Pharmceutical Industry Today
Don’t swallow this pill
Are the European Union and its multinational pharmaceutical companies now pressuring the Indian prime minister’s office? In recent months, as negotiators from India and Europe have been thrashing out the details of a free trade agreement to be signed within months, people living with HIV have been hitting the streets. From New Delhi to Nairobi and Brussels to Bangkok, they have been protesting against the very real threat posed to India’s ability to supply life-saving generic medicines to people across the developing world.
Publicly, both sides have assured that the trade deal will not harm access to the affordable generic medicines, and have reiterated, as if by rote, the primacy of people’s health over economic interests. But the Indian press now reports that the PMO, under pressure to conclude the deal, has asked the concerned government department to reconsider intellectual property (IP) provisions it had earlier rejected.
What is at stake? India became the ‘pharmacy of the developing world’ because its generic manufacturers are able to produce medicines that are patented elsewhere. This has made it a safe haven for affordable medicines. Medecins Sans Frontieres now purchases more than 80% of the medicines it uses to treat 1,60,000 people living with HIV/AIDS around the world from producers in India. But this safe haven has been under constant attack.
Six years ago, the first attack came when India was obliged under international trade rules to introduce patents on medicines. Already, patents have been granted on cancer, AIDS and hepatitis medicines. But crucially, India’s parliamentarians sought to balance patents with public health, and designed a strict patent law that would stand up to trade rules and protect access to affordable generic medicines.
One core provision of the law stops pharmaceutical companies from abusing the patents system. Section 3d says no patent shall be granted for a minor change to an existing medicine, if it shows no significant therapeutic efficacy over one which already exists. This prevents “evergreening”, when companies seek monopolies to block out generic competition for as long as possible, simply by making minor changes to a drug.
This has irked multinational pharmaceutical companies, which launched a second attack on the pharmacy of the developing world. As patent applications for several big-ticket drugs – oseltamivir for avian and swine flu, imatinib for leukaemia and, very recently, lopinavir/ritonavir and atazanavir for AIDS – failed to pass the patentability test in India, companies sought to overturn the law, or empty it of any substance. Novartis notoriously took the government of India to court in 2006, but lost. Other companies like Bayer have taken a stab, but have yet to succeed.
Enter the free trade agreement negotiations, as the European trade agenda becomes the latest mouthpiece for the multinational pharmaceutical companies. Until now, much of the debate on generic production in India has focussed on patents. Now, the EU has changed track and is pushing hard for India to sign up to another means of blocking off generic production: data exclusivity.
With data exclusivity, India would be agreeing to grant a period of exclusivity over the clinical trial data submitted by a pharmaceutical company. This in turn would prevent the Drugs Controller General of India – the body responsible for approving medicines for market – from registering a generic medicine until that time was over. The multinational pharmaceutical industry has asked for that time to be 10 years.
Data exclusivity is a backdoor to monopoly protection. It also sweeps away the attempts by India’s parliamentarians to balance health and profits. It makes a mockery of India’s patent offices’ work to apply rigorous standards and ensure only innovative medicines are granted a monopoly. Now, a pharmaceutical company would merely have to submit clinical trial data to obtain several years of monopoly, whether the drug was patented or not, whether it was old or new, whether it showed inventive step or not, or gave added therapeutic benefits or not.
The effect on access to affordable medicines is clear. India can learn from the countries that have preceded it down this path. Jordan brought in data exclusivity as part of a trade deal with the US. A study by Oxfam found that of 103 medicines registered and launched since 2001 that had no patent protection in Jordan, at least 79% had no competition from a generic equivalent as a consequence of data exclusivity. The study also found that prices of these medicines under data exclusivity were up to 800% higher than in neighbouring Egypt.
India should not repeat others’ mistakes, or the effect would be felt far beyond India’s borders. The country is the source of the vast majority of drugs used to treat AIDS in developing countries. Affordable medicines produced in India have played a major part in reaching the more than five million people receiving HIV/AIDS treatment across the developing world today.
In 2000, treating one HIV positive person for a year cost more than Rs 4,00,000. Thanks to competition among generics from India, this same treatment today costs Rs 3,000. Any measure in the free trade agreement that would have the effect of blocking competition would effectively be turning the clock back on access to medicines. India needs to stand strong and resist European demands.
Government lets fraudulent drug companies deal with Medicare
Seven years ago, Lee Chartock, a psychiatrist in South Weymouth, Mass., got a visit from a drug saleswoman offering to pay his expenses to an “advisory meeting” in Boca Raton, Fla.
There, hucksters encouraged him and other attendees to prescribe the drug Zonegran, approved by the Food and Drug Administration (FDA) as one of several medications to treat epilepsy seizures in adults. That small market wasn’t growing. But physicians had been paid up to $1,250 to attend Florida sessions where they were encouraged to increase the drugs’ sales by prescribing it “off-label” as a diet pill, to treat mood disorders, and for epilepsy in children.
Back in Massachusetts, the saleswoman offered to pay him to give speeches on behalf of the drug’s maker, an Irish firm with R&D and other operations headquartered in South San Francisco called the Elan Corporation.
Chartock declined. Instead he filed a federal whistle-blower complaint describing an illegal marketing scheme by Elan to market Zonegran for “off-label” uses.
On Dec. 15, the Justice Department announced that Elan would pay criminal and civil penalties totaling more than $200 million. As part of a legal settlement, Elan signed a so-called corporate integrity agreement, designed to ensure it doesn’t repeat this kind of practice. For the next five years, it will employ a “compliance committee” and regularly report back to the government on whether employees are breaking the law.
U.S. Attorney General Eric Holder said in a Dec. 16 speech that the cash settlement and the agreement were examples of how the Obama administration is “fighting back in bold, innovative ways” against health care fraud.
“Ironic” might be a word more apt than innovative. That’s because, when it comes to pharmaceutical companies, the federal government’s antifraud strategy has itself smacked of flimflam.
Elan is one of hundreds of entities under corporate integrity agreements requiring them to audit their own behavior under the supervision of the U.S. Department of Health and Human Services. Such negotiated deals have quietly become America’s preferred method of battling criminal activity in Big Pharma, the largest source of documented fraud against the U.S. government.
But even the feds’ top cop in charge of investigating Medicare fraud points out these agreements can be shams. “Sometimes you can dance around corporate integrity agreements and still be in compliance,” said Timothy Menke, deputy inspector general for investigations with the U.S. Department of Health and Human Services, during congressional testimony in March.
Peter Rost, a former Pfizer marketing vice president who blew the whistle on drug marketing fraud, takes Menke’s criticisms a step further. “In my opinion, this whole thing is a bit of a circus for the consumption of the masses,” he says. “The Department of Justice can say we’ve extracted hundreds of millions of dollars in fines. But it’s a game, and the reason it’s a game is that it really doesn’t change anything.”
As if to confirm Rost’s point, Elan’s official statements seem to suggest the company got caught up in a minor legal quibble and emerged with hardly a scratch. “We are pleased to have reached this agreement, which concludes a longstanding legal matter on a product Elan divested over six years ago,” counsel John Moriarty said. “Elan is committed to adhering to the highest ethical and legal standards.”
Management of health care is one of America’s greatest concerns. In California, new Gov. Jerry Brown’s austere 2011-2012 budget included more than $41 billion to fund Medi-Cal payments for disabled and elderly residents. The federal HHS budget, which includes Medicare and Medicaid health insurance programs for the elderly and poor, is $880 billion.
Medicare fraud, meanwhile, is estimated to take up $60 billion per year of these funds. Much of that problem can be traced to Big Pharma, which can sometimes earn a quarter of its income selling medicine paid for by the government.
Drug company reps can boost sales radically by bribing doctors to prescribe medicines for conditions for which the FDA has not approved them. Laws prohibit off-label marketing to prevent snake-oil salesmen from poisoning the public. For example, the FDA specifically did not approve Zonegran for use in children because of severe potential side effects of heat exhaustion and dehydration. Nonetheless, according to a federal indictment, one sales rep went so far as to instruct physicians to administer the drug to a child by emptying a capsule into applesauce.
According to Chartock’s complaint, between 2001 and 2003 Zonegran’s sales increased 87 percent to more than $80 million “due in large part to” bribes and off-label marketing.
Medicare rules banish companies convicted of felony fraud. But that rarely happens, even in cases of multibillion-dollar fraud.
The reason is simple: Like Bear Stearns and AIG, pharmaceutical giants seem too big to fail. Felony convictions would require banning big drug companies that defraud the government. That would make certain types of medicine unavailable to Medicare patients. And given pharmaceutical companies’ reliance on Medicare sales, banishment would drive companies out of business, eliminating thousands of jobs.
So instead of pursuing felony cases, companies get fines and wrist-slaps in the form of corporate integrity agreements. There’s no drug industry equivalent to Martha Stewart, a famous cheating executive who was jailed as a warning to others.