THE TRUTH ABOUT DRUG COMPANIES

David Drum Writer
10 min readJun 29, 2024

--

A book review

By David Drum

Drug prices are infernally high in America because big pharmaceutical companies deceive consumers, doctors, and regulatory agencies in a concerted effort to inflate their profits, according Marcia Angell, MD, a longtime editor of the New England Journal of Medicine.

The Truth About the Drug Companies: How They Deceive Us and What to Do About It, her book, is a damning expose of the false claims, bad faith, payoffs, backscratching, dodgy legal maneuvers, and borderline fraud the world’s giant drug companies practice and get away with every day of the week.

The cover of Dr. Angell’s informative book

Dr. Angell spent 20 years editing the New England Journal of Medicine and her well-documented book explains how the industry she understood so well keeps prices sky-high by pulling the wool over the eyes of American consumers, politicians, and doctors morning, noon, and night.

Although The Truth About Drug Companies was published two decades ago, Dr. Angell’s book remains one of the best and most extensive exposes of the shady practices of large drug companies who habitually rig the system to enrich themselves.

Medicine is a noble profession, she believes, and new, more effective drugs to treat various medical problems are sorely needed. However, Dr. Angell observes, for-profit drug companies are less focused less on creating useful new drugs than on raking in enormous profits, often on drugs which aren’t any better than existing drugs.

Pharmaceutical companies regularly rank high on lists of the most profitable Fortune 500 companies, and selling drugs remains one of the most profitable businesses in America.

From 2000 to 2018 the median profit of drug companies expressed as a fraction of revenue was almost double that of large non-pharmaceutical companies (13.8% vs 7.7%), according to a recent study published in the Journal of the American Medical Association. That level of profit can buy a whale of a lot of influence, and it does.

In the 20 years since Dr. Angell first shined the light into the dark crannies of Big Pharma, it’s safe to say that America’s drug companies haven’t reformed very much at all.

HIGH DRUG PRICES

American consumers do not get prescription drugs at reasonable prices. Americans pay almost twice what patients in other industrialized nations like Canada pay for the same drugs, even for drugs which are manufactured here and must be shipped to other countries.

Pharmacological drugs are not priced according to what they actually cost to make (numbers which companies take pains to conceal) but according to what the market will bear. Big Pharma claims this is because new drugs cost a lot to develop, but Dr. Angell observes that this claim is false and deceptive. These days, she notes, drug companies spend a lot more on advertising and marketing than they do on research and development to develop new drugs.

Due to changes in legislation governing the patent process, and exclusive marketing rights granted by the Food and Drug Administration or FDA, new drugs now enjoy 20-odd years of profitable exclusivity before less-expensive generic drugs can even be released to compete with them.

Even when patent protection expires for profitable drugs, Big Pharma’s lawyers fight to extend the life of the patent (and the stream of profits) in myriad ways. Federal regulators can be too compromised or overwhelmed to respond, Dr. Angell writes, or they simply ignore the legal games and the underlying dodgy legal strategy, and look the other way.

An obvious example of the enormous power of Big Pharma is the Medicare prescription drug benefit, passed by Congress with some hoopla in 2003. Urged on by an army of drug company lobbyists, this legislation expressly forbade Medicare from negotiating prices with drug companies. This forced the federal agency that funds health care for older Americans to pay the absolute maximum retail price for senior’s drugs.

No other government agency is forbidden from negotiating prices, Dr. Angell noted. Today, more than 20 years after the prescription drug benefit passed, Congress has finally and timidly allowed Medicare to negotiate prices for only about a dozen drugs.

DEVELOPMENT COSTS

To justify high drug prices, drug companies claim that they need their fat profits to finance the research and development necessary to develop life-saving new drugs, but this claim is untrue.

Developing good new drugs is important. In fact, it’s the reason drug companies exist. Years ago, big drug companies did actually work to develop useful new drugs, according to Dr. Angell, but these days, very few truly life-saving new drugs are being developed at pharmaceutical companies.

During the Reagan years, Congress passed legislation that changed the way the industry worked, Dr. Angell says.

Since the 1980 Bayh-Dole Act and laws that followed in its wake, she notes, big drug companies develop few new cutting-edge drugs on their own. The Hatch-Waxman Act of 1984 ushered in more laws favorable to Big Pharms.

In 1992, the Prescription Drug User Fee Act gave drug companies authority to pay “user fees” to the FDA to expedite approval of new drugs. These fees soon accounted for more than half the FDA budget, making the agency more or less dependent and almost captive to the industry it is charged with regulating.

Big Pharma now typically licenses drugs after their development has been funded by the National Institutes of Health and basic research as well as first, second, and third stage clinical trials conducted by universities and small start-ups who are now legally permitted to patent and profit from their discoveries.

Most promising new drugs are developed elsewhere, and merely licensed by large drug companies. While drug companies sometimes fund Phase 4 clinical trials, the last of four phases necessary to present a new drug to the FDA for approval, Dr. Angell notes that this is a small percentage of the total cost of development.

Since drug companies can also design and pay for clinical trials of their own drugs, this gives them an opportunity to put their fingers on the scale in various ways. Drug companies might design trials in such a way that they yield favorable results, for instance, or they can bury or not publish information on trials which don’t yield the results they want.

Dr. Angell cites an internal document produced by the National Institutes of Health, which was publicized by the consumer group Public Citizen. The NIH analyzed the five top-selling drugs of 1995 — Zantac, Zovirax, Capoten, Vasotec, and Prozac. Of the 17 scientific papers leading to their discovery, 16 of 17 came from outside the industry. Even when all the relevant published research on the five drugs was examined, 55 percent came from NIH-funded laboratories and 30 percent from foreign academic institutions, with only 15 percent from the industry.

“ME TOO” DRUGS

Truly new and useful drugs represent only a small share of “new” drugs brought to market, Dr. Angell writes.

In 2002, of the 78 new drugs approved by the FDA, only 17 contained any new active ingredients at all. And only seven of those were classified by the FDA as improvements over older drugs.

Drug companies shell out much more money for direct-to-consumer television advertising than they do to develop new drugs. Most of their TV advertising budgets go to promote profitable “me too” drugs. These are not actual improvements on older drugs, but rather drugs that chemically resemble a best-selling drug, sometimes differing from the original by only a molecule or two to justify a new patent.

The drug marketed as Viagra, successfully introduced to treat erectile dysfunction, was quickly followed by competing “me-too” drugs Levitra and Cialis. Prozac, a best-selling type of antidepressant, was followed by Zoloft, Celexa, and Lexapro, “me too” drugs introduced by other pharmaceutical firms.

Schering-Plough’s Clairtin, an allergy drug, was followed by the same company’s “me too” drug Clarinex, a very slightly modified version of Claritin introduced and heavily marketed when the original Claritin went off patent and was available as a generic.

Many pharmacological firms employ this “bait and switch” strategy when introducing “me too” drugs to replace best-selling older drugs. Big advertising budgets for “me too” drugs with a new name, and in a new package, and in a new color, are intended to switch consumers from one drug going off patent to another patented drug and of course the advertising and marketing costs are passed along to consumers in the form of very high prices.

Clinical trials which allow new drugs to be compared with a placebo, rather than an existing drug. This allows drug companies to market new drugs which are not any better than existing drugs, according to Dr. Angell. She calls for new drugs to be tested against existing drugs in clinical trials, and to prove they are truly more effective than existing drugs before they are approved for use.

FOOD, FLATTERY, AND FRIENDSHIP

Big Pharma fields a virtual army of representatives to call on doctors, and sell and promote new drugs. This amounts to one drug company rep for every five or six physicians in the U.S., Dr. Angell observes.

Drug company representatives call on medical doctors and doctors in training and aim to persuade them with “flood, flattery, and friendship.” Reps ply medical professionals not only with nice meals at expensive restaurants, but also with all-expense paid vacations, lucrative speaking engagements, and more.

Money invested in wooing doctors to use a particular drug often results in more prescriptions, and higher profit, on the back end.

One inducement is to give doctors free samples of new drugs, which their patients may ask for after seeing TV advertisements. The physician can make his patients happy by providing free samples. But when the doctor writes that patient a prescription for the new drug, the patient or health care provider pays the high retail price which includes the company’s advertising and marketing costs but also a considerable bit of profit.

The work of drug company reps can involve giving doctors personal gifts, offering doctors and their spouses all-expense-paid trips to drug company-sponsored “in service” presentations in exotic locations, offers to write and place articles with the doctor’s byline on new drugs in medical journals, paying doctors to enroll patients in company-sponsored research trials, filling in doctors and staff in on the latest (company-sponsored) research, and more.

Big Pharma is active in supporting and sponsoring medical trade associations and “educational” conferences of all sorts which often allow them an opportunity to promote particular drugs.

Physicians who are experts or highly-regarded in their fields frequently sit on important committees, and a good many are recipients of significant drug company largesse. It is good form and often required that doctors declare a competing financial interest, if one exists, but this is not always done.

When an expert panel recognized a new category of high blood pressure called “pre-hypertension,” acceptable normal blood pressure levels were revised down from 140 over 90, to 120 over 80. While lifestyle changes are often recommended first, changes in diet and exercise patterns are difficult to achieve for many, and the upshot is doctors write million more prescriptions for blood pressure-lowering drugs and that increases the profits for Big Pharma.

Similarly, Dr. Angell observes, expert panels have recommended acceptable blood cholesterol levels be revised down from below 280 (where they stood for some time) to below 240, and then to below 200. This helped make Lipitor the top-selling pharmaceutical drug in the world in 2022, since millions more Americans were being diagnosed with high cholesterol under the new guidelines.

The influence of drug companies now reaches deeply into the nation’s medical schools, where the process of diagnosing and treating disease is becoming more closely linked with which drug to prescribe rather than examining all feasible treatments for a particular disease or condition.

LOBBYING

Big Pharma employs an army of well-connected lobbyists to work the halls of congress, and the state legislatures.

Lobbyists often begin their careers as regulators with agencies like the FDA or as politicians or congressional staff members, and then transition to lucrative corporate lobbying jobs. According to Dr. Angell, Big Pharma employs more lobbyists than the defense industry, or more than one lobbyist for every member of Congress.

Members of Congress need campaign contributions. Politicians that introduce industry-friendly legislation or help push it through are often beneficiaries of significant drug company largess when they run for office or retire.

Politicians who sit on important committees or oversee particular agencies can walk through the “revolving door” into high-paying drug company jobs, while drug company executives often waltz into jobs overseeing the industry from which they sprang.

Not surprisingly, some studies show that only about 41 percent of Americans now trust Big Pharma to look out after their interests.

THE FUTURE

Unless American consumers demand it, and Congress can be convinced to respond with strong, appropriate legislation, Big Pharma looks to chug right into the future reaping bigger and ever-growing profits.

Americans take a lot of prescription drugs. In 2021, more than 60 percent of Americans over the age of 18 took at least one prescription drug, according to statistics from the Centers for Disease Control. For people over 65, some 90 percent took at least one drug, and many take considerably more.

When Dr. Angell’s book was published two decades ago, Big Pharma was raking in revenues of $200 billion a year on prescription drugs. This year, according to Health Care Analysis, Americans will spend more than $600 billion on prescription drugs.

In 2022, one company, Pfizer, achieved an eye-popping $100 billion in revenue.

In 2022, the FDA approved 37 new drugs, according to Accountable US. The same year, America’s five largest drug companies reaped a whopping $80 billion in profit.

The Centers for Medicare and Medicaid Services’ (CMS) Office of the Actuary predicted that it expects national healthcare expenditures to outpace U.S. economic growth over the next several years. The CMS estimates this will result in an increase in the health spending share of our gross national product from 17.3% in 2022 to 19.7% in 2032. This analysis showed U.S. healthcare expenditures reaching $4.8 trillion this year with healthcare spending reaching $7.7 trillion by 2032.

Robert Weissman, president of Public Citizen, has stated that the coming surge in healthcare spending “has nothing to do with improving care and everything to do with price-gouging, monopolization, and wealth extraction by insurance corporations, Big Pharma, and for-profit hospitals.”

The Truth About Drug Companies, Dr. Angell’s book, remains the single best explanation of why we Americans pay sky-high prices for prescription drugs.

David Drum is a writer based in Los Angeles. He is the author of several non-fiction books in the healthcare area, three novels, and many other works of writing.

--

--

David Drum Writer

David Drum has worked as a newspaper reporter, ranch foreman, a funeral director, and more. MFA from the University of Iowa, author of several books.