1 Running Head: THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY

The Influences of the Pharmaceutical Industry And the Impact It Has on Society Devon DiChiara Jefferson Community and Technical College

2 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY

The Influences of the Pharmaceutical Industry And the Impact It Has on Society

In America, we have become so accustomed to the pharmaceutical industrys place in our daily life that we seldom pause to objectively evaluate its impact. Evening television attracts our attention to a multitude of prescription drugs, urging the watcher to ask his or her doctor for the medicine in questionin the commercial, the faces of smiling happy users provide graphic reinforcement while voice-overs list the possible side effects. Direct to consumer advertising was made legal in the United States in 1981, making the U.S. only the second capitalist country to allow it (the other is New Zealand). This fact undoubtedly helps to explain why Americans spend half the world wide total of $400 million on prescription drugs. Pharmaceutical companies manipulate the costs, the government regulations and the marketing, all to increase their profits. To prevent such manipulations we must implement stricter laws and regulations governing the behavior of the pharmaceutical companies. A number of factors have combined to produce this manipulation; they include government influences, regulation and marketeering. We can only project the probable impact of these factors on American society once the universal health care legislation takes effect. It has been said that the pharmaceutical industry is the most profitable industry in America. Why shouldnt it be? After all, as Joanne Laurier, a writer for the World Socialist Web Site said, Americans spend a staggering $200 billion a year on prescription drugs out of worldwide sales of $400 billion (Laurier, 2005). One way that the pharmaceutical companies achieve these high profits is by selling to American citizens, especially to those without health

3 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY insurance. This causes those who have no insurance to pay the full price for the brand named pharmaceutical. Pharmaceutical companies have maintained and increased their profits since 1980, under President Reagans administration. Helen Redmond of the International Socialist Review said that the pharmaceutical companies were so profitable that from1995 to 2002, it was the nations most profitable industry (Redmond, 2007). In 2002, the combined profits of the 10 drug companies in the Fortune 500 ($35.9 billion) were more than the total profits of the other 490 businesses ($33.7 billion) (Laurier, 2005). With Americans spending up to $252 billion on prescription drugs in 2005, its no wonder that the pharmaceutical industry is so profitable. With the knowledge that medicine in America is twice as expensive as in Europe and Canada, its not much of a surprise that people are attempting to buy their drugs online from sites like candrugstore.com (Redmond, 2007). Richard Epstein, a senior fellow at the Hoover Institution, is one of the many people who support the pharmaceutical industrys reasons for having high prices on prescription drugs in America. Epstein says, There is no reason to rejoice in putting pharma (pharmaceutical industry) on the ropes if its business reversals hurt the consumers they are trying to serve (Epstein, 2006). What Epstein is saying here is that if the pharmaceutical company loses a large chunk of its profit then we shouldnt be happy about. If the company was to run out of business it would hurt not only its employees but also hurt the consumers who depend on their products. As of this moment the pharmaceutical industry has the most successful profits due to its control over its prices of their brand name drugs and their ability to control agencies within the American government like the Food and Drug Administration. The Food and Drug Administration, or FDA, began in 1906, with the Food and Drug Act. It was created in response to the exposures of the horrible conditions in the famous novel, The

4 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY Jungle, by Upton Sinclair (Laurier, 2005). Under President Franklin Roosevelts administration in 1937 and 1938, several medical disasters compelled the President to sign the Food, Drug and Cosmetic Act of 1938. This brought cosmetics and medical devices under government control and required that drugs be labeled with adequate directions for safe use (Laurier, 2005). The 1938 bill brought about a vast expansion of the pharmaceutical industry both in size and power. The power the pharmaceutical industry gained from the 1938 bill lead to the concept of prescription drugs. This means that drugs available only through physicians at a price set by the drug companies. Under the Carter and Reagan administrations anti-regulatory actions like the FDAs enforcement budget was slashed to pieces. This decreased and limited the number of routine actions that the FDA could use to keep contaminated foods and problematic drugs off the market, increasing the risk of endangering the lives of American citizens who buy these products. The limitations placed on the FDAs budget gave way to the 1992 bill, which did provide the FDA their needed budget but, not without putting themselves into the pockets of the pharmaceutical companies allowing them into the drug approval process (Laurier, 2005). Once the pharmaceutical companies were allowed into the drug approval process, they shortened the amount of time they originally required to have clinical trial testing for their drugs. This way the testing didnt eat up more time from their 20 year long patents and they could maximize their profits with more time for marketing and advertising. This is just one of the ways that pharmaceutical companies increase their profits through the manipulation of government and its agencies (Laurier, 2005). Redmond gives us another example of the pharmaceutical companies control over the government to increase profits. She notes that, with the aid of U.S. government and Food and Drug Administration, the pharmaceutical industry has tried to seal off the border between the United States and Canada(Redmond, 2007). Its

5 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY because of the inflating prices of prescription drugs is much higher in America than it is in Canada, so people go up to Canada to get their medication even though its illegal. To combat against attempts to lower drug prices and the attempts to introduce cheaper generic drugs, pharmaceutical companies hire bus loads of lawyers to fight for them. These lawyers fight to extend the life of drug patents so that they can continue marketing their products without the threat of competition from a rival company with a similar product of their own (Laurier, 2005). The pharmaceutical industrys influence in the government goes even further than controlling agencies like the FDA or using lawyers to fight regulatory laws on their companies. It goes as far as paying politicians thousands of dollars for their elections, effectively putting those politicians in the pharmaceutical companies pockets and using them to pass laws and regulations that work for the pharmaceutical companies favor (Balber & Flanagan, 2009). Carmen Balber and Jerry Flanagan give us an example of this when they talk about the 111th Congress of the United States. They say that the combined donated contribution of health insurers and pharmaceutical companies was a combined $26.6 million dollars to the top ten members of congresss election campaigns. They do this so that the members of congress that get elected into office will have an incentive to bend certain laws in the pharmaceutical companies favor in the hopes that the members will get paid more money (Balber & Flanagan, 2009). This begins to show just how deep the pharmaceutical companies pockets are and how far their influence goes. When it comes down to the pharmaceutical companies research and development of prescription drugs the whole thing could be considered a masking of its true face. Laurier quotes Marcia Angells, The Truth About the Drug Companies: How They Deceive Us and What to do About it, saying that Big pharma likes to refer to itself as a research-based industry, but it is

6 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY hardly that (Laurier, 2005), this gives support for the masking it true face phrase. The Pharmaceutical companies true face is in reality is a marketing and advertisement face. In reality, the budget of the drug companies for research and development is dwarfed by massive marketing expenditures (Laurier, 2005). What Laurier is saying here is that instead of focusing on more innovative, helpful and affordable drugs they focus most of their expenses on marketing drugs. This results in only having a handful of drugs being developed despite the staggering 2.3 million Americans involved in an estimated 80,000 studies in any given year (Laurier, 2005). The number of prescription drugs that are released onto the market means nothing when only a few of these new drugs are actually new. An example of this is that, in 2002, of the 78 drugs approved by the FDA, only 17 contained new active ingredients and only 7 were classified as being improvements over their older versions (Laurier, 2005). That means that the pharmaceutical companies have tricked the majority of the American population into buying drugs that are said to better than before, but are actually the same drugs but under a different name. These so called new drugs are just variations of older drugs already on the market, which are affectionately called me-too drugs (Angell, 2005). The reason for the existence of these me-too drugs has nothing to do with making specific drugs more available. Instead its to allow the pharmaceutical companies to produce something very similar to a top selling drug, with the simple goal of making a profit. The existence of me-too or copy cat drugs leads into the reasons for why there is a shortage of life saving drugs. Laurier writes that the reason for these shortages is because of drug companies trying to free their production capacity for drugs with a bigger likelihood of earning the company a larger profit (Laurier, 2005). Such shortages are serious when it comes to drugs to treat premature infants, antidotes for certain drug overdoses, and anti-clotting drug for

7 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY hemophilia. These shortages can lead to thousands of high risk sections of the population which can include the elderly, children, pregnant women and those with chronic and life-threatening diseases such as cancer (Laurier, 2005). As stated earlier, research and development is the mask of the pharmaceutical industry when its true face is marketing. The popular style advertisement used by the pharmaceutical companies is known as direct-to-consumer (DTC) advertisement. The history of DTC began when it was made legal in the United States in 1981 and then extended in 1997. This made it so that only the major side effects and contraindications had to be included in media ads, (Angell, ####). This allowed the pharmaceutical industry to leave out information that they felt could hinder the selling of their products. With DTC legalized, the massive increase of drug ads in the 1990s allowed for researchers to discover that 2 out of 5 ads attempted to medicalize ordinary life issues (Laurier, 2005). What this means is that pharmaceutical companies are saying that if you have itchy watery eyes, hair loss or a runny nose then that means youre in need of medical help and that you should buy their products because theyre proven to fix your problems. This will then urge you to spend money for these products which increases the pharmaceutical companys profits all because they got you to think that you were sick and needed help. DTC advertisement was not just a boon for the pharmaceutical industry, but it also became a major profit maker for media advertisement agencies, for example most medical journals are now dependent on drug ads for survival. Its for this and other reasons that DTC is illegal in every other advanced capitalist country except New Zealand. Angell asks, if prescription drugs are so good then why do they have to be pushed so hard? (Angell, 2005). The answer is that the company isnt advertising

8 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY the drug but, as Stephen Hall of New York Times wrote they are selling the company itselfand the virtues of the drug industry as a whole (Hall, 2004). Direct-to-consumer advertising has actually educated patients and doctors. Sal Perreca, chairman and CEO of Lowe HealthCare Worldwide says, DTC advertising ensures that patients are properly informed on products so they can ask their physicians questions and become more involved in the decision making process (Perreca, 2006). Perreca talks about how marketing agencies should work together with the pharmaceutical industry to ensure that physicians are properly informed on products before patients begin asking questions. This also assures that the consumer is educated on efficiency and safety. This way the doctors dont get caught off guard by the advertisement and especially when the patient asks questions about the product in question. When it comes down to the new Patient Protection and Affordable Care Act of 2010, that was proposed by President Obama, the pharmaceutical industry has a big part to play--when it comes to the industrys company profits, the new polices that will concern them, and the development of new drugs. The pharmaceutical industrys profits will increase more than they had before. FirstWord Dossier analysts of the healthcare reform agree that big pharma was among the net winners of the bill because it brings approximately 32 million new insured patients (2010). These analysts also say that the legislation is a double-edged sword for the pharmaceutical industry in both short and long term effects. The short term effects is that discounts and rebates as well as industry fees will lead to a dip in profits, but in 2015 these negative factors will be offset as revenues start to rise due to the number of newly-insured individuals.

9 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY In conclusion what is given here are the reasons for why there should be stricter laws and regulations on the pharmaceutical industry along with support that the pharmaceutical industry is doing good. With stricter regulations in place they can prevent pharmaceutical companies from having too big an influence within the government, its agencies, and the marketing companies. Hopefully they may begin researching and developing on new and innovative drugs to actually help the American population instead of just focusing on increasing their profits and giving us the same drugs under different names. It is with great hope that as a nation these regulations get passed and soon.

10 THE INFLUENCES OF THE PHARMACEUTICAL INDUSTRY

References

First Word Dossier. (2010). US Healthcare Reform: Impact and Implications for the Pharmaceutical and Biotech Industries. Retrieved from http://www.firstwordplus.com/FWD0410510.do

Hall, S.S. (2004, November 14). The Truth About the Drug Companies and Powerful Medicines: The Drug Lords. New York Times. Retrieved from http://www.nytimes.com/2004/11/14/books/review/14HALL.html?_r=1

Redmond, H. (2007). The Big Pharmaseutical Ripoff: Bitter Medicine. Retrieved from http://www.isreview.org/issues/54pharma.shtml

Laurier, J. (2005). The Drug Industrys Chokehold on Americas Health Care. Retrieved from http://www.wsws.org/articles/2005/jan2005/drug-j03.shtml

Laurier, J. (2005). The Drug Industrys Chokehold on Americas Health Care. Retrieved from http://www.wsws.org/articles/2005/jan2005/drug-j03.shtml

Epstein, R. A. (2006, December 3). Whats Good for Pharma is Good for America. Boston Globe. Retrieved from