How Drugs Companies Cheated America Out of a Trillion Dollars

Do you have any data to back up this claim? This sounds like one of those numbers people just throw around.

 

Log in or Sign up to hide all adverts.

Some factors that have increased the cost of drug development:

- switch to focus on developing treatments for chronic and degenerative diseases or conditions associated with those diseases which development costs are higher.

- increase in patient recruitment prices because more drugs are under development.

- more drugs are tested for effectiveness against an already existing drug, which is more expensive as testing against a placebo.

Journal of Health Economics
Volume 22, Issue 2, March 2003, Pages 151-185

 

Log in or Sign up to hide all adverts.

Yes they are. By the very nature of these "services" one can only use estimates - that was why I was vague ("hundreds") - a LOWER limit is set by the number of girls who do seek hospital care after an abortion that, despite their "too late" hospitalization, will die from the abortion.

IMHO, it really is not too important whether the correct number of abortion deaths in USA is 234 or 4123 annually. The policy that causes them to die is wrong.

It is extremely ironic that this policy has its strongest base in the religious "right to life" group, which is why GWB and his apointed director of the FDA (now gone, fortunately) opposed making Barr's "Plan B" (morning after anti-conception*, at least anti-fertalized egg implantation pill) available to under 18 girls with out a perscription. Those so ashamed, confused, etc. that they place their life in hands of an old lady with a coat hanger, do not have inclination (or time to get doctor's appointment) and fear he would seek their parent's aproval as is required by law in many states.
----------------------
*Depends on how you define "conception." - IMHO, conception is the sequence of processes that results in a fertalizized egg dividing into two cells. Thus a condum is an "anti- conception" agent, as is vaginal chemical foams which either kill or immobalize the sperm, as are other agents such as Barr's menstral cycle extender (FDA approved "Seasonal") which make a woman on it have only 3 or 4 fertal periods each year, or such as Barr's Plan B, or if it exists, an agent that prevents the wall of the egg from selecting only one particular sperm from penetrating (hundreds doing so would now doubt not result in a sucessful conception; - but some with a more narrow POV about coneption (definiton that has it one instant in time, rather than a complex process) might say that conception occurred with the first sperm to enter the egg (even though there was as yet no joining of the male and female contributions to DNA, etc) and less than a second later with the entry of the second sperm the conception failed.

IMHO, that "conception is one instant event" POV is too simple and only reflects their ignorance of how complex the PROCESS of conception is.
I think some of the religious right avoid any need to understand conception by defining conception as that instant when the "soul" joins with the body. Probably at least 10 fertailized eggs or even fetal cell masses of hundreds of cells go into the toilet un-noticed every day in the US for every conception which 9 months later will yield a birth. And these religious people tend to believe that once joined to a body the soul will ultimately go to heaven or hell, with its "restored" body,"** it would be logically very convenient for them to have that joining of soul to body occur with the first breath of the baby - that way there would not be tiny cell masses burning in hell or trying to enjoy their presence with God in heaven; however very few of these religious people concern themselves with clear logical thought.
----------------
**None want to be in heaven with the body they had at the instant of death.

 

Log in or Sign up to hide all adverts.

LOL What do want, heaven as a Night of the Living Dead movie? Sounds like hell. Also reminds me of the Party Animal anthem,

"Live Hard, Die Young, and Leave a Good Looking Corpse."
​

 

Who is "cheating" whom?
Not the bigger drug companies. (Why I own only the tiny ones, in early drug development stages -about 40 of them.)
Look at this:

"The world's largest drug company spent $55 billion on research and development and $180 billion in stock and cash on acquisitions since 1998, yet it went almost a decade without launching a drug that brings in more than $1 billion in annual sales. ..."
FROM:
http://www.forbes.com/2007/10/15/bi...016pfizerbiogen.html?partner=daily_newsletter

CORRECTION OF ABOVE:
That 55 billion + 180 billion is for JUST ONE COMPANY, Pfizer, not the whole of "big Pharma" but all are in big financial troubles as their "block buster" drugs are going off patent. (most by 2012)

" ... Pfizer's trail of woe, reflected in a 40% share price decline since 1998, is a result of an affliction known to every problem gambler: the delusion that skill can overcome chance. So desperate was it to replace its megahits, like the $12 billion Lipitor, that it kept piling up its bets on drug candidates without a coldhearted assessment of their odds.

Pfizer spent the tenures of two chief executives and billions of dollars on Exubera, the first inhaled insulin. Kindler's predecessor, Henry McKinnell, called it "a major medical breakthrough," and Pfizer forecast sales of more than $1.5 billion. The drug was finally approved a year ago but generated sales of $4 million last quarter. That's less than McKinnell's annual pension.

Pfizer tried to buy its way out of the drought. Macugen,* for macular degeneration, cost Pfizer $300 million to license but brings in no sales. Indiplon, a sleeping pill, was licensed for $200 million, then turned down by the Food & Drug Administration. In 2003 Pfizer spent $1.3 billion acquiring Esperion Therapeutics, maker of a protein to Roto-Rooter clogged arteries, but now can't manufacture enough to start a new clinical trial. Vicuron Pharmaceuticals was swallowed in 2005, at a cost of $1.9 billion, for two anti-infectives that were expected to hit the market within months. One isn't selling, and the other has yet to be approved. And then the biggest disaster of them all: Pfizer spent $1 billion, a record for late-stage trials, to win approval for its Lipitor replacement torcetrapib. Torcetrapib caused deaths in a big trial. It's a goner. ..."

FROM:
http://members.forbes.com/forbes/2007/1029/044.html?partner=biotech_newsletter

Pfizer is still desperate. I would not touch them with the proverbal 10 foot pole. See:
http://www.forbes.com/2007/10/15/bi...6pfizerbiogen.html?partner=biotech_newsletter

Pfizer appears to be "thowing in the towel" on Exubera. (just breaking news -Oct 18 at 8AM EDT) I have not confirmed yet. See:
http://blogs.forbes.com/sciencebizblog/
BTW, that link speaks more about small company I have owned for about two years. I liked very much fact that its drug was used for about 17 years in Russia (for different application) so not likely to fail FDA on safety. (Most drugs that fail cause liver problems) There you can read:
"... Medivation, which trades on the Nasdaq with the ticker MDVN. Its lead drug, Dimebon, ..."


--------------------------
*BTW, I owned shares in EyeTech, the originator of Macugen. They did very impressive science - found the one of eight VEGF types that was most effective at stopping the growth of new blood vessels in the retina and I think were the very first to get FDA approval for any Vascular Endofilia Growth Factor blocker. (They were cautious, and did not want to play around blocking all new blood vessels.) Now Avastin is a billion dollar drug approved for several solid tumers and blocks all (I think) VEGF. (one modified version of Avastin is now used instead of Macugen, in most cases, but as it may comprmise development of new blood vessels in the post stroke heart, not all.)The tumor can not grow if it can not get more blood supply. EyeTech was sold to OSI, if I remember correctly and I only suffered small loss, but then OSI lost big time on it. It seems that Pfizer owns Macugen now, I owned OSI but sold it when it bought Eyetech and have not followed Macugen since.

This is a good example of fact that excellent science, clever ideas, very good connection to the market (EyeTech's CEO was widely respected eye doctor.) FDA approval, first in the field, very motivated rich customers (going blind) paying $1000 every 6 weeks for their Macugen shot, and market with only a few specialist doctors (small sales force required) IS NOT ENOUGH TO GUARANTEE financial sucess. - I was sure EyeTech would be a big winner and lucky to get out with only small loss. Most of the 40 or so early stage drug developers I own have less going for them than EyeTech seemed to have! It is a very risky business to be in, but the rewards can ocasionally be great.

 

It is currently good vote getter to attack the drug companies. Below in blue is an example of this "grandstanding." - To understand why, you need to know that both drugs mentioned retard the development of new blood vessels (are anti VEGF agents, for those who know a little of this) Avastin is great commercial success, but NOT APROVED FOR USE IN THE EYE. The closely related Lucentis is approved for treatment of wet macular degeneration (wet M,D.) by FDA, but significantly more expensive.

Doctors can legally, at their discression, give you any drug on the market even if untested and not approved for that use. (They can also cut you up anyway they like, if surgens.) Many eye doctors have been giving Avastin as treatment of wet M.D. Genentech is trying to obey the law (and avoid possible law suits if there are bad side effects) IMHO, Senator Kohl is seeking votes with little concern for the law or the public safety! (I have no financial interest in Genetech - too "late stage" for my funds as I want a bigger risk priced in than the dollar dropping risk all US companies are subject to.) I.e. Kohl is "grandstanding" to exploit the common anti-drug company sentiments of his ignorant voters.


" ...Genentech's plan to restrict the availability of Avastin, allegedly to force doctors to use the newer and more expensive Lucentis, will cost taxpayers $1 billion to $3 billion a year, according to Senator Herb Kohl (D-Wisc.). Kohl said in letters to the Centers for Medicare and Medicaid Services and the FDA that Genentech's decision to limit access to the medicine by pharmacies that repackage drugs ''is of great concern.'' He also sent the company a letter saying that his staff would investigate the restrictions. Kohl is a member of the Senate's Appropriations Committee. ..."

Unfortunately, I can not give a good link as this was Emailed to me today by PharmaLive.com, but if you go there you can probably find it. (I get more than 100 reports each week from them on tiny drug companies, all or free.)

I know all about wet M.D. drugs as owned shairs in EyeTech, the first to market with a $1000/ shot drug, that rich people gladly paid every 6 weeks to avoid going blind. I was lucky to get out with little loss when OSI bought up Eyetech. OSI has lost a bundle on that Eyetech drug, in part becuase of both of Genetech's drug are cheaper and better (but used once a month) in most patients without heart problems. (Damaged heart may need to develope all the new blood vessels it can - you don't want all 6 types of VEGF supressed if you have damaged heart. (Eyetech's drug hit only the most important type of VEGF receptor for wet M.D. not all 6. EyeTech was not only first, but did very good science. I like it a lot, but it went under financially - early drug development is very risky - why I own more than 40 of these early stage companies.) OSI is trying to find a buyer for the EyeTech drug now. They just want out too now. Buying EyeTech was a terrible decision by OSI, but helped me get out.

 

you have yet to respond to any point made. You respond to points that are not being made and make near random statements.

 

yes, sigh. Why did you need to mention that and remind me?

Pfizer was much too well established to interest me, but I still own some of NEKTAR THERAPEUTICS who licenesed some of the technology of Exubera to Phizer. It is now worth almost 40% of what I paid for it, but they are very good at what they do, under relative new management, who recognizes that the prior management did not get the level of royalities it should as they are the world leader is a small, but important, field - so I will "hang in with them" and hope for recovery.

 

Following not worth new thread nor exactly on thread, but does illustrate a little about FDA {If you already know that the independant pannel of experts recommended AGAINST this new approved use of Avastin as it in the breast cancer case, it does not extend life and is expensive.}

"... Avastin almost doubled the time cancers were held in check before starting to worsen. It also doubled the number of women whose tumors shrank significantly.
It did not extend overall survival rates and caused more serious side effects, including perhaps half a dozen deaths. That seems like a modest basis for approval pending completion of additional clinical trials. The quandary is whether an extra 5 1/2 months of holding tumor progression at bay is worth toxic side effects.

The drug is already prescribed ''off label'' for some 11,000 American women with advanced breast cancer, but the latest approval is expected to increase its use among some 43,000 women deemed suitable candidates for treatment. The cost could be enormous. Genentech charges about $92,000 a year for breast cancer patients. For women with annual family incomes below about $100,000, it caps the charges at $55,000 a year.

The company argues that Avastin emerged from many years of costly research. It does not claim that the drug is cost-effective for advanced breast cancer but believes it will clearly be worth the cost if shown effective in earlier stages of breast cancer.

Britain's National Health Service has balked at paying for Avastin for breast cancer patients. If this country hopes to get escalating health care costs under control, it will need a way to determine which treatments are worth paying for, and which are not. The case of Avastin is a reminder of just how difficult that can be. ..."

From: http://www.therapeuticsdaily.com/ne...747618&contenttype=sentryarticle&channelID=28

 

Yes, what I found so amazing was immediately after the 2006 elections Phrma was saturating the TV markets with ads claiming that if congress changed this law, it would limit and restrict drug choices available to seniors....amazing.

 

Good post Kmguru, but I might add that there is cost also even after the drug makes it to market. - often like corn flakes, that promotional cost (for the army of "detailers" calling on doctors, free samples and in some case distribution in Africa etc below production cost etc.) exceeds the production cost.

To see how much "profit margin" is actually available to pay for the development etc., the drop in price when it goes "off patent" and some generic company like Barr, TEVA, etc starts to sell gives a crude indication, but the generics have cost to get their version thru the FDA also.

Don't forget there is always a chance that after several year of being sold -some rare but serious "side effect" will become known and then there are the law suits, legal defense fees, etc. that need to be covered by the other drugs they sell if company is to survive.

 

Part of the cost, at least under GWB, was needless delays and limitation on very save drugs that save lives. GWB's politically chosen head of the FDA ignored all of the data and several reviews by scientific committees strong endorsing Barr's "Plan B" moring after pill for prevention of unwanted pregnacy.

An un known number of young girls died from "back alley" abortions due to the political power of the religious right that solidly supported GWB, while ironically calling themselves "right to lifers." Perhaps this loss of lives and the hospital expense associated with repair of botched abortions is the greatest cost the people like Palin imposed on society with opposition to Plan B. - Anyone know how the "shotgun wedding" of her knocked up daughter is holding up?

During the years Plan B was held off the market by GWB's FDA head various reductions in restrictions were achieved. First girls over 18 with doctor's perscription (probably too late for Plan B to function when that was obtained) could buy without pararental approval. Eventually, the 18 and over could buy over the counter. Senator Hilery Clintion was active in getting the restrictions removed and eventually that political head of the FDA who ignored all the science about safty and effectiness removed.

Yesterday the restrictions were relaxed a little more:

"In the latest chapter of a long-running political saga, a federal court in New York late Monday ruled that the Food and Drug Administration must allow over-the-counter sales of the controversial contraceptive Plan B to women aged 17 or older. The judge also criticized FDA officials of politicizing the issue and stonewalling efforts over the years to lower the age limit."

Quote from a Morning Star report on TEVA which now owns Barr.

 

If the FDA makes carrots against the law then I am going to war (seriously)!!!

PS. I love carrots!

 

"... Over the past several years large-pharmaceutical companies have gotten quite good at lowering their effective tax rates thanks to foreign subsidiaries and R&D credits. In fact, the average tax rate using the 14 largest U.S-based pharmaceutical and biotech companies in 2008 was 23%.

It is possible that the President’s proposal could raise the effective rate for each firm to 30% by closing these loopholes and cutting R&D tax credits. That equates to a 7% increase in effective tax rate for the average company, or as much as a 20% to 30% decrease in net income. The details on the tax reform aspect to President Obama’s proposal have yet to be divulged, but this does have the potential to be a significant negative for: ..."

Please Register or Log in to view the hidden image!

This image of table did not show, for me, so Here is data less well arranged:

Company____ % U.S. Revenues*____ Est. % Govt. Biz____ % At Risk Exposure
Abbott Labs 48% ~8% ~4%
Bristol-Myers 59% ~14% ~9%
Johnson & Johnson 51% ~9% ~5%
Merck & Co. 56% ~10% ~6%
Schering-Plough 30% ~8% ~3%
Eli Lilly & Co. 54% ~18% ~10%
Pfizer, Inc. 42% ~6% ~3%
Wyeth, Inc. 47% ~5% ~2%

A low first number company is less effected by US laws and market.
A low second number company is less effected by US government buying.

Here is the 2008 US tax rates paid by top U.S. market Drug Companies. They get to use R&D and other expenses, including marketing which is often larger than R&D, (Sales reps calling on doctors mainly, but ads on TV, newspapers etc. can be significant also.) to reduce profits:
Abbott Labs 22%
Amgen 22%
Bristol-Myers 22%
Alcon, Inc. 15%
Genentech 36%
Biogen Idec 29%
Genzyme 34%
Gilead Sciences 27%
Johnson & Johnson 23%
Eli Lilly & Co. 21%
Merck & Co. 17%
Pfizer, Inc. 22%
Schering-Plough 15%
Wyeth, Inc. 30%

Quote & data from ZACKS.com the "Week-end Wisdom" of 11April09 (I cannot give link as it opens my email inbox.)

 

billy i was reading your first post in this thread and i disagree with you. Technical bills DONT have to be written by an industry alone, thats why in australia we have the commity proccess in parliment (mainly focused around the senate), they consult with law groups, industry, consumer groups, statory bodies, the general public if people wish to make a submission and achademics in the fields. For instance if you want to make a bill to ensure safe drugs you dont just go to those who have the insentive to gain by cutting corners, you ask the TGA what THEY think the parliment should do, you ask the associated proffessional groups like the AMA, the nursing federation ect, you ask the universites. You do ask the drug companies but that should just be a very small part of where the bill comes from

 

I have not yet re-read my OP but it should not (but seems to have) give the impresion that ONLY drug companies write the laws.

However as you note they have a lot at state so will make drafts, that congress flies by doctor groups (AMA, etc.) and especially the FDA, which is were the university experts get to have imput. Almost, all new drugs seeking market approval from the FDA get at least one science committee review, which the FDA usually goes along with.

For a current example I have been following as I own stock in Alkermes Inc. ALKS:
"... Analysts at Lazard Capital Markets lowered their rating of Amylin Pharmaceuticals AMLN on Friday to hold from buy, citing concerns that the company's drug candidate exenatide LAR might run into the same regulatory approval snags as Novo Nordisk A/S' liraglutide.

Late Thursday, an FDA panel reviewing liraglutide's application expressed concnern over a study that indicated it might trigger thyroid cancer tumors in rodents. Amylin is co-developing exenatide LAR, a long-acting version of its popular medication Byetta, with Alkermes Inc. ALKS and Eli Lilly & Co. LLY.

Both liraglutide and exenatide belong to the sames class of drugs called GLP-1s. "Exenatide LAR may deliver a cleaner preclinical safety profile than liraglutide, but we wonder if less than 500 patients from exenatide LAR's DURATION-1-3 trials are sufficient to address the FDA's concern yesterday over a potential 'class effect' for thyroid cancer that could increase with longer-acting agents, and if additional trials would be required," wrote the Lazard analyst Matthew Osborne, in his note. " From: http://news.morningstar.com/newsnet...C6FF1E60-3BE0-4B79-B8B9-3C5B7402CD02_univ.xml

Matthew Osborne is well aware that if the FDA wants more tests, that is years and big costs. I bet they will, but as Lilly is picking up most of the cost and ALKS's big hope is long lasting drug for alcohol adicts, already used in Russia , I will not sell my ALKS shairs. There are other reasons also.

A day or two ago I learned that this science review commettee was split and one member would not vote. - too hard to decide if the posibility of killing a few via more thyroid cancer was justified to save many others from the ravages of diabetes,* which can be fatal and often has serious side effect, like blindness loss of perferical circulation (and the effected areas surgerically removed). They have thrown the problem back to the FDA to decide.

In the US, what the law may say is not nearly as important as what the FDA does. Recently the FDA fined one of the big drug companies for misleading TV ads. Effectively US congress has said - the proper regulation and control of drugs is too tough for us simple lawyers to rule on - let the FDA do that.

*For almost all the new longer acting drugs are ssafe and very effecive, especially when one considers that many with diabetes (no symptons, until much too late) do not comply with their needed dosing (needle injections several times daily for most) There are no easy answers here. I think the FDA normally** does a great job (but twice thay have cost me a lot of money, with "marketing approval rejected").

**Only when political pressure intefers do they screw up. - Like GWB's blocking Barr's Plan B for years to please his religious right wing supporters.

 

I'm reminded of all the quotes that came out of the banking industry related to the regulation of credit default swap agreements, which were along the lines of "You want to regulate us? Good luck...because no one outside the group of people actively making these agreements even understands what it is we're doing..." which was actually pretty accurate.

 

a couple of differences to note:

1) the TGA (similar to your FDA but only dealing with drugs and poisions, food is delt with by the Australian and NZ food safty board and the states themselves depending on the issue) deals with aproval and regulation for drugs but only under law. It was the law itself we were talking about

2) you seem bitter about a paticular drug decision, cant (and WONT) give an opinion on it but if i rember (and you give me the generic name insted of the trade name) i will do some resurch on the TGA and cochrain for you

3) on political pressure, i know what you mean RU486 was actually taken out of the hands of the TGA compleatly and put into the hands of the minster for a while. Thankfully its back where it belongs, with the TGA

4) its illegal to advertise perscription meds to the general public in australia (though the public does find out about alot of them and i carry quite a reasonable size drug database in my head because i have to be able to work out what a pt has by there medication). Joe blow is quite able to get the TGA database and the cochrain libary (because the fed gov pays for a licence for the whole country) and look up the drug the doc wants to put him on but drug companies are banned from direct marketing to the public