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big pharma makes its moves « Previous | |Next »
January 4, 2006

I see that Medicines Australia--- the US pharmaceutical firms---are starting to have a go at the Australian PBS scheme by using the recently signed Australia-US Free Trade Agreement. It did not take them long to make a start to begin to wind things back behind closed doors.

Big Pharma does not like reduced prices for their exclusive drugs. They want increased prices to make ever bigger profits. Hence their hostility to the measures introduced this year to cut the price of new generic medicines by 12.5 per cent. Kieran Schneemann from Medicines Australia said that cutting the price of new generic medicines:

"...was a difficult policy for us. It forces the prices of medicines down … and we are concerned in the future as this policy continues to roll out that it will impact on the value of innovative medicines and it may in time prevent some new innovative medicines coming to Australia."

These are old drugs at the end of their life. It is where the big profits are made. Big pharma is not going to give this up. The generics have to be contained so as to protect their monopoly rights to their exclusive drrugs.

Australia cannot expect much sympathy from the US government on this issue. The Bush administration consistently acted to support the interests of Big Pharma in the negotiations around US Australia Free Trade Agreement last year.

Bush basically repeated the big pharma line when in Australia:

"Our research and development costs are enormous, and we need to cover them somehow. As 'research-based' companies, we turn out a steady stream of innovative medicines that lengthen life, enhance its quality, and avert more expensive medical care. You are the beneficiaries of this ongoing achievement of the American free enterprise system, so be grateful, quit whining, and pay up."

Since prescription drug costs are rising so fast, the federal government is particularly eager to get out from under the burden of the PBS by shifting costs to individuals. The result is that more people have to pay a greater fraction of their drug bills out of pocket. Increasingly, many cannot afford them.

| Posted by Gary Sauer-Thompson at 8:40 AM | | Comments (6)


One of Howard's many policies which will return to bite his successor (be they Liberal or Labor) on the bum.

I am surprised Big Pharma waited a year before starting their push.

The big pharma companies in the US are under increasing pressure to maintain their profits at the moment. US citizens are increasingly going to Canada to fill their prescriptions because of the lower prices. Typically a US company works on a 10% profit margin but the pharma companies work on 60-70% profit margins. These margins are now being eroded by the fact that they lose patents after 5 years and generic versions come onto the market, this is something they are lobbying hard to change.

Thanks for that. That shows the Australian situation can be seen as a part of a general strategy by Big Pharma to limit the generic versions in order to bolster their bloated profits.

You can see why. After exclusive marketing rights expire, copies ( generic drugs) enter the market, and the price usually falls to as little as 20 percent of what it was. Presumably the strategy in the US is lengthen the patent life for brand-name drugs and protect the monopoly rights.

I heard a report on Radio National that stated that the great majority of "new" drugs are not new at all but merely minor variations of older drugs already on the market: 'me-too' drugs.


I thinks that it is the first time we've heard about it--that it has gone public. There would have been a lot of Big Pharma lobbying going on behind closed doors to allow the pharmaceutical manufacturers to be able to renew drug patents on the basis of ephemeral alterations. Their plan would be to lock out generic competitors, who launch cheap copies of medicines as soon as patents expire.

From where I sit it appears that Big Pharma is primarily a marketing machine to sell drugs of dubious benefit. It is an industry that uses its wealth and power to co-opt every institution that might stand in its way, including the Parliament, the bureaucracy, academic medical centers, and the medical profession.

There aren't many checks and balances on this kind of corruption. At the very minimium we should only make approval of new drugs on the PBS contingent on their being better in some important way than older drugs already on the market. That would stop the me-tooism drugs.

Secondly, the drug companies need to open their books so that we know the results of the clinical trials they sponsor, not just the favourable ones they make public.

"and we are concerned in the future as this policy continues to roll out that it will impact on the value of innovative medicines and it may in time prevent some new innovative medicines coming to Australia."

This is already occuring as my wife and I found out when we returned to Adelaide for a year from the USA. My wife has a heart condition and one of the medicines she uses is called Cozaar, this is unavailable in Australia because the pharma company didn't like the low cost that the government wanted, so simply refused to supply it to Australia.

As a side note, pharma companies in the US no longer push their drugs through doctors or hospitals, now prefering to advertise directly to the user, so the patients are now asking the doctors to be put on X name drug. Generally you can expect 1 drug ad every commercial break during a program.

Two things of note from this article
First, the US public is showing signs of being fed up:

The fact that Americans pay much more for prescription drugs than Europeans and Canadians is now widely known. An estimated one to two million Americans buy their medicines from Canadian drugstores over the Internet, despite the fact that in 1987, in response to heavy industry lobbying, a compliant Congress had made it illegal for anyone other than manufacturers to import prescription drugs from other countries...In addition, there is a brisk traffic in bus trips for people in border states, particularly the elderly, to travel to Canada or Mexico to buy prescription drugs. Their resentment is palpable, and they constitute a powerful voter block--a fact not lost on Congress or state legislatures.

That suggests you could try and order Cozaar over the internet from Canadian pharmacies.
Secondly, big pharma is not innovative. It is marketing machine based on me-too drugs. The innovation. As Marcia Angell points out there are:
...'very few drugs in the pipeline ready to take the place of blockbusters going off patent. In fact, that is the biggest problem facing the industry today, and its darkest secret. All the public relations about innovation is meant to obscure precisely this fact. The stream of new drugs has slowed to a trickle, and few of them are innovative in any sense of that word. Instead, the great majority are variations of oldies but goodies---"me-too" drugs.'

The innovation is being done by the little biotech companies that spin of from the research in universities.