_

Pharmaceutical companies are in the business
of making money from people's sickness.

 

 

Drug Companies Maintain "Astounding" Profits

4 May 2002 by Scott Gottlieb, New York, BMJ 2002

Pharmaceuticals again ranked as the most profitable sector in the United States, topping the annual Fortune 500 ranking of America's top industries, released this month.

The pharmaceutical industry topped all three of Fortune magazine's measures of profitability for 2001, making this decade the third in which the industry has been at or near the top in all the magazine's measures of profitability.

The occasion was seized by critics of the industry as reflecting corporate greed. Frank Clemente, director of Public Citizen's Congress Watch, said: "During a year in which there was much talk of sacrifice in the national interest, drug companies increased their astounding profits by hiking prescription prices, advertising some medicines more than Nike shoes, and successfully lobbying for lucrative monopoly patent extensions. Sometimes what's best for shareholders and chief executive officers isn't what's best for all Americans, particularly senior citizens who lack insurance cover for prescription drugs."

Overall profits of Fortune 500 companies declined by 53% in 2001, while the top 10 US drug makers increased profits by 32% from $28bn (20bn; 31bn) to $37bn, according to Public Citizen's analysis of the Fortune 500 data. Together the 10 drug companies in the list had the greatest return on revenues, reporting a profit of 18.5 cents for every dollar of sales, eight times higher than the median for all Fortune 500 industries, which was 2.2 cents.

The drugs industry says it needs extraordinary profits to fund risky research and development of new drugs and to absorb the high cost of drug failures in clinical trials. The industry's output of new drugs has risen only modestly in the past two decades, despite a more than sixfold increase, after adjustment for inflation, in spending on research and developmentto more than $30bn a year. In the past few years output has actually declined. Many industry supporters blame tougher scrutiny by the Food and Drug Administration.

The time spent to develop a drug, not counting the months consumed by government review, has lengthened from about nine years in the 1980s to more than 11 years, according to the Tufts Center for the Study of Drug Development, and the cost has more than doubled, after adjustment for inflation, to $800m. Public Citizen notes that the Tufts Center gets money from drug companies and maintains that the centre's figures are inflated to justify high drug costs.

Public Citizen's report is available at its website

 

Brazil Threatens To Break Patents, Produce Antiretroviral Drugs If Companies Do Not Reduce Prices
[Aug 29, 2003]

      Brazil has threatened to break the patents on three antiretroviral drugs and begin producing generic versions of the medicines if drug makers Abbott Laboratories ,Roche and Merck do not cut their prices by 50%, according to the AP/Las Vegas Sun . Brazilian Health Minister Humberto Costa issued an "ultimatum" to the companies, saying that if the companies do not offer an "acceptable" plan by tomorrow, Brazil will explore making generic versions of the drugs or consider importing them, according to the AP/Sun . The drugs in question -- lopinavir, made by Abbot; nelfinavir, produced by Roche; and efavirenz, made by Merck -- represent 63% of Brazil's $172 million annual budget for antiretroviral drugs, according to the AP/Sun . The companies responded to Costa's threat by saying that they already offer Brazil reduced prices on the drugs. Abbott offered to reduce the price of lopinavir by 1.3% to $1.48 per dose. Roche sells nelfinavir to Brazil for 53 cents per dose, and Merck supplies efavirenz for $2.10 per dose. However, Marcia Lage, a spokesperson for the Brazil's National STD/AIDS Programme of the Ministry of Health, said that the government can produce individual doses of the drugs for 25 cents, 27 cents and 87 cents per dose, respectively. Abbott in a statement said that it is "hopeful of a positive end to the current negotiations." Merck spokesperson Anita Larsen said that the company is waiting for a "specific price cut proposal" from Brazil, according to the AP/Sun . Both Abbott and Merck say that they offer Brazil the lowest price on their antiretroviral drugs outside of the prices offered to African nations and other countries designated as least developed by the United Nations . Roche said that it also offers the drugs to Brazil at reduced prices.

Importation Possible
Brazil adopted a law in 1997 that allows the government to break drug company patents and make generic versions if the firms are charging "abusive" prices, according to the AP/Sun . Lage said that a health ministry team will travel to India today to determine if the drugs can be purchased from Indian generic drug makers at a lower cost than they can be made in Brazil. In order to import the drugs from India, a new law would have to be passed; Lage said that Costa's office is drafting such a proposal, the AP/Sun reports. Brazil has one of the "most successful" HIV/AIDS programs in the world, offering free antiretroviral drugs to all who need them, according to the AP/Sun . There are approximately 143,000 Brazilians with HIV/AIDS and about 70,000 of them receive antiretrovirals, according to the AP/Sun (Clendenning, AP/Las Vegas Sun , 8/28).

Additional information on AIDS in Brazil is available online through kaisernetwork.org's Issue Spotlight on AIDS .

The following are past
postings from
AIDSACT

>we just feel that in the time of plague, drug cos. should
>make a REASONABLE profit, rather than continuing their
>normal practice of charging ..... profit margins that are 4 to 5 times
>that of the most profitable non-drug industries.

Mark Milano

---------------

While I agree that Mark's statements are cogent and to the point, I'd like to point out one common misconception. Regarding the development of Foscarnet, and as one who worked on the pricing of Foscarnet extensively as a member of T&D, Foscarnet was not developed with "almost entirely" taxpayer money.

According to the Summary of Approval with FDA, the Antiviral Advisory Committee of the FDA considered 5 studies in the NDA. Of those 5, only one, the study conducted by the NEI in cooperation with the NIAID was partially funded by the U.S. government (Palestine et al, Annals of Intern Med). And that was a very small, peripheral retinitis study with less than 30 patients.

That said, I don't think it in any way detracts from Mark's comments on the extraodinary price that Astra introduced Foscarnet with, and continues to charge today.

And his comments as to the profitiability of the industry in general, and their pricing practices in particular, are right on target.

Kevin Frost

---------------

The cost of producing ddC is practically nothing. One kilogram of ddC will supply more than a thousand people for a year; and as far as I know, the chemical is not especially difficult to manufacture. It has been available in bulk from chemical supply catalogs for many years--which is how buyers' clubs obtained and sold it in the U.S. before it was approved anywhere.

Pharmaceutical-grade production adds to the expense, but this difference is probably not enough to have any significant impact on the economics of distribution or treatment. (An extra thousand dollars per kilo means only one dollar per year extra treatment cost per patient; and impurities are less likely to be a problem when a drug is given in such tiny amounts.)

Of course ddC is seldom used today, because of the difficulty of finding a therapeutic window between an effective dose and the serious side effect of neuropathy, which is not always reversible by stopping the drug. Nevertheless, ddC does work well for some patients (probably a small minority), who apparently do have enough therapeutic window because of their individual metabolism.

What is needed is to take ddC as a "lead compound," research its antiviral action and its side effects, and find or synthesize related chemicals which have larger therapeutic windows. This approach would get around the Roche patent, because the result would be a different molecule. If the right people were contracted to do the work, the chemistry, animal toxicity tests, and small phase I/II viral load tests in people would not be terribly expensive--well under a million dollars per new drug candidate I would think, even at U.S. or European research prices--although of course there is no way to guarantee when or if any useful drug will be found.

If we also want FDA approval for the U.S., then we must also go through an enormously inefficient research and development system with many palms to be greased. Many people around the world might choose to accept less than that, in view of the lack of alternatives available to them.

What we could do as a community is to bring proposals together, saving money by using top quality but lower cost researchers and institutions, in developing countries when possible--and find wealthy donors willing to finance projects for human benefit with no proprietary restrictions.

John S. James

---------------

>No one wants to take away the profit motive,
>we just feel that in the time of plague, drug cos. should
>make a REASONABLE profit,

What is a reasonable profit to some is unreasonable to others. I'm not going to defend the pharmas across the board. While their profitability is not the 4-5 times you said, it is ONLY 2-3 times the industry average and clearly the most profitable major industrial sector in the economy. Them boys ain't hurtin.

But I do have to argue that so much of what they do is secret that it is nearly impossible to determine what is profit--reasonable or otherwise--on a particular drug. All we have to do is look at our "friends" in the entertainment industry, where even blockbuster movies seldom make a "profit," to know that there are lots of games accountants can play. The Oxandrin example you cite is one of the few clear examples of price gouging because we have a before and after snapshot. Drawing and quartering would be too kind for that CEO.

I would also disagree with you on the cost of research. From what I've seen at NIH and in other sectors, the cost of research is going up much faster than the general cost of living. But then, when marketing takes up 15-30 percent of budget for the pharmas, profits 20+ percent, there is a lot of room for reducing drug prices and still not going bankrupt.

Bob Roehr

---------------

>What is a reasonable profit to some is unreasonable to others. I'm not going
>to defend the pharmas across the board. While their profitability is not the
>4-5 times you said, it is ONLY 2-3 times the industry average and clearly the
>most profitable major industrial sector in the economy. Them boys ain't hurtin.

If Mr. Roehr is not currently a PR rep for a drugco, he should apply soon. Our research of a couple of years ago showed the following % annual profits based on net income/sales. These figures came from each company's annual report.

AT&T 2%
Texaco 3%
Chrysler 3%
General Motors 2.5%

Merck 22%
Abbott 16%
Roche 18%
Glaxo 23%

These number ARE 4-5 times higher than non-drug industries, and even more. The drugcos have NO justification for their profits other than that they are able to charge whatever they choose, since people have no choice but to take their drugs. Despicable.

Mark Milano

---------------

> These number ARE 4-5 times higher than non-drug industries, and
> even more. The drugcos have NO justification for their profits
> other than that they are able to charge whatever they choose,
> since people have no choice but to take their drugs.

There is no reasonable doubt about it. Besides the fact: AIDS vaccines are neglected, to give priority to medicines that do not cure but create a lifetime-dependent income.

Carlos


MAKING TOP DOLLARS    The New York Times   April 13, 2004
Many prescription drugs sold in the United States are priced much higher than in most other industrial countries.
How much companies receive for one-month supplies of each drug

DRUG
Norvir
Lipitor
Plavix
Singulair
Xalatan
Daily dosage
(200 mg)
(20 mg)
(75 mg)
(10 mg)
(Drops)
Treatment
AIDS
Cholesterol
Heart disease
Asthma
Glaucoma
MAKER
Abbott
Laboratories
Pfizer
Bristol-Myers
Squibb
Merck
Pfizer

U.S. (CVS*)
$175
$129
$146
$109
$64
U.S.
(Drugstore.com)
540
95
115
82
51
Canada
59
51
59
50
20
Denmark
N/A
N/A
97
18
10
Netherlands
61
64
68
N/A
25
Britain
N/A
64
N/A
54
29
New Zealand
57
18
N/A
N/A
23

*Retail price from a store in Washington.   N/A = not available
Sources: Essential Inventions; Drugstore.com; Euromedicines.org

SEE ABBOTT'S PRICE HIKE ON NORVIR


_
This goes on
. . .

 


BMJ  2003;326:1296

Developing world (14 June 2003)

Public health and company wealth

by Nathan Ford, access to medicines adviser  (Médecins Sans Frontières, London EC1N 8QX nathan.ford@london.msf.org )

"The doctor's role goes from caregiver to undertaker. You talk to them about the cheapest method of burial. Telling them about the drugs is always kind of a cruel joke," said Dr Chris Ouma of Kenya, where 2.5 million people are infected with HIV, and most cannot afford AIDS drugs

Introduction
 
Millions of people in the developing world are dying because they cannot access the medicines they need. This made international headlines during the World Trade Organisation's meeting in Seattle in December 1999.
1 The high price of AIDS drugs became a banner of the world's iniquities: on one side of the globe, Western multinationals made billions of dollars; on the other side, millions of people suffered and died of treatable infectious diseases.

For decades the pharmaceutical industry was the Golden Boy of Wall Street. By the end of the 1990s it began to acquire a new reputation, featuring as the villain of spy novels (like John Le Carre's The Constant Gardener2) and Hollywood blockbusters (like Mission Impossible II). The industry has responded to growing public criticism by reducing some drug prices for some countries. From company boardrooms, it might seem that many sacrifices have been made. But few patients in developing countries are aware of these efforts. Progress in reducing drug prices has depended mostly on market competition (which the industry, through lobbying on global trade rules, is trying to squash) and media attention (which is fickle and exhaustible).

Drug prices down, but not nearly enough
 
Three years ago AIDS treatment cost $15 000 a year whether you lived in London or Lusaka. Today, some pharmaceutical companies provide discounts for sub-Saharan Africa. This is clearly good, but companies are not doing all they can. At the beginning of 2003, while one company was claiming that "the pace is picking up" in providing antiretrovirals to poor countries,
3 another was charging $2000 a year more for its AIDS drug in Guatemala than in Switzerland.4

The responsibility to ensure access to essential medicines lies with governments. In 1996, the Brazilian government began to provide AIDS treatment for all in need by making their own version of expensive brand drugs, reducing costs by around 80%. Over 115 000 people in Brazil now receive antiretroviral treatment.5

But few have been able to follow Brazil's example: only 5% of the six million people in the developing world who need antiretroviral drugs are receiving them. The problem extends well beyond AIDS: access to treatment is denied for many people who have diseases such as leukaemia, pneumonia, and diabetes, because brand medicines are too expensive. In many cases generic drugs are much cheaper.6 Although the right of governments to override patents whenever needed was affirmed at the World Trade Organisation's November 2001 meeting, few developing countries have the manufacturing capacity to make their own medicines, so they depend on exports from countries like Brazil and India that produce quality, affordable generics.

Summary points

Most medicines are developed in the West, for use in the West, and priced accordingly

This seriously undermines the doctor-patient partnership in the developing world, where many medicines are too expensive, others are old and ineffective, and some diseases are completely untreatable because no medicines have been developed

The pharmaceutical industry's efforts to date are insufficient

Governments worldwide must make greater efforts to ensure the development of and equitable access to medicines

Essential goods as luxury products
 
Medicines are big business. The pharmaceutical industry is among the most profitable in the world, with profits nearly four times the average. Because market prospects, not health needs, drive production lines, drugs are developed for Western diseases while diseases of the developing world are ignored. Lack of profits dictated that eflornithine, a lifesaving drug needed by hundreds of thousands of people with sleeping sickness in Africa, was withdrawn from production in the 1990s; this left doctors with a 50 year old, arsenic based drug-which is becoming increasingly ineffective and whose side effects kill 1 in 20 patients. (Eflornithine production was later restarted, but long term production is not guaranteed.)
7

In many clinics throughout the developing world doctors are forced to use old drugs that are toxic and don't work well. For some diseases, no medicine is available at all. Buruli ulcer, a disfiguring and debilitating infectious disease, is a good candidate for antibiotic treatment, but because no drugs have been developed the only option is surgery, including amputation. Industry can be relied on for another half a dozen impotence drugs, but the next generation of tropical medicines is nobody's business-only 1% of medicines developed in the past 25 years are for tropical diseases.8

Better business behaviour
 
A group of major UK investors recently published a report urging drug companies to improve poor people's access to medicines.
9 The report proposed a framework of good practice to audit companies' behaviour on issues like anti-monopoly enforcement, fair pricing, and unfair use of political influence.

The response of the Association of the British Pharmaceutical Industry to the concerned share-holders was: "The problem is not the attitude or commitment of the pharmaceutical industry. It is one of poverty, lack of infrastructure, and lack of political will."10 Everyone's fault, in other words, but not the industry's. And yet the drugs industry can do much to contribute by reducing prices systematically for poor countries and directing some of its enormous drug development capabilities to neglected health needs.

Ensuring social responsibility from industry in the long term depends on socially responsible government policies. An international convention should be developed to ensure that new medicines are developed according to global health needs, and equitable drug pricing should be ensured through a mandatory framework. However, such policies are unlikely to be forthcoming while the pharmaceutical industry continues to influence government to the extent it currently does.11

The director of the International Pharmaceutical Manufacturers Federation recently said: "For people with no income or little income, price is a barrier. I mean I can't afford certainly a car of my dreams, you know, which might be a Jaguar XJE."12 But medicines are not the same as sports cars, and patients are not consumers: they cannot choose between AIDS and leukaemia, and few can move from Guatemala to Switzerland. Over 90% of the world's medicines are produced in Western countries by companies that develop drugs according to profit prospects, not health needs.. This needs to change. While medicines are treated like luxury consumer products, millions in poor countries will continue to go without the lifesaving medicines they need, and doctors will continue to play the part of undertaker, advising on funeral costs because it is the only option available. 13

------------------------------------------------------------------------   [animated photo from ACT UP Pharmco Demonstrations]

 References

1. Sleep less in Seattle. Lancet 1999;354; 9194.
2. Le Carré J. The constant gardener. London: Hodder and Stoughton, 2001.
3. Hirschler B. Aids drugmakers say they're boosting Africa supply. Reuters, 14 January 2003.
www.accessmed-msf.org/prod/publications.asp?scntid=2912003151267&contenttype=PARA & (accessed 29 May 2003).
4. Roche cuts price of AIDS drug to nations. Associated Press, 13 February 2003.
www.accessmed-msf.org/prod/publications.asp?scntid=1722003113423&contenttype=PARA & (accessed 29 May 2003).
5. Galvão J. Access to antiretroviral drugs in Brazil. Lancet 2002;360: 1862-6.[
CrossRef][ISI][Medline]
6. World Health Organisation/Health Action International. Medicines prices. WHO/HAI, Geneva, May 2003.
www.haiweb.org/medicineprices (accessed 29 May 2003).
7. McNeil D Jr. Profits on cosmetic save a cure for sleeping sickness. New York Times 2001 February 9.
8. Trouiller P, Olliaro P, Torreele E, Orbinski J, Laing R, Ford N, Drug development for neglected diseases: a deficient market and a public-health policy failure. Lancet 2002;359: 2188-94.[
CrossRef][ISI][Medline]
9. Dyer G. Investors warn drugs industry of backlash over health crises. Financial Times 2003 March 24.
10. Curl A. Patents are no bar to healthcare for the poor. Financial Times 2003 March 28.
11. Abrahams J. The pharmaceutical industry as political player. Lancet 2002;360: 1498-502.[
CrossRef][ISI][Medline]
12. Saving grace: defeating Aids needs a global approach. Guardian 2003 February 18.
www.guardian.co.uk/leaders/story/0,3604,897761,00.html (accessed 28 May 2003).
13. Vick K. African AIDS victims losers of a drug war. US policy keeps prices prohibitive. Washington Post 1999 December 4.

PDF of this article        website: http://bmj.com/cgi/content/full/326/7402/1296?eaf#REF1

 


see also:

 

HIGH DRUG PRICES LINKED TO ADVERTISING, PROFITS, AND
ENORMOUS EXECUTIVE SALARIES
_
.

Price variations of HIV medications _
Presented @ Durban South African AIDS Conference, 11 July 2000

 

Pharmaceutical Company Profits and Salaries Listing _
by Richard Laing, Department of International Health, School of Public Health, Boston University
Presented @ Durban South African AIDS Conference, 11 July 2000

and selling the Brooklyn Bridge >>>
Makers of AIDS Drugs Agree to Slash Prices in Third World _
May 11, 2000

_
Past Drug Pricing Principles:

CONSENSUS STATEMENT ON LONG TERM EFFECTIVENESS RESEARCH
TAG statement to NIAID Council on June 15-16, 2000 -

Consensus Statement Impending Drug Pricing Actions
JUNE 2000__Pending Abbott Actions

Consensus Statement on Drug Pricing
C O M M U N I T Y -A L E R T -- D R U G -P R I C I N G _
September 9, 1998

Lower the Costs of Pharmaceuticals
DEMAND PHARMACEUTICAL COMPANIES LOWER COSTS >



see also [off-site]  The Truth About the Drug Companies


 

 

 

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