Double-Dealing Drug and Chemical Companies

By Michelle Mairesse

     The Food and Drug Administration's decision to let pharmaceutical companies televise prescription drugs ads released a juggernaut that is still rolling over the medical landscape.

     No sooner had Republican candidate for president Bob Dole lost the election to Bill Clinton than he became the poster boy for "erectile dysfunction" and top salesman for Viagra throughout the world. It was an easy sell because Viagra had no competitors, but after several men died when they combined Viagra with their heart medication, the manufacturer prudently attached a brief warning label to its product.

     Owing to fast-track FDA approval, manufacturers have promoted a number of inadequately tested drugs. The infamous diet drug Fen-Phen was recalled in 1997 after users sustained heart-valve damage. Trovan broke all antibiotic sales records in 1998, but the FDA issued a public health advisory that Trovan inflicted severe liver damage on some patients and was implicated in six deaths. Rezulin, a heavily-promoted diabetes drug that got fast-track approval in 1997, has been linked to over 215 reported deaths, but it was not taken off the market until March 21, 2000.

     Many of the highly advertised new drugs were more expensive and less effective than compounds already on the market. A thirty day supply of Claritin cost about $66 compared with $1.40 for non-prescription chlorheniramine, but patients are still clamoring for Claritin because they've been "educated" by advertisers.

     All unwitting, the general public is now subject to the same inaccurate and unbalanced advertising blitz pharmaceutical companies impose on physicians. The medical journals themselves, dependent on pharmaceutical advertising, cannot be trusted to present unbiased information.

     Professor Allan Detsky and associates from Toronto Hospital conducted a study of seventy articles about calcium channel blockers that appeared in the New England Journal of Medicine. They concluded that two-thirds of the articles "had industry backing" and that all of the authors who favored calcium channel blockers had "financial interactions" with at least one pharmaceutical manufacturer.

     It certainly pays to advertise. In 1998, drug companies earned $22 billion, chalking up a 5% greater profit margin than that of any other American industry. They had a little help from their friends, of course. The Congressional Research Service reported in 1999 that the drug industry paid 16.2% in taxes from 1993 to 1996, while all other major industries had an average tax rate of 27.3%. The drug industry was able to reduce its tax bill by approximately $3.8 billion in 1996 alone, owing to tax breaks for research and development granted by a Congress awash in drug company donations.

     The National Institutes of Health donate research to the industry, which patents the information, although it is acquired at taxpayer expense. The FDA works hand in glove with the industry and too often grants its seal of approval to drugs that have not been subjected to independent testing.

     Are the drug companies grateful for their privileged status in the United States? Not at all. As early as 1992, a General Accounting Office study concluded that drug companies charge Americans double the price they charge Canadians. The explanation is simple: In Canada, the Canadian Patent Medicine Prices Review Board regulates prices; in America, the pharmaceutical companies regulate prices. Only large institutions, such as the Veterans Administration, large insurance companies, and HMOs, can negotiate prices with the drug companies in America. (Individual consumers, who have no negotiating power, pay double, according to a staff report issued by Maryland Representative Elijah E. Cummings in 1999.)

     Since the GAO report appeared, the price Americans pay for prescription drugs continues to exceed that of any other industrial nation. In 1998, the Canadian Pharmaceutical Medical Review Board compared American pharmaceutical prices with European prices. Prescription drugs in the United Sates are 96% higher than in Italy, 75% higher than in France, 55% higher than in the United Kingdom, 47% higher than in Sweden, 40% higher than in Germany, and 26% higher than in Switzerland.

     Several congresspersons have recently issued staff reports documenting the blatant profiteering of American pharmaceutical companies. The report prepared for Representative Bernard Sanders in November 1998 found that the average prices senior citizens in Vermont paid were 81% higher than the Canadian average and 112% higher than the Mexican average.

     Elderly Amercans, 12% of the population, use 1/3 of all prescription drugs. Is it any wonder, then, they have begun to organize junkets to Canada and Mexico to take advantage of lower-priced pharmaceuticals?

     Public Citizen's President Joan Claybrook believes that Congress must act to control runaway prescription drug expenditure inflation because any Medicare prescription drug benefit plan is likely to cost too much and offer too little in benefits. "Neither the seniors and people with disabilities who rely on Medicare nor the taxpayers whose dollars will support the drug benefit can afford to subsidize drug companies' escalating prices and profits," she said.

     Senator Ted Kennedy and several other liberals advocated tying Medicare prescription coverage to discounted drug prices. They will need all the support they can get because drug companies do not want Medicare prescription coverage. Such coverage would eventually entail price ceilings, and why impose price ceilings when the sky is the limit?

     The drug industry's advertising barrage has already begun. They tell us that we don't want the government in our medicine cabinet; let the government regulate drug prices and the next thing you know, you won't have a choice, etc. Does anyone doubt that drug industry lobbyists are pouring money into congressional coffers and attempting to build a fence around their money tree? The FDA, a regulatory agency infested with representatives from the industry, has warned Americans against purchasing drugs from Canadian sources, but the warning hasn't stopped the rush to the border.

     Mark Catroppa, vice president of marketing and operations for, fills around 600 prescriptions daily online for more than 2,000 medications.

     He discounted the risks the FDA cited, saying Canadian and American standards for pharmacies are similar, that in most cases, the drugs are manufactured in the same places, and that a Canadian doctor and pharmacist review prescriptions to verify them and check for possible drug interactions. The same amount of the breast cancer drug tamoxifen that a major U.S. pharmacy sells for $340 costs only $56 at, Catroppa said.

     The numbers speak for themselves. We need a government that cares more for the general welfare than for the particular campaign contributor. Maybe next year?

8/27/2011: Since the last update to this article appeared, some damaging drugs have been withdrawn, but the FDA is still slow to act and reluctant to penalize. Too often, patients are left to their own devices.

"Around 1600 lawsuits were filed against the company [Bayer] in total, all claiming similar allegations that Bayer failed to design and test the drug [Trasylol] properly. Furthermore, and perhaps most disturbing, the lawsuits allege that Bayer did not let healthcare professionals and users know about the dangerous side-effects and risks associated with the drug. Compounding the matter, the lawsuit also charges Bayer with delayed disclosure of negative data to the FDA, as well as failure to issue proper warnings or a Trasylol recall."

Life Extension, September, 2011

      It is reported that answering approximately 150 lawsuits filed for individuals, Bayer recently settled for $60 million.

      The Department of Justice is more stringent, in some instances, than the FDA.

"Google's healthy online advertising business took an anticipated hit today when the Justice Department announced that is fining the company $500 million for helping Canadian pharmaceutical companies to place illegal online ads in the U.S.

"In a lengthy release, the Justice Department calls out Google's lax management of its AdWords program, which allows companies to place advertisements across the web and next to Google search results.

"The $500 million forfeiture, one of the largest in American history, represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google's AdWords program, plus gross revenue made by Canadian pharmacies from their sales to U.S. consumers," according to the DOJ.

"In exchange, Google won't face criminal charges, but will be subject to 'compliance and reporting measures.' Although it is illegal to import Canadian drugs into the U.S. except through a pharmaceutical company, U.S. consumer demand for Canadian pharmaceuticals has skyrocketed in recent years, namely due to their relative cheapness and availability. As the Canadian Pharmaceutical Journal explained last year: In Canada, brand name drugs are on average 57% less than US brand name products and range from 40% to 80% less. Generic drugs, however, are 115% higher in Canada. Price is truly the driving force for the US public demand for Canadian drugs. However, the rising value of the Canadian dollar compared to the US dollar has decreased the demand for Canadian pharmaceuticals."

Excerpts from Talking Points, August 21, 2011 (updated August 26)

      Hmm. Does $60 million versus $500 million sound right to you? Talking Points also asks some interesting questions. Is Facebook next?