I just finished reading Dr. Marcia Angell’s book, The Truth About the Drug Companies, and reading this article by Malcolm Gladwell in an obvious attempt to undermine Dr. Angell’s main points has not changed my mind that the former NEJM editor has the more compelling arguments.

Mr. Gladwell, to begin with, does not mention anything about the bloated budget for Big Pharma’s marketing and administration, which Dr. Angell estimates far outpaces money spent for R and D (research and development.)Those expenses are hidden in what Dr. Angell calls a black box, which Big Pharma refuses to open. Duplicitous? You bet it is.

Secondly, Mr. Gladwell ignores completely the ways Big Pharma engages in what I feel are corrupt practices in extending its patents on drugs, including bribing generic manufacturers to extend those patents for as long as possible. As further examples, how can we justify the practice of Big Pharma getting an automatic extra 30 months for suing a generic manufacturer, or an extra six months for testing drugs on children, when there are no valid reasons for these suits or for pediatric testing? These effectively destroy Gladwell’s arguments that the higher prices we pay for patented drugs lead to lower prices when they become generics. Three more years of monopoly because of a lawsuit can mean billions of dollars.

Thirdly, the example he gives of AstraZeneca’s sordid ploy to bammboozle the public that
Nexium is better than Prilosec
illustrates pointedly that Big Pharma has come up with few innovative drugs, but a surfeit of copycat drugs with no better benefits and sill sold at prohibitive prices, despite minimal research, and with renewed patents that will keep that monopoly and multi-billior dollar business flowing for years. Dr. Angell gave examples of the really few innovative drugs that came out the last five years, with the vast majority being “me-too” drugs that are promoted as better when they are not. That $802 million average it allegedly costs Big Pharma to develop and market a new drug looms more and more like a fantasy.

Fourthly, Mr. Gladwell mentions the benefits of drug-benefit programs without stating that a number of these are owned by companies doing advertising for Big Pharma. See the conflicts of interest?

Fifth, Mr. Gladwell does not address the incestuous relationships Big Pharma has with the FDA, the NIH, and academic centers, with conflicts of interests that should not be there. Just as important, the vast majority of basic research is done through public funding by the NIH, which then franchises it to medical schools and biotechology centers, which in turn enter into agreements with Big Pharma, but with the public still victimized by high prices. The stories of Taxol and Gleevec are classical examples which physicians should read.

There are many other points that Mr. Gladwell omits, including the ubiquitous and well-known practice of Big Pharma spending vast amounts of money for marketing disguised as education and research. The ever-growing direct-to-consumer (DCA) is adding to the marketing budget, aimed not at educating the public but at promoting sales of its products. You bet that marketing money will translate into those high prices.

Mr. Gladwell may be right in saying we need to communicate better with physicians and consumers, but how can you fight a godzilla with that gargantuan money and a marketing machine that keeps promoting the sales of its products instead of educating us?

I would urge physicians to read Dr. Angell’s book. The book is a litany of truths, while Mr. Gladwell’s article is a smokescreen for Big Pharma.

The Wall Street Journal looked at a number of drug companies financial statements and, if memory serves, R&D was 17% of gross income. Big Pharma is here to sell, and sell they do, for a very good profit.

In response to qetzal:

First, I did not advocate restricing the marketing budget of Big Pharma. I was reinforcing the point made by Dr. Angell that the drug companies have been lying about costs for research and development, which, as it turns out, are far, far less than those for marketing. Just recall they cite their R & D costs as a justification for the high prices of drugs, which is duplicitous.

Compounding the problem is that Big Pharma refuses to open what Dr. Angell calls a “black box,” which surely would give us transparency over what they have been peddling to the public.

Secondly, Dr. Angell made the point that Big Pharma has been able to bamboozle physicians with its vast marketing schemes disguised as “education” and “research.” Despite restrictions imposed by AMA and PhARMA, the incessant promotion of products to physicians has not slowed down. So-called CME meetings are held with the ubiquitous shadow of Big Pharma looming overhead with either sponsorship fees or speakers with ties to the industry. I agree we are not powerless sheep, but I’m not happy over the vast influence the drug industry continues to hold among us.

I’m all for incentives to have physicians prescribe cheap but equally effective drugs, but other things need to be done as Dr. Angel proposes. These include curbing monopolies, opening that “black box,” restructuring the FDA, creating a special institute for clinical testing of drugs to replace those sponsored by the drug companies, get Big Pharma out of medical education, and establish reasonable and uniform pricing.

I did not miss the point of Mr. Gladwell’s article, but he appears to be a shill for the drug industry; in presenting his counterpoint to the book by Dr. Angell, he missed painting the whole picture.

RGL says “Just recall they cite their R & D costs as a justification for the high prices of drugs, which is duplicitous.”

Nope. There are only two possibilities. Pharmas are either (1) throwing money away to annoy TV viewers, or (2) advertising has a positive return on investment (ROI). We know it must be #2, because pharma boards of directors are greedy puppets being controlled by even greedier investors.

What’s more, we know that advertising ROI is greater than 11%, because that’s how profitable the stock market is. (If it was less than 11%, they’d just buy securities.) In fact, we know it’s a lot more than 11%, advertising a single product is vastly riskier than a diversified stock portfolio.

Re. Nexium versus Prilosec: They aren’t identical “me too” drugs. The little granules in Nexium verus the Prilosec tablet make a noticable difference for some people, me included, presumably because of differences in stomach motility. Mind you, not enough to justify the factor of 10 price difference.

“As further examples, how can we justify the practice of Big Pharma getting an automatic extra 30 months for suing a generic manufacturer, or an extra six months for testing drugs on children, when there are no valid reasons for these suits or for pediatric testing? These effectively destroy Gladwell’s arguments that the higher prices we pay for patented drugs lead to lower prices when they become generics.”

Patents bring in vast revenues, which pay to develop drugs, which become cheap generics. End of discussion. (Whether extensions just enrich the lawyers is another question.)

“Just as important, the vast majority of basic research is done through public funding by the NIH,…”

Nope. The NIH does a lot of biology research. The NIH does not synthesize millions of compounds, put them in screening libraries, and routinely test them against potential therapeutic targets.

In a free, market-oriented society, there is no such thing as charging too much. The only entity with the power to forcibly extract funds from you as a condition of existing is the government; it will put you in jail or confiscate your property if you don’t pay up. No one can force you to buy Nexium, Prilosec, generic cimetidine or Maalox. It’s up to you whether you want to pay to be relieved of heartburn, pay a quarter for a dose of Maalox, or $3 for a day of relief from Nexium, or put up with the effects of excess stomach acid. Same is true for antibiotics, blood pressure meds, and every other category of medications. The newer brand name expensive drugs are easier and more effective than the older ones, and in almost every case, the older ones were once the new and expensive ones. Just as no one can force you to take Nexium, no one can force Merck or Pfizer or Jane the biochemist to try to develop the next new drug. This gets back to classical economics and Adam Smith’s “Invisible Hand.” Whether Big Pharma spends 10 or 30 or 50% of revenue on R&D is it’s own business, just as it is Microsoft’s and General Motors’ and the Gap’s business how to spend their revenue. When a patient comes in and I need to prescribe an antibiotic, my first choice is generally a cheap generic cephalosporin, but sometimes a more expensive drug is needed, and only once have I had to explain to a patient who had to buy Levaquin out of pocket at a hardship to him (multiple allergies to the cheap drugs). Maybe that’s why I rarely get visited by detail reps.
As the owner of a 50+ year old prostate, colon, pancreas, and circulatory system, I’m very glad that the Pharma companies have the resources to devote to developing new drugs, even if their motivation is to eventually make a buck, or lots of bucks, off of me. I understand that Pfizer and Merck and Jane the biochemist have never heard of JB, and they secretly hope that I get all kinds of chronic diseases so that I will want to buy their products. What I’m afraid of is that the trial lawyers will put Merck out of business over Vioxx, and scare Pfizer and Bayer and the rest out of taking chances on new drugs that may save my life at great expense to me and great profit to them.
I grow weary of people saying that because these drugs are lifesaving, spending public money on them or imposing extra regulations and fee controls on the drug companies is justified. Lots of things in our society are potentially lifesaving, yet people elect to do without them when they are spending their own dimes. How many people go out and buy the top rated safety car every year? I’ve never met one yet. Sure, people consider safety rating when they buy a new car, but most can’t afford a new car every year, and wait until a new car is needed for other reasons before upgrading their safety. It’s only when they can find someone else to pay for it that they demand the absolute best safest way to take care of their problem.

Oops! Missed an end-italics code after “budget” above. Sorry.

To Qetzal:

I have no problem with Big Pharma conducting marketing activities as long as they are not disguised as “education” and “research.”
We also need to make sure we get rid of what Dr. Angell calls lures, bribes, and kickbacks in the conduct of these activities. Qetsal surely must be aware of these
shenanigans if he has been in practice long enough.

Marketing is what sells products, and Big Pharma knows about that. But it ought not to put a smokescreen by exaggerating their costs for R & D, while minimizing their marketing expenses, to dupe the public into believing that’s what is driving drug prices beyond what is reasonable.

In response to JB:

I don’t know how long JB has been in surgical practice, but I presume he must be familiar when physicians were billing patients on the basis of UCR – usual, customary, and REASONABLE. That was before Medicare and private insurance companies started controlling fees. Why? A number of those charges were deemed to be UNREASONABLE, indefensible under the pretext of a market-centered society. A number of us may not feel we are not being paid enough, but at least the current fee schedule system is much saner. And by the way, it’s not based on the unsavory philosophy that you can charge as much as you can.

It’s also naive to believe that that Big Pharma “will not give away its products” if there is no prospect of profits waiting for them. This is not a question of giving their drugs away as much as it is of asking them to price those drugs REASONABLY. When, for the past 20 years, you have the Big Ten of Big Pharma amassing profits larger than those of 490 other businesses combined on Fortune’s 500, you are talking about real money. Can we just agree it is nothing more than naked GREED?

Of course nobody is forcing Americans to buy these expensive drugs; even if they are forced, many cannot afford to do so. But isn’t that why there is a problem and we need to do something about it? I get the feeling JB could care less, but my training as a physician has endowed me, and thousands of colleagues I know, with certain ethical standards. We all need to advocate for the interests of our patients, unless JB feels we all ought to behave like businessmen.

For JB to believe it’s the American way to extract as much profits as possible, cognizant there are problems in the drug industry, is to embrace a philosophy that recognizes no ethical compass. As I said before, corporations, like physicians, ought to have a conscience.

T%o JB:

This will be my last riposte on this subject, since it appears we can beat this to death without agreeing, mainly because of our differing philosophies. It’s not because I’m a Marxist, as you imply, and which is not true, but we are looking at this subject from two entirely different perspectives.

My original comments on this issue began after reading Malclom Gladwell’s piece in the New Yorker, and I felt he did not lay out a comprehensive picture of the problem of high drug prices, in contrast to the litany of what Dr. Marcia Angell, in her book, described as corrupt practices by Big Pharma to tweak these prices.

Chief among these is that the drug industry bamboozles the public by overstating its R & D expenses (11% of sales revenues) when these are dwarfed by its vast marketing scheme that eats up 35% of the revenues, in contrast. Couple this with other unsavory practices, all documented in Dr. Angell’s book, and you begin to see why prices are set so high, victimizing a lot of people except the investors.

JB contends that is perfectly alright, withou acknowledging that there are problems. And that’s where JB and I differ. It’s not a simple question of letting the market run on its own course; we need to make sure the rules are fair. Come to think about it: 10 drug companies outstripping the combined profits of 490 other businesses on that FORTUNE 500 list. And that has been consistent for the last 20 years. You call that a high-risk business?

On the subject of fee schedules, yes I’m quite familiar with the old UCR and the current RV-based system.The old system did not last because medical providers, sad to say, abused it – an example of a free market gone wild. The RV system at least is fair, and while not perfect, it is equitable and reasonable. Most of us still make confortable sums of money, but without the freedom to dictate how much we can charge without constraints.

Which brings me to my last point: ethics in medicine. I don’t have to wear my ethical compass on my sleeve; that ought to be ingrained in the practice of our profession. While I can understand JB’s need to behave like a businessman, that’s not the image that I would like to project to the public as a physician. Mixing medicine with business is not a good mixture, which can only sully our already tarnished image.

Maybe I’m too much of an idealistic physician, but what is wrong with that? I practiced Internal Medicine for 33 years, retired three years ago, and never had any regret about not commercializing my practice. It’s the last thing we need at a time when the public is getting increasingly skeptical about our profession.

To JB:

Here we go again!

In trying to justify the high prices of drugs, Big Pharma always invokes its supposedly massive costs for R&D when in reality it’s the vast marketing budget that eats up over 1/3 of of its annual sales revenues ($200 billion.)
Where is the honesty there and how can we believe them
in trying to justify their outrageous prices?

A lot of that marketing money is spent on massive advertising to doctors, in DCA, and in other activities masquerading as “education” and “research.” A lot of those things are questionable, even corrupt.

But in addition, I made it clear we have to do other things, including curbing monopoly rights to facilitate getting generic drugs faster,
strengthening the FDA to distance itself from industry influence, creating an independent institute to carry out clinical trials and replace those sponsored by Big Pharma, getting the drug industry out of medical education, and establishing reasonable and uniform pricing.

I feel these things would work. Nobody had confronted Big Pharma before about its practices, and it’s a good thing we are finding out more about them. Besides Dr. Angell’s book, two others by Dr. Jerome Kassirer(On the Take) and an investigative
team from TIME (In Critical Condition ) just came out, with chapters quite critical of the drug industry.

Also consider there are dark clouds ahead for Big Pharma if it decides to do things as usual. People are mad, states are complaining about drug bills busting their Medicaid budgets, and the drug pipeline, particularly for innovative drugs, is slowing down to a trickle. On top of that, patents are due to expire on a number of blockbuster drugs.

So, yes it’s in the interest of the drug industry to impose better discipline on itself, or BIG TROUBLE will be looming just ahead.

Good to hear from you,Matthew.

I want to assure you I’m not a bloody socialist like a few friends I have in England.

Matt, I would urge you to read a piece in the current New England Journal of Medicine — Doctors and Drug Companies, by Dr. David Blumenthal.

The author, among other things, writes about the drug industry’s…. “methods that are deeply troubling and even criminal” and its …. “egregious excesses.”

This may be an eye-opener to rabid free-market advocates.