I'm going to be talking,
the pharmaceutical industry. as you've heard, about
is begin by giving you the vital And what I thought I would do
How much money it makes, statistics of this industry.
and so forth. wAnd how it behaves,,
more generally, before later on focusing more specifically
on how it interacts with
and with the medical profession. academic medicine
statistic, from the point of view of the public, is the
rapidly increasing cost of prescription drugs.
Indeed, drug spending is
growing component thof our healthcare bill.st
Some years, it's number one,
But it is one of the fastest some years it's number two.
of our healthcare bill, which itself is rising
at an unsustainable rate. So, this is a situation
that just can't go on.
spending is partly a matter The rapiof volume. in drug
There are more people using more drugs.
But it's mainly a matter
The price of the top 200 drugs of price.
on average, every year, two to four times the background
inflation rate. So you can see that just
can't go on.
running out of payers Ato pay these prices.e
Employers are bridling under
with whom they contract, this burden and the insurers
some of the costs anonto the patients themselvesg
by capping the contributions. State governments are feeling
the burden, because Medicaid
part of their budget, and a big part of the Medicaid budget
is prescription drugs.
its back now that is has Medicare has this monkey on
You can see that it's chipping away at other parts
of the Medicare benefit program in order to be able to cover
the prescription drug benefit.
gone up, co-payments Premiums for Part B have
And certainly individuals can't afford the prices anymore.
Surveys have shown that a large percentage of Medicare
recipients choose not to
they can't afford it, or play out their prescriptions
by taking half a dose,
with spouses. orSo, high drug prices arens
a problem that is very, very
Why are drug prices so high? crucial right now to the public.
would like us to believe Well, what the drug companies
high in order to cover is that drug prices have to be
development costs, which their high research and
most of their revenues implies that they spend
and that afterwards, they have on research and development
only for modest profits. enough left over
In the rest of my talk, or most of the rest of my talk,
I'd like to answer that question
at an industry that's very, very different from
the industry portrayed
All of the slides I'm going to show you, if I can do it--
It looks like I might be able to do it, are for last year,
for 2006, unless I say otherwise.
It's unfortunate that I don't have the PowerPoint,
because it really makes these points graphically,
but I'll do my best.
showing you... The first slide that I'm not
gives you an overall view of the industry globally.
It shows the top ten
I do have here a copy of the slides so that'll help.
These are the ten companies that dominate the industry,
total drug sales last year
Billion dollars, were about $643 billion,
And these ten companies alone account for over 40% of that.
They had sales last year
What are the companies? Well, Pfizer is number one,
the biggest drug company
GlaxoSmithKline is number two. in the world.
Novartis is number four. Sanofi-Aventis is number three.
Johnson & Johnson, Merck, AsRoche, Lilly, and Wyeth..
They are the giants.
is that this is not Whan American industry.ved
Of those ten companies, five are American
and five are European.
Sanofi-Aventis is French. GlaxoNovartis is Swiss.ish,
AstraZeneca is British Company. And Roche is Swiss.
So it's international.
industry. ItThe drugs themselves arel
manufactured all over the world.
plants in 32 countries, located Pfmainly for tax purposes.g
Some of the manufacturing plants
are in third world countries are in Ireland, but many of them
I tell you this, because all over the world.
over borders all the time. obviously drugs are flying
to believe that a drug And yet Americans are invited
of crossing the Canadian border. turns to poison by virtue
Now if you look at the annual reports of these ten companies,
and I've spent an awful lot of time doing that, you find
that they are very similar. They're similar in the sense
that their budgets
They spend roughly the same lopercentage of salesme.
on marketing and administration,
and development. roughly the same on research
amount left as profits. So, the numbers are expressede
in different units, some in francs, some in pounds,
some in dollars.
This is truly a multi-national But they are very similar.
Another thing they have in common is for most of them,
their profit center is in the United States, and roughly
half their sales are in the United States.
And the United States is
does not regulate drug prices in some way, so identical drugs
cost, on average, twice as much in the United States as they
do in the other countries.
important to this So thiwhole industry.tremely
Therefore, they tend to pass
implicitly, as American tin their public relations,
in the ads you'll see on the programs that old people
watch, the evening news or the
They tend to pass themselves off Sunday morning talk shows.
In fact, the trade association as American.
named the Pharmaceutical of the industry is misleadingly
of America, abbreviated FRMA, even though it consists of
35 of the largest companies all over the world.
So, we may not know,
that GlaxoSmithKline, even the maker of Paxil, know
is a British company; or that AstraZeneca--
Here is that slide
Or that AstraZeneca, I promised you.
is another British company. You can see here, it's just
a staggering size of the sales
Pfizer last year had sales revenues of these companies.
There are some countries that would very much like to have
a gross national product
Now, this next slide that big.
from the first one. It shows only U.S. companies.
It shows the nine biggest drug
And these were the nine that companies in the United States.
alist of the 500 biggest companies in America,
the Fortune 500.
Johnson & Johnson, Pfizer, Those companies are:
Wyeth, Bristol-Myers Squibb, Merck, Abbott,
and Schering-Plough. Lilly, Amgen,
American companies. ThThe other way in whichst
this slide differs somewhat is that is shows all sales
of these companies. The first slide showed just
sales of prescription drugs.
That amounts to the same thing, in the case of most companies
because they are dominated by their prescription drug sales.
But for a couple of companies,
they also have substantial sales like Johnson & Johnson,
although still their major sales of other consumer goods,
Now, this may be come from prescription drugs.
I'm going to show you today. the most important slide that
around, a laser pointer? Is there a pointer by any chance
That's all right. That's all right.
I'll tell you where to look.
slide, because it shows the vital statistics of these
nine biggest drug companies in the United States.
And what should you notice? Well, first obviously,
the total sales were $230 billion last year
for these nine companies alone. But the second thing
you should notice is
Profits were $49 billion, the pheor 20% of sales.argin.
That is an astonishing
It compares with only 6.3% profit margin for all
the of Fortune 500 companies
That's pretty good too, but the pharmaceutical industry
is three times as high. And indeed for many years,
the pharmaceutical industry was the most profitable industry
in the United States, number one
going right up until 2003, as far back as I could find,
And at that point, petroleum when the war in Iraq began.
Energy jumped ahead. and mining jumped ahead.
industry was still number two. But last year, pharmaceutical
if an industry is consistently Now, if a company,
I think for a couple of years, number one or two,
year before last it was five. But if it's consistently
three to six times
for the Fortune 500 companies, more profitable than the median
a risky industry. And yet it portrays itself
as a risky industry.
The next thing to observe is how much money this industry
spends on marketing and administration.
Last year, that was $73 billion or 32% of sales revenue.
A lot of money. I'm going to come back
to marketing and administration and where that $73 billion goes.
But just remember that staggering amount.
The same year, research and development accounted
for only $37 billion. Now, $37 billion is a lot
of money, but it's only half
marketing and administration. what And less, even, thant on
they retain in profits
This is the smallest of the three main budgetary items,.
the smallest. Let me just say something
about Pfizer, too, and about
industry as far as profits go. what's happening in this
biggest drug company Last year, Pfizer, the world's
Right up there with the big oil companies, 40%.
It spent 32% on marketing and administration,
16% on R and D, on research and development,
so that's 40%.
to a company? Well, in a sense they become
victims of their own success, because these are investor-owned
companies.
is for your profits to go up. They don't care how profitable
you are today.
in the next quarter? What are you going to do for me
And you may have heard that Pfizer is laying off people,
because they are compelled. They feel that they
are compelled to trump 40%. And that is true of any
investor-owned business.
of leaving this industry We can get into the wisdom
later, perhaps. But it's a real problem.
So, what are we getting for all of this money?
Now, I want to look at
industry for this decade the output of the pharmaceutical
And I have to give you over the seven years, 2000-2006.
Many of you will know this, a lbut others may not.rst.
Before a drug can legally be sold in this country,
it has to be approved by the FDA
So all of these companies, wherever it is made.
or Timbuktu, want to be sold whether they're in Europe,
because it is the major in tprofit center.es,
So they all need to get FDA approval for their drugs.
Approval depends on the company demonstrating in clinical trials
that a new drug is
But compared with what? They don't have to compare their
new drugs with existing drugs to treat the same condition with
the best standard treatment.
have to compare their new drugs In mwith a placebo.only
So new drugs have to be better
an extremely low standard. than nothing, which is
and it's logical to think this. Many of you may also have this
notion that FDA approval
something better means a drug is offering
for the same condition. than wBut that's not so. using
For all we know,
If you look at a family of similar drugs..
Let's look at the family
or the family of SSRIs of statins to lower cholesterol,
For all we know, each subsequent drug in this class
is worse than the one before. Most likely it's roughly
the same at equivalent doses. But they don't want to have
a head-to-head competition
Sometimes they'll fool around at ewith doses.oses.
They'll compare a new drug
at a dose that is designed with an old drug
For example, if they want toto show that their new drugd.
is more stronger, they'll compare it with an old drug
at too low a dose.
their new drug is safer, Or, if they want to show that
an old drug too high a dose. they'll compare it with
at equivalent doses. But rarely head-to-head
a new drug, it classifies that drug in two major ways.
You can go to the FDA Web site
I'm about to tell you. and find out everything
first of all, according to It classifies the drugs,
or just an old drug whetin a slightly differentall,
dosage form, or a very different
The new drugs, the FDA dosage form in some cases.
And the others are not calls new molecular entities.
The second way it classifies new molecular entities.
whether it's likely to offer an improvement over
drugs already sold to treat the same condition,
or whether it's likely not to have any therapeutic advantages.
And so, those are the two major ways that they classify
the drugs that they approve.
then, for these seven years. Well, let's look at the output
were 599 new drugs approved, In those seven years, there
could come on the market. The column on the left
is labeled "NME"
These were the new drugs, but they were only 25%
of the total; 75% were simply old drugs
in new forms. Even more startling, if you
look at those classified
drugs, and that's in purple, as improvements over existing
you see 68 on the top at tof the NME columnlumn,
and 44 at the top of the Non-NME column.
Those were the ones that were classified as likely
to be improvements. They were only 20% of the total.
80% were judged not to offer
already on the market. anything better than what was
That is the major output Look at the 399.
And these are old drugs judged not to be any better than
drugs already on the market,
trivial variations of drugs talready on the market.
And this is this industry's major output now.
Well why? Well, that's where the money is.
And fiduciary responsibility
is to maximize profits to these companies
And that is where the money is. fIt's easy and fast.
to make "me too" drugs. And they cash in on already
established lucrative markets.
chronic conditions They tend to target
That's economics 101. iThere are more normal people
than sick people, so that's who
you want to sell to.
in essentially normal people: They targeheartburn;conditions
shyness, which they call
heartburn, which they call social anxiety disorder;
erectile dysfunction, that's half of the population
is their target with that particular condition.
They not only target chronic
but it's a population condithat can be expanded.ation,
Who hasn't been shy from time to time?
Call it social anxiety disorder and advertise Paxil
as taking care of that little problem, and you can
expand that market greatly. And they act in this sense
more like an oligopoly
It has been shown that if you market one "me too" drug in
a class, if you market Zoloft,
for the whole class. it increases the sales
and they all get a little piece It jusof that action.arket,
The "me too" drugs also target
like high cholesterol and high blood pressure.
These drugs can be lifesaving for these things.
I don't want to throw out the baby with the bath water.
But they are precursor
really trying to ward off is conditions, and what you're
and strokes, and so forth, the heart attacks
of these precursor conditions. that are complications
can be expanded greatly Welby simply redefiningket
what is a normal cholesterol, what is hypertension,
what is high blood pressure?
the conclusion now that the only safe blood pressure
is no blood pressure. ( laughter )
Again and again, you find that panels of experts,
often with financial ties to the industry are lowering
the acceptable level
and blood pressure. You'll notice too that
most marketing that you see on television, and probably
that you experience in your professional lives,
most marketing is for "me too"
important innovative drugs, dand that makes sense.ly
If a drug company had a cure
beat a path to it's door. You wouldn't have to market it
in ads on television. So, what they're marketing is
primarily these "me too" drugs. They don't engage
in price competition
In most industries, you'll hear buy the Honda
instead of the Toyota because it's cheaper.
You never hear that you should
because it's cheaper. There is no price competition.
What they do is to imply
Better, more effective, that itsafer, whatever.e way.
Despite the fact that there is almost never any evidence
to that effect. But that's what is going on
in the drug ads.
you probably noticed, Aadvertise a diseasey,
instead of the drug.
social anxiety disorder, They tell you that you have
sit in a bathtub or they tell you that you can
( laughter ) with your loved one in the woods
I've never seen bathtubs if you get some Cialis.
But they advertise a disease in the woods.
Now I want to make this point and not tmore starkly,ny cases.
the point that this industry
and less innovative. is getting less
You can see that everything Thiswas a "me too" drug.ar.
There were 93 drugs approved, 75 were "me too" drugs.
There were 18 that were NMEs, but only six of those
were judged to be improvements
You may wonder what a new molecular entity is
that is not an improvement. Clarinex is the metabolite
of Claritin.
when you swallow it. It's what Claritin turns into
so that's a new molecular entity, or was,
when it came on the market. But it does not offer
anything over drugs already on the market.
So, there were just six last year that were innovative
in any true sense of that word. What were the six?
Well, it's down on the screen with the asterisk:
Sutent, Chantix, Prezista,
I doubt whether you've heard Sprycel, Noxafil, Zolinza.
But increasingly, this is what you see, that two
of the six are orphan drugs.
designed to target a disease And these are drugs that are
people have. that fewer than 200,000
marketing rights You get extra exclusive
And so, two of them if yoare orphan drugs.drug.
One of them is something
I think the other three tare last ditch treatmentsn.
for conditions that are refractory to other treatments.
I think one is a HIV AIDS treatment for people
who are refractory
And so that's it. toI don't mean to says.
that's not a good thing to have a last ditch drug
for people who are desperate
But still, not what you would and otcall a breakthrough.rked.
And that's it.
from this mighty industry, That is the total output
innovative every year. which is growing less and less
come from? Where do the innovative drugs
This is much, much earlier. It's based on information
from the mid '90s.
I see no reason to think it has changed much.
This refers to an internal study
to try to find exactly where that was done by the NIH
that gave rise to the five the contributions came from
And those drugs were: Zantac, Zovirax, Capoten,.
Vasotec, and Prozac.
literature to find out where And so they looked at the
discovery and the development tof these drugs came from.e
And what they found was that
emanated from NIH-funded labs, of all of the studies, 55%
sometimes at the NIH itself; usually in universities,
public labs all over the world; 30% and only 15% came fromally
the companies that actually made the drugs.
They then looked at the 17 key studies.
And of the 17 most important
only one came from studies for these drugs,
that sold the drug. Lilly did one of the important
studies that gave rise
The others all came from to Prozac.
There have been other analyses NIH-funded or foreign work.
looking at references and patent applications,
and so forth, that find much the same thing.
It's usually 50-30-15 those sorts of numbers.
And that lopsidedness in
is particularly true in whimportant drugs that targetom
life-threatening illnesses. HIV AIDS, cancer, almost all
of these drugs emanate
Even among "me too" drugs, from NIH-funded research.
the pioneer drug among the first in the series,
from outside the industry. "me too" drugs usually came
Lipitor is the top selling drug Let's jusin the world. statins.
I think that sales last year
That is the fourth of six very similar "me too" drugs.
The first of them, Mevacor, came on the market in 1987.
It was based on university work in Texas
and on work done in Japan.
simple matter to keep turning Afout very similar statins.rly
Mevacor, incidentally, is now available as generic Lovastatin.
Nobody uses it
The newer, very expensive brand name drugs are the ones
that are marketed.
the more intensely And the newer they are,
So nobody buys they're marketed.
Similarly, look at the SSRIs. Prozac, just by coincidence,
came on the market
That too, except for the Lilly the same year, 1987.
done outside of the company. trial, was based mainly on work
for pennies, generically. INobody uses it.le
They use Zoloft, or Paxil,
As each becomes generic, or now up to Celexa.
ahead of them, things with long patent lines
So, you might say, all right, what's wrong with this.
Okay, the drug companies
but they support don't do the innovation,
They put the pills the clinical trials.
They market the pills. in the bottles.
done by NIH-funded researchers So what if the creative work is
in small bio-tech companies. somewhere else, increasingly
the drug companies expect to be rewarded as though they
were the source of innovation instead of rewarded for their
much more modest functions. Now I'd like to go back to the
Fortune 500 U.S. drug companies.
a little bit later about Remember I told you I'd talk
Those two things are lumped together in the annual reports
of the drug companies for no reason that I can imagine
except for that either alone
so they kind of squish them would together.assing,
They're both very large.
how much goes for marketing It's impand how muchease out
goes for administration.
executive salaries, legal costs, Administration--
of running a big business. you know, the costs
for most of the companies. You can't tease this out
The Swiss company Novartis, Novin its annual report.hem.
And of the total that they spend on marketing
and administration, 85% goes to marketing
and 15% goes to administration. If this is true of those
nine giant U.S. companies,
very close to that, because aas I said, these companiesg
all look very similar in their annual reports.
If that's true, then we can calculate that last year
when they spent $73 billion on the combination
of marketing and administration,
went to administration $11 billion
went to marketing, and $62 billion
Remember that number. That is a colossal amount.
It is over 25%
And so you wonder, of sales revenues.
Well, what the drug companies whersay in their PRy go?
is that they really don't spend that much on marketing,
that they spend more on R and D.
they make this case, But you'll notice that when
as only four activities. they're defining marketing
of free samples. It's the retail value
100,000 drug reps Ito haunt your offices.g
It's the cost of direct-to-consumer ads,
which now amounts to about $5 billion a year.
It's the cost of journal ads, which amounts to something less
than $1 billion a year. That's what they say
is marketing. But their own annual reports
say something quite different.
I made all of the calculations, but I'm estimating that no more
than $15 billion was spent
on these four activities. bYou can't get any more
than $15 billion
on those four activities. nThat leaves approximatelyis
$47 billion totally unaccounted for.
Well, that's a lot of money to leave lying around
without a word
It's the elephant in the living room..
Where does this missing $47 billion go?
Well, one clue was contained
in the Journal of the American in an article published
last month by Eric Campbell Mediand his colleaguesAMA)
at Mass. General Hospital.
the chairs of the departments Whof medicine, psychiatry,y
microbiology, two other clinical
or maybe it was two other basic science departments
in all 125 medical schools
connections with industry were. They got a pretty good response
rate, 67%, and what they found
between these chairs was that the financial ties
their personal ties, as individuals,
their departmental ties plus were all pervasive. ties,
And they were huge. 60% of department heads
had personal financial ties to industry.
11%, this is what floored me, 11% were actually on the board
of directors of drug companies. Now, how do you spell
conflict of interest? This is an immense
conflict of interest. But they had all kinds,
equity interest, all kinds
the pharmaceutical industry. of relationships with
of the departments had major An even larger number, 67%
industry. sAnd I'm not just talking about
grant support for research. I'm talking about support
for CME, support for training of residents and fellows,
and so forth. So there is some money there.
Let me, in a more systematic way, go through
what the elephant is up to. On the left there, are
some things that we know
They, the pharmaceutical these companies do a lot of.
the largest lobby in Washington. industry, for many years has had
campaigns, 80% to republicans, It gives copiously to political
But I can guarantee that 20% to democrats.
I think that great sucking sound that's going to change soon.
republicans to democrats. you hearBut anyway,oing from
they cover their bases. They lobby extensively.
They have more lobbyists
members of Congress to lobby. iThey have well over 1,000re
lobbyists, and as I say they
campaigns. give copiously to political
they get what they pay for. Congress almost never does
anything that this industry does not what them to do.
They also support a lot of front groups,
patient advocacy groups are often set up and supported
by drug companies, because
for a disease if then you, by definition,ty
are going to increase the sales of drugs to treat that disease.
So many patient advocacy groups are essentially front groups
for industry. Also policy organization.
For example, people will be skeptical if the drug companies
say something obviously self-serving.
But if they can set up
seems to be a citizens group, then they get more attraction
that way. So an example is something
called "Citizens for
Now, this sounds like a bunch of old folks sitting in their
rockers who got together
have better Medical care," and decided, "Oh, we should
for the pharmaceutical industry. but it is a front group
very hard to make sure Among other things, it worked
negotiate drug prices and the Medicare drug benefit.
So, that costs money. They are very charitable,
philanthropic in their presence in communities.
They give to cultural organizations, symphonies, and
they give to medical schools. I looked at the list of major
donors to Harvard Medical School
right up in the top donors a couple of years ago, and
Even so, this does not account were the major drug companies.
So where does the rest of it go? for $47 billion.
in the second column. We like to call this education,
and certainly,
likes to call their relationship the pharmaceutical industry
with the medical profession, with doctors,
education. with academic medicine
They don't have an education But of course it's not that.
It's marketing. That's where all of this
education comes out of, and that's what it is,
it's marketing. They support most
continuing medical education. They support most
professional societies and
far more opulent their meetings, which tend to be
or even beneficial. They support medical
conferences.
educational materials. They give medical students
and junkets, small gifts to medical students and residents,
big gifts to grown ups. Trips to Hawaii for example,
ostensibly to learn something.
are gathered together, so too is the pharmaceutical industry.
It is everywhere. Now, why?
And let me just say that
dwarfs what they spend what they spend on doctors
absolutely dwarfs it. on direcSo, why so much?tising,
Well, doctors write the prescriptions.
That's why they have to get them.
We, in the medical profession,
our responsibility to educate doctors about pharmacology
and about the use of prescription drugs.
We have largely abdicated that to companies with
a clear conflict of interest. Now, the companies know it's
marketing and not education.
reports it's called marketing. As I said, in their annual
to look to a company for And it's self evidently absurd
about a product it sells. impartialWe know thatformation
in all other walks of our life. If we want to decide whether
to buy a Toyota or a Honda, we don't ask the Honda dealer.
We know better than that. And yet we imagine that Lilly
is in a position to teach us
We just suspend our usual skepticism, and I might say
intelligence, in this case. Also, follow the money.
You know that if you want to take tennis lessons
or French lessons,
the teacher doesn't pay you. you pay the teacher,
the drug companies pay us to be educated by them.
Now, deep throat was right. You do follow the money.
And when you follow the money,
of the transaction, which is that they are buying
access to doctors.
or say they believe Nowthat drug companieseve,
don't influence them. But there have been plenty of
studies that show very clearly
And in fact the drug companies that they do.
if it didn't influence them. wouldn't bother
And if they behaved like They're not charities.
in executive suites. charities, heads would roll
So, let's look at what They get what they pay for.
information, because they do doctors learn from all of this
They learn three major things. learn something.
up there on the bottom First of all, and that's
They learn to practice of the right hand column.
of medicine. a very drug intensive style
ailment and discontent, They there is a drug.very
And there may be many drugs.
I have about all of this In fact, one of the worries
in this country now, is the degree of polypharmacy
Many older people are taking, not one drug, but four, five,.
six different drugs every day.
on old people at all, usually. And yet, drugs are not tested
it's just one drug at a time. But usually, it's tested
in younger people without co-morbidities, and
without taking other drugs. What is this doing?
I know what it's doing for some of the Medicaid population.
The drug companies push their psychiatric drugs
heavily in this population. And you can read about
Medicaid recipients who are getting an SSRI
for bipolar disorder. They're getting
an anticonvulsant off-label, for whatever.
They're getting one of the new
They're getting Zyprexor, or one of the others.
And then they can hardly
because they're so doped up. get out of bed in the morning,
for the side effects And then they're getting a drug
And they're staggering around. of the other drugs.
most vulnerable And tand fragile patients.ety's
So, anyway, we learn
style of medicine. a drug intensive
a head-to-head comparison of There is not usually
The drug companies don't want a druto sponsor that, andnges.
it doesn't happen very often. But there have been a couple
of such studies dealing with the prevention
of type II diabetes.
Metformin and one of Diet and exercise versus
to prevent diabetes in people the at risk for it.drugs
And the lifestyle changes blew away the drugs,
much more effective.
And we learn to think Butthat somehow drugsat.
are what we should be doing.
is that expensive new drugs are better than old ones,
despite the fact that as
any evidence to that effect. I pointed out, there is seldom
of the opposite in the all-hat study.e
Maybe we can
There's probably not time. talk about that later.
So, this plays into sort of Ooh, tan American belief all.
that new technology is always better than old technology.
Well, sometimes it's not. But what is pushed
are the new, expensive drugs. And that's what
the free samples are. They're never
for a generic drug. They're never for a drug
about to go off patent. They're for the newest,
most expensive drug.
will tell you that this And yois an improvement.ative
The third thing we learn
other than the indications is to use drugs for indications
Now, sometimes this makes sense if there is a new, well-done
scientific study showing
for this other use, and it hasn't yet been approved
for that use, but will be.
what's going on. But mainly that is not
for a very narrow use. The drug will get on the market
which is probably the best example of this.,
It got on the market, approved
refractory to other drugs. to treat seizures in people
they began to market it off-label for migraines,
and bipolar disorder, and as
until pretty soon, everybody a general all-purpose tonic
Now, it's illegal to market a drug for off-label uses.
But if you can construe it as education, and that's
exactly what the company did. If you can construe it
as education, invite a bunch
to hear a paid Neurologist of people to Neurontin
say, "Yeah, I think it's great for migraine,"
then you can evade that law.
Now, finally, where I'm looking in the elephant, there.
Finally, I think, and this is something
we pay too little attention to. What does this do
to the price of drugs?
is that it amounts My very conservative estimate
on the price of drugs. to a 20% markup
unseemly about some of And I think there's something
of society, and no matter what the most privileged members
you are some of the most your medical school debt is now,
Being the beneficiaries of privileged members of society.
of say, a little old lady so who has to pay 20% moreense
for her Fosimax.
unseemly about that, I think there is something
about that. and So, I'd like to closehard
by answering the question posed at the outset.
Why do prescription drugs cost so much?
Well, we know now that it's not to cover their R and D costs,
that's a small part of it.
that it's to cover their You could make a better case
maintain there enormous profits. gigantic marketing budgets, or
is mainly because they can get away with it.
Here's an industry that expects to be rewarded
as though it were the source
that insists on the freedom to produce whatever,
kinds of drugs it chooses,
erectile dysfunction drug, one more statin, one more
a drug for malaria. iIt can choose,
whatever it wants to develop. It insists on the freedom
to price their drugs
And generally talks the rhetoric as high as it likes.
being utterly, utterly dependant of the free market while
and government granted on publicly funded research
in the form of patents monopoly rights
exclusive marketing rights. It's the recipient of
extraordinary tax breaks
I think that we, and other special favors.
should stop behaving in the medical community,
Instead, we should be liat the forefront of effortse.
to reform this industry,
and to bring it into line with its rhetoric and,
with its original high purpose
genuinely important drugs, of trying to discover
and make those drugs available to fill unmet needs,
Thank you, and I've kept you on reasonable terms.
( applause five minutes over.
)