It is remarkable what very profitable drug companies—as they merge into fewer giant multinationals—continue to get away with by way of crony capitalism. Despite frequent exposure of misdeeds, the army of drug company lobbyists in Washington continues to gain political influence and rake in corporate welfare at the expense of taxpayers. The drug industry goes beyond crony capitalism when it then charges Americans the highest drug prices in the world.
Here is a short list of the honey pot produced by the lobbying muscle of the $300 billion a year pharmaceutical industry. It receives billions of dollars in tax credits for doing research and development that it should be doing anyway. Some companies reaped billions of dollars in revenues when they were granted exclusive rights to market a drug, such as Taxol, developed by the government’s National Institutes of Health (NIH). These corporations turn around and gouge patients without any price controls or royalties to NIH. (See Knowledge Ecology International for more information.)
The pharmaceutical industry spends far more on marketing and advertising to physicians and patients than what it spends on research and development. More drug industry funds go to influencing politicians to prevent the implementation of price restraints on its staggering markups.
As Dr. Marcia Angell, the former editor of the New England Journal of Medicine wrote in her book, The Truth About the Drug Companies, “only a small fraction of its drugs are truly new; most are simply ‘me too’ variations on older drugs.” Dr. Angell charges that the industry is “primarily a marketing machine to sell drugs of dubious benefits, using its wealth and power to co-opt every institution that might stand in its way, including the U.S. Congress, the Food and Drug Administration, academic medical centers and the medical profession itself.” By the way, the drug industry is required by law to fund a large portion of the FDA’s drug review budget, which contributes to this weak regulatory oversight.
Katharine Greider points out in her book The Big Fix: How the Pharmaceutical Industry Rips off American Consumers that, “Other countries move to control prices and sharply limit advertising.” This does not happen in the U.S. where many patients confront a “pay or die” system.
In recent years this stark choice has made headlines. New drugs, like Sovaldi for treating Hepatitis C, are costing consumers or taxpayers $84,000 for a full course of treatment or $1,000 a pill per day! The same drug treatment, according to the Washington Post, costs “$57,000 in Britain and just $900 in Egypt.” Other so-called “break-through” drugs are costing patients over $100,000 each a year and driving frantic health insurers and Medicaid managers up the wall.
Will competition bring prices down? Wall Street pharmaceutical analyst, Tim Anderson at Sanford C. Bernstein & Company, explains that this is not the case in a recent New York Times article. “He said that drug companies, while not colluding, ‘have all looked at each other and said, ‘None of us needs to compete on price if we just hold the line.’ ” The cause of competition was not helped when the drug company lobbyists used their campaign contributions and influence on Congress in 2003 to brazenly prohibit Uncle Sam from negotiating prices for the gigantic Medicare drug benefit program.
The financial rip-offs aren’t the only problems with the out-of-control drug industry. Federal law requires all approved drugs to be both “safe and effective.” The actual record has been shocking. The Public Citizen Health Research Group published three books – Pills That Don’t Work (1981), Over The Counter Pills That Don’t Work (1983), and Worst Pills, Best Pills: A Consumer’s Guide to Avoiding Drug-Induced Death or Illness (2005) – documenting hundreds of prescription and over-the-counter drugs that were not effective for their advertised purposes or had harmful side effects. Wide exposure to these findings, especially on the Phil Donahue Show, helped get many of these so-called medicines off the market.
Over the years, the government has fined drug companies billions of dollars for pushing unapproved uses of drugs. More perilously, drugs get approved prematurely and result in mass sickness and fatalities. This human toll takes an estimated 100,000 deaths a year in the U.S. from adverse effects of such drugs. For example, the drug Vioxx, sold by Merck &Co., Inc., as an anti-inflammatory drug, stayed on the market from 1999 to 2004 despite documented cardiovascular risks. According to the well-regarded medical journal Lancet, an estimated 88,000 Americans had heart attacks from taking Vioxx and 38,000 of them died!
Bextra, sold by Pfizer, Inc., another anti-inflammatory analgesic drug was approved by the FDA in 2001, and was then removed in 2005 because of concerns about increased risk of heart attacks and strokes, as well as serious, sometimes fatal skin reactions.
Rezulin, made by Parke-Davis/Warner Lambert, was approved by the FDA in 1997 and withdrawn in 2000 because the drug caused liver toxicity, having been linked to 63 liver-failure deaths.
Meridia, a weight-loss drug sold by Abbott Laboratories, was withdrawn by the company after thirteen years of sales because studies demonstrated that it increased the risk of adverse cardiovascular episodes, such as heart attacks, strokes and cardiac arrest.
These illustrations come from Public Citizen’s Health Research Group whose newsletter Worst Pills, Best Pills News has been reliably reporting these avoidable tragedies for many years.
There are other human and economic costs of the drug industry’s relentless sales pressure. Antibiotic resistance has been building up for half a century due to massive overuse of antibiotics both in humans and in edible farm animals. As a result, there are now lethal infections for which existing antibiotics are ineffective. And, inadequate warning labels have led to the misprescription of drugs and the use of drug combinations that have dangerous interactions.
Congress used to regularly investigate the drug companies when Senators like Estes Kefauver (D-TN) and Gaylord Nelson (D-WI) were on Capitol Hill. Silence is now the norm. Even the drug company practice – to seek even more profits – of importing about eighty percent of the ingredients in our medicines from China and India, where public inspection regulations can be weak and the FDA has few inspectors, does not command the attention of our congressional representatives. About 100 Americans died in 2008 from a contaminated blood thinner called heparin imported from China.
So, next time you hear the talking heads from corporatist think tanks such as the American Enterprise Institute or the Heritage Foundation or their corporate allies demand “de-regulation,” consider what an inadequately regulated drug industry has already inflicted on millions of Americans.