In her recently released book, The Truth About the Drug Companies, former New England Journal of Medicine editor Marcia Angell argues that the pharmaceutical industry has played a key role in corrupting the American health-care system (see BW Online, 08/18/04, "Drugmakers Blackmail the Public"). Her book joins several others released in the past year that take aim at the industry. Among the most common criticisms: marketing tactics that rely heavily on relationships with physicians, a focus on developing "me too" drugs, lack of financial transparency, and undue influence over regulators.
Indeed, the industry is fighting an uphill battle to win the hearts and minds of a skeptical public. According to Alan Holmer, president of the trade association Pharmaceutical Researchers & Manufacturers of America (PhRMA), Angell and other critics make light of the industry's contributions. "My biggest frustration is that critics of the industry trivialize the amazing medicines that scientists have developed, and they trivialize the amazing future that's ahead for pharmaceutical innovation," he says.
Holmer recently spoke with BusinessWeek Online Reporter Amy Tsao about the merits of the pharmaceutical business. Edited excerpts of their conversation follow:
Q: By PhRMA's estimation, what does the industry spend on research and development?
A: Last year, the pharmaceutical industry spent over $33 billion on research and development, and a little over $3 billion on direct-to-consumer advertising. Including roughly $16 billion in free samples that the companies provide to physicians, the total on marketing is about $25 billion.
Q: That seems like an awful lot of money for marketing.
A: Marketing is important because there's no point in discovering and developing a new medicine if patients and their physicians don't know about it. We have a huge problem in this country with respect to undertreatment and underdiagnosis of disease. Just last year, in the U.S. we spent $1.3 billion on amputations of lower limbs of diabetes patients. I submit that if patients were to understand earlier that they have diabetes and could begin treatment earlier, they [would] be able to avoid amputations and lead far healthier lives -- at a substantially lower cost to the health-care system.
Q: There's a lot of criticism about the "me too" drugs, which are often incremental improvement to big sellers that treat chronic illnesses. Is this criticism valid?
A: Each of us is unique, and different medicines are going to affect each of us somewhat differently. My mother, for example, had high blood pressure for as long as I can remember, and has taken medicine for it. But as part of the aging process, she reached the point where the medicine she was taking caused her face to swell and for her to become very dizzy. Her doctor prescribed a new, different medicine, which she was able to take that didn't have the side effects.
For those who criticize "me too" medicines -- that second medicine that my mother was able to take wouldn't have existed [as critics would say] because somehow it didn't add value. It certainly added value for my mother and our family!
Q: There's real concern that company pipelines are relatively dry.
A: The science is very, very hard with respect to the breakthrough medicines. [We're] pursuing frontiers that were unimaginable a half a century ago. We're talking about cancer medicines that can be absorbed in the bloodstream and then go to find a malignant tumor and kill the cells in that tumor, but leave the healthy cells around it untouched.
We're talking about not just treating the symptoms of the disease, but trying to eradicate the disease itself. This isn't rocket science -- this is much harder than rocket science.
Q: In her book, Dr. Angell suggests that having to conduct comparison trials of new drugs against existing ones would decrease the number of "me too" drugs. What do you think of adding that hurdle?
A: It's already difficult, time-consuming, and expensive to get medicines through the Food & Drug Administration approval process. I'm not against head-to-head trials per se. My concern would be establishing an additional hurdle. The average time it takes between when a medicine is discovered at the laboratory bench until it's available to patients is already somewhere between 10 and 15 years. I don't think it's in the interest of patients.
Q: A lot of critics say the industry's influence over regulating bodies, like the Food & Drug Administration and Congress, has gotten out of hand. What do you think?
A: We are the most regulated industry in the world, and we have no hesitation in advocating for public policies that would encourage an environment that's going to allow continued research and development for new cures and treatments.
We've seen what has happened in countries where they've treated their pharmaceutical industry as a public utility. In countries like Canada, Spain, and France, because of policies like price controls, R&D is lacking. The lights in the laboratories go out.
Q: Aren't there significant contributions coming from non-U.S.-based companies? Switzerland-based Novartis NVS
particularly has come up with several innovations in the last several years, and it has one of the most promising pipelines in the industry.
A: Yes, but there's a very important caveat. Novartis recently decided to move its headquarters of research operations to Cambridge, Mass. In fact, the chairman of that company said that if researchers continue to leave Europe, he may move his whole headquarters to the U.S. The chairman of Serono SRA
-- also in Switzerland -- has said the same thing.
Q: What are the differences between profit margins in the U.S., vs. countries where the profits are controlled?
A: I don't have specific numbers, but I would suspect accurate numbers would show higher profit margins in the U.S. than in other countries.
Q: Affordability of medicine is a problem for millions of American. How can the industry help to change that?
A: We, the pharmaceutical companies, haven't done a good enough job of letting patients know about our patient-assistance programs, and we plan to remedy that. Last year, all of the pharmaceutical companies provided 17 million free prescriptions for more than 6 million patients.
A first huge step is getting prescription-drug coverage for seniors and the disabled -- the ones who use medicines most frequently. There are a variety of different programs. You can go to our Web site, click on a particular drug. Based on income level, a patient can find out whether they qualify for particular programs.
In addition to that, at higher income levels, there are discount-card programs. In the case of Eli Lilly (LLY), if you meet a particular income category, you only have to pay $12 per prescription. In the case of Pfizer PFE
, it's $15 per prescription. The companies are doing a huge amount to help people pay for medicines.