When I began practicing Pharmacy in the early 1960s, it was common to refer to the large research-based pharmaceutical companies as the ethical drug business. This designation apparently hinged on the underlying assumption that the research was intended to find new drugs to cure or treat diseases and that was a morally right and virtuous activity. Any profit was a pleasant but secondary side effect. One company, Burroughs Wellcome, did not even distribute profits but re-invested any surplus funds back in research.
Times have changed.
Drug makers were the biggest beneficiaries of a tax amnesty two years ago when they moved $100 billion in foreign countries back to the United States where they paid minimal taxes on this money. Numbers this large can numb the mind. To put this in perspective, $100 billion would pay for operating the North Carolina state government for five years.
While this tax holiday was in the past, there are signs that a similar provision is expected in the future.
Attentive readers of business news noticed earlier this month the announcement by the pharmaceutical giant Pfizer that it had prevailed in a patent litigation suit over its blockbuster drug Lipitor (atorvastatin). The case against the generic drug maker, India-based Ranbaxy, was heard in Dublin, Ireland. This victory, which may be appealed, is crucial to Pfizer, which would retain patent rights until 2011.
Exclusive rights to Lipitor is essential to Pfizer's constant search for profits. In 2004, half the profits for the entire company came from this one product. Simple math applied to its 2004 financial figures from the New York Times shows that over 70 percent of the selling price of Lipitor was pretax profit. This was more than $8 billion, another example of a numbing number. This kind of money would pay the first-year salary for more than 215,000 teachers in this state.
Brand name drug manufacturers regularly and unilaterally increase their prices, causing a steady rise in health plan expenses followed by increased costs for drug coverage. Lipitor's 10 mg tablets, for example, have had a 66 percent price increase over the last 10 years. Physicians, pharmacists and hospitals cannot arbitrarily increase their rates and expect to get paid by health plans in the same way.
In medical circles, Pfizer has a reputation for being aggressive. This may account for its expedition into Nigeria in the mid-1990s to test the antibiotic Trovan as a treatment for meningitis. Given the history of corruption in that country as well as the assertive nature of some Nigerians, trouble was almost inevitable. Executives who decided to hold these clinical trials in Africa need to be held accountable when so many sites are available in the United States, including North Carolina.
The Nigerian government and others now claim wrongdoing by Pfizer and billions of dollars are sought in damages and other compensation. Perhaps more problematical are the criminal proceedings scheduled for October that require Pfizer personnel to appear in court. The possibility of a term in a Nigerian prison certainly would discourage any other pharmaceutical company executives from testing drugs in that country.
Income from Lipitor and the Nigeria situation have been well known for years. Now Pfizer has quietly disclosed a new business tactic which will affect medical centers and probably have an adverse impact on its competitors. One pivotal point in bringing new drugs to market is the clinical trials necessary to prove to the federal Food and Drug Administration that the product is safe and effective.
At a Drug Information Association meeting last month, a Pfizer executive announced that his company had been signing exclusive deals with the largest and best-performing clinical research sites. Either the location will contract for studies only with Pfizer or they will not contract with Pfizer for any studies. This could effectively close out many other drug companies and delay or prevent other companies' products from reaching the market
|
