After the Housing Bubble, Get Ready for the Big Pharma Bubble
March 9, 2012
It is no consolation to the roughly one out of 600 families who lost their homes in the U.S. but Wall Street made a lot of money slicing and dicing mortgages it knew would implode, while hiding risks. Financial giants, like AIG, are still buzzing along and neither penalties or new laws will prevent a future crash, say financial analysts, because the risky business models have not really changed. In fact, occlusive business models responsible for the previous Internet bubble in 2000 and for which CEOs are still in prison may soon be legal again under the U.S.' pending JOBS Act. Thanks for that.
A similar Big Pharma bubble, leavened with risky blockbuster drugs that also blew up, is now bursting. Almost 20,000 jobs have vanished at AstraZeneca, Novartis and Pfizer in the last 12 months alone. AstraZeneca has scrapped 21,600 more jobs since 2007.
Like Wall Street's bundled high risk loans, the bubble created by Big Pharma's blockbuster drugs in the 2000s created jobs in sales, advertising, public relations and medical communication agencies while enriching TV and radio stations, websites, medical journals and doctor/pitchmen. Until it didn't.
And like the Wall Street bubble, many of Pharma's "assets" were later revealed to be toxic and/or misleading. The FDA now warns that bestselling statin drugs like Lipitor and Crestor, even sold to children, are linked to memory loss and diabetes. Oops. And the equally well selling proton pump inhibitors like Nexium and Prilosec for acid reflux disease (GERD) are now believed to increase the risk of bone fractures by 30 percent.
In March, the FDA even rejected a Merck drug that combines the active ingredient in Lipitor with the active ingredient in Zetia, a drug that Forbes calls Son of Vytorin. Vytorin (the father) was advertised to treat both food and family "sources of cholesterol" until results from a study that Merck and Schering-Plough appeared to withhold from regulators showed the drug had no effect on the buildup of plaque in the arteries (believed to correlate with heart attack and stroke). There was such a gap between marketing and science, Sen. Chuck Grassley (R-Iowa) asked the General Accounting Office to investigate why the FDA was approving "drugs that appear to have little to no effect in protecting lives and increasing health."
In Europe, governments are no longer willing to pay the bubble prices for drugs that they once did say published reports and some countries are drafting laws making drug makers "prove their drugs are effective or risk having them dropped from the coverage list, or covered at a lower rate," says the New York Times. Imagine.
Germany has already saved 1.9 billion euros in 2011 by refusing to pay higher prices for drugs unless they are clearly superior to existing medicines, and Pharma worries that other countries will also get tough and want scientific proof for drug effectiveness instead of marketing and spin. In the U.S. and elsewhere, a drug only needs to be superior to no drug (placebo) to be approved by regulators--yet "new" is conveyed as "better than any drug to date" in advertising. Some clinicians say Haldol, an inexpensive antipsychotic and lithium, a similarly affordable bipolar drug are better than blockbuster psychiatric drugs that created Pharma's 2000's bubble.
Being a Pharma rep was probably the next best thing to working on Wall Street before the Vioxx scandal and gigantic settlements over blockbuster drugs like Zyprexa, Bextra, Celebrex, Geodon and Seroquel. Direct-to-consumer advertising did your pre-sell for you, and all you had to do was show up with your snappy Vytorin tote bag and samples case. Some Pharma reps had their own reception room with ice water, swivel chairs, and laptop ports at medical offices, and most waltzed in to see the doctor right in front of waiting and sick patients. (It didn't hurt that reps were usually "hotties," both men or women).
But, by 2011, the bloom had fallen off Pharma reps' roses. The number of prescribers willing to see most reps fell almost 20 percent, the number refusing to see all reps increased by half, and eight million sales calls were "nearly impossible to complete," reported ZS Associates. Blockbuster drugs that were found to be unsafe after their big sales push or even withdrawn altogether, did not help the reps' credibility with doctors. After the aggressively marketed hormone therapy was linked to high incidences of cancer, stroke and heart attack, Wyeth (now Pfizer) announced it was eliminating 1,200 jobs and closing its Rouses Point, New York plant where Prempro products were manufactured.
As government and private insurers increasingly say, "You want us to cover what?" Pharma is seeking new drug markets in "emerging" and poor countries and moving operations there. Workers and people willing to be drug trial subjects are a bargain in poor countries where many can't understand drug risks or refuse them if they did. In January the Argentinian Federation of Health Professionals accused drug maker GlaxoSmithKline of misleading participants and pressuring poor families into joining a trial for the Synflorix vaccine, which the company says protects against bacterial pneumonia and meningitis, reported CNN. In 2010, 10 deaths occurred during Pfizer and AstraZeneca drug trials at the Bhopal Memorial Hospital and Research Centre which was ironically built for survivors of the 1984 Bhopal gas disaster, reports MSNBC. 3,878 workers perished in Bhopal when chemicals leaked at a Union Carbide pesticide plant.
Outsourcing drug manufacturing to cheap venues, where many can not afford the drugs they make, also contributes to Pharma's cascade of "quality control" problems in which drugs are mislabeled, contaminated or otherwise made dangerous. It is speculated that Johnson & Johnson's CEO William Weldon "was pushed to retire because of all of the quality issues at McNeil as well as with the company's hip implant products, which have resulted in a raft of litigation," reports FiercePharma.
Yet like the forces behind the JOBS Act, some say U.S. regulators are too hard on new drugs, not too easy. "The FDA is impeding useful innovations in the U.S.," says former FDA deputy commissioner Scott Gottlieb in the a Wall Street Journal oped, and lagging behind other countries. Former FDA commissioner Andrew Von Eschenbach, also writing in the WSJ, agrees. The FDA should improve U.S. drug competitiveness by allowing drugs "to be approved based on safety, with efficacy to be proven in later trials," while the public is already taking the drugs. Isn't that what's happening now?
Martha Rosenberg's first book, Born With a Junk Food Deficiency: How Flaks, Quacks, and Hacks Pimp the Public Health, will be published in April by Prometheus Books.
Wednesday, March 21, 2012
Martha Rosenberg: The Big Pharma Bubble | Scoop News