PHARMACEUTICAL GIANTS – Extortion and Blackmail? no responses
You decide.
S is a good friend of mine, who suffers from a debilitating, life-threatening disease. I can’t give you details for extremely good reasons. Let’s just say, they’re partly personal, partly professional. So forgive me if I am a little vague.
Being careful with the facts: the conventional drug and treatment regime for her disease has been in use for years. S has suffered all her life with horrendous pain, the kind that holds sleep at bay for nights. As she says, “When it’s really bad it can put my life on hold all together – forget about going out on dates or having a day out with friends. It affects my professional life too.”
Then, in her late twenties a new drug became available. Private insurers don’t cover this treatment. To get the NHS to fund it, she had to undergo a barrage of tests to prove that the disease is aggressive enough to justify treatment. Luckily her consultant was prepared to try this, having tried most other approaches. And it worked. After a while, symptoms decreased and S was able to have close to a normal life. It did require a monthly intensive treatment to keep the situation stable, but that was a small price to pay.
S explains “Every case needs to be reviewed on an annual basis. It’s just procedure. Patients like myself must therefore undergo tests again to prove that the disease is still active. If it’s not then the NHS stops treatment, which is ridiculous as the disease is incurable and therefore will likely flare up again. Consequently patients like myself hope that the treatment hasn’t made them ‘too well’ or treatment will be stopped.”
And last week the Hospital announced that the treatment would be stopped.
The treatment costs the NHS £23,000 a year. So we have to conclude that a cash-strapped NHS would happily discontinue an expensive treatment on the grounds that the symptoms had diminished. But as she said, the disease is a lifetime condition! And if a treatment has successfully controlled the condition to an extent, stopping the treatment would undoubtedly lead to recurrence. It doesn’t make sense.
Cheap at the price? Well, Cancer is estimated to cost the NHS £40,000 per patient per year. Sure, that’s not just the drugs. But it’s still £40,000 per year. Cheap as chips then. See https://www.nhs.uk/news/cancer/cancer-survival-rates-threatened-by-rising-cost/
WHAT THE HELL – !
On Monday morning on the BBC Radio 4 Today programme John Humphries interviewed Professor Mariana Mazzucato , professor in the Economics of Innovation and Public Value and the director of the Institute for Innovation at UCL, who unpacked some of the reasons for the horrendous costs of medicines.
“Two weeks ago,” she said, “the price of an antibiotic went up 400% overnight, and the CEO of Nostrum Pharmaceuticals said they had a ‘moral imperative to allow prices to rise to what the market would bear’.”
The “moral imperative.” In other words, the maximum customers would pay in order to achieve the maximum profits to satisfy shareholders.
To the oft-repeated justifications or rationalisations offered by pharmaceutical companies for their outrageous prices, that research and development costs are huge – and many medicines never reach the market for a number of reasons, she pointed out that many of the R&D costs are not in fact incurred by pharmaceutical companies. Much of the research is done by universities and hospitals, at the expense of the taxpayer.
Interesting fact, by the way: a drug for Hepatitis C, Sobaldi: in the UK a 12 wk course costs £35,000. In Australia the same drug costs £8,000. Because, the Professor says, in Australia they buy large volumes and negotiate, therefore, more effectively. Which certainly goes to illustrate that drug companies charge as much as they can get away with.
But how does this play out in terms of costs, revenues and profit?
THE STATS
D&D, F&F. What I always shout at pupils. Don’t make assertions without Depth and Detail, Facts and Figures!
The first stat: the global pharmaceutical market is worth $1tn pa. That’s $1,000,000,000,000 (and even or 1,000,000,000,000,000,000 in some countries). (Yes, those are 18 zeroes in that last one.) https://www.vocabulary.com/dictionary/trillion
THE TOP
Table: https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical_companies_by_revenue
Source: https://www.statista.com
See also
Billion-dollar big beasts, for sure.
So let’s go back to their ‘justifications”, or rationalisations for their huge profits. “Drug companies justify the high prices they charge by arguing that their research and development (R&D) costs are huge. On average, only three in 10 drugs launched are profitable, with one of those going on to be a blockbuster with $1bn-plus revenues a year. Many more do not even make it to market.
But as the table below shows, drug companies spend far more on marketing drugs – in some cases twice as much – than on developing them. And besides, profit margins take into account R&D costs.” See https://www.nhs.uk/news/cancer/cancer-survival-rates-threatened-by-rising-cost/ The figures are interesting:
A mere glance at the figures show that whatever their costs, Big Pharma are thumbing their noses at us.
“What disgusts me,” S says, “is what they spend on Marketing.” Here’s why S has to be anonymous: she works for one of the huge pharmaceutical companies in their Marketing department. Unfortunately her company doesn’t make the drugs she needs, although who knows if they would offer a Staff Discount! “…the real injustice here lies in the waste on media spend. It needs to be regulated some how. Drug companies plough millions into the creative development of marketing campaigns which never see the light of day. … the money they sink into the actual building of the stands at these medical conferences is just a small fraction of the waste, not to mention the creative development behind those stands. Honestly Jon you wouldn’t believe it.”
She gives one notable example: a company whose drugs for HIV and Hepatitis C are essential for the survival of so many people, Gilead, are estimated to have spent £200,000 on a trade stand at a recent pharmaceutical exhibition. (S does NOT work for Gilead.) Surely when you have a patent on some exclusive and life-saving drugs you don’t need to indulge in such ego-enhancing exercises?
According to an article in the Washington Post, “Most of this marketing money is directed at the physicians who do the prescribing, rather than consumers. …companies spent more than $3 billion a year marketing to consumers in the U.S. in 2012, but an estimated $24 billion marketing directly to health care professionals.” 11 Feb 2015 Washington Post
So those are pretty old figures, we can be certain the amounts spent have increased.
Here, just fyi and fya, is the expenditure of Glaxo Smith Klein up to 2017. Note: this is the advertising costs alone, not total marketing. (Marketing is “above the line”, i.e Advertising, and “below the line” i.e. everything else, so that’s exhibitions, mailings, internet-based, etc)
ANNUAL EXPENDITURE ON ADVERTISING GLAXO SMITH KLEIN 2011-2017 IN £MILLION
Source: Statista.com
Note the increase over the last three years. And yes, put the right amount of zeros on to that figure and it reads £1,351,000,000!
CONCLUSIONS AND RECOMMENDATIONS
It is the absence or paucity of regulations that have allowed plc companies to exploit, cheat, misrepresent, in order to maximize profits for shareholders and thence, salaries and bonuses for the CEO and the Board. Because their products are life-saving and life-enhancing, they can charge anything they like for patented medicines. Is this blackmail and extortion?
Maybe public concerns and awareness have finally penetrated through to the Boardroom. The recently appointed new CEO of GSK, Emma Walmsley, has accepted a 10% lower salary than her predecessor.
So she is only paid only £1.23 million only. Aww diddums. We don’t know what her share options or bonus are.
(http://fortune.com/2017/03/15/glaxosmithkline-ceo-emma-walmsley-pay-package/)
Until Governments wake up to the way we are all being used as cash dispensers for the corporations and the mega-rich, and bring in some proper regulation, this situation will continue. I have addressed this in a previous blog, see
http://jonelkon.com/break-one-thing-fix-another/
Look: if these companies are busting a gut (ours. Consider what the poor sods who they use to trial their treatments get paid. If anything.) to fix cancer and Alzheimer’s and HIV, we must be extremely grateful. Thank you. Also, thank the governments and hospitals and universities who do so much of the research. But give us a break. You can still buy the odd yacht and Bentley (go on, destroy the Environment) and charge fair prices. Prices which truly reflect an ethic, a moral stance, a participation in a society aimed at bettering the health and environment for all of us.
I’m thinking of changing my name to Cassandra. No, I’m not changing gender. Read the Illiad. Or watch Troy. The Greeks are coming. Only they’re not bothering to hide in a wooden horse.
Breaking news: S has just called me. After a major effort from her consultant, her treatment has just been approved. Just in time! Had the approval not come in this week, she would have had to wait until the symptoms were again unbearable and start the whole regime again.