{"product_id":"the-truth-about-the-drug-companies-isbn-9780375760945","title":"The Truth About the Drug Companies","description":"During her two decades at \u003ci\u003eThe\u003c\/i\u003e \u003ci\u003eNew England Journal of Medicine\u003c\/i\u003e, Dr. Marcia Angell had a front-row seat on the appalling spectacle of the pharmaceutical industry. She watched drug companies stray from their original mission of discovering and manufacturing useful drugs and instead become vast marketing machines with unprecedented control over their own fortunes. She saw them gain nearly limitless influence over medical research, education, and how doctors do their jobs. She sympathized as the American public, particularly the elderly, struggled and increasingly failed to meet spiraling prescription drug prices. Now, in this bold, hard-hitting new book, Dr. Angell exposes the shocking truth of what the pharmaceutical industry has become–and argues for essential, long-overdue change.\u003cbr\u003e\u003cbr\u003eCurrently Americans spend a staggering $200 billion each year on prescription drugs. As Dr. Angell powerfully demonstrates, claims that high drug prices are necessary to fund research and development are unfounded: The truth is that drug companies funnel the bulk of their resources into the marketing of products of dubious benefit. Meanwhile, as profits soar, the companies brazenly use their wealth and power to push their agenda through Congress, the FDA, and academic medical centers.\u003cbr\u003e\u003cbr\u003eZeroing in on hugely successful drugs like AZT (the first drug to treat HIV\/AIDS), Taxol (the best-selling cancer drug in history), and the blockbuster allergy drug Claritin, Dr. Angell demonstrates exactly how new products are brought to market. Drug companies, she shows, routinely rely on publicly funded institutions for their basic research; they rig clinical trials to make their products look better than they are; and they use their legions of lawyers to stretch out government-granted exclusive marketing rights for years. They also flood the market with copycat drugs that cost a lot more than the drugs they mimic but are no more effective.\u003cbr\u003e\u003cbr\u003eThe American pharmaceutical industry needs to be saved, mainly from itself, and Dr. Angell proposes a program of vital reforms, which includes restoring impartiality to clinical research and severing the ties between drug companies and medical education. Written with fierce passion and substantiated with in-depth research, \u003ci\u003eThe Truth About the Drug Companies\u003c\/i\u003e is a searing indictment of an industry that has spun out of control.“Dr. Angell’s case is tough, persuasive, and troubling.”\u003cbr\u003e—\u003ci\u003eThe New York Times\u003cbr\u003e\u003c\/i\u003e\u003cbr\u003e“In what should serve as the \u003ci\u003eFast Food Nation\u003c\/i\u003e of the drug industry, Angell… presents a searing indictment of ‘big pharma’ as corrupt and corrupting.”\u003cbr\u003e—\u003ci\u003ePublishers Weekly\u003cbr\u003e\u003cbr\u003e\u003c\/i\u003e“\u003ci\u003eThe Truth About the Drug Companies\u003c\/i\u003e is a sober, clear-eyed attack on the excesses of drug company power… a lucid, persuasive, and highly important book.”\u003cbr\u003e—\u003ci\u003eThe Boston Sunday Globe\u003cbr\u003e\u003cbr\u003e\u003c\/i\u003e“Her prose is clear and readable… Angell does an excellent job [making] a convincing case against Big Pharma.”\u003cbr\u003e—\u003ci\u003eChicago Sun-Times\u003cbr\u003e\u003c\/i\u003e\u003cbr\u003e“If you’ve ever suffered prescription drug sticker shock, Dr. Marcia Angell’s \u003ci\u003eThe Truth About the Drug Companies\u003c\/i\u003e is the book for you.”\u003cbr\u003e—\u003ci\u003eNewsday\u003cbr\u003e\u003cbr\u003e\u003c\/i\u003e“In-depth and insightful”\u003cbr\u003e—\u003ci\u003eRocky Mountain News\u003cbr\u003e\u003cbr\u003e\u003c\/i\u003e“Put your money on Angell.  We need to know why drugs cost what they do, and we need to know how our physicians choose the drugs they give us.”\u003cbr\u003e—\u003ci\u003eSt. Louis Post Dispatch\u003cbr\u003e\u003cbr\u003e\u003c\/i\u003e“Engaging and well-written”\u003cbr\u003e—\u003ci\u003eSan Antonio Express-News\u003cbr\u003e\u003c\/i\u003e\u003cbr\u003e\"Pharamceutical companies will need a new miracle pain reliever after the whipping they receive from Marcia Angell in her book….a starting point for serious discussion.\"\u003cbr\u003e\u003ci\u003e--The Hartford Courant\u003c\/i\u003e\u003cbr\u003e\u003cbr\u003e\"If informed criticism contains the sharpest stings, author Marcia Angell's jolting indictument of 'Big Pharma' might just be enough to pierce the beast's hide.\"\u003cbr\u003e\u003ci\u003e--Minneapolis Star Tribune\u003c\/i\u003eFormer editor-in-chief of \u003ci\u003eThe\u003c\/i\u003e \u003ci\u003eNew England Journal of Medicine \u003c\/i\u003eand now a member of Harvard Medical School’s Department of Social Medicine, Marcia Angell is a nationally recognized authority in the field of health policy and medical ethics and an outspoken critic of the health care system. \u003ci\u003eTime\u003c\/i\u003e magazine named her one of the twenty-five most influential people in America. Dr. Angell is the author of \u003ci\u003eScience on Trial\u003c\/i\u003e: \u003ci\u003eThe Clash of Medical Evidence and the Law in the Breast Implant Case\u003c\/i\u003e.Chapter 1\u003cbr\u003e\u003cbr\u003eThe $200 Billion Colossus\u003cbr\u003e\u003cbr\u003eWhat does the eight-hundred-pound gorilla do?\u003cbr\u003e\u003cbr\u003eAnything it wants to.\u003cbr\u003e\u003cbr\u003eWhat’s true of the eight-hundred-pound gorilla is true of the colossus  that is the pharmaceutical industry. It is used to doing pretty much  what it wants to do. The watershed year was 1980. Before then, it was a  good business, but afterward, it was a stupendous one. From 1960 to  1980, prescription drug sales were fairly static as a percent of U.S.  gross domestic product, but from 1980 to 2000, they tripled. They now  stand at more than $200 billion a year. Furthermore, since the early  1980s, this industry has consistently ranked as the most profitable in  the United States—by a long shot. (Only in 2003 did it fall from that  position to rank third among the forty-seven industries listed in the  Fortune 500.) Of the many events that contributed to their sudden great  and good fortune, none had to do with the quality of the drugs the  companies were selling.\u003cbr\u003e\u003cbr\u003eIn this chapter I’ll give you an overview of the pharmaceutical  industry—its meteoric rise and the recent, early signs of either a  coming fall or an overhaul. I will not go into much detail here, I’ll  leave that to later chapters. What I want to do now is provide a quick  look at what’s under this rock when it’s lifted. It’s not a pretty  sight.\u003cbr\u003e\u003cbr\u003eBefore I begin, a few words about the facts and figures I will use  throughout the book. In most cases, I use data from the year 2001,  because it is the most recent year for which information is reasonably  complete for all the aspects of the industry I will consider. If I  stick with one year, it will make it easier to see the whole picture.  But for some important facts, I will use figures from 2002 and,  whenever possible, 2003. In all cases, I will make it clear what year I  am talking about.\u003cbr\u003e\u003cbr\u003eI also need to explain what I mean when I say this is a $200 billion  industry. According to government sources, that is roughly how much  Americans spent on prescription drugs in 2002. That figure refers to  direct consumer purchases at drugstores and mail order pharmacies  (whether paid for out of pocket or not), and it includes the nearly 25  percent markup for wholesalers, pharmacists, and other middlemen and  retailers. But it does not include the large amounts spent for drugs  administered in hospitals, nursing homes, or doctors’ offices (as is  the case for many cancer drugs). In most analyses, they are allocated  to costs for those facilities.\u003cbr\u003e\u003cbr\u003eDrug company revenues (or sales) are a little different, at least as  they are reported in summaries of corporate annual reports. They  usually refer to a company’s worldwide sales, including those to health  facilities. But they do not include the revenues of middlemen and  retailers.\u003cbr\u003e\u003cbr\u003ePerhaps the most quoted source of statistics on the pharmaceutical  industry, IMS Health, estimated total worldwide sales for prescription  drugs to be about $400 billion in 2002. About half were in the United  States. So the $200 billion colossus is really a $400 billion  megacolossus, but my focus in this book will be mainly on how the drug  companies operate in the United States.\u003cbr\u003e\u003cbr\u003eYou should understand, however, that it is virtually impossible to be  precise about most of these figures. Before drugs reach consumers, they  pass through many hands and are paid for in exceedingly complicated,  often hidden, ways. It is easy to compare apples and oranges without  knowing it. You need to ask, for example, whether a number refers just  to prescription drugs or includes over-the-counter drugs and other  consumer products made by drug companies; whether it includes revenues  for middlemen and retailers or not; whether it refers just to  outpatient consumer purchases or also to health facility purchases; and  whether it includes mail order purchases.\u003cbr\u003e\u003cbr\u003eLet the Good Times Roll\u003cbr\u003e\u003cbr\u003eThe election of Ronald Reagan in 1980 was perhaps the most fundamental  element in the rapid rise of big pharma—the collective name for the  largest drug companies. With the Reagan administration came a strong  pro-business shift not only in government policies but in society at  large. And with the shift, the public attitude toward great wealth  changed. Before then, there was something faintly disreputable about  really big fortunes. You could choose to do well or you could choose to  do good, but most people who had any choice in the matter thought it  difficult to do both. That belief was particularly strong among  scientists and other intellectuals. They could choose to live a  comfortable but not luxurious life in academia, hoping to do exciting  cutting-edge research, or they could “sell out” to industry and do less  important but more remunerative work. Starting in the Reagan years and  continuing through the 1990s, Americans changed their tune. It became  not only reputable to be wealthy, but something close to virtuous.  There were “winners” and there were “losers,” and the winners were rich  and deserved to be. The gap between the rich and poor, which had been  narrowing since World War II, suddenly began to widen again, until  today it is a yawning chasm.\u003cbr\u003e\u003cbr\u003eThe pharmaceutical industry and its CEOs quickly joined the ranks of  the winners as a result of a number of business-friendly government  actions. I won’t enumerate all of them, but two are especially  important. Beginning in 1980, Congress enacted a series of laws  designed to speed the translation of tax-supported basic research into  useful new products—a process sometimes referred to as “technology  transfer.” The goal was also to improve the position of American-owned  high-tech businesses in world markets. The most important of these laws  is known as the Bayh-Dole Act, after its chief sponsors, Senator Birch  Bayh (D-Ind.) and Senator Robert Dole (R-Kans.). Bayh-Dole enabled  universities and small businesses to patent discoveries emanating from  research sponsored by the National Institutes of Health (NIH), the  major distributor of tax dollars for medical research, and then to  grant exclusive licenses to drug companies. Until then,  taxpayer-financed discoveries were in the public domain, available to  any company that wanted to use them. But now universities, where most  NIH-sponsored work is carried out, can patent and license their  discoveries, and charge royalties. Similar legislation permitted the  NIH itself to enter into deals with drug companies that would directly  transfer NIH discoveries to industry.\u003cbr\u003e\u003cbr\u003eBayh-Dole gave a tremendous boost to the nascent biotechnology  industry, as well as to big pharma. Small biotech companies, many of  them founded by university researchers to exploit their discoveries,  proliferated rapidly. They now ring the major academic research  institutions and often carry out the initial phases of drug  development, hoping for lucrative deals with big drug companies that  can market the new drugs. Usually both academic researchers and their  institutions own equity in the biotechnology companies they are  involved with. Thus, when a patent held by a university or a small  biotech company is eventually licensed to a big drug company, all  parties cash in on the public investment in research.\u003cbr\u003e\u003cbr\u003eThese laws mean that drug companies no longer have to rely on their own  research for new drugs, and few of the large ones do. Increasingly,  they rely on academia, small biotech start-up companies, and the NIH  for that. At least a third of drugs marketed by the major drug  companies are now licensed from universities or small biotech  companies, and these tend to be the most innovative ones. While  Bayh-Dole was clearly a bonanza for big pharma and the biotech  industry, whether it is a net benefit to the public is arguable (I’ll  come back to that).\u003cbr\u003e\u003cbr\u003eThe Reagan years and Bayh-Dole also transformed the ethos of medical  schools and teaching hospitals. These nonprofit institutions started to  see themselves as “partners” of industry, and they became just as  enthusiastic as any entrepreneur about the opportunities to parlay  their discoveries into financial gain. Faculty researchers were  encouraged to obtain patents on their work (which were assigned to  their universities), and they shared in the royalties. Many medical  schools and teaching hospitals set up “technology transfer” offices to  help in this activity and capitalize on faculty discoveries. As the  entrepreneurial spirit grew during the 1990s, medical school faculty  entered into other lucrative financial arrangements with drug  companies, as did their parent institutions. One of the results has  been a growing pro-industry bias in medical research—exactly where such  bias doesn’t belong. Faculty members who had earlier contented  themselves with what was once referred to as a “threadbare but genteel”  lifestyle began to ask themselves, in the words of my grandmother, “If  you’re so smart, why aren’t you rich?” Medical schools and teaching  hospitals, for their part, put more resources into searching for  commercial opportunities.\u003cbr\u003e\u003cbr\u003eStarting in 1984, with legislation known as the Hatch-Waxman Act,  Congress passed another series of laws that were just as big a bonanza  for the pharmaceutical industry. These laws extended monopoly rights  for brand-name drugs. Exclusivity is the lifeblood of the industry  because it means that no other company may sell the same drug for a set  period. After exclusive marketing rights expire, copies (called generic  drugs) enter the market, and the price usually falls to as little as 20  percent of what it was. There are two forms of monopoly rights—patents  granted by the U.S. Patent and Trademark Office (USPTO) and exclusivity  granted by the Food and Drug Administration (FDA). While related, they  operate somewhat independently, almost as backups for each other.  Hatch-Waxman, named for Senator Orrin Hatch (R-Utah) and Representative  Henry Waxman (D-Calif.), was meant mainly to stimulate the foundering  generic industry by short-circuiting some of the FDA requirements for  bringing generic drugs to market. While successful in doing that,  Hatch-Waxman also lengthened the patent life for brand-name drugs.  Since then, industry lawyers have manipulated some of its provisions to  extend patents far longer than the lawmakers intended.\u003cbr\u003e\u003cbr\u003eIn the 1990s, Congress enacted other laws that further increased the  patent life of brand-name drugs. Drug companies now employ small armies  of lawyers to milk these laws for all they’re worth—and they’re worth a  lot. The result is that the effective patent life of brand-name drugs  increased from about eight years in 1980 to about fourteen years in  2000. For a blockbuster—usually defined as a drug with sales of over a  billion dollars a year (like Lipitor or Celebrex or Zoloft)—those six  years of additional exclusivity are golden. They can add billions of  dollars to sales—enough to buy a lot of lawyers and have plenty of  change left over. No wonder big pharma will do almost anything to  protect exclusive marketing rights, despite the fact that doing so  flies in the face of all its rhetoric about the free market.\u003cbr\u003e\u003cbr\u003eRiding High\u003cbr\u003e\u003cbr\u003eAs their profits skyrocketed during the 1980s and 1990s, so did the  political clout of drug companies. By 1990, the industry had assumed  its present contours as a business with unprecedented control over its  own fortunes. For example, if it didn’t like something about the FDA,  the federal agency that is supposed to regulate the industry, it could  change it through direct pressure or through its friends in Congress.  The top ten drug companies (which included European companies) had  profits of nearly 25 percent of sales in 1990, and except for a dip at  the time of President Bill Clinton’s health care reform proposal,  profits as a percentage of sales remained about the same for the next  decade. (Of course, in absolute terms, as sales mounted, so did  profits.) In 2001, the ten American drug companies in the Fortune 500  list (not quite the same as the top ten worldwide, but their profit  margins are much the same) ranked far above all other American  industries in average net return, whether as a percentage of sales  (18.5 percent), of assets (16.3 percent), or of shareholders’ equity  (33.2 percent). These are astonishing margins. For comparison, the  median net return for all other industries in the Fortune 500 was only  3.3 percent of sales. Commercial banking, itself no slouch as an  aggressive industry with many friends in high places, was a distant  second, at 13.5 percent of sales.\u003cbr\u003e\u003cbr\u003eIn 2002, as the economic downturn continued, big pharma showed only a  slight drop in profits—from 18.5 to 17.0 percent of sales. The most  startling fact about 2002 is that the combined profits for the ten drug  companies in the Fortune 500 ($35.9 billion) were more than the profits  for all the other 490 businesses put together ($33.7 billion). In 2003,  profits of the Fortune 500 drug companies dropped to 14.3 percent of  sales, still well above the median for all industries of 4.6 percent  for the year. When I say this is a profitable industry, I mean really  profitable. It is difficult to conceive of how awash in money big  pharma is.\u003cbr\u003e\u003cbr\u003eDrug industry expenditures for research and development, while large,  were consistently far less than profits. For the top ten companies,  they amounted to only 11 percent of sales in 1990, rising slightly to  14 percent in 2000. The biggest single item in the budget is neither R  \u0026amp; D nor even profits but something usually called “marketing and  administration”—a name that varies slightly from company to company. In  1990, a staggering 36 percent of sales revenues went into this  category, and that proportion remained about the same for over a  decade. Note that this is two and a half times the expenditures for R \u0026amp;  D.\u003cbr\u003e\u003cbr\u003eThese figures are drawn from the industry’s own annual reports to the  Securities and Exchange Commission (SEC) and to stockholders, but what  actually goes into these categories is not at all clear, because drug  companies hold that information very close to their chests. It is  likely, for instance, that R \u0026amp; D includes many activities most people  would consider marketing, but no one can know for sure. For its part,  “marketing and administration” is a gigantic black box that probably  includes what the industry calls “education,” as well as advertising  and promotion, legal costs, and executive salaries—which are whopping.  According to a report by the nonprofit group Families USA, the former  chairman and CEO of Bristol-Myers Squibb, Charles A. Heimbold, Jr.,  made $74,890,918 in 2001, not counting his $76,095,611 worth of  unexercised stock options. The chairman of Wyeth made $40,521,011,  exclusive of his $40,629,459 in stock options. And so on. This is an  industry that amply rewards its own.\u003cbr\u003e\u003cbr\u003eIn recent years, the top ten companies have included five European  giants—GlaxoSmithKline, AstraZeneca, Novartis, Roche, and Aventis.  Their profit margins are similar to those of their American  counterparts, and so are their expenditures for R \u0026amp; D and marketing and  administration. Furthermore, they are members of the industry’s trade  association, the misleadingly named Pharmaceutical Research and  Manufacturers of America (PhRMA). Recently I heard Daniel Vasella, the  chairman and CEO of Novartis, speak at a conference. He was clearly  pleased with the American commercial and research climate. “Free  pricing and fast approval secure rapid access to innovation without  rationing,” he said, sounding like the most red-blooded of Americans,  despite his charming Swiss accent. His company is now moving its  research operations to a site near the Massachusetts Institute of  Technology (MIT), a hotbed of basic research surrounded by  biotechnology companies. I suspect the move has nothing to do with  “free pricing and fast approval” at all, and everything to do with the  opportunity to profit from U.S. taxpayer-funded research under the  terms of Bayh-Dole, and from the proximity of U.S. medical scientists  who do the research.Former editor in chief of The New England Journal of Medicine; Winner of the Polk Award; Updated, with a chapter on the Vioxx controversy","brand":"Random House Trade Paperbacks","offers":[{"title":"Default Title","offer_id":46300671705317,"sku":"NP9780375760945","price":18.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780375760945.jpg?v=1767741928","url":"https:\/\/k12savings.com\/es\/products\/the-truth-about-the-drug-companies-isbn-9780375760945","provider":"K12savings","version":"1.0","type":"link"}