109 Marcia Angell

>> I'm going to be talking, as you've heard, about the pharmaceutical industry. And what I thought I would do is begin by giving you the vital statistics of this industry. How much money it makes, where the money goes, and so forth. And how it behaves, more generally, before later on focusing more specifically on how it interacts with academic medicine and with the medical profession. The most important vital statistic, from the point of view of the public, is the rapidly increasing cost of prescription drugs. Indeed, drug spending is the first or second fastest growing component of our healthcare bill. Some years, it's number one, some years it's number two. But it is one of the fastest growing components of our healthcare bill, which itself is rising at an unsustainable rate. So, this is a situation that just can't go on. The rapid increase in drug spending is partly a matter of volume. 

There are more people using more drugs. But it's mainly a matter of price. The price of the top 200 drugs in this country goes up on average, every year, two to four times the background inflation rate. So you can see that just can't go on. And quite simply we're running out of payers to pay these prices. Employers are bridling under this burden and the insurers with whom they contract, and are increasingly offloading some of the costs onto the patients themselves by capping the contributions. State governments are feeling the burden, because Medicaid in some states is the biggest part of their budget, and a big part of the Medicaid budget is prescription drugs. Medicare has this monkey on its back now that is has a prescription drug benefit. 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. Premiums for Part B have gone up, co-payments are increasing, and so forth. 

And certainly individuals can't afford the prices anymore. Surveys have shown that a large percentage of Medicare recipients choose not to fill prescriptions because they can't afford it, or play out their prescriptions by taking half a dose, or share their prescriptions with spouses. So, high drug prices are a problem that is very, very crucial right now to the public. Why are drug prices so high? Well, what the drug companies would like us to believe is that drug prices have to be high in order to cover their high research and development costs, which implies that they spend most of their revenues on research and development and that afterwards, they have enough left over only for modest profits. Is that true? In the rest of my talk, or most of the rest of my talk, I'd like to answer that question by giving you a look at an industry that's very, very different from the industry portrayed in its public relations. 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. The first slide that I'm not showing you... 

(laughter) gives you an overall view of the industry globally. It shows the top ten drug companies in the world. 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 were about $643 billion, Billion dollars, I almost said million. And these ten companies alone account for over 40% of that. They had sales last year of $271 billion. What are the companies? Well, Pfizer is number one, the biggest drug company in the world. GlaxoSmithKline is number two. Sanofi-Aventis is number three. 

Novartis is number four. AstraZeneca is number five. Johnson & Johnson, Merck, Roche, Lilly, and Wyeth. They are the giants. What you may have observed is that this is not an American industry. Of those ten companies, five are American and five are European. GlaxoSmithKline is British, Sanofi-Aventis is French. Novartis is Swiss. AstraZeneca is British Company. And Roche is Swiss. 

So it's international. It's truly an international industry. The drugs themselves are manufactured all over the world. Pfizer has 60 manufacturing plants in 32 countries, located mainly for tax purposes. Some of the manufacturing plants are in Ireland, but many of them are in third world countries all over the world. I tell you this, because obviously drugs are flying over borders all the time. And yet Americans are invited to believe that a drug turns to poison by virtue of crossing the Canadian border. (laughter) 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 look very much the same. They spend roughly the same percentage of sales on marketing and administration, roughly the same on research and development. 

And they have roughly the same amount left as profits. So, the numbers are expressed in different units, some in francs, some in pounds, some in dollars. But they are very similar. This is truly a multi-national industry. 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 the only advanced country that 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. So this country is extremely important to this whole industry. Therefore, they tend to pass themselves off as American, implicitly, as American in their public relations, in the ads you'll see on the programs that old people watch, the evening news or the Sunday morning talk shows. They tend to pass themselves off as American. In fact, the trade association of the industry is misleadingly named the Pharmaceutical Research and Manufacturers of America, abbreviated FRMA, even though it consists of 35 of the largest companies all over the world. 

So, we may not know, even some of you may not know that GlaxoSmithKline, the maker of Paxil, is a British company; or that AstraZeneca-- Here is that slide I promised you. Or that AstraZeneca, the maker of Nexium is another British company. You can see here, it's just a staggering size of the sales revenues of these companies. Pfizer last year had sales of $45 billion. There are some countries that would very much like to have a gross national product that big. Now, this next slide is a little different from the first one. It shows only U.S. companies. It shows the nine biggest drug companies in the United States. And these were the nine that appeared on Fortune Magazine's list of the 500 biggest companies in America, the Fortune 500. Those companies are: Johnson & Johnson, Pfizer, Merck, Abbott, Wyeth, Bristol-Myers Squibb, Lilly, Amgen, and Schering-Plough. 

These are the nine biggest American companies. The other way in which this slide differs somewhat is that is shows all sales of these companies. The first slide showed just sales of prescription drugs. This shows all sales. 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, like Johnson & Johnson, they also have substantial sales of other consumer goods, although still their major sales come from prescription drugs. Now, this may be the most important slide that I'm going to show you today. Is there a pointer by any chance around, a laser pointer? I don't see one. That's all right. 

That's all right. I'll tell you where to look. It may be the most important 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 the phenomenal profit margin. Profits were $49 billion, or 20% of sales. That is an astonishing profit margin. It compares with only 6.3% profit margin for all the of Fortune 500 companies together. 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 as far back as I could find, going right up until 2003, when the war in Iraq began. And at that point, petroleum and mining jumped ahead. Energy jumped ahead. But last year, pharmaceutical industry was still number two. Now, if a company, if an industry is consistently number one or two, I think for a couple of years, maybe I think the year before last it was five. But if it's consistently three to six times more profitable than the median for the Fortune 500 companies, you can hardly call that a risky industry. And yet it portrays itself as a risky industry. This is not 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 what these companies spent on marketing and administration. And less, even, than they retain in profits after all of their expenses. This is the smallest of the three main budgetary items, the smallest. Let me just say something about Pfizer, too, and about what's happening in this industry as far as profits go. Last year, Pfizer, the world's biggest drug company had a profit margin of 40%. 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%. Now what does this do to a company? Well, in a sense they become victims of their own success, because these are investor-owned companies. And what Wall Street wants is for your profits to go up. They don't care how profitable you are today. What are you going to do for me in the next quarter? It's very hard to trump 40%. 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. 

We can get into the wisdom of leaving this industry to investor ownership later, perhaps. But it's a real problem. So, what are we getting for all of this money? Now, I want to look at the output of the pharmaceutical industry for this decade over the seven years, 2000-2006. And I have to give you a little background first. Many of you will know this, but others may not. Before a drug can legally be sold in this country, it has to be approved by the FDA wherever it is made. So all of these companies, whether they're in Europe, or Timbuktu, want to be sold in the United States, because it is the major profit center. 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 reasonably safe and effective. 

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. In most cases they only have to compare their new drugs with a placebo. So new drugs have to be better than nothing, which is an extremely low standard. Now, people think, and it's logical to think this. Many of you may also have this notion that FDA approval means a drug is offering something better than what you're already using for the same condition. But that's not so. For all we know, it could be worse. If you look at a family of similar drugs. Let's look at the family of statins to lower cholesterol, or the family of SSRIs to treat depression. 

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 at equivalent doses. Sometimes they'll fool around with doses. They'll compare a new drug with an old drug at a dose that is designed to find what they want to find. For example, if they want to show that their new drug is more stronger, they'll compare it with an old drug at too low a dose. Or, if they want to show that their new drug is safer, they'll compare it with an old drug too high a dose. But rarely head-to-head at equivalent doses. Now, when the FDA approves a new drug, it classifies that drug in two major ways. You can go to the FDA Web site and find out everything I'm about to tell you. 

It classifies the drugs, first of all, according to whether it's a new drug at all, or just an old drug in a slightly different dosage form, or a very different dosage form in some cases. The new drugs, the FDA calls new molecular entities. And the others are not new molecular entities. The second way it classifies new drugs is according to 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. Well, let's look at the output then, for these seven years. In those seven years, there were 599 new drugs approved, that is new drugs that could come on the market. The column on the left is labeled "NME" New Molecular Entity. 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 as improvements over existing drugs, and that's in purple, at the top of each column, you see 68 on the top of the NME column 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 anything better than what was already on the market. Look at the 399. That is the major output of this industry. And these are old drugs judged not to be any better than drugs already on the market, that is "me too" drugs, trivial variations of drugs already on the market. And this is this industry's major output now. Well why? Well, that's where the money is. And fiduciary responsibility to these companies is to maximize profits for their investors. 

And that is where the money is. It's easy and fast to make "me too" drugs. And they cash in on already established lucrative markets. They tend to target chronic conditions in essentially normal people. That's economics 101. There are more normal people than sick people, so that's who you want to sell to. They target chronic conditions in essentially normal people: heartburn; shyness, which they call social anxiety disorder; heartburn, which they call acid reflux disease; erectile dysfunction, that's half of the population is their target with that particular condition. They not only target chronic conditions in a huge population, but it's a population that can be expanded. 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 than a competitive market. It has been shown that if you market one "me too" drug in a class, if you market Zoloft, it increases the sales for the whole class. It just expands the market, and they all get a little piece of that action. The "me too" drugs also target precursor conditions 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 conditions, and what you're really trying to ward off is the heart attacks and strokes, and so forth, that are complications of these precursor conditions. Well here, too, the market can be expanded greatly by simply redefining what is a normal cholesterol, what is hypertension, what is high blood pressure? And in fact I've come to 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 of cholesterol 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" drugs, not for generally important innovative drugs, and that makes sense. If a drug company had a cure for cancer, the world would 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 like in most industries. In most industries, you'll hear buy the Honda instead of the Toyota because it's cheaper. You never hear that you should buy Zocor instead of Lipitor because it's cheaper. There is no price competition. What they do is to imply that it's better in some way. Better, more effective, safer, whatever. 

Despite the fact that there is almost never any evidence to that effect. But that's what is going on in the drug ads. And they increasingly, you probably noticed, advertise a disease instead of the drug. They tell you that you have social anxiety disorder, or they tell you that you can sit in a bathtub with your loved one in the woods (laughter) if you get some Cialis. I've never seen bathtubs in the woods. But they advertise a disease and not the drug in many cases. Now I want to make this point more starkly, the point that this industry is getting less and less innovative. This is just for last year. You can see that everything was a "me too" drug. 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 over other drugs. You may wonder what a new molecular entity is that is not an improvement. Clarinex is the metabolite of Claritin. It's what Claritin turns into when you swallow it. But it's a new chemical, 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, Sprycel, Noxafil, Zolinza. I doubt whether you've heard of any of these drugs. 

But increasingly, this is what you see, that two of the six are orphan drugs. And these are drugs that are designed to target a disease that fewer than 200,000 people have. You get extra exclusive marketing rights if you make an orphan drug. And so, two of them are orphan drugs. One of them is something to aid in smoking cessation. I think the other three are last ditch treatments for conditions that are refractory to other treatments. I think one is a HIV AIDS treatment for people who are refractory to protease inhibitors. And so that's it. I don't mean to say that's not a good thing to have a last ditch drug for people who are desperate and other drugs haven't worked. But still, not what you would call a breakthrough. 

And that's it. That is the total output from this mighty industry, which is growing less and less innovative every year. Where do the innovative drugs come from? Now this is not 2006. This is much, much earlier. It's based on information from the mid '90s. It's still quite interesting. I see no reason to think it has changed much. This refers to an internal study that was done by the NIH to try to find exactly where the contributions came from that gave rise to the five top selling drugs in 1995. And those drugs were: Zantac, Zovirax, Capoten, Vasotec, and Prozac. 

And so they looked at the literature to find out where the science that led to the discovery and the development of these drugs came from. And what they found was that of all of the studies, 55% emanated from NIH-funded labs, usually in universities, sometimes at the NIH itself; 30% came from foreign, usually public labs all over the world; and only 15% came from the companies that actually made the drugs. They then looked at the 17 key studies. And of the 17 most important studies for these drugs, only one came from one of the companies that sold the drug. Lilly did one of the important studies that gave rise to Prozac. The others all came from NIH-funded or foreign work. There have been other analyses done in different ways 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 where the innovation comes from is particularly true in important drugs that target life-threatening illnesses. HIV AIDS, cancer, almost all of these drugs emanate from NIH-funded research. 

Even among "me too" drugs, the first in the series, the pioneer drug among "me too" drugs usually came from outside the industry. Let's just look at the statins. Lipitor is the top selling drug in the world. I think that sales last year were $13 billion of Lipitor. 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. After Mevacor, it was a fairly simple matter to keep turning out very similar statins. Mevacor, incidentally, is now available as generic Lovastatin. Nobody uses it because nobody markets it. 

The newer, very expensive brand name drugs are the ones that are marketed. And the newer they are, the more intensely they're marketed. So nobody buys the cheapest statin. Similarly, look at the SSRIs. Prozac, just by coincidence, came on the market the same year, 1987. That too, except for the Lilly trial, was based mainly on work done outside of the company. It's now available for pennies, generically. Nobody uses it. They use Zoloft, or Paxil, or now up to Celexa. As each becomes generic, things with long patent lines ahead of them, very expensive drugs. 

So, you might say, all right, what's wrong with this. Okay, the drug companies don't do the innovation, but they support the clinical trials. They put the pills in the bottles. They market the pills. So what if the creative work is done by NIH-funded researchers somewhere else, increasingly in small bio-tech companies. Well, the problem is that 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. Remember I told you I'd talk a little bit later about marketing and administration. 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 would be embarrassing, so they kind of squish them together. They're both very large. 

It's impossible to tease out how much goes for marketing and how much goes for administration. Administration-- executive salaries, legal costs, you know, the costs of running a big business. You can't tease this out for most of the companies. Novartis does separate them. The Swiss company Novartis, in its annual report. 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, and I suspect it's something very close to that, because as I said, these companies 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, $11 billion went to administration and $62 billion went to marketing, $62 billion. Remember that number. That is a colossal amount. 

It is over 25% of sales revenues. And so you wonder, where did this money go? Well, what the drug companies say in their PR is that they really don't spend that much on marketing, that they spend more on R and D. But you'll notice that when they make this case, they're defining marketing as only four activities. It's the retail value of free samples. It's the cost of sending 100,000 drug reps to haunt your offices. 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. 

Now I won't go through how I made all of the calculations, but I'm estimating that no more than $15 billion was spent by these nine companies on these four activities. You can't get any more than $15 billion no matter how you slice this on those four activities. That leaves approximately $47 billion totally unaccounted for. Well, that's a lot of money to leave lying around without a word about what it's for. It's the elephant in the living room. Where does this missing $47 billion go? Well, one clue was contained in an article published in the Journal of the American Medical Association (JAMA) last month by Eric Campbell and his colleagues at Mass. General Hospital. What they did was to survey the chairs of the departments of medicine, psychiatry, microbiology, two other clinical departments, one other, or maybe it was two other basic science departments in all 125 medical schools to see what their financial connections with industry were. They got a pretty good response rate, 67%, and what they found was that the financial ties between these chairs as individuals, their personal ties, plus their institutional ties, their departmental ties were all pervasive. 

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 of relationships with the pharmaceutical industry. An even larger number, 67% of the departments had major support from the pharmaceutical industry. And 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 these companies do a lot of. They, the pharmaceutical industry, for many years has had the largest lobby in Washington. It gives copiously to political campaigns, 80% to republicans, 20% to democrats. But I can guarantee that that's going to change soon. I think that great sucking sound you hear is money going from republicans to democrats. But anyway, they cover their bases. They lobby extensively. They have more lobbyists in Washington than there are members of Congress to lobby. They have well over 1,000 lobbyists, and as I say they give copiously to political campaigns. 

And let me say 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 if you can get more publicity for a disease then you, by definition, 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 a policy group that seems to be a citizens group, then they get more attraction that way. So an example is something called "Citizens for Better Medical Care." Now, this sounds like a bunch of old folks sitting in their rockers who got together and decided, "Oh, we should have better Medical care," but it is a front group for the pharmaceutical industry. Among other things, it worked very hard to make sure that Medicare could not 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 a couple of years ago, and right up in the top donors were the major drug companies. Even so, this does not account for $47 billion. So where does the rest of it go? Well, I think that's in the second column. We like to call this education, and certainly, the pharmaceutical industry likes to call their relationship with doctors, with the medical profession, with academic medicine education. But of course it's not that. They don't have an education item in their budget. 

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 their meetings, which tend to be far more opulent than are necessary or even beneficial. They support medical conferences. They give medical students educational materials. They supply gifts, meals and junkets, small gifts to medical students and residents, big gifts to grown ups. Trips to Hawaii for example, ostensibly to learn something. And everywhere two doctors are gathered together, so too is the pharmaceutical industry. It is everywhere. 

Now, why? And let me just say that what they spend on doctors dwarfs what they spend on direct consumer advertising, absolutely dwarfs it. So, why so much? Well, doctors write the prescriptions. That's why they have to get them. We, in the medical profession, have largely abdicated 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. As I said, in their annual reports it's called marketing. And it's self evidently absurd to look to a company for impartial critical information about a product it sells. 

We know that 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 about depression. 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, you pay the teacher, the teacher doesn't pay you. But in this case, 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, you find the real nature of the transaction, which is that they are buying access to doctors. Now, some doctors believe, or say they believe that drug companies don't influence them. But there have been plenty of studies that show very clearly that they do. And in fact the drug companies wouldn't bother if it didn't influence them. They're not charities. And if they behaved like charities, heads would roll in executive suites. They get what they pay for. So, let's look at what doctors learn from all of this information, because they do learn something. They learn three major things. First of all, and that's up there on the bottom of the right hand column. 

They learn to practice a very drug intensive style of medicine. They learn that for every ailment and discontent, there is a drug. And there may be many drugs. In fact, one of the worries I have about all of this is the degree of polypharmacy in this country now, particularly for older people. Many older people are taking, not one drug, but four, five, six different drugs every day. And yet, drugs are not tested on old people at all, usually. And when they are, 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 anti-psychotics. They're getting Zyprexor, or one of the others. And then they can hardly get out of bed in the morning, because they're so doped up. And then they're getting a drug for the side effects of the other drugs. And they're staggering around. And these are some of society's most vulnerable and fragile patients. So, anyway, we learn a drug intensive style of medicine. 

There is not usually a head-to-head comparison of a drug with lifestyle changes. The drug companies don't want to sponsor that, and it doesn't happen very often. But there have been a couple of such studies dealing with the prevention of type II diabetes. Diet and exercise versus Metformin and one of the newer diabetic drugs to prevent diabetes in people at risk for it. And the lifestyle changes blew away the drugs, much more effective. But you don't hear that. And we learn to think that somehow drugs are what we should be doing. The second thing we learn is that expensive new drugs are better than old ones, despite the fact that as I pointed out, there is seldom any evidence to that effect. There is some evidence of the opposite in the all-hat study. Maybe we can talk about that later. 

There's probably not time. Ooh, there's not time at all. So, this plays into sort of an American belief 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. And your sales representative will tell you that this is an improvement. 

The third thing we learn is to use drugs for indications other than the indications for which it was approved. Now, sometimes this makes sense if there is a new, well-done scientific study showing that a drug is good for this other use, and it hasn't yet been approved for that use, but will be. But mainly that is not what's going on. The drug will get on the market for a very narrow use. This is true of Neurontin, which is probably the best example of this. It got on the market, approved to treat seizures in people refractory to other drugs. And once on the market, they began to market it off-label for migraines, and bipolar disorder, and as a general all-purpose tonic until pretty soon, everybody was taking Neurontin. 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 of people to Neurontin to hear a paid Neurologist on the faculty of Harvard say, "Yeah, I think it's great for migraine," then you can evade that law. 

That's exactly what goes on. 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? My very conservative estimate is that it amounts to a 20% markup on the price of drugs. And I think there's something unseemly about some of the most privileged members of society, and no matter what your medical school debt is now, you are some of the most privileged members of society. Being the beneficiaries of so much largess at the expense of say, a little old lady who has to pay 20% more for her Fosimax. I think there is something unseemly about that, and we should think very hard about that. So, I'd like to close 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. You could make a better case that it's to cover their gigantic marketing budgets, or maintain there enormous profits. But the real answer is mainly because they can get away with it. Here's an industry that expects to be rewarded as though it were the source of medical miracles, that insists on the freedom to produce whatever kinds of drugs it chooses, one more statin, one more erectile dysfunction drug, instead of say, a drug for malaria. It can choose whatever it wants to develop. It insists on the freedom to price their drugs as high as it likes. And generally talks the rhetoric of the free market while being utterly, utterly dependant on publicly funded research and government granted monopoly rights in the form of patents then FDA conferred exclusive marketing rights. It's the recipient of extraordinary tax breaks and other special favors. I think that we, in the medical community, should stop behaving like junior partners, or worse. Instead, we should be at the forefront of efforts to reform this industry, to regulate it better, and to bring it into line with its rhetoric and with its original high purpose of trying to discover genuinely important drugs, to fill unmet needs, and make those drugs available on reasonable terms. 

Thank you, and I've kept you five minutes over. (applause)