Guest Blogspot: The Pharmaceutical Industry – Friend or Foe?

Recent months have seen publicity over examples of disgraceful behaviour by pharmaceutical companies. The question arises as to whether the failings have been rare and exceptional or whether they are indicative of generally low moral standards in the industry.

Pharmaceutical firms have been portrayed in fictional books and films as well as by some political commentators as unscrupulous, faceless, powerful corporations that seek to make money at the expense of patients, mislead doctors and bully governments. Is such an opinion supported by the facts?

The pharmaceutical industry certainly makes a significant contribution to health and life-expectancy. This fact is obvious when the impact on individual illnesses such as cancer is considered. The authorities only approve new medicines for sale when their benefits have been demonstrated very convincingly and require products to be withdrawn or restricted if the evidence changes. The results of statistical analyses of the entire population are also consistent with medicines having a strong influence on life expectancy, although this kind of exercise cannot be as conclusive because of the large number of other influences. Other factors that are helping longevity include improved surgical techniques, reduced smoking and an absence of major wars. Working in the opposite direction are increased obesity, alcohol consumption, stress and degenerative neurological disorders.

The undeniable fact that medicines help health and life expectancy makes the pharmaceutical industry one of the most desirable. Every large pharmaceutical company only exists because of valuable drug discoveries with which it has been associated. The same does not apply in many other industries. Some business areas can be argued to have at their core making profit from harmful activities (for example the tobacco and sugar trades) or have controversial aspects (e.g. alcohol and betting). Other business sectors such as banking and oil are essentially amoral in that their main purpose is not to improve mankind but their services are essential in modern society. In most industries, if one company had not existed, another would have taken its place. In the case of pharmaceuticals this principle does not apply, because each company has normally made its own unique discoveries.

Taking everything into account, the pharmaceutical industry does strong net good and is one of the most important to encourage. What are the things that sometimes go wrong?  There are three distinct sets of circumstances where harm can be done affecting innocent people outside the company concerned :

  1. Accidents that the company had not foreseen such as the emergence of wholly unexpected drug side effects after all normal testing has been completed. In this situation the firm may have just been unlucky or may have been short-sighted or insufficiently careful but has otherwise acted with integrity.
  2. Law or rule breaking where innocent people have or might have suffered from wrongdoing by a firm or a member of its staff. Generally someone or a group of people in the company will have been deliberately dishonest or misleading or will have knowingly withheld information or purposefully failed to comply with statutory or regulatory requirements. The cases of greatest public concern are those where the greatest harm has been or could have been caused outside the company concerned.
  3. Actions that are within the Law but not in line with best practice.

All three types of behaviour occur from time to time in all industries.

A few of the many examples in the first category outside the drug industry  include the oil spillage linked to BP in the Gulf of Mexico, NatWest’s recent inability to provide accurate bank balances to many customers and unforeseen safety defects in cars.

The second category includes, for example, the manipulation of financial markets by financial services companies or knowingly failing to keep client money in separate identifiable accounts. Barclays Bank was fined £290m for the former offence in June 2012.  J P Morgan was fined £33.32m for not keeping client money separate by the UK authorities in 2010.

The third category includes, for example, advertising cigarettes to non-smokers in countries where legal ways of doing so can be found.

Accidents in the first category in the drug industry are often wholly or largely just bad luck and could not have been foreseen at the time. Examples are the tragedies relating to thalidomide and practolol. If patients are ever to receive the benefit of new drugs, testing cannot continue forever. A wholly unexpected side effect can sometimes only be uncovered when enough patients have been treated for a pattern to emerge. Generally today drugs are tested in 1,000’s of patients before launch but unfortunately many serious side effects only become apparent after tens of thousands of patients have been treated.

In the case of practolol a follow-up drug based on the same research proved to be a major medical breakthrough. A Nobel prize was won and the good from the programme outweighed the harm done by practolol, even though the latter had tragic consequences for some patients.

The second category, involving breaking the Law or rules, is the one that gives the most concern in the pharmaceutical industry, where the worst cases generally relate to deliberately false, incomplete, unapproved or misleading information about the effects of drugs. One of the most memorable examples concerned an arthritis drug, benoxaprofen, launched and later withdrawn by Lilly in the early 1980’s. The background was the subject of a Panorama television documentary.

The most recent major example concerns GlaxoSmithKline plc (GSK). The company announced earlier this month (July 2012) that it had reached an agreement with the US Government, multiple states and the District of Columbia.  GSK will make payments totalling $3bn, a record amount in the industry. The agreement resolves criminal and civil liabilities related to an investigation begun by the US Attorney’s office of Colorado in 2004 and later taken over by the US Attorney’s Office of Massachusetts. Under the terms of the settlement, GSK has agreed to plead guilty to misdemeanour violations of the Federal Food, Drug, and Cosmetic Act related to certain aspects of the marketing of Paxil (an antidepressant) for paediatric use and of Wellbutrin (another antidepressant) for certain uses, and for failure to include information about the initiation or status of certain studies of Avandia (an antidiabetic) in Periodic and Annual Reports submitted to the US authorities.

Pfizer was fined $2.3bn in 2010, and Abbott $1.5bn in May this year over their aggressive US marketing tactics. In April 2010 AstraZeneca agreed  to pay a $520m  fine plus interest to US regulators over the past marketing of Seroquel, a schizophrenia drug.

In a case not relating to medical claims over products  Roche agreed in 1999 to plead guilty and pay $500 million (a record at the time) by way of criminal fine for leading a worldwide conspiracy to raise and fix prices and allocate market shares for certain vitamins sold in the United States and elsewhere. Dr. Kuno Sommer, former Director of Worldwide Marketing, Hoffmann-La Roche Vitamins and Fine Chemicals Division, was charged with participating in the vitamin cartel and lying to investigators in 1997 in an attempt to cover-up the conspiracy. Dr. Sommer, a Swiss citizen, agreed to submit to the jurisdiction of the U.S. District Court in Dallas, plead guilty to certain charges, serve a four-month prison term, and pay a $100,000 fine.

In the case of the GSK and AstraZeneca drugs mentioned above, the key violations occurred a considerable period ago in different eras at the companies and without Main Board knowledge at the time.

I have tried to give explicit examples of some of the worst cases of wrongdoing in the pharmaceutical industry. On any reasonable analysis they are dwarfed by the good done by the industry and indeed by the companies that have been at fault.

Regretfully pharmaceutical companies that act within the Law do admittedly not always follow best practice. However, the hurdles imposed by the Law are higher than in most industries. Examples of regrettable but legal behaviour from pharmaceutical companies often concern indirect inducements for doctors to prescribe or recommend drugs. Bias is shown in the media by the way in which drug companies are criticised for offering inducements more than doctors for accepting them. Standards of behaviour in the pharmaceutical industry have risen strongly in recent years, partly as a result of voluntary codes and partly because of fines.

Do pharmaceutical companies make money at the expense of patients and mislead doctors? The answer is occasionally and regretfully yes, but on balance the positive contribution is huge. Nearly all new drugs in the past 100 years have been discovered or developed by commercial pharmaceutical companies. Academics, charities and government-funded organisations around the world have made an enormous contribution to science and medical understanding that has been invaluable to pharmaceutical R&D departments. However, organisations outside the pharmaceutical industry have not in general developed medicines themselves to the stage of being suitable for widespread use in patients. Most pharmaceutical research scientists have three motivations: a desire to contribute to advances in medicine, a goal of being respected by their peers and a wish to see their company or themselves benefit financially. The first two aims alone generally seem to be insufficient to lead to success in actually bringing drugs to the market. The reasons are very interesting but are beyond the scope of this blog.

We must not fall into the trap of thinking that wrongdoing is specific to people working for commercial companies. Perhaps the worst case of harm resulting from deliberate wrongdoing in pharmaceutical history arose through the criminal behaviour of Zhen Xiaoyu when head of the Chinese drug authority. He was sentenced to death and executed in 2007 for accepting bribes and dereliction of duty, resulting in a number of patients dying or suffering severe side effects.

Does the pharmaceutical industry bully governments? My opinion is that governments, like the medical profession, have the resources to develop their own opinions and should take independent advice when necessary. Very often in Europe including the UK the government or state healthcare system in a country is the dominant purchaser of drugs (e.g. as with the NHS) and many products have only one supplier (because of patent protection). In these circumstances negotiations between suppliers and governments are inevitable. Whilst recognising that we live at a time of economic austerity, the more the encouragement given to pharmaceutical companies, the greater will be the number of breakthrough new drugs in the future. It would be unfair if Europe were to “free-ride” on the USA by paying much lower prices than the USA for drugs which would not be available without the higher US prices.

Perhaps what is needed is some good films and novels about pharmaceutical R&D workers burning the midnight oil in a dedicated attempt to discover new medicines and about founders of biotechnology companies mortgaging their houses in a desperate attempt to raise start-up capital. Stories could be told about the joys of success and the pain of failure in R&D.  The pharmaceutical industry is one of the major drivers behind the progress of mankind. We must not allow the shame of wrongdoing in the industry to distract us from seeing the big picture.

About Barbara Arzymanow

Barbara Arzymanow is a Research Fellow at 2020health and is a founding director of an independent healthcare consultancy firm. She has been an investment analyst specialising in Pharmaceuticals for 25 years, prior to which she carried out academic medical research in university laboratories. Her experience, obtained entirely from outside the pharmaceutical industry, gives her a unique, political perspective independent of commercial lobbies. She has extensive experience in financing the biotechnology industry, which is vital for the long-term standing of medical research in the UK. She has always been inspired by the scientific excellence within the UK and would like to see collaborations between industry, the NHS and academia strengthened. For more information about Barbara's research and writings including submissions to Government Departments please visit . Barbara also tweets as @barbararesearch .
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