The scandal of drug companies and the NHS
Super-profits from illness
THE SERIOUS Fraud Office has just launched criminal proceedings
against five drug companies, over the alleged price-fixing of drugs
supplied to the NHS.
Meanwhile several women have launched campaigns in
recent months because of the refusal of their primary care trusts to
fund Herceptin for breast cancer.
Claire Job, a nurse and a member of Swansea Socialist Party looks
into the multi-million pound pharmaceutical industry.
HERCEPTIN IS expensive, it costs £21,800 per patient per year. But
the mainstream media don’t question why it is so expensive. The
pharmaceutical companies say that research and development costs a lot
but what is the truth?
The pharmaceutical multinationals have great power and influence and
make great profits. The top ten drug companies – "Big Pharma" – are
American, British, Swiss and French. In 2002 the combined profits of Big
Pharma in the Fortune 500 list were more than the profits of the other
490 businesses put together.
In 2002 the worldwide sale of prescription drugs cost $400 billion. A
large proportion of these sales were in the USA. Without a national
health service and where many low-paid jobs come without medical
insurance, many workers in America have to trade off taking medicines
against paying for heating and food.
The frailest and most vulnerable people string out prescriptions,
taking less than is prescribed. Or worse, people risk sharing
prescription medicines. Perversely, those without health insurance pay
more for medicines because they miss out on discounts negotiated by the
insurance companies.
Why is this industry so profitable?
Heavily prescribed drugs are routinely jacked up in price. People are
taking a lot more medicines and these are more likely to be expensive
new drugs instead of the older cheaper ones that do the same thing.
But the research and development part of the drug companies’ budgets
is small compared to marketing and certainly much smaller than the
profits they make. The prices of these medicines have little
relationship to the costs of making the drugs and could be enormously
cut without coming close to threatening research and development.
Anyway, public money plays a significant role in the development of
new medicines. Most of the research and development is done in academic
institutions. About a third of medicines marketed by Big Pharma are
licensed from academic institutions.
The industry is not particularly innovative either, most drugs are
variations of the same medicine produced in competition with existing
drugs that do the same thing. This duplication is enormously wasteful
and outrageous, given the rarer illnesses that need drug research but
don’t get it because they will not be profitable.
The patents of medicines are the life blood of this industry. These
give the drug companies exclusive rights to the profits from sales. When
the rights to the medicine expire a generic drug (copy) can enter the
market at a significantly cheaper price.
Big Pharma therefore employ armies of lawyers to ensure they maintain
the patent for as long as possible. In 1980 a patent length was eight
years. In 2000 this had grown to 14 years.
Blockbuster
A drug company that has exclusivity to a very widely sold medicine –
they call this a blockbuster – has secured its place amongst the top
pharmaceutical companies. With this comes enormous power, influencing
governments on a global scale.
Big Pharma will do almost anything to protect exclusive marketing
rights, including condemning people in the developing world to a
premature death from AIDS. 95% of people with the HIV virus live in the
developing world – that’s 32 million people.
Antivirals dramatically reduce mortality from AIDS in wealthy
countries and have gone some way in transforming the fatal AIDS virus
into a chronic condition that people can live with. Big Pharma have made
billions from the sales of antiretroviral drugs. But their cost puts
them out of the reach of the vast majority in the developing world. This
is about profit and power not health!
The biggest item on a drug company’s budget is "marketing". This can
be two and a half times that spent on research and development. This
covers education, advertising and promotion. This means influencing
those that write the prescription or influencing those who influence the
prescription-writer.
Doctors and nurses are given free gifts of everything from pens,
computer accessories and paper weights to sponsorship to attend world
conferences and study days that are not funded by the strapped-for-cash
NHS. A recent study showed even those doctors who said they were not
influenced by the drug companies’ marketing did in fact alter their
prescription habits. If marketing didn’t work and increase profits they
wouldn’t invest so much in it.
The quest for profit pushes every other consideration aside,
including public safety. Medicines have been withdrawn due to health
risks. One of Big Pharma’s members has recently had to pay hundreds of
millions of dollars in compensation. They produced a medicine taken by
20 million people worldwide (including by my own father) that has been
linked to what is estimated to be around 28,000 heart attacks or deaths
since 1999.
Their response should be to invest more in research, development and
safety. But the fear is they will respond by being even less innovative
in developing new medicines.
So what is the answer to this global industry that puts profit before
health and safety, that does not respond to public health need and who
condemns the poor to premature death?
The nationalisation of the drug companies under democratic workers’
control, would provide the NHS and public health with the funding
required to dramatically improve the health of the world, re-investing
in the research and development of medicines produced for health need
not profit.
Ill-health is strongly associated with poverty, the environment and
lack of education. All past capitalist governments have been useless in
running society and health care.
No matter who is in power, the gap between the health of the wealthy
and the health of the poor is growing. That is why we need the socialist
transformation of society so we can tackle the causes of ill-health.
Everyone should have an equal opportunity to live life to the full, to
be productive and to be cared for.
Conspiracy to defraud
FIVE DRUG companies and nine individuals, senior employees of those
companies, are being charged as part of the investigation into
price-fixing. This is one of the biggest investigations the Serious
Fraud Office has ever brought to trial.
In a separate but related civil action already in the High Court, it
has been estimated that the NHS has lost £150 million through this
alleged price fixing.
The five companies in the dock are being charged with conspiracy to
defraud in relation to the supply of the blood-thinner warfarin and some
penicillin-based antibiotics. The five companies are Kent
Pharmaceuticals, Norton Healthcare, Generics (UK), Ranbaxy (UK) and the
Goldshield Group.
The investigation started in 1999 when the price of some generic
drugs shot up by 40%. Some even went up by 300% over 18 months. The NHS
spends nearly £2 billion a year on these generic (off-patent) drugs.
The break-up and privatisation of the health service has meant the
big drug companies are in a strong position when individual hospitals
and primary care trusts are doing the buying. There is no standard price
list for drugs and no central purchaser. And the drug companies have
been making the most of this.
Some of the companies have already paid £ millions to settle civil
actions against them, without admitting liability.
