Merck & Vioxx: A Case Study in FDA
Corruption
There are a lot of older folks out there who have had a very
good experience with the pain killer Vioxx. The drug was prescribed
to arthritis sufferers and most who have taken it will tell
you that the drug works wonders. But the drug is also a killer.
Vioxx was released by the pharmaceutical company Merck back
in 1999. Merck had Vioxx in thousands of pharmacies less than
two weeks after it was approved by the FDA. But the FDA should
never have approved the drug for mass distribution. The FDA
knew about the severe side effects including bleeding ulcers,
strokes and heart attacks--all of which can lead to death--yet
approved the drug anyway. Almost 60,000
Americans have died from taking Vioxx. Why did the
FDA permit this? Because the pharmaceutical companies control
the FDA. That's why we believe that...
The American Pharmaceutical Industry Is
Corrupt!
Healthcare costs in the U.S. are the highest in the world
because of an inefficient private system that ensures profits
for hospitals, blood-sucking middlemen (insurance companies),
and drug companies. Especially drug companies.
Pharmaceutical corporations are among the most profitable
companies in the US As an industry, they have the highest
returns on revenue (their profits as a percentage of their
total revenues), meaning that they take enormous markups on
their products. Literally, they charge "what the market
will bear," which is quite a lot if you have a severe
illness and need pain killers, or better yet, a terminal illness
that can be arrested with a pill (or lots of them). In other
countries with national healthcare, governments have enacted
price controls on drugs to limit skyrocketing costs, because
the government has to pay for the drugs. Not so in the good
ol' USA. Drug Price. Instead, you and I pay two times, three
times, sometimes 10 times more for our medicine than people
do in Canada, for example. This year, wholesale drug prices
in the US soared a record 10.7 percent in the month of May
alone, then climbed another 3.2 percent in June.
How do pharmaceutical companies explain the high prices?
They blame them on the cost to research and develop new drug
therapies. R&D is expensive, but not as expensive as they
want you to believecertainly not as expensive as the
cost to promote, market, and sell these drugs to hospitals,
HMOs, and an estimated 600,000 prescribing physicians. On
average, companies spend about $200 million to develop a new
drug therapy (which includes all the tests and trials of drugs
and chemical combinations that never prove useful). The last
time Congress checked, back in 1991, annual R&D costs
for US pharmaceutical companies totaled $9 billion, yet drug
companies spent more than $10 billion per year just to promote
their products in the private marketplaceand that cost
has only grown since then. In 1997, Bristol-Myers Squibb alone
spent $1.4 billion on R&D, and a colossal $2.2 billion
on advertising and promotion.
Why do drug companies need to spend so much money pushing
their products? If the need is there, doctors will prescribe
it, right? Not true. More than half of the new drugs developed
every year are not designed to treat new or untreated conditions,
but to compete with drugs that are already on the market.
Called "me-too" drugs, these are easier and cheaper
for companies to develop, because much of the basic research
on how the drug should work in the human body has already
been doneit's just a matter of finding a new, slightly
different compound in the same class as the old drug. For
the company to patent and market it, the new drug needs to
be different, and if it is stronger and has different side-effects
(hopefully fewer and less severe, but not always), so much
the better.
The motive behind the "me-too" phenomenon is simple:
as a drug that's been on the market for a number of years
gets close the expiration of its patent, the company that
owns the drug starts to panic. Once the patent expires, other
companies can make generic versions of their best-selling,
proprietary drugthereby forcing the price down. The
company has to find a new, different, more powerful drug to
replace it. Of course, when the new drug hits the market,
the company has to spend millions to persuade doctors to stop
prescribing the old, cheaper medication and switch their patients
to the new one. It's an endless cycle of skyrocketing costs
fueled by the immoral, for-profit nature of the US healthcare
system.
We're always hearing about HMOs, hospitals, and insurance
companies seeking ways to cut costs, and keeping down the
cost of prescription medications is part of that process.
But while it's becoming harder for drug companies to sell
expensive new "me-too" drugs to doctors, there's
a new promotional cost in the equation: They've started pushing
their wares directly to consumers. In 1996, drug companies
spent $600 million on direct advertising to consumers, which
is twice what they spent in 1995 and almost ten times more
than in 1991. Direct-to-consumer advertising of prescription
drugs is banned in most other nations, and the World Health
Organization's Ethical Criteria for Medicinal Drug Promotion
expressly forbids it.
Yet US pharmaceutical companies are buying more billboards
and TV time, and pushing more aggressively for their medicines
to be switched from prescription-only to the over-the-counter
market, so consumers can be free to self-prescribe. More drugs
were switched to over-the-counter status in 1997 than in the
previous five years. Since 1986, the FDA has approved only
33 over-the-counter switches; over a third of those were done
in 1995 and 1996. And in August 1997, the FDA finally gave
in to drug company lobbyists and released new criteria for
the advertising of drugs on TV, making it easier for drug
companies to hock their wares directly to patients.
In addition to marketing costs, pharmaceutical companies
take huge markups in devious ways. Most drug companies belong
to a larger holding company that also owns a chemical company.
The chemical company can make the drug chemicals in its own
plant, then "sell" them to its sister division,
the pharmaceutical company, at a high markup; this is called
"transfer pricing." When consumers complain about
prices, the pharmaceutical company then points to the high
price it had to pay for "raw materials"but
they bought the chemicals from themselves and manufactured
the high markup.
In addition to padding their own pockets, pharmaceutical
companies still get a special tax credit (subsidy) from the
US government (US taxpayers) when they manufacture the "raw
materials" into pill form. The Section 936 tax credit
applies to any company that sets up a manufacturing plant
in Puerto Rico. Other industries have benefited from this
tax credit too, but by the early '90s drug companies were
collecting more than all other industries combined. This little
loophole is being phased out, but it still saves the pharmaceutical
industry over a billion dollars every year.
So beware of brand new, expensive drugsthe high cost
is not an indication of efficacy. And when your doctor writes
you a prescription, ask him how much it's going to cost you.
Ask him if there's a generic drug that will do the same thing,
or an alternative treatment that will be effective without
the need for you to take a pill and support a drug company.
And remember that, for those of us who have serious conditions
that need drug treatment on a continual basis, our private
healthcare system really fails. Chronically ill people often
can't afford high drug prices, and end up suffering needlessly
when they ration their medication or are forced to stop taking
it. For their sake, if for no other reason, we need a single-payer
system and a limit on drug prices.
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