Thursday, September 16, 2004

Anti-Capitalism and Pharmaceutical Companies

Egad, this is what I get for listening to NPR. "On Point" with Tom Ashbrook is interviewing Marcia Angell, who just wrote a tome claiming that the industry by and large rips off the American consumer. Am I completely off point to observe a contradiction in her argument?

First, she complains that the drug industry doesn't actually do much real research or innovation. Most of that, she claims, is actually done by government-funded and university research. The drug industry actually parasitically pumps out mere "copy-cat" drugs that bring them far more profits than other industries. They spend more on marketting (and we know how immoral that is) than on research.

But another major complaint she lobbies forth is that the drug companies too strictly monitor and control research that universities perform on drugs, leading to research bias.

So I don't get it! Are drug companies bad because they don't actually research and innovate enough, or are they bad because they do it too much by tangling up and controlling all the channels of research? Argh...


Blogger Thad said...

Hey Kraorh, good to see you back to blogging. We should settle the beer thing sometime.

Anyway, I'm afraid I don't see the problem here.

(A) Big Pharma doesn't do much original research. (This is true.)

(B) Big Pharma tries to exert influence on publicly funded research. (This is also true.)

Where's the contradiction?

Saturday, September 18, 2004 2:10:00 PM  
Blogger Moon God said...


Sorry it took so long to respond. The weekend through Monday and Tuesday are my absolute busiest times. To answer your question, though:

On one hand, "Big Pharma" (funny how ominous something gets when "big" is tacked on as an adjective and it's treated in the singular, like a monolith) is being reamed for not doing enough research. On the other hand, it's being reamed for getting its hands into too much research.

Part of the problem here is we're using terms in different ways. You claim that "Big Pharma" exerts too much "influence." By "influence," you probably mean that their funding of research is quite selective, funding only that research that may ultimately earn them more money. But that's the heart of the conflict. I don't know how much independent research the pharmacuetical companies do in their own labs, but they underwrite a hell of a lot of reseach done by others - thus making them "manipulative."

Critics of that industry can't have both ways. It can't be the case that "Big Pharma" is bad because it doesn't research enough, yet also bad because it "influences" too much research.

Now, maybe you could look at specific practices by specific parties and find fault accordingly. Perhaps one company profits illegitimately off of the labor of others with a specific drug, while collectively they don't, by your lights, spend enough (either in their labs or on public research) on, say, AIDS research, while spending too much on baldness cures. But Marcia Angell's criticisms paint such a wide brush that they don't even have internal consistency.

Tuesday, September 21, 2004 4:08:00 PM  
Blogger Thad said...

Hi Kraorh,

First off, you have to understand that the research that leads to innovative new drugs -- i.e., research that actually benefits the public -- happens overwhelmingly at public institutions, like public universities and the National Institutes of Health -- or, sometimes, by small, independent biotech companies, like the type you saw all over Cambridge.

But when research *is* being conducted by a public-private partnership -- for instance, when a pharmaceutical corporation partially funds research at a public university -- and then the pharmaceutical company tries to influence the direction of that research in a way that is favorable to them but not the public, who defends the public's interest in that partnership? If the research is funded 90% by the university and 10% by the pharmaceutical company, who's there to stand up and say, "You can't contribute 10% of the cost and then try to grab 100% of the control"?

The question of defending the public's interest in determining how public money is used becomes even thornier when the relationships aren't one-off studies but long-term public-private partnerships.

You may disagree with Angell, but there's nothing incoherent, unspecific or contradictory about what she's saying. For a more detailed look at her argument, you may want to check out her article in the NY Review of Books:

A relevant excerpt:


"The most important of these laws is known as the Bayh-Dole Act, after its chief sponsors, Senator Birch Bayh (D-Ind.) and Senator Robert Dole (R-Kans.). Bayh-Dole enabled universities and small businesses to patent discoveries emanating from research sponsored by the National Institutes of Health, the major distributor of tax dollars for medical research, and then to grant exclusive licenses to drug companies. Until then, taxpayer-financed discoveries were in the public domain, available to any company that wanted to use them. But now universities, where most NIH-sponsored work is carried out, can patent and license their discoveries, and charge royalties. Similar legislation permitted the NIH itself to enter into deals with drug companies that would directly transfer NIH discoveries to industry.

"Bayh-Dole gave a tremendous boost to the nascent biotechnology industry, as well as to big pharma. Small biotech companies, many of them founded by university researchers to exploit their discoveries, proliferated rapidly. They now ring the major academic research institutions and often carry out the initial phases of drug development, hoping for lucrative deals with big drug companies that can market the new drugs. Usually both academic researchers and their institutions own equity in the biotechnology companies they are involved with. Thus, when a patent held by a university or a small biotech company is eventually licensed to a big drug company, all parties cash in on the public investment in research.

"These laws mean that drug companies no longer have to rely on their own research for new drugs, and few of the large ones do. Increasingly, they rely on academia, small biotech startup companies, and the NIH for that [7] At least a third of drugs marketed by the major drug companies are now licensed from universities or small biotech companies, and these tend to be the most innovative ones.[8] While Bayh-Dole was clearly a bonanza for big pharma and the biotech industry, whether its enactment was a net benefit to the public is arguable.

"The Reagan years and Bayh-Dole also transformed the ethos of medical schools and teaching hospitals. These nonprofit institutions started to see themselves as 'partners' of industry, and they became just as enthusiastic as any entrepreneur about the opportunities to parlay their discoveries into financial gain. Faculty researchers were encouraged to obtain patents on their work (which were assigned to their universities), and they shared in the royalties. Many medical schools and teaching hospitals set up 'technology transfer' offices to help in this activity and capitalize on faculty discoveries. As the entrepreneurial spirit grew during the 1990s, medical school faculty entered into other lucrative financial arrangements with drug companies, as did their parent institutions.

"One of the results has been a growing pro-industry bias in medical research —exactly where such bias doesn't belong."


I think you'll find, if you look into this issue more extensively, that the pharmaceutical industry actually operates in ways that are profoundly anti-competitive and anti-free market. In fact, they owe their entire existence to the patent system, which is a government-granted monopoly. They are behind anti-competitive legislation, like the provisions in the new Medicare prescription drug boondoggle that specifically prohibit the government from negotiating for lower drug prices in bulk buys, and the one that makes it illegal to import drugs from Canada or other countries. There is no reason why a principled libertarian such as yourself should support the industry's efforts to game the system.

Wednesday, September 22, 2004 2:18:00 PM  
Blogger Lindsay Beyerstein said...

"Controlling research" means much more than selective funding. It means control in the absolute literal sense. Drug companies cut deals with researchers.

They say, "We'll give you money. We'll help you publish your results. Send us your raw data, we'll hire someone to write the paper for you. We'll shop it around to the best journals. That's what the Publications Planning department is there for. We can even ensure that you're invited to write a review for a prestigious publication--only, get this, you dont' have to write it--we have people for that. Heck, send us your scribbled lecture notes. We'll transform them into polished PowerPoint slides. With animations and everything!

Wait, it gets even better. Want to be a C-list celeb? We'll bill you as a "top doc" when we invite you to speak at our symposia and advisory boards. We'll pay you handsome honoraria for your valuable time. How does 1200 bucks sound, for an article you didn't even have to write?

THERE'S A CATCH, THOUGH. If your little experiment doesn't turn out the way the Marketing Team hopes, you agree to bury the whole unfortunate incident and never speak of it again."

That's how it works. I'd post this rant on my own blog, but I'm afraid I'd get myself fired.

Thursday, September 23, 2004 7:54:00 PM  
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