Pharmaceutical industry

From Wikipedia, the free encyclopedia

Glivec, a drug used in the treatment several cancers, is marketed byNovartis, one of the world majorpharmaceutical
companies.
The pharmaceutical industry develops, produces, and
markets drugs or pharmaceuticals licensed for use as medications.
[1]
Pharmaceutical companies are
allowed to deal in generic or brand medications and medical devices. They are subject to a variety of
lawsand regulations regarding the patenting, testing and ensuring safety and efficacy and marketing
of drugs.
Contents
[hide]
1 History
2 Research and development
o 2.1 The cost of innovation
o 2.2 "Me-too" drugs
o 2.3 Controversies
3 Product approval
o 3.1 Orphan drugs
o 3.2 Legal issues
4 Industry revenues
o 4.1 Market leaders in terms of healthcare revenue
o 4.2 Market leaders in terms of sales
o 4.3 Patents and generics
o 4.4 Medicare Part D
o 4.5 Mergers, acquisitions, and co-marketing of drugs
o 4.6 Prescriptions
o 4.7 Publications
5 Marketing
o 5.1 To healthcare professionals
o 5.2 To insurance and public health bodies
o 5.3 To retail pharmacies and stores
o 5.4 Direct to consumer advertising
o 5.5 Controversy about drug marketing and lobbying
o 5.6 Regulatory capture
o 5.7 Pharmaceutical fraud
6 Developing world
o 6.1 Patents
o 6.2 Nigerian clinical trial
o 6.3 Charitable programs
7 Pharmaceutical industry in popular culture
8 Industry associations
9 Regulatory authorities
10 See also
11 References
12 Bibliography
o 12.1 Economics of the industry
o 12.2 Relationship between pharma and the medical profession
o 12.3 Relationship between pharma and the nursing profession
o 12.4 Relationship between pharma and consumers (general public)
o 12.5 Industry trends
13 External links
History[edit]
The earliest drugstores date to the Middle Ages. The first known drugstore was opened by Arabian
pharmacists in Baghdad in 754,
[2]
and many more soon began operating throughout the medieval
Islamic world and eventually medieval Europe. By the 19th century, many of the drugstores in
Europe and North America had eventually developed into larger pharmaceutical companies.
Most of today's major pharmaceutical companies were founded in the late 19th and early 20th
centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-
manufactured and distributed. Switzerland, Germany and Italy had particularly strong industries, with
the United Kingdom, the United States, Belgium and the Netherlands following suit.
Legislation was enacted to test and approve drugs and to require appropriate labeling. Prescription
and non-prescription drugs became legally distinguished from one another as the pharmaceutical
industry matured. The industry got underway in earnest from the 1950s, due to the development of
systematic scientific approaches, understanding of human biology (including DNA) and sophisticated
manufacturing techniques.
Numerous new drugs were developed during the 1950s and mass-produced and marketed through
the 1960s. These included the first oral contraceptive, "The Pill", Cortisone, blood-pressure drugs
and other heart medications. MAO inhibitors, chlorpromazine (Thorazine), haloperidol (Haldol) and
the tranquilizers ushered in the age of psychiatric medication. Diazepam (Valium), discovered in
1960, was marketed from 1963 and rapidly became the most prescribed drug in history, prior to
controversy over dependency and habituation.
Attempts were made to increase regulation and to limit financial links between companies and
prescribing physicians, including by the relatively new U.S. Food and Drug Administration (FDA).
Such calls increased in the 1960s after the thalidomide tragedy came to light, in which the use of a
new anti-emetic in pregnant women caused severe birth defects. In 1964, the World Medical
Association issued its Declaration of Helsinki, which set standards for clinical research and
demanded that subjects give their informed consent before enrolling in an experiment.
Pharmaceutical companies became required to prove efficacy in clinical trials before marketing
drugs.
Cancer drugs were a feature of the 1970s. From 1978, India took over as the primary center of
pharmaceutical production without patent protection.
[3]

The industry remained relatively small scale until the 1970s when it began to expand at a greater
rate.
[citation needed]
Legislation allowing for strong patents, to cover both the process of manufacture
and the specific products, came into force in most countries. By the mid-1980s, small biotechnology
firms were struggling for survival, which led to the formation of mutually beneficial partnerships with
large pharmaceutical companies and a host of corporate buyouts of the smaller firms.
Pharmaceutical manufacturing became concentrated, with a few large companies holding a
dominant position throughout the world and with a few companies producing medicines within each
country.
The pharmaceutical industry entered the 1980s pressured by economics and a host of new
regulations, both safety and environmental, but also transformed by new DNA chemistries and new
technologies for analysis and computation.
[citation needed]
Drugs for heart disease and for AIDS were a
feature of the 1980s, involving challenges to regulatory bodies and a faster approval process.
Managed care and Health maintenance organizations (HMOs) spread during the 1980s as part of an
effort to contain rising medical costs, and the development of preventative and maintenance
medications became more important. A new business atmosphere became institutionalized in the
1990s, characterized by mergers and takeovers, and by a dramatic increase in the use of contract
research organizations for clinical development and even for basic R&D. The pharmaceutical
industry confronted a new business climate and new regulations, born in part from dealing with world
market forces and protests by activists in developing countries. Animal Rights activism was also a
challenge.
Marketing changed dramatically in the 1990s. The Internet made possible the direct purchase of
medicines by drug consumers and of raw materials by drug producers, transforming the nature of
business. In the US, Direct-to-consumer advertising proliferated on radio and TV because of new
FDA regulations in 1997 that liberalized requirements for the presentation of risks. The new
antidepressants, the SSRIs, notably Fluoxetine (Prozac), rapidly became bestsellers and marketed
for additional disorders.
Drug development progressed from a hit-and-miss approach to rational drug discovery in both
laboratory design and natural-product surveys. Demand for nutritional supplements and so-called
alternative medicines created new opportunities and increased competition in the industry.
Controversies emerged around adverse effects, notably regarding Vioxxin the US, and marketing
tactics. Pharmaceutical companies became increasingly accused of disease mongering or over-
medicalizing personal or social problems.
[4]

Research and development[edit]
Main articles: Drug discovery and Drug development
Drug discovery is the process by which potential drugs are discovered or designed. In the past
most drugs have been discovered either by isolating the active ingredient from traditional remedies
or by serendipitous discovery. Modern biotechnology often focuses on understanding the metabolic
pathways related to a disease state or pathogen, and manipulating these pathways using molecular
biology or biochemistry. A great deal of early-stage drug discovery has traditionally been carried out
by universities and research institutions.
Drug development refers to activities undertaken after a compound is identified as a potential drug
in order to establish its suitability as a medication. Objectives of drug development are to determine
appropriate formulation and dosing, as well as to establish safety. Research in these areas generally
includes a combination of in vitro studies, in vivo studies, and clinical trials. The amount of capital
required for late stage development has made it a historical strength of the larger pharmaceutical
companies.
[5]

Often, large multinational corporations exhibit vertical integration, participating in a broad range of
drug discovery and development, manufacturing and quality control, marketing, sales, and
distribution. Smaller organizations, on the other hand, often focus on a specific aspect such as
discovering drug candidates or developing formulations. Often, collaborative agreements between
research organizations and large pharmaceutical companies are formed to explore the potential of
new drug substances. More recently, multi-nationals are increasingly relying on contract research
organizations to manage drug development.
[6]

The cost of innovation[edit]
Drug companies are like other companies in that they manufacture products that must be sold for a
profit in order for the company to survive and grow. They are different from some companies
because the drug business is very risky. For instance, only one out of every ten thousand discovered
compounds actually becomes an approved drug for sale. Much expense is incurred in the early
phases of development of compounds that will not become approved drugs.
[7]
In addition, it takes
about 7 to 10 years and only 3 out of every 20 approved drugs bring in sufficient revenue to cover
their developmental costs, and only 1 out of every 3 approved drugs generates enough money to
cover the development costs of previous failures. This means that for a drug company to survive, it
needs to discover a blockbuster (billion-dollar drug) every few years.
[7]

Drug discovery and development is very expensive; of all compounds investigated for use in humans
only a small fraction are eventually approved in most nations by government appointed medical
institutions or boards, who have to approve new drugs before they can be marketed in those
countries. In 2010 18 NMEs (New Molecular Entities) were approved and three biologics by the
FDA, or 21 in total, which is down from 26 in 2009 and 24 in 2008. On the other hand, there were
only 18 approvals in total in 2007 and 22 back in 2006. Since 2001, the Center for Drug Evaluation
and Research has averaged 22.9 approvals a year.
[8]
This approval comes only after heavy
investment in pre-clinical development and clinical trials, as well as a commitment to ongoing safety
monitoring. Drugs which fail part-way through this process often incur large costs, while generating
no revenue in return. If the cost of these failed drugs is taken into account, the cost of developing a
successful new drug (new chemical entity, or NCE), has been estimated at about 1.3 billion
USD
[9]
(not including marketing expenses). Professors Light and Lexchin reported in 2012, however,
that the rate of approval for new drugs has been a relatively stable average rate of 15 to 25 for
decades.
[10]

Industry-wide research and investment reached a record $65.3 billion in 2009.
[11]
While the cost of
research in the U.S. was about $34.2 billion between 1995 and 2010, revenues rose faster
(revenues rose by $200.4 billion in that time).
[10]

A study by the consulting firm Bain & Company reported that the cost for discovering, developing
and launching (which factored in marketing and other business expenses) a new drug (along with
the prospective drugs that fail) rose over a five-year period to nearly $1.7 billion in
2003.
[12]
According to Forbes, development costs between $4 billion to $11 billion per drug.
[13]

These estimates also take into account the opportunity cost of investing capital many years before
revenues are realized (see Time-value of money). Because of the very long time needed for
discovery, development, and approval of pharmaceuticals, these costs can accumulate to nearly half
the total expense. Some approved drugs, such as those based on re-formulation of an
existing active ingredient (also referred to as Line-extensions) are much less expensive to develop.
Calculations and claims in this area are controversial because of the implications for regulation
and subsidization of the industry through tax credits and federally funded research grants.
[14]

"Me-too" drugs[edit]
Competition between pharmaceutical companies has resulted in "me-too" drugs, which are defined
as chemically-similar compounds or compounds with the same mechanism of action as an existing,
approved chemical entity.
[15]
Much of the "me-too" drug phenomenon is actually a result of
independent parallel research at rival companies.
[16][17]
It may take 10 or more years for a drug to go
from discovery to FDA approval, and if a new clinical pathway is discovered, multiple companies
often will simultaneously develop a drug treatment within this pathway, leading to several similar
drugs arriving on the market within a short period of time.
[18]

Critics of the pharmaceutical industry suggest that "me-too" drugs are only brought to market
because their development is cheaper and less risky than drugs with a novel mechanism of
action.
[19]
However, proponents point to the cost benefits of market competition between similar
drugs. When a second drug arrives on the market, the manufacturer of the first drug no longer has a
monopoly, and the resulting competition puts a downward pressure on pricing.
[20]
To be approved by
the FDA, second and third entrants also need to offer advantages over the existing therapy, such as
fewer side effects or more convenient dose schedules.
[20]

Controversies[edit]
Due to repeated accusations and findings that some clinical trials conducted or funded by
pharmaceutical companies may report only positive results for the preferred medication, the industry
has been looked at much more closely by independent groups and government agencies.
[21][22]

In response to specific cases in which unfavorable data from pharmaceutical company-sponsored
research was not published, the Pharmaceutical Research and Manufacturers of America have
published new guidelines urging companies to report all findings and limit the financial involvement
in drug companies of researchers.
[23]
US congress signed into law a bill which requires phase II and
phase III clinical trials to be registered by the sponsor on the clinicaltrials.gov website run by the
NIH.
[24]

Drug researchers not directly employed by pharmaceutical companies often look to companies for
grants, and companies often look to researchers for studies that will make their products look
favorable. Sponsored researchers are rewarded by drug companies, for example with support for
their conference/symposium costs. Lecture scripts and even journal articles presented by academic
researchers may actually be "ghost-written" by pharmaceutical companies.
[25]

Researchers who have tried to reveal ethical issues with clinical trials, or publish papers showing
harmful effects of drugs and who saw themselves as whistleblowers have faced or been
threatened with lawsuits from drug companies, or have lost their jobs.
[26]
For example, Dutch medical
researcher Dr. Koos Stiekema was sued by the pharmaceutical company Organon for violating his
confidentiality agreement, after he discussed his concerns about a clinical trial design with three
ethics committees in 1999. Organon's other experts agreed that the trial design was safe, and a
court in Amsterdam awarded Organon 550,000 for the trial-delay costs that resulted from
Stiekema's disclosures.
[27]
The award was overturned on appeal; the court ruled that Stiekema's
breach of confidentiality was "justified by a higher interest."
[28]
In the United States, corporate
whistleblowers are given a percentage of any fines levied.
[29]

Since 2008, pharmaceutical companies have been increasing the cost of name-brand prescriptions
to offset declining revenues as out-of-patent drugs become available as generics.
[30]
Simultaneously,
pharmaceutical manufacturers are taking increasing advantage of tax havens to avoid taxation.
[31]

An investigation by ProPublica found that at least 21 doctors have been paid more than $500,000 for
speeches and consulting by drugs manufacturers since 2009, with half of the top earners working
in psychiatry, and about $2 billion in total paid to doctors for such services. AstraZeneca, Johnson &
Johnson and Eli Lilly have paid billions of dollars in federal settlements over allegations that they
paid doctors to promote drugs for unapproved uses. Some prominent medical schools have since
tightened rules on faculty acceptance of such payments by drug companies.
[32]

Product approval[edit]
Main article: Food and Drug Administration
In the United States, new pharmaceutical products must be approved by the Food and Drug
Administration (FDA) as being both safe and effective. This process generally involves submission of
an Investigational New Drug filing with sufficient pre-clinical data to support proceeding with human
trials. Following IND approval, three phases of progressively larger human clinical trials may be
conducted. Phase I generally studies toxicity using healthy volunteers. Phase II can
include Pharmacokinetics and Dosing in patients, and Phase III is a very large study of efficacy in
the intended patient population. Following the successful completion of phase III testing, a New Drug
Application is submitted to the FDA. The FDA review the data and if the product is seen as having a
positive benefit-risk assessment, approval to market the product in the US is granted.
[33]

A fourth phase of post-approval surveillance is also often required due to the fact that even the
largest clinical trials cannot effectively predict the prevalence of rare side-effects.Postmarketing
surveillance ensures that after marketing the safety of a drug is monitored closely. In certain
instances, its indication may need to be limited to particular patient groups, and in others the
substance is withdrawn from the market completely. Questions continue to be raised regarding the
standard of both the initial approval process, and subsequent changes to product labeling (it may
take many months for a change identified in post-approval surveillance to be reflected in product
labeling) and this is an area where congress is active.
[34]

The FDA provides information about approved drugs at the Orange Book site.
[35]

In many non-US western countries a 'fourth hurdle' of cost effectiveness analysis has developed
before new technologies can be provided. This focuses on the efficiency (in terms of the cost
per QALY) of the technologies in question rather than their efficacy. In England NICE approval
requires technologies be made available by the NHS, whilst similar arrangements exist with
the Scottish Medicines Consortium in Scotland and the Pharmaceutical Benefits Advisory
Committee in Australia. A product must pass the threshold for cost-effectiveness if it is to be
approved. Treatments must represent 'value for money' and a net benefit to society. There is much
speculation
[36]
that a NICE style framework may be implemented in the USA in an attempt to
decrease Medicare and Medicaid spending by balancing benefits to patients versus profits for the
medical industry.
In the UK, the British National Formulary is the core guide for pharmacists and clinicians.
Orphan drugs[edit]
Main article: Orphan drug
There are special rules for certain rare diseases ("orphan diseases") involving fewer than 200,000
patients in the United States, or larger populations in certain circumstances.
[37]
Because medical
research and development of drugs to treat such diseases is financially disadvantageous,
companies that do so are rewarded with tax reductions, fee waivers, and market exclusivity on that
drug for a limited time (seven years), regardless of whether the drug is protected by patents.
Legal issues[edit]
Where pharmaceutics have been shown to cause side-effects, civil action has occurred, especially in
countries where tort payouts are likely to be large. The top 20 pharmaceutical cases account for over
$16 billion in recoveries. Due to high-profile cases leading to large compensations, most
pharmaceutical companies endorse tort reform. Recent controversies have
involved Vioxx and SSRI antidepressants.
Industry revenues[edit]
[38]
For the first time ever, in 2011, global spending on prescription drugs topped $954 billion, even
as growth slowed somewhat in Europe and North America. The United States accounts for more
than a third of the global pharmaceutical market, with $340 billion in annual sales followed by the EU
and Japan.(pdf) Emerging markets such as China, Russia, South Korea and Mexico outpaced that
market, growing a huge 81 percent.
[39]
According to IMS the global pharmaceutical industry can
reach to US$1.1 trillion by 2014.
[40]

Pfizer's cholesterol pill Lipitor remains a best-selling drug world wide.
[dubious discuss][needs
update]
Its annual sales were $12.9 billion, more than twice as much as its closest competitors: Plavix,
the blood thinner from Bristol-Myers Squibb and Sanofi-Aventis; Nexium, the heartburn pill from
AstraZeneca; and Advair, the asthma inhaler from GlaxoSmithKline.
[39]

IMS Health publishes an analysis of trends expected in the pharmaceutical industry in 2007,
including increasing profits in most sectors despite loss of some patents, and new 'blockbuster'
drugs on the horizon.
[41]

Teradata Magazine predicted that by 2007, $40 billion in U.S. sales could be lost at the top 10
pharmaceutical companies as a result of slowdown in R&D innovation and the expiry of patents on
major products, with 19 blockbuster drugs losing patent.
[42]
As the number of patents that expire
accumulates faster than the number of marketed drugs, this amount is expected to increase even
more in the near future.
[43][44]

Market leaders in terms of healthcare revenue[edit]

This article is outdated. Please update this article to reflect recent events or
newly available information. (May 2013)
Main article: List of pharmaceutical companies
The following is a list of the 20 largest pharmaceutical and biotech companies ranked by healthcare
revenue. Some companies (e.g., Bayer, Johnson and Johnson and Procter & Gamble) have
additional revenue not included here. The phrase big pharma is often used to refer to companies
with revenue in excess of $3 billion, and/or research and development expenditure in excess of $500
million.
Reven
ue

Rank
2008
[45]

Company
Countr
y
Total
Revenues(USD milli
ons)
Healthcare
R&D
2006(USD millio
ns)
Net income/
(loss)
2006(USD millio
ns)
Employe
es 2006
1 Pfizer USA 67,809 7,599 19,337 122,200
2 Novartis
Switzerlan
d
53,324 7,125 11,053 138,000
3 Merck & Co. USA 45,987 4,783 4,434 74,372
4 Bayer Germany 44,200 1,791 6,450 106,200
5
GlaxoSmithKli
ne
United
Kingdom
42,813 6,373 10,135 106,000
6
Johnson &
Johnson
USA 37,020 5,349 7,202 102,695
7 Sanofi France 35,645 5,565 5,033 100,735
8
HoffmannLa
Roche
Switzerlan
d
33,547 5,258 7,318 100,289
9 AstraZeneca
United
Kingdom
26,475 3,902 6,063 50,000+
10
Abbott
Laboratories
USA 22,476 2,255 1,717 66,800
Reven
ue

Rank
2008
[45]

Company
Countr
y
Total
Revenues(USD milli
ons)
Healthcare
R&D
2006(USD millio
ns)
Net income/
(loss)
2006(USD millio
ns)
Employe
es 2006
11
Bristol-Myers
Squibb
USA 17,914 3,067 1,585 60,000
12
Eli Lilly and
Company
USA 15,691 3,129 2,663 50,060
13 Amgen USA 14,268 3,366 2,950 48,000
14
Boehringer
Ingelheim
Germany 13,284 1,977 2,163 43,000
15
Schering-
Plough
USA 10,594 2,188 1,057 41,500
16
Baxter
International
USA 10,378 614 1,397 38,428
17
Takeda
Pharmaceutical
Co.
Japan 10,284 1,620 2,870 15,000
18 Genentech USA 9,284 1,773 2,113 33,500
19
Procter &
Gamble
USA 8,964 n/a 10,340 29,258

SUM

497,519 70,843 110,077 1,342,700

AVERAGE

24,876 3,542 5504 67,135
Market leaders in terms of sales[edit]
The top 15 pharmaceutical companies by 2008 sales are:
[11][46]

Rank Company Sales ($M) Based/Headquartered in
1 Pfizer 43,363 United States
2 GlaxoSmithKline 36,506 United Kingdom
3 Novartis 36,506 Switzerland
4 Sanofi-Aventis 35,642 France
Rank Company Sales ($M) Based/Headquartered in
5 AstraZeneca 32,516 United Kingdom
6 HoffmannLa Roche 30,336 Switzerland
7 Johnson & Johnson 29,425 United States
8 Merck & Co. 26,191 United States
9 Abbott 19,466 United States
10 Eli Lilly and Company 19,140 United States
11 Amgen 15,794 United States
12 Wyeth 15,682 United States
13 Bayer 15,660 Germany
14 Teva 15,274 Israel
15 Takeda 13,819 Japan
Patents and generics[edit]
Depending on a number of considerations, a company may apply for and be granted a patent for the
drug, or the process of producing the drug, granting exclusivity rights typically for about 20
years.
[47]
However, only after rigorous study and testing, which takes 10 to 15 years on average, will
governmental authorities grant permission for the company to market and sell the drug.
[48]
Patent
protection enables the owner of the patent to recover the costs of research and development
through high profit margins for thebranded drug. When the patent protection for the drug expires,
a generic drug is usually developed and sold by a competing company. The development and
approval of generics is less expensive, allowing them to be sold at a lower price. Often the owner of
the branded drug will introduce a generic version before the patent expires in order to get a head
start in the generic market.
[49]
Restructuring has therefore become routine, driven by the patent
expiration of products launched during the industry's 'golden era' in the 1990s and companies' failure
to develop sufficient new blockbuster products to replace lost revenues.
[50]

Medicare Part D[edit]
In 2003 the United States enacted the Medicare Prescription Drug, Improvement, and Modernization
Act (MMA), a program to provide prescription drug benefits to the elderly anddisabled. This program
is a component of Medicare (United States) and is known as Medicare Part D. This program, set to
begin in January 2006, will significantly alter the revenue models for pharmaceutical companies.
Revenues from the program are expected to be $724 billion between 2006 and 2015.
[51]

Pharmaceuticals developed by biotechnological processes often must be injected in a physician's
office rather than be delivered in the form of a capsule taken orally. Medicare payments for these
drugs are usually made through Medicare Part B (physician office) rather than Part D (prescription
drug plan).
Mergers, acquisitions, and co-marketing of drugs[edit]
A merger, acquisition, or co-marketing deal between pharmaceutical companies may occur as a
result of complementary capabilities between them. A small biotechnologycompany might have a
new drug but no sales or marketing capability. Conversely, a large pharmaceutical company might
have unused capacity in a large sales force due to a gap in the company pipeline of new products. It
may be in both companies' interest to enter into a deal to capitalize on the synergy between the
companies.
Prescriptions[edit]
In the U.S., prescriptions have increased over the past decade to 3.4 billion annually, a 61 percent
increase. Retail sales of prescription drugs jumped 250 percent from $72 billion to $250 billion, while
the average price of prescriptions has more than doubled from $30 to $68.
[52]

Publications[edit]
The drug company Merck & Co. publishes the Merck Manual of Diagnosis and Therapy, the world's
best-selling medical textbook, and the Merck Index, a collection of information about chemical
compounds.
Marketing[edit]


A promotional item given to a psychiatrist
Main article: Pharmaceutical marketing
Pharmaceutical companies commonly spend a large amount on advertising, marketing and lobbying.
In the US, drug companies spend $19 billion a year on promotions.
[23]
Advertising is common in
healthcare journals as well as through more mainstream media routes. In some countries, notably
the US, they are allowed to advertise directly to the general public. Pharmaceutical companies
generally employ sales people (often called 'drug reps' or, an older term, 'detail men') to market
directly and personally to physicians and other healthcare providers. In some countries, notably the
US, pharmaceutical companies also employ lobbyists to influence politicians. Marketing of
prescription drugs in the US is regulated by the federalPrescription Drug Marketing Act of 1987.
To healthcare professionals[edit]
Currently, there are approximately 81,000 pharmaceutical sales representatives in the United
States
[53]
pursuing some 830,000 pharmaceutical prescribers. A pharmaceutical representative will
often try to see a given physician every few weeks. Representatives often have a call list of about
200300 physicians with 120180 targets that should be visited in 12 or 3 week cycle. The number
of pharmaceutical sales reps has been shrinking between 2008 and 2010, an estimated 30%
industry wide reduction has occurred and current estimates are there may only be 60,000
pharmaceutical sales reps in the United States.
[53]

In 2008, Senator Charles Grassley began an investigation about unreported payments to physicians
by pharmaceutical companies. Grassley led a Congressional Investigation which found that well-
known university psychiatrists, who had promoted psychoactive drugs, had violated federal and
university regulations by secretly receiving large sums of money from the pharmaceutical companies
which made the drugs.
[54]
The New York Times reported that Dr. Joseph Biederman of Harvard
University had failed to report over a million dollars of income that he had received from
pharmaceutical companies.
[55]
Weeks later, Business Week reported that Grassley alleged that Alan
Schatzberg, chair of psychiatry at Stanford University, had underreported his investments in Corcept
Therapeutics, a company he founded.
[56]
Dr. Schatzberg had reported only $100,000 investments in
Corcept, but Grassley stated that his investments actually totalled over $6 million. Dr. Schaztberg
later stepped down from his grant which is funded by the National Institutes of
Health (NIH).
[57]
Similarly, Dr. Charles Nemeroff resigned as chair of the psychiatry department
at Emory University after failing to report a third of the $2.8 million in consulting fees he received
from GlaxoSmithKline. At the time he received these fees, Dr. Nemeroff had been principal
investigator of a $3.9 million NIH grant evaluating five medications for depression manufactured by
GlaxoSmithKline.
[58]

The book Bad Pharma also discusses the influence of drug representatives, how ghostwriters are
employed by the drug companies to write papers for academics to publish, how independent the
academic journals really are, how the drug companies finance doctors' continuing education, and
how patients' groups are often funded by industry.
[59]

To insurance and public health bodies[edit]
Private insurance or public health bodies (e.g. the NHS in the UK) decide which drugs to pay for,
and restrict the drugs that can be prescribed through the use of formularies. Public and private
insurers restrict the brands, types and number of drugs that they will cover. Not only can the insurer
affect drug sales by including or excluding a particular drug from a formulary, they can affect sales
by tiering or placing bureaucratic hurdles to prescribing certain drugs as well. In January 2006, the
U.S. instituted a new public prescription drug plan through its Medicare program known as Medicare
Part D. This program engages private insurers to negotiate with pharmaceutical companies for the
placement of drugs on tiered formularies.
In 2008, for the first time, Charles Grassley asked the American Psychiatric Association to disclose
how much of its annual budget came from drug industry funds. The APA said that industry
contributed 28% of its budget ($14 million at that time), mainly through paid advertising in APA
journals and funds for continuing medical education.
[60]

To retail pharmacies and stores[edit]
Commercial stores and pharmacies are a major target of non-prescription sales and marketing for
pharmaceutical companies.
Direct to consumer advertising[edit]
Main article: Direct-to-consumer advertising
Since the 1980s new methods of marketing for prescription drugs to consumers have become
important. Direct-to-consumer media advertising was legalised in the FDA Guidance for Industry on
Consumer-Directed Broadcast Advertisements.
Internationally, many pharmaceutical companies market directly to the consumer rather than going
through a conventional retail sales channel.
Controversy about drug marketing and lobbying[edit]
There has been increasing controversy surrounding pharmaceutical marketing and influence. There
have been accusations and findings of influence on doctors and other health professionals through
drug reps, including the constant provision of marketing 'gifts' and biased information to health
professionals;
[61][62]
highly prevalent advertising in journals and conferences; funding independent
healthcare organizations and health promotion campaigns; lobbying physicians and politicians (more
than any other industry in the US
[63]
); sponsorship of medical schools or nurse training; sponsorship
of continuing educational events, with influence on the curriculum;
[64]
and hiring physicians as paid
consultants on medical advisory boards.
To help ensure the status quo on U.S. drug regulation and pricing, the pharmaceutical industry has
thousands of lobbyists in Washington, DC that lobby Congress and protect their interests. The
pharmaceutical industry spent $855 million, more than any other industry, on lobbying activities from
1998 to 2006, according to the non-partisan Center for Public Integrity.
[65]

Some advocacy groups, such as No Free Lunch, have criticized the effect of drug marketing to
physicians because they say it biases physicians to prescribe the marketed drugs even when others
might be cheaper or better for the patient.
[66]

There have been related accusations of disease mongering
[4]
(over-medicalising) to expand the
market for medications. An inaugural conference on that subject took place in Australia in 2006.
[67]
In
2009, the Government-funded National Prescribing Service launched the "Finding Evidence
Recognising Hype" program, aimed at educating GPs on methods for independent drug analysis.
A 2005 review by a special committee of the UK government came to all the above conclusions in a
European Union context
[68]
whilst also highlighting the contributions and needs of the industry.
There is also huge concern about the influence of the pharmaceutical industry on the scientific
process. Meta-analyses have shown that studies sponsored by pharmaceutical companies are
several times more likely to report positive results, and if a drug company employee is involved (as is
often the case, often multiple employees as co-authors and helped by contracted marketing
companies) the effect is even larger.
[69][70][71]
Influence has also extended to the training of doctors
and nurses in medical schools, which is being fought.
[72]

It has been argued that the design of the Diagnostic and Statistical Manual of Mental Disorders and
the expansion of the criteria represents an increasing medicalization of human nature, or "disease
mongering", driven by drug company influence on psychiatry.
[73]
The potential for direct conflict of
interest has been raised, partly because roughly half the authors who selected and defined the
DSM-IV psychiatric disorders had or previously had financial relationships with the pharmaceutical
industry.
[74]
The president of the organization that designs and publishes the DSM, the American
Psychiatric Association, recently acknowledged that in general American psychiatry has "allowed the
biopsychosocial model to become the bio-bio-bio model" and that the gifts from drug reps are little
more than "kickbacks and bribes".
[75]

Regulatory capture[edit]
Chapter three of the book Bad Pharma describes the concept of "regulatory capture," whereby a
regulator such as the Medicines and Healthcare products Regulatory Agency(MHRA) in the UK, or
the Food and Drug Administration (FDA) in the United States ends up advancing the interests of
the drug companies rather than the interests of the public. The author, Ben Goldacre, writes that this
happens for a number of reasons, including the revolving door of employees between the regulator
and the companies, and the fact that friendships develop between regulator and company
employees simply because they have knowledge and interests in common. The chapter also
discusses surrogate outcomes and accelerated approval, and the difficulty of having ineffective
drugs removed from the market once they have been approved.
[76]
He argues that regulators do not
require that new drugs offer an improvement over what is already available, or even that they be
particularly effective.
[77]

Pharmaceutical fraud[edit]
See also: List of largest pharmaceutical settlements in the United States
Pharmaceutical fraud involves activities that result in false claims to insurers or programs such
as Medicare in the United States or equivalent state programs for financial gain to a pharmaceutical
company. There are several different schemes
[78]
used to defraud the health care system which are
particular to the pharmaceutical industry. These include: Good Manufacturing Practice (GMP)
Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and
Manufactured Compound Drugs. The Federal Bureau of Investigation (FBI) estimates that health
care fraud costs American taxpayers $60 billion a year.
[79]
Of this amount $2.5 billion was recovered
through False Claims Actcases in FY 2010. Examples of fraud cases include
the GlaxoSmithKline $3 billion settlement, Pfizer $2.3 billion settlement and Merck & Co. $650
million settlement. Damages from fraud can be recovered by use of the False Claims Act, most
commonly under the qui tam provisions which rewards an individual for being a "whistleblower",
or relator (law).
[80]

Antipsychotic drugs are now the top-selling class of pharmaceuticals in America, generating annual
revenue of about $14.6 billion. Every major company selling the drugs Bristol-Myers Squibb, Eli
Lilly, Pfizer, AstraZeneca and Johnson & Johnson has either settled recent government cases,
under the False Claims Act, for hundreds of millions of dollars or is currently under investigation for
possible health care fraud. Following charges of illegal marketing, two of the settlements set records
last year for the largest criminal fines ever imposed on corporations. One involved Eli Lilly's
antipsychotic Zyprexa, and the other involved Bextra. In the Bextra case, the government also
charged Pfizer with illegally marketing another antipsychotic, Geodon; Pfizer settled that part of the
claim for $301 million, without admitting any wrongdoing.
[81]

On 2 July 2012, GlaxoSmithKline pleaded guilty to criminal charges and agreed to a $3 billion
settlement of the largest health-care fraud case in the U.S. and the largest payment by a drug
company.
[82]
The settlement is related to the company's illegal promotion of prescription drugs, its
failure to report safety data,
[83]
bribing doctors, and promoting medicines for uses for which they
were not licensed. The drugs involved were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-
label, non-covered uses. Those and the drugsImitrex, Lotronex, Flovent, and Valtrex were involved
in the kickback scheme.
[84][85][86]

The following is a list of the four largest settlements reached with pharmaceutical companies from
1991 to 2012, rank ordered by the size of the total settlement. Legal claims against the
pharmaceutical industry have varied widely over the past two decades, including Medicare and
Medicaid fraud, off-label promotion, and inadequate manufacturing practices.
[87][88]

Company Settlement Violation(s) Year Product(s)
Laws allegedly
violated
(if applicable)
GlaxoSmithKline
[89]
$3 billion
Off-label promotion/
failure to disclose safety
data
2012 Avandia/Wellbutrin/Paxil
False Claims
Act/FDCA
Pfizer
[90]

$2.3
billion
Off-label
promotion/kickbacks
2009
Bextra/Geodon/
Zyvox/Lyrica
False Claims
Act/FDCA
Abbott
Laboratories
[91]

$1.5
billion
Off-label promotion 2012 Depakote
False Claims
Act/FDCA
Eli Lilly
[92]

$1.4
billion
Off-label promotion 2009 Zyprexa
False Claims
Act/FDCA
Developing world[edit]
The role of pharmaceutical companies in the developing world is a matter of some debate, ranging
from those highlighting the aid provided to the developing world, to those critical of the use of the
poorest in human clinical trials, often without adequate protections, particularly in states lacking a
strong rule of law. Other criticisms include an alleged reluctance of the industry to invest in
treatments of diseases in less economically advanced countries, such as malaria; Criticism for the
price of patented AIDS medication, which could limit therapeutic options for patients in the Third
World, where most of the AIDS infected people are living. However, a better policy of price
discrimination would benefit to both patients and companies.
In September 2008 the Open Source Drug Discovery Network was launched in India to combat
infectious diseases common to developing countries.
Patents[edit]
See also: Criticism of patents
Patents have been criticized in the developing world, as they are thought to reduce access to
existing medicines.
[93]
There is mixed evidence on the efficacy of patents to stimulate pharmaceutical
innovation, with recent evidence suggesting that patent grants slow down innovation.
[94]
Reconciling
patents and universal access to medicine would require an efficient international policy of price
discrimination. Moreover, under the TRIPS agreement of the World Trade Organization, countries
must allow pharmaceutical products to be patented. In 2001, the WTO adopted the Doha
Declaration, which indicates that the TRIPS agreement should be read with the goals of public
health in mind, and allows some methods for circumventing pharmaceutical monopolies:
via compulsory licensing or parallel imports, even before patent expiration.
[95]

In March 2001, 40 multi-national pharmaceutical companies brought litigation against South
Africa for its Medicines Act, which allowed the generic production of antiretroviral drugs (ARVs) for
treating HIV, despite the fact that these drugs were on-patent.
[96]
HIV was and is an epidemic in
South Africa, and ARVs at the time cost between 10,000 and 15,000 USD per patient per year. This
was unaffordable for most South African citizens, and so the South African government committed to
providing ARVs at prices closer to what people could afford. To do so, they would need to ignore the
patents on drugs and produce generics within the country (using a compulsory license), or import
them from abroad. The Indian pharmaceutical company Cipla audaciously offered to make the drugs
at 350 USD per patient per year, roughly 1/40th of the lowest price available from a patent holder,
which stunned the world community. After massive international protest in favour of public health
rights (including the collection of 250,000 signatures by MSF), the governments of several
developed countries (including The Netherlands, Germany, France, and later the US) backed the
South African government, and the case was dropped in April of that year.
[97]

Nigerian clinical trial[edit]
See also: Kano trovafloxacin trial litigation
In 1996, a pediatric clinical trial conducted on behalf of Pfizer tested the antibiotic Trovan allegedly
without first obtaining the informed consent of participants or their parents.
[98][99][100][101]

Charitable programs[edit]
Charitable programs and drug discovery & development efforts are routinely undertaken by
pharmaceutical companies. Some examples include:
"Merck's Gift," wherein billions of river blindness drugs were donated in Africa
[102]

Pfizer's gift of free/discounted fluconazole and other drugs for AIDS in South Africa
[103]

GSK's commitment to give free albendazole tablets to the WHO for, and until, the elimination
of lymphatic filariasis worldwide.
In 2006, Novartis committed USD 755 million in corporate citizenship initiatives around the
world, particularly focusing on improved access to medicines in the developing world through its
Access to Medicine projects, including donations of medicines to patients affected
by leprosy, tuberculosis, and malaria; Glivec patient assistance programs; and relief to support
major humanitarian organisations with emergency medical needs.
[104]

However, some NGOs such as Mdecins Sans Frontires do not routinely accept corporate
donations of medicines. More precisely, they do not become reliant on such supplies of medicines
because the supply is dependent upon the fluid, profit-driven charities of said pharmaceutical
companies, and thus may dry up during a critical or otherwise important time. The book An Imperfect
Offering: Humanitarian Action for the 21st Century by ex-MSF president James Orbinski describes
this in detail.
Pharmaceutical industry in popular culture[edit]
As for many other major industries since the middle of the twentieth century, the pharmaceutical
industry has been stereotyped as a global shadowy force in numerous western fiction works.
Notorious films such as The Fugitive (1993) and Resident Evil and novels/films such as The
Constant Gardener characterize this trend. The pharmaceutical industry was a main topic of the
movie Love and Other Drugs.
Industry associations[edit]
European Confederation of Pharmaceutical Entrepreneurs (EUCOPE)
Drug Information Association (DIA)
European Generic Medicines Association
European Federation of Pharmaceutical Industries and Associations (EFPIA)
European Pharmaceutical Market Research Association (EphMRA)
International Federation of Pharmaceutical Manufacturers and Associations (IFPMA)
Japan Pharmaceutical Manufacturers Association (JPMA)
New York Health Products Council (NYHPC)
Pharmaceutical Research and Manufacturers of America (PhRMA)
Irish Pharmaceutical Healthcare Association (IPHA)
Regulatory authorities[edit]
Main article: Regulation of therapeutic goods
International Conference on Harmonisation of Technical Requirements for Registration of
Pharmaceuticals for Human Use (ICH)
European Medicines Agency (EMEA)
Therapeutic Goods Administration (Australia) (TGA)
U.S. Food and Drug Administration (FDA)
Ministry of Health, Labour and Welfare (Japan)
Medicines and Healthcare products Regulatory Agency (MHRA)
Central Drugs Standards Control Organisation (India) (CDSCO)
Ukrainian Drug Registration Agency [1]
Medicines Authority (Malta) [2]
Irish Medicines Board (Ireland)[3]