Many years ago I worked at a drug company in upstate New York. There were about 2500 employees of which 500 were in research. I was told that another group worked in the tropical jungles of the world trying to find yeasts and molds that offered new cures for disease. We made penicillin and a lot of it. A large part of the profits were returned to the research of new drugs and cures.
At a recent hearing before a Senate committee, the question was asked to a drug company CEO why the cost of insulin had risen so much. The CEO answered that they needed the money to pay for research for new drugs and cures. The answer kind of hung in the air because the cost of insulin had risen more than double in the last few years and surely there were other ways to raise funds for research rather than penalize those with diabetes. After working at a brand name pharmaceutical company for a while, I took a job with a generic company. This company made drugs that had come off patent and after development of the final dosage form had to prove that our copy of the branded drug was the same in potency and availability to the body for treatment. We had to do testing in humans giving them the drug and then testing their blood for the presence of the drug. It had to appear within the time limits set by the innovator’s drug and match it precisely. After this we could send an application (ANDA) to the FDA and wait for approval to sell the drug as a generic. Since we had not had to do original research or even prove the drug was efficacious, we could sell it much cheaper than the branded product.
The price of drugs being raised to pay for research was not something that I had heard before because the price of a new drug is usually set at a level to cover the cost of the research and development of that drug within a short time period. We have often heard that the high price of a new drug reflects its developmental cost. Now we hear that it is necessary to raise the price of all products to cover these costs, and this is a scam to increase profits because there is very little original research being done by drug companies.
Penicillin was discovered by Sir Alexander Fleming, and the conversion of the penicillin mold into a usable drug form was done at Oxford University. After this, a drug company did the work of clinical trials to get FDA approval in the US. A drug company did not pay for or do the actual original research. As new penicillin products were made available, the individual drug companies did the research to invent them but they started with the original molecule and added to it. Each was priced to pay for the research and development. There was no need to raise prices to pay for the research to make these additional drugs.
In 1976, investigators from Sankyo in Japan found a chemical substance in a green-blue mold that was from the penicillin family that prohibited cholesterol synthesis in animals. This investigation was started and stopped a few times until Merck took the compound and developed it into a drug dosage form and after the necessary clinical trials got it approved by the FDA in 1987. The drug was called Lovastatin and branded as Mevacor. It was a revolution in the lowering of cholesterol in humans and immediately became a hit. What followed was the rest of the pharmaceutical houses of the world getting on the bandwagon of this new and very profitable drug. It was not long before there were half a dozen other brand names of statins being offered for the same reason to prescribe Mevacor. Each of the drug companies that followed Mevacor had taken the molecule that was the active portion of the drug and created a new salt or form of the drug and had it patented, after clinical trials proving that it was effective were approved by the FDA. Seven drug products that were active to lower cholesterol in the same way with the same chemical action were approved, and none of them did or paid for the original research. In fact, after Mevacor there was no research but simple development to copy the first drug approved.
In 1987, Eli Lily was approved to sell Prozac or fluoxetine for depression. This was a new class of drugs to fight depression, which had been a problem for the medical world. Many of the older drugs were somewhat effective but had problems and side effects that prevented them from doing a good job. Prozac offered a new way to give people some help with this terrible mental condition. Within a couple of years there were at least five new copies of Prozac from other drug companies, such as Zoloft and Paxil. Again, after the approval of a new and effective drug, the rest of the pharmaceutical industry scrambled to copy the Eli Lilly product by offering different forms of the molecule that was the active ingredient in Prozac. None of them did any original research and had only developmental costs to recover. Their pricing was the same as Prozac.
Another drug product that was imitated was Prilosec or omeprazole, which was approved in 1989. Soon after came a slew of copies of the proton pump inhibitor, and all were priced equally even though there was no original research. When Prilosec was near to patent expiration, the company submitted its isomer for a new patent and it was granted. Thus, esomeprazole. I still do not know how this happened since an isomer is a mirror image of a molecule and is not different in structure or atoms contained within the molecule. They received another patent life and started to sell it as an improvement of the original Prilosec. It is still a bestseller, as Nexium, but with no real research to produce it.
Last but not least is insulin. Eli Lilly’s Humalog cost $35 in 2001 and rose to $234 in 2015. Novo Nordisk’s Novolog went from $289 to $540, and Sanofi’s Lantus went from $244 to $431. Insulin is used by diabetics and is needed to keep them alive. There is no way for a diabetic to live without their insulin, yet these products that are the same drug produced thirty or forty years ago have been increased in price to the point that many diabetics have been making the choice between food or drug.
One CEO said that the price of insulin had to be increased to pay for research. He lied. It was increased to increase profits, which increased his bonus. Drug companies do very little original research, and most of their developmental costs are to copy their competitors’ products. Original research is done at universities through government grants, and the universities end up getting enough grant money from a pharmaceutical company for the company to claim the patent. When you give money to the Cancer Society or the Heart Association you are paying for research at a university setting, and this is not being paid for by the pharmaceutical companies that will eventually sell the finished product. There are developmental costs to bring a drug substance to market, and they can be very expensive but most are paid back in the first couple of years of sales. We live in the only major country in the world that does not have drug price controls so the world comes here to make their profits. We are funding the profits of drug companies and paying for them to copy each other with no benefit in pricing to the consumer. The retired person who has seen their insulin rise from $35 to over $200 in a few short years is the pawn in this worldwide scheme.
After reading this blog, try to add the fact that the way drugs are sold also cheats the public with huge discounts and paybacks to chains and wholesalers. The schemes used to hide the true cost of drugs have been adopted by the rest of the medical community, and we the people are paying dearly. Unfortunately, we are at the mercy of our legislators who are being paid by the lobbyists to get reelected, and their power is worth more to them than their constituents. By the way, notice the TV ads for the “mabs.” You will see a number of anti-autoimmune drugs with the generic ending -mab. That’s another example of a group of copies of a new drug that is very effective but most of the copies have had no original research to pay for. TV advertising is adding about thirty percent to the cost of drugs in the US, and yet only a doctor can prescribe them. Think about the doctor who prescribes a drug based on his patient’s recommendation.
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