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Profit quest leads big pharma down wrong road

by Cesar Chelala

Faced with declining prescription drug sales in the United States, and having lost patent protection for many profitable drugs, the drug industry is relying increasingly on new markets such as China and rapidly developing countries in Africa. That expansion, however, is often tainted by unsavory commercial practices.

The Economist Intelligence Unit estimates $166 billion in drug sales by 2017 in China, making the country a natural market for companies looking for further growth. In Africa, although the size of the market is still small, the rapid growth of many big cities offers interesting opportunities for development.

Pharmaceutical spending in Africa may reach $30 billion by 2016, from approximately $18 billion now. According to the World Health Organization (WHO) Africa has 11 percent of the world’s population, yet accounts for 24 percent of the global disease burden.

The rebound of the economies in several Latin American countries has made the region an attractive market for drug companies. The Latin American market is estimated to worth $70 billion in sales. Brazil, which is the largest market in the region, grew by 10 percent in 2010, and is now worth $26 billion, according to IMS Health, which provides information services and technology to the drug industry.

In China, relationships between doctors and patients are under stress. One reason is the unethical relations between many doctors and several drug companies. Although the practice of bribing doctors is not new in China, new allegations have surfaced recently against some well-known drug companies, underscoring the need for new and more effective measures against this practice.

According to some estimates, up to 30 percent of the cost of drugs is kicked back to doctors to increase sales.

The ways in which doctors are bribed by drug companies range from cash payments and all-expenses-paid trips to presents for their families and even “sexual favors.” Drug companies bribe hospitals to stock their products for filling prescriptions.

Among the latest allegations is against GlaxoSmithKline (GSK), whose staff is accused of improperly using cash and other incentives to boost prescriptions of Botox in China, which the British group sells under agreement with the patent-holder Allergan.

Although China now accounts for only a portion of the company’s total earnings (about $1.2 billion in 2012 vs. $40 billion in worldwide sales), the country is one of the company’s fastest growing markets.

Allegations against GSK are not limited to China. Last summer the company agreed to pay a $3 billion fine to settle criminal and civil charges with U.S. federal and state governments resulting from illegal activities for over 10 years. The British pharmaceutical group was accused of selling antidepressant medications in the U.S. for unapproved uses on children, concealing critical evidence from the U.S. Food and Drug Administration.

In addition to GSK, several other companies have been accused of rampant bribery, among them Eli Lilly, Pfizer, AstraZeneca, Sanofi, Novartis, Novo Nordisk and UCB. A former employee of Eli Lilly has accused the company of spending more than $490,000 to bribe doctors in China. Over the last year, both Eli Lilly and Pfizer have been accused of making illegal payments in China.

The Swiss drug maker Novartis was also accused of bribing doctors to prescribe its anticancer drug Sandostatin LAR.

In Africa, drug companies have been accused of testing dangerous drugs in children or conducting drug tests without obtaining informed consent.

In Nigeria, a committee of medical experts accused Pfizer Inc. of having violated international law during a 1996 meningitis epidemic by testing an unapproved drug for use in children. According to Nigerian officials, Pfizer’s illegal actions resulted in the deaths of 11 children and left dozens of children disabled.

Pfizer never obtained authorization from the Nigerian government to give the untested drug to nearly 100 children and infants. Nigerian medical experts stated that an oral form of Trovan, the drug used in the test, had apparently never been given to children with meningitis.

Thirty Nigerian families whose children participated in the Trovan trial filed suit against Pfizer in 2001 under the Alien Tort Claims Act, to have the case heard in the U.S. instead of in Nigeria. On July 30, 2010, Pfizer agreed to pay $75 million in a settlement to have the charges dropped.

But WikiLeaks alleges that, instead of paying up, Pfizer conspired to have Nigeria’s attorney general drop the charges.

According to a report by the Public Citizen’s Health Research Group in Washington, four companies (GlaxoSmithKline, Pfizer, Eli Lilly and Schering-Plough) accounted for more than half of all financial penalties imposed over drug companies in the last two decades.

In Latin America, drug companies have pursued an aggressive policy to the market. Such policy has been harshly criticized because it translates into increasing prescription drug prices for the consumers. Those that oppose these policies are bound to pay a high political price for it.

Argentina is a paradigmatic case in that regard. Dr. Arturo Umberto Illia, who was elected president of Argentina in 1963, was overthrown in 1966 among other reasons because of the limits he tried to put to the drug companies in Argentina.

In 1964 the “Medicine Law” was passed, tightening regulations to the pharmaceutical industry. That law also granted the Ministry of Health the authority to control prices of basic medicines, and forced pharmaceutical companies to present to a judge an analysis of the costs of their drugs and to formalize all existing contracts.

Impartial observers and people along the political spectrum believe that these restrictions alienated business interests and were decisive in Illia’s overthrow by a military coup.

Emerging markets offer exceptional opportunities for prescription drug companies to grow. Such development, however, should be according to international norms and practices — not just with the companies’ profit in mind.

Cesar Chelala, M.D. and Ph.D., is an international public health consultant and a co-winner of the Overseas Press Club of America award.