Big Drugs: A Bitter Pill

To pay a high price for a prescription drug is a bitter pill if you're already struggling to make ends meet.

All the more bitter if you learn that there's been a problem all along with that drug you've been taking, reports Sunday Morning correspondent Martha Teichner.

It's enough to shake one's confidence in the pharmaceutical industry - if it hasn't been shaken already.

According to a Harris poll published in June, Americans' regard for drug companies has been plummeting, from 79 percent thinking they were doing a good job in 1997, to 44 percent in 2004. That's a 35 percent drop, placing them only slightly above oil and tobacco companies in the public's esteem.

Shocking? In a CBS News poll released this weekend, only 15 percent of those interviewed had a positive view of drug makers. And a customer in a Washington, D.C., pharmacy summed up the prevailing attitude with this challenge to the industry:

"Why don't you cut out all the baloney about not being able to do research and development if prices are lowered - you're already spending billions on advertising."

Some $3 billion last year, according to the industry.

A significant chunk of that now being spent attempting image repair.

The ads are not about the issue driving the poll results: Prescription drug prices in the United States are the highest in the world.

Take a look at these figures compiled by AARP for five of the name brand drugs most used by seniors. In just four years, the registered wholesale price increased as much as 35 percent.

Lipitor rose 26.3 percent, Plavix 35.1 percent, Prevacid 22.6 percent, Celebrex 17.7 percent, and Norvasc 19.7 percent.

The drug industry makes the point that it gave away 17 million prescriptions last year, free, to people who can't afford to pay. But that's not even one percent of the 3.5 billion prescriptions filled in this country in 2003.

Alan Holmer, president of PhRMA, the pharmaceutical industry trade organization, says prices for drugs may be lower in Canada, but notes that there are no major research-based pharmaceutical companies there. "We need to keep that innovation engine strong in order to make sure that we're able to get new cures and the new treatments for Alzheimer's, for cancer..."

Pfizer CEO Hank McKinnell says the answer to high drug prices is disease prevention, not price controls, a sentiment is reflected in the company's latest ad campaign.

In defense of the pharmaceutical industry, McKinnell points to the list of drugs Pfizer produces.

"This is an industry that has made more difference to people's lives than any other industry I can think of," he says.

And as for innovation, he says, Pfizer is in the late stage of developing a drug that allows people to quit smoking. "It increases quit rates from 5 percent to maybe 50 percent," he says. "This is a drug which will have a profound impact on people's lives."

Former New England Journal Of Medicine editor in chief Dr. Marcia Angell has written one of five current exposes of the pharmaceutical industry.

"The industry is getting away with price gouging the American people and covering it up by all kinds of assertions that simply aren't true," she says.

It had become a giant marketing machine, "a $200 billion a year colossus," she calls it, that can well afford to cut prices, given that it's consistently at or near the top of the Fortune 500 list of most profitable industries.

"If you look at their annual reports, you see that they spend two to two and a half times as much on marketing and administration as they spend on research and development," she says. "It's become increasingly an industry dedicated not to turning out innovative drugs, but to turning out minor variations of top-selling drugs already on the market called me-too drugs.... The innovative drugs come almost entirely from publicly-funded research done in universities and government labs."

Holmer, the PhRMA president, says Angell couldn't possibly be more wrong. "And she trivializes the work of the tens of thousands of researchers in America's pharmaceutical companies, and the number of new cures and treatments that they have come forward with.... The overall marketing costs for the pharmaceutical industry is roughly $25 billion last year, compared to an R&D number, just for a number of companies, of over $33 billion."

PhRMA says that out of its members' $25 billion a year marketing budget, $16 billion went just for physicians samples, given to doctors to hand out to patients.

But according to Dr. Angell, there' s much more to marketing. "There are laws against giving doctors kick-backs to prescribe drugs, and there are laws against advertising or promoting a drug for off-label uses, but if you can somehow construe these activities as educational activities or research activities, then you can violate these laws. This is what happened in the Neurontin case."

Neurontin, manufactured by the Parke-Davis division of Warner-Lambert, was approved by the FDA as an epilepsy drug. So how did it end up a $2.5 billion a year blockbuster, prescribed for an array of other, non-FDA approved, so-called off-label uses such as migraine, attention deficit disorder and bipolar disease - even restless leg syndrome?

David Franklin, a former medical liaison for Parke-Davis, says, "It was my job to convince the doctor that evidence did exist that Neurontin was effective for say, bipolar disease, when in fact the company had not even shared with its own employees that clinical trials had shown that it was not at all effective, and in some cases may have actually exacerbated the symptoms of bi-polar disease... My job was to get market share - was to sell as much of the drug as possible."

As a medical liaison, a scientist not a salesman, Franklin realized what he was doing was illegal.

"The term we used was that we were doing 55 - doing 60 in a 55 mph zone - that it was just pushing the limits, but there was really nothing wrong. This was standard industry practice and that we shouldn't worry about it."

But Franklin did worry, so he quit and decided to sue under a civil-war era law called the false claims act.

The suit charged that Parke-Davis had hired writers to prepare papers promoting all those other off-label uses of Neurontin, then paid doctors to put their names to them. It also charged that the company also paid doctors to prescribe a lot of Neurontin, and then rewarded them by sending them, all-expenses paid, to conferences at fancy resorts.

Franklin said a combination of conscience and fear prompted him to blow the whistle. He recalls a colleague of his said, "We've gone too far. We've crossed the line and this is illegal, and it's just a matter of time before we all go to jail."

In May this year, Parke Davis pleaded guilty of criminal fraud and was fined $430 million. Pfizer, now owner of the company, is adamant it would not tolerate such conduct.

David Franklin was awarded $26.6 million of the settlement - minus his legal fees and costs.

And then there's that other case of what you don't know might hurt you. Claims that some drug companies suppressed evidence concerning the suicide risk to children on anti-depressants has led six House and Senate Democrats, including Rep. Henry Waxman of California, to propose the Fact Act, legislation that would require that the results of clinical trials, good or bad, be posted on the NIH Web site, with penalties of $10,000 a day for failure to comply.

"I don't make the claim it's a pattern of deception," says Waxman, "but there have been enough deceptions that we shouldn't permit it any longer."

Will the Fact Act pass? It's not clear. Consider this, in 2002, the year of the last federal election, manufacturers of prescription drugs contributed nearly $22 million to political campaigns, 20 percent to Democrats, 80 percent to Republicans. Last year, brand name pharmaceutical companies spent $79 million on the 526 lobbyists they sent to Capitol Hill to insure that the lawmakers look favorably on the drugmakers and follow their prescription