Pharmaceutical Industry across the globe wants absolute transparency in all government laws, policies, guidelines, transactions and overall governance. They also expect the trade environment should be predictable, non-manipulative and business-friendly. These expectations are indeed well justified and deserve whole-hearted support from all concerned.
However, when similar expectations of transparency are voiced by stakeholders in the Big Pharma business operations, that will have direct or indirect impact on public health interests, one would mostly encounter a well guarded, mammoth and impregnable ‘Black Box’, wearing a ‘Top Secret’ label, with all relevant information kept inside.
Such areas of stakeholders’ interests on Big Pharma could well be related to details, like for example:
- Actual break-up of R&D expense details,
- Transparency in all clinical trials data for experts review,
- Patented products’ pricing rationale,
- Enormous total costs of lobbying and related expenses at the global level,
- Marketing spend on doctors and other decision makers, directly or indirectly, just to name a few.
Mounting curiosity:
Continuation of such opaque practices for a long time, in turn, sparks the curiosity of the intelligentsia to know more in details, especially, about the areas as stated above.
Various research studies are now coming up, with huge revelations and strong findings in these areas. All of these together indicate, it is about time for the global pharma to also demonstrate transparency in their respective business practices and corporate governances, without further delay.
If it does not happen, probably respective governments in various countries will start acting on these areas of opaque self-serving pharma business practices, with the enactment and more importantly, stricter enforcement of requisite laws and policies. President Obama Administration in the United States has already initiated some important actions in these areas with proposals and laws, like for example, the “Physicians Payment Sunshine Act’ .
The ‘Power Game’:
An interesting article of May 3, 2013 highlighted that the global pharmaceutical industry exerts incredible influence over the prescription medicines across the globe. This power, as many will know, flows from robust political contacts and influences over various important government agencies administrating the entire healthcare system, executed immaculately by expensive lobbying and PR campaigns by their globally integrated trade bodies.
Similar powerful influences also get extended to doctors and the people who matter to further their interests. These well crafted plans are reportedly executed through sponsored or paid opinion-modifying articles, ‘advertorials’, DTC advertisements (wherever legally permitted) and well-organized, seemingly third party, speeches to push the envelopes further.
Most probably, keeping such ongoing practices in mind and coming under intense media pressure, the Medical Council of India (MCI) on December 10, 2009 amended the “Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002″ for the doctors in India. Unfortunately, its implementation on the ground is rather tardy.
The above article also stated, “In fact, in the United States the industry contributes heavily to the annual budget of the U.S. Food and Drug Administration (FDA), which is charged with regulating drugs and devices made by those same companies.”
Avoidable Expenditures:
The paper indicates that in the United States alone the industry associations:
- Have 1,100-plus paid lobbyists on Capitol Hill,
- Allocated US$ 188 million annual lobbying budget
- Doles out around US$ 14 million to political candidates every year
The report also comments, ‘Drug companies spend substantially more on marketing than they do on research and development.’
Influencing opinion against patients’ interest?
The article in the ‘drugwatch’ also states:
“Doctors are persuaded by the pharma companies to attach their names (ghost writing), against financial considerations, to favorable article on a particular drug ensuring that it is published in a well reputable medical journal.”
The author continues that ‘Ghost writings’ are being used to promote numerous drugs to influence concerned stakeholders.
In 1998, a study of the prestigious New England Journal of Medicine found that ‘out of 75 published articles, nearly half were written by authors with financial conflicts. And, worse than this, only two of the articles disclosed interests.’
Richard Smith, former editor of the British Medical Journal, was quoted saying, “All journals are bought – or at least cleverly used – by the pharmaceutical industry.”
Striking facts:
Following are some striking facts as reported in the article, as mentioned above:
“Advertising instead of research: For every US$ 1 spent on “basic research,” Big Pharma spends US$ 19 on promotions and advertising.
Distribution of free drug samples: The United States has 1 pharmaceutical sales representative for every 5 office-based physicians.
Sponsorship of symposiums and medical conventions: Drug and medical device makers spend lavishly on doctors, including covering meals, travel, seminars and conventions that may look more like vacations.”
Pressure on publications:
The paper highlights that large global pharma majors may even pull its advertisements out, if the concerned medical journal will question the accuracy of an ad. Such types of threats have very serious effects on these journals in running their businesses without getting lucrative advertisement dollars from the drug manufacturers.
Making drugs looking good:
The same article highlights:
“Quite often the academics and scientists are hired hands who supply human subjects and collect data according to the instructions from their corporate employers. Sponsors keep the data, analyze, write the papers and decide whether and when and where to submit them for publication. Drug companies have discovered ways to stage-manage trials to produce predetermined outcomes that will put their products in the best light.”
With this strategy even a bad drug can allegedly be made looking good by doing many things, like for example:
- Comparing them to a placebo
- Comparing them to a competitor’s medication in the wrong strength
- Pairing them with a drug that is known to work well
- Shortening a trial before any bad results surface
- Testing in groups too small to provide valid evidence
Pay-for-delay deals:
A recent report titled, “Top twenty pay-for-delay drugs: How Industry pay-off delay generics” highlights that ‘Pay-for-delay deals’ have forced patients in the United States to pay an average of 10 times more than necessary for at least 20 blockbuster drugs.
Key findings of the analysis on the impact of pay-for-delay deals are as follows:
- This practice has held back generic medicines used by patients with a wide range of serious or chronic conditions, ranging from cancer and heart disease, to depression and bacterial infection.
- These payoffs have delayed generic drugs for five years, on average, and as long as nine years.
- These brand-name drugs cost 10 times more than their generic equivalents, on average, and as much as 33 times more.
- These patented drug companies have made an estimated US$ 98 billion in total sales of these drugs while the generic versions were delayed.
Citing example, the paper says, a pay-for-delay deal kept a generic version of the breast cancer drug Tamoxifen off the US market for nine years, while Pfizer made $7.4 billion in sales of its cholesterol-lowering drug Lipitor (atorvastatin) in 2012 alone.
The point to ponder yet again is, why such practices are being surreptitiously carried out for years sacrificing patients’ interest and without the regulators’ strong interventions, in general?
French Government has initiated a probe:
The French Competition Authority is reportedly expected to publish a report on the findings of its inquiry, initiated in February 2013, into the costs and pricing of medicines in France. The report will also look at whether industry practices are interfering with the market entry of generic drugs, including distribution arrangements between drug manufacturers, wholesalers and pharmacists.
An appreciable initiative in America, but why not in India?
There is still a simmering hope. As indicated above, President Obama’s Affordable Care Act reportedly requires that from September 2013, pharmaceutical companies will need to collect data and openly report information on payments, investment interests, ownership and items of value given to doctors and hospitals. Very unfortunately, the Department of Pharmaceuticals of the Government of India has not taken any such steps, as yet, despite the situation turning grave in the country.
The power of pharma lobby in the US:
According to a recent NYT report, in the United States, government health programs are forbidden from rejecting new drugs on cost grounds.
When the issue of drug prices came up as part of President Obama’s ‘Affordable Care Act’ debate, it was summarily rejected in Congress. Simultaneously, a move toward comparative-effectiveness studies, putting rival drugs or treatments through trials to determine which work better, was also decried.
The report highlights, the mere suggestion of the US government throwing its weight around on drug prices stirs up talk of ‘socialism’. The pharma lobby doesn’t have to look far for support in fighting that idea. In the US, the so-called ‘free market’ is trusted to regulate drug prices, despite the reality that the healthcare market is far from transparent, ‘with byzantine pricing mechanisms and costs that vary wildly region-by-region, pharmacy by pharmacy and even patient-by-patient’.
The usual supply/demand/pricing relationships do not apply to drug prices at the consumer level in the US too, just as it has been proved in India.
A large part of creation of this environment is attributed to pharmaceutical and other health-products firms, who reportedly spent a total of US$ 250 million on lobbying last year.
Big Pharma keeps failing credibility tests:
This happened very recently, when The Guardian in July 2013 reported, the pharmaceutical industry has “mobilized” an army of patient groups to lobby against plans to force companies to publish secret documents on drug trials. This is related to the news that the European Medicines Agency (EMA) could force drug companies to publish all Clinical Trial (CT) results in a public database.
The above report says, while some pharma players agreed to share data, important global pharma industry associations have resisted this plan of the EMA. The report continues, a leaked letter from two large pharma trade associations, the Pharmaceutical Research and Manufacturers of America (PhRMA) of the United States and the European Federation of Pharmaceutical Industries and Associations (EFPIA), have drawn out a strategy to combat calls by drug regulators to force companies to publish all CT results.
The strategy reportedly shows how patient groups, many of which receive some or all of their funding from drugs companies, have been drawn into this battle by these Big Pharma lobby groups.
The e-mail reportedly seen by ‘The Guardian’ was from Richard Bergström, Director General of EFPIA, addressed to directors and legal counsel at Roche, Merck, Pfizer, GSK, AstraZeneca, Eli Lilly, Novartis and many smaller companies.
The e-mail leaked by an employee of a pharma company describes a four-pronged campaign that starts with “mobilizing patient groups to express concern about the risk to public health by non-scientific re-use of data”.
Translated, as ‘The Guardian’ reported, “that means patient groups go into bat for the industry by raising fears that if full results from drug trials are published, the information might be misinterpreted and cause a health scare.”
This appears to be another classic case of vested interests working against patients’ interests.
Global lobbying started taking the center stage in India too:
With the above back-drop and lobbying scandals reportedly being surfaced in many other countries, it is about time that India puts its acts together with India-specific stricter disclosure policies, including R&D, Clinical Trials (CTs), Patented Products Pricing, Marketing Practices and Trade Lobbying.
Interestingly, to influence Government policies India’s top lobbying spenders in 2012 (US$ million) were reported as follows:
| 1 | US Chamber of Commerce |
136.3 |
| 2 | National Association of Realtors |
41.5 |
| 3 | Blue Cross / Blue Shield |
22.5 |
| 4 | General Electric |
21.1 |
| 5 | American Hospital Association |
19.2 |
| 6 | National Cable & Telecom. Association |
18.9 |
| 7 | Pharmaceutical Research & Mfrs. of America (PhRMA) |
18.5 |
| 8 |
18.2 |
|
| 9 | Northrop Grumman |
17.5 |
| 10 | AT&T |
17.4 |
| 11 | American Medical Association |
16.5 |
| 12 | Boeing |
15.6 |
Source: The Center for Responsive Politics (Economic Times, June 4, 2013)
According to the latest lobbying disclosure reports filed with the US Senate and the House of Representatives, at least two dozen American companies and industry associations are reportedly lobbying hard with the US lawmakers on issues in India, which include:
- Intellectual Property (IP)
- Patent
- Market access
Another recent report comments as follows:
“The US Chamber of Commerce has become a portal for dubious reports that claim India’s intellectual property regime is worse than China’s. Such “research” by paid lobbyists and disseminated through the halls of US Congress…”
Hefty fines for illegal practices, yet Black Box remains tight and safe:
In December 2010, Healthcare advocacy group Public Citizen published a report that, for the first time, documented all major financial settlements and court judgments between pharmaceutical manufacturers and the federal and state governments of the United States since 1991.
It says, almost US$ 20 billion was paid out by the pharmaceutical industry to settle allegations of numerous violations, including illegal, off-label marketing and the deliberate overcharging of taxpayer-funded health programs, such as Medicare and Medicaid.
Three-fourths of the settlements and accompanying financial penalties had occurred in just the five-year period prior to 2010. There has been no indication that this upward trend is subsiding.
10 Largest Settlements and Judgments on Big Pharma mis governance:
(Period: Nov. 2, 1010 – July 18, 2012)
| Company | Amount US$ Million | Year | Reasons | |
| 1. | GlaxoSmithKline | 3, 000 | 2012 | Unlawful promotion, kickbacks, concealing study data, overcharging government health programs |
| 2. | Abbott | 1,500 | 2012 | Unlawful promotion, kickbacks |
| 3. | Johnson & Johnson | 1,200 | 2012 | Unlawful promotion |
| 4. | Merck | 950 | 2011 | Unlawful promotion |
| 5. | Ranbaxy | 500 | 2012 | Poor manufacturing practices, falsifying data on FDA applications. |
| 6. | Johnson & Johnson | 327 | 2011 | Unlawful promotion |
| 7. | Boehringer Ingelheim | 280 | 2011 | Overcharging government health programs |
| 8. | Mylan’s Dey Pharma unit | 280 | 2010 | Overcharging government health programs |
| 9. | Elan | 203 | 2010 | Unlawful promotion, kickbacks |
| 10. | Johnson & Johnson | 158 | 2012 | Unlawful promotion |
Conclusion:
All such expenditures, including expensive lobbying and court settlement charges for illegal business practices, as mentioned above, I reckon, are wasteful and avoidable. These are mostly outcomes of self serving measures, shorn of public health interest,
If all these costs are eliminated and actual R&D expenses are reflected, in a transparent manner, there could be significant reduction in the costs of newer innovative drugs, extending their access to billions of patients, across the world.
Thus to help evaluating the innovative drugs with greater transparency, there is an urgent need for the Big Pharma to set examples by voluntarily disclosing the secrets hidden within the ‘Black Boxes’, as deliberated above. These disclosures should be made to the independent experts and the respective Governments under appropriate statutes.
Expectations of transparency in Governance should not, therefore, be restricted just to Government laws, policies and decisions, the industry should reciprocate it too, in equal measures.
To be patient-centric, transparency in governance needs to be a two-way traffic, where pharma industry should volunteer to be an integral part, sooner than later. Otherwise it may be too late for them to avoid harsh interventions of the respective regulators, as the intense pressure from intelligentsia, civil society and media, keep mounting.
That said, the question lingers:
When the ‘Big Pharma is rightly demanding transparency in all areas of public discourse, why are they so reluctant in making their intriguing ‘Black Boxes’ transparent, that too only in areas of public health interest, for fair experts review?
By: Tapan J. Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.