breakthroughs were possible without patents?

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Pfizer, Novartis & Eli Lilly Received A Bunch Of Illegal Pharma Patents In India

Mike Masnick — Fri, 9 Apr 2010 14:37:00 PDT

As you may or may not know, India only recently changed its patent laws (under sever pressure from foreign countries and pharmaceutical companies) to allow pharmaceutical patents. Before that, pharmaceuticals (for the most part) were unpatentable there. Of course, contrary to what patent system supporters would tell you, India had a thriving pharma industry. Yes, a lot of it was in generic drugs, but according to patent system supporters if people can just copy each other, no one will even bother to get into that business. Reality shows that wasn't true. But, of course, the big pharma companies were quite upset by all of this, and got their governments to put pressure on India to "join the world community." In 2005, India's new patent laws went into effect, and while the results of all of this are still being analyzed, one thing that politicians smartly put into the law were sections 3(d) and (e), "which restrict protection being granted to already known and long-ago patented drugs and their combinations." This upset pharma industry sympathisers, but it's hard to fathom who could reasonably be against such a rule. You simply should not be able to patent things that are already known or patent the simple combinations of drugs that are already known. This is just common sense to prevent pharmaceutical firms from getting monopolies on drugs already out there.

However, Jamie Love points us to the news of a new report that found that the Indian patent office has gone against this law and issued such patents quite frequently and, no surprise, the main recipients are among the world's largest pharma companies, including Pfizer, Novartis and Eli Lilly. Is it any wonder that they've all been pushing to dump sections 3(d) and (e) all along? Remember, pharma patents are not about drug discovery, but about jacking up the prices on drugs.

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How Pfizer And The US Gov't Set Up A Fake Subsidiary To Take The Brunt Of Lawsuit Over Falsely Marketed Drugs

Mike Masnick — Thu, 8 Apr 2010 07:47:00 PDT

The pharmaceutical industry is a huge mess, which has little, if anything, to do with making people healthy. The way the system is currently designed, if it's more profitable for a pharmaceutical company to put you at greater risk, it will do so. And sometimes the US gov't will help them brush it under the rug. Reader Bill Pickett points us to a recent investigative report concerning the big, high-publicity lawsuit the US gov't filed against Pfizer, after the company blatantly went against FDA approvals and marketed a drug for all sorts of alternative uses, which the FDA had specifically noted could be dangerous and could put people at greater risk.

The FDA approved Bextra only for arthritis and menstrual cramps. It rejected the drug in higher doses for acute, surgical pain. Promoting drugs for unapproved uses can put patients at risk by circumventing the FDA's judgment over which products are safe and effective. For that reason, "off-label" promotion is against the law.

But with billions of dollars of profits at stake, marketing and sales managers across the country nonetheless targeted anesthesiologists, foot surgeons, orthopedic surgeons and oral surgeons. "Anyone that use[d] a scalpel for a living," one district manager advised in a document prosecutors would later cite.

A manager in Florida e-mailed his sales reps a scripted sales pitch that claimed -- falsely -- that the FDA had given Bextra "a clean bill of health" all the way up to a 40 mg dose, which is twice what the FDA actually said was safe....

Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra.

Pfizer said in court that "the company's intent was pure": to foster a legal exchange of scientific information among doctors.... But an internal marketing plan called for training physicians "to serve as public relations spokespeople."

Where the story gets scary is in what happened when all this came out. Federal officials announced a criminal case over this, but they didn't actually sue Pfizer directly. Instead, they sued a (not kidding) subsidiary of a subsidiary of a subsidiary of a subsidiary of Pfizer, which was basically set up just take the brunt of this lawsuit:

According to court documents, Pfizer Inc. owns (a) Pharmacia Corp., which owns (b) Pharmacia & Upjohn LLC, which owns (c) Pharmacia & Upjohn Co. LLC, which in turn owns (d) Pharmacia & Upjohn Co. Inc. It is the great-great-grandson of the parent company.

But it was only that last one, Pharmacia & Upjohn Co. Inc., that was sued -- and the report also notes that this company just happened to be set up the same day that Pfizer and federal officials worked out a deal for it to plead guilty -- even though it, as an entity, hadn't done anything.

Why did they do this? Well, if Pfizer itself had been found guilty then it would be barred from Medicare and Medicaid, and prosecutors figured it would effectively close down Pfizer -- and Pfizer was deemed "too big to fail" like that. Why? I have no idea. If the company really did have to close down, it seems likely that others would have picked up the company's various products -- and perhaps done so without putting people's lives at risk.

Really, the problem here is the way the entire system is set up. The FDA requires expensive and involved clinical trials. This is very good, because we want to make sure that any drugs actually do what they're supposed to do, and don't have serious side effects or cause even worse problems. But, the system is currently set up so that the pharmaceutical company itself is in charge of paying for and running those clinical trials, which creates two very problematic situations. First, it gives the company all sorts of incentives to fudge the results or to pretend the results said something different than they really did (see the example above, or Merck with Vioxx) and second, it contributes to the "expense" that a drugmaker can claim comes from developing a new drug, which is part of why it demands patent rights. But if you break out the costs of the clinical trials, the marketing-hidden-ad-development-costs, and the amount of research that's actually funded by gov't grants -- you find that pharmaceutical firms really aren't spending nearly as much as they claim. A big part of the issue is the clinical trials, and that's leading to all sorts of questionable behavior. In the past, some have suggested that such trials should be conducted by the gov't, rather than by the pharma companies themselves. While I'm not sure that's the answer, it's pretty clear that the existing system is not working, if our end goal is to make people healthier.

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Pay-For-Delay Anti-Trust Lawsuit Against Pharma Company Dismissed

Mike Masnick — Fri, 2 Apr 2010 07:33:00 PDT

Last year, we wrote about the rise of pay-for-delay programs being run by big pharmaceutical firms to use patent lawsuits as a cover to pay off generic drug makers to prevent them from competing in the market. We were pretty disappointed that a part of health care reform that would have outlawed such deals got dropped, but figured that these still seemed like anticompetitive actions that the FTC could deal with.

Well, that might not work either. Joe Mullin points out that one such lawsuit suggesting that some of these deals were anticompetitive has been tossed out. The specifics here are a bit more complex -- as the deal that the big pharma, Schering-Plough (now owned by Merck) worked out with two generic drug makers was technically structured as a "license deal" where Schering got to license drugs from those generic drugmakers -- even if it never really did so. It still provided some amount of "cover." Furthermore, the agreement not to introduce the generics in the market only occurred during the time when Schering's drug was still covered by the patent. So, really, there was some dispute as to whether or not the generic actually violated the patent or not -- but since the ruling was not about determining that fact, just whether the actions were anti-competitive, the judge concluded that there wasn't enough evidence of any anticompetitive behavior.

So, basically, the only reason this wasn't anticompetitive was because it all happened under a government-granted monopoly. Talk about ironic, right? Because there's a monopoly, the company doesn't get labeled a monopolist. Isn't the patent system great?

This ruling is unfortunate for a variety of reasons. You can see why generic drug makers agree to these deals: it's either go through an expensive fight to put a drug on the market, or get out of the lawsuit and get paid a ton of money for nothing. Not hard to make that decision. But the end result is anti-competitive, in that it allows big pharma firms to keep the prices jacked up very high on their drugs, much to the detriment of everyone else.

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Pharma Patent Nuclear War In Action

Mike Masnick — Wed, 3 Feb 2010 20:26:00 PST

Peter Amstutz writes "Techdirt often talks about the "mutually assured destruction" model of patent litigation. Well, here is an excellent example of the staggering costs of competing through the courts instead of the markets. Boston Scientific and Johnson & Johnson have been locked in patent disputes for years, each alleging the other infringed on the their patents. Recently, Boston Scientific was ordered to pay a staggering $1.73 Billion (with a B!) in settlement to J&J. As if that's not enough, apparently there are additional unrelated patent cases still ongoing between the companies. One wonders how much has been spent on lawyers."

Think of all this money being shuffled around having nothing to do with actually creating new products that help people or actually getting those products to market where they can help. The patent system isn't being used to promote progress here at all, but to stifle competition and hold back progress.

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Pay-For-Delay Agreements Again Show How Pharma Abuses Patent Law To Harm Us All

Mike Masnick — Mon, 7 Dec 2009 05:30:00 PST

We've discussed in the past how pharmaceutical patents actually tend to slow down the development of better healthcare solutions, and earlier this year, we mentioned how the EU was growing increasingly concerned about how patent holders were abusing their patents to try to prevent generic competitors from entering the market. Recently, US FTC officials have noticed the same thing and are trying to do something about it -- but are facing tremendous (well organized and well financed) pushback from pharmaceutical lobbyists (the kind who are able to get more than 40 Congressional reps, on both sides of the aisle, to repeat talking points into the Congressional record with no shame).

At issue is the fact that the big pharma firms are paying off generic drug makers to keep them from entering the market -- which in any other market would be a clear anti-competitive activity. How do patents fit into the equation? Well, the big pharma companies are suing the generics for patent infringement, but know they don't have any legal leg to stand on. The filing of the lawsuit is basically just a negotiating ploy, bringing the generic manufacturer to the table. If there were actual infringement, then the generic maker could be barred or would have to pay up. Instead, the money flows the other way. The two parties settle in a "pay for delay" pact, whereby the patent holder pays off the generic maker to stay out of the market, even if there's no real infringement. This basically grants the patent holder extra monopoly time on a drug, which can be worth billions, but makes drugs significantly more expensive for everyone.

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Bad Science Blog Highlights The Harm Done By Pharma Patents

Mike Masnick — Wed, 9 Sep 2009 13:24:45 PDT

CG was the first of a bunch of folks who sent in a link to Dr. Ben Goldacre from the always excellent Bad Science blog taking on the issue of the harm done by pharma patents:

Ignoring patent and licensing issues has allowed Dr Yusuf Hamied, director of Cipla, to innovate: even though each drug is officially owned by a different company, he could put a common combination of three treatments (Stavudine, Lamivudine and Nevirapine) into one simple, single combination pill. This increases treatment compliance -- it's easier to take your medication correctly -- and that keeps you alive longer, while reducing the emergence of resistant strains.

Hamied calls his pill Triomune (he also offers "Antiflu", a copy of Tamiflu for the developing world, and many more). In 2001 he was selling to MSF clinics for $350 per person per year, more than 30 times cheaper than the official versions of these drugs. Triomune is now only $87 a year. This is amazing. Hamied is a hero.

Richard Sykes, head of GlaxoSmithKline (and now retired rector of Imperial College London) disagreed. He called Hamied a "pirate" and described the quality of Indian generic drugs as "iffy". Hamied says GSK is a "global serial killer" for charging high prices for their medication. So who is right?

From there, Goldacre runs through the traditional arguments both in favor of and against pharma patents, and concludes:

If the global $550bn pharmaceutical industry are trying to make an economic case for patents in the developing world, then they must argue that the benefit to drug development from the financial incentives in these tiny corners of the world market is so significant -- so vital, the final link in the incentive chain -- that it is more important than millions of unnecessary deaths. I am not a health economist, but I doubt that is a fair swap, and this is not what patent laws were invented for.

Indeed. I'm glad to see Goldacre take on this issue, though I hope that he'll spend some time exploring the work done by many before him that goes much more deeply into the problems with pharma patents. For example, in explaining why pharma patents can be "good," Goldacre trots out the line "It takes about $800m and 10 years to bring a drug to market," but that's been widely debunked. If Goldacre (or anyone else) is interested in the subject, they should check out Merrill Goozner's detailed and thorough analysis of this claim in his book, appropriately entitled The $800 Million Pill, which thoroughly debunks the notion that it costs a pharma company $800 million to bring a pill to market.

On top of that, he should look at the some of the work done by Nobel Prize winning economist Joseph Stiglitz in detailing how patents harm innovation in the drug process. Or, hell, he can look to the US government itself. The GAO put out a report a few years ago, noting that patents appeared to be hindering, not helping, the development of new drugs. Another great source of detailed information is the chapter in David Levine and Michele Boldrin's book, Against Intellectual Monopoly, that directly deals with the case of pharma patents (pdf). It goes through the history of different patent laws in different countries and totally debunks the idea that patents create true incentives for pharma. There's plenty of evidence of harm, but very, very little true evidence that patents create actual incentives for innovation.

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The Placebo Effect: Things Pharma Prefers You Not Worry About

Mike Masnick — Thu, 3 Sep 2009 10:10:00 PDT

There's a fascinating article in the latest issue of Wired about the placebo effect and pharmaceutical companies. It's fascinating for a few reasons: First, because it shows the thought process of pharma firms and why "what's best for pharma" is often not what's best for your health (which is a line often trotted out by those who believe in protecting pharma). Second, because it suggests that some (potentially significant) parts of pharmaceutical science -- the stuff we hear over and over again is so important to protect via patents -- is bunk. And, finally, just because it may surprise you to know just how powerful the placebo effect appears to be -- and that it's only getting stronger.

The critical point is that final one. Basically, the placebo effect (the impact had on a patient taking a sugar pill under the false impression that it's medicine) seems to be quite real and, at times, quite powerful and lasting. Even more surprising is that, over time, the placebo effect has only become stronger and stronger.

Now, if pharmaceutical companies were actually interested in your health, then this would be a ripe area of study, well worth exploring to see if the placebo effect could be better understood and somehow harnessed to make people healthy. But, of course, you can't patent a sugar pill, so pharma research dollars have gone into drugs that can be patented.

However, a serious problem has arisen: with the placebo effect getting stronger and stronger, these "wonder drugs" that pharma has been spending millions of dollars "developing" have increasingly been failing clinical trials, because they can't out-perform placebos. The theory behind testing against placebos is that if a drug doesn't outperform the placebo, you have to question what good the actual drug is and why it should be approved. So, if a drug fails to outperform a placebo, then (the thinking goes) the drug is useless. But that's partly based on the idea that the effect of taking a placebo is weak.

This leaves out an important part of the equation: If the placebo is really effective in dealing with certain issues, then why not examine how to utilize that fact to make people healthy? Some in the pharma world have been pushing for this for a long time, and have repeatedly asked the big pharma companies to release their data on clinical trials, in order to better understand the impact of placebos and to see if there's a way to harness their power. But the pharma companies have resisted and don't want to release the data -- in part because they're scared to death of what this all means. If sugar pills are effective, that's a very different business, and the claims of all of the drugs that are on the market would be called into serious question. Instead, they've apparently spent their time writing out detailed marketing plans that convince doctors to prescribe medicine that doesn't work any better than alternatives.

Now, let's be quite clear here: I am not saying that drugs don't do any good. There are plenty of pharmaceuticals that certainly help deal with certain conditions, and there are plenty of people who lead better lives (or are alive at all) solely because of modern medicine. But, these findings about the placebo effect certainly suggest that -- at least in many cases -- rather than dumping chemicals into the human system via a pill, your brain may actually be a lot more effective at concocting the proper chemicals itself.

If we had a healthcare system built on incentives to actually keep people healthy -- rather than just to sell more pills -- this would be the beginning of a very important field of study. Instead, it's been resisted and the data has been hidden away for years.

The incentive system is clearly screwed up. It's based on patents and hoarding information, rather than on actually keeping people as healthy as possible. If you could craft a healthcare system that actually rewards those who keep patients healthy, then perhaps we'd actually know a lot more about the placebo effect and, beyond it, our own brains' ability to produce important, potentially life-saving or life-improving chemicals on its own. In fact, in such a system, the incentives would be less about hoarding information, and more about sharing it, since, through collaboration, it would be more likely that more people could be kept healthier, allowing greater overall profits. The problem today is that the system is based on incentives that are misaligned... and thus, it's a struggle to get anyone to care about the fact that the placebo effect actually seems to help some people.

Update: As pointed out in the comments, Skeptic Magazine recently had an article that provides some more thoughts on placebos.

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Big Pharma Abusing Patent Laws To Seize And Destroy Legal Indian Generic Drugs

Mike Masnick — Tue, 11 Aug 2009 09:44:00 PDT

The deeper you look at how pharmaceutical companies use and abuse the patent system, the worse it looks. It's much more horrifying than what's happening in the tech industry in many ways (especially since lives are often at stake). The latest such example highlights the desperate lengths that Big Pharma will go to, in attempts to stamp out perfectly legal competition. India has a legal and thriving generic drug market that was built up initially via a ban on pharma patents in India (which, as an aside, shows again that a ban on patents can actually help create a thriving industry). More recently, India was forced, almost entirely against its own wishes, to implement patents on drugs. Even so, many of its generics are not covered by patents, and there are a number of developing countries that also do not recognize patents on certain drugs. Thus, it should be perfectly legal for Indian generics to ship those drugs from India to developing nations. And... it is. Except that pharma companies have convinced EU trade officials to seize and/or destroy such shipments that pass through EU borders in transit to these developing nations.

Thus, if a legal Indian generic drug maker has a shipment of those drugs to Peru, where the same drugs are also perfectly legal and not blocked by patent law -- those drugs might still get seized because en route to Peru, they may pass through some European countries, where Big Pharma has used its lobbying clout to get customs officials to search for and confiscate any such medicine, claiming they are violating patents in the EU. Because of this, the Indian firms need to spend a lot more money and ship via other means.

To deal with this, India is looking to file a complaint with the WTO, and at least according to the experts in the WSJ article above, India has a strong likelihood of winning. Big Pharma and the border patrol folks are defending their actions, claiming it's to stop counterfeit drugs, but that's not what's happening here at all. These drugs are not counterfeits. They're legal generics, not intended for the EU at all, and they're being confiscated for no good reason other than the fact that Big Pharma doesn't want to compete.

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Patents Not Enough Of A Monopoly, According To Biotech Firms

Mike Masnick — Thu, 23 Jul 2009 22:50:00 PDT

Apparently, a bunch of big biotech firms feel that the patent monopolies they already have over certain drugs aren't enough, and they are demanding Congress enact laws that also stamp out any competition from similar drugs (known, back here in the real world, as competitors). You would think that after centuries of understanding how bad monopolies are for the market that the gov't wouldn't kowtow and simply hand over such things -- but it is. Of course, the biotech firms already have patents, so it's questionable why they also need an additional gov't granted monopoly period to block out "biosimilar" drugs, other than the fact that they don't like competition.

They claim, of course, that they need this exclusivity to recoup their costs in developing the drug. However, the deeper you look at the details, the less true that really is in practice. Much of the really core biotech work is done under gov't grants anyway, and often at research institutes. These private firms pick up the trail later in the game in a lot of cases -- but still get full patent rights. The actual cost of developing these things has been massively overstated, often lumping in marketing costs to R&D. It is true that clinical trials are crazy expensive and a huge burden on biotech and pharma companies, but that's a separate issue. There are numerous proposals about ways to take the clinical trial burden expense away from pharma. Lumping those mandatory gov't induced expenses into basic R&D is misleading. Furthermore, even in the face of competition, time and time and time again, we've seen that the original provider still commands a large and noticeable premium, from which it can easily recoup its costs. This is nothing more than blatant monopoly rents with a Congress too clueless about basic economics to resist.

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Surprise, Surprise: Pharma Abusing IP Laws To Prevent Competition

Mike Masnick — Thu, 9 Jul 2009 14:49:00 PDT

The deeper and deeper you look into the pharmaceutical market and the way those firms use patents, the worse and worse it looks. There's little evidence that pharmaceutical companies really need the kind of exclusivity that patents provide, but it's become so established an idea, that some actually believe that pharma would disappear without patents. However, the truth is quite different. The chemistry industry -- the precursor to the pharma industry -- actually fought against patents in the early days, knowing that robust competition was what drove innovation and profits. Patents only allowed the leaders to stomp out competition and limit the overall market, increasing their own profits, but slowing innovation and product development.

Thus it should come as no surprise at all that a new report has found that pharmaceutical companies are regularly abusing patents for anti-competitive purposes (thanks Rob Hyndman for the link):

Pharmaceutical companies are manipulating the intellectual property rights system and are "actively trying to delay the entry of generic medicines onto their markets," a top EU official said of an EU inquiry into the pharmaceutical sector released Wednesday. As a result, there has been a decline in the number of innovative medicines getting to the market, it says.

In other words, contrary to the popular myth, patents are actually being used to hold back innovation in the healthcare market.

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