Zoo Station

My friend S.D. (who is Indian) is a reader of this blog and happens to have a Ph.D. in pharmaceutics and also happens to work for one of the "contemptible" big US drug companies. Recent posts to this blog [1 | 2 | 3] have addressed several problematic aspects of drug companies and the patent regime. Therefore, in true fair and balanced fashion (see blog title), here is a little piece from S.D. where she look at things from an insider's point of view.

It would be foolhardy to try to explain things from an "opposite" point of view, because of sheer complexity of the matter. Nevertheless, I would like bring out certain points.

First, re US drug pricing: Drugs are indeed one of the most risky businesses. Those who say that the risk is overplayed need only see the results of Vioxx, Merck's antiarthritic drug. Once a blockbuster, it now faces innumerable law suits. It is true that a company plans and saves assets for these eventualities. But where do you think these assets come from? They come from the apparently huge profit margins. Moreover, a company is not free from litigations from citizen advocacy groups even when its drugs perform well in the market. It has happened with almost any top selling drug you can name. Furthermore, though it seems a cliché, big pharma companies do spend huge amounts of money in R&D. The industry average is around 20% of its net profit, one of the highest amongst all industries, especially chemical industries (what happens to the remaining 80%, I will delve into later). Big pharma companies also have to deal with expiring patent issues. It is seldom recognized that while the success of a drug molecule can be shared by the parent company, and, after its patent life, by generic manufacturers, in the event of an adverse effect, however, it rests primarily on the parent company to deal with it, because they are the ones with the first clinical and tox studies. All this adds up to a substantial amount, which needs to be saved, even though they are available in liquid assets.

I don't pretend to understand the marketing strategy of drug companies. But it is true that if there is a problem, sales, and a little less so marketing, are the first to be affected. R&D is usually cushioned from these hiccups (a part of the 80% remaining profit has some use), unless there is a bigger problem and then, funding is restricted. However, it needs to be understood that while sales and marketing can be fluid and strategies can change easily, stops in R&D are far more difficult to handle, both for the employees in the short term and the companies' pipeline in the long term. Hence, a considerable profit margin is set aside so as to deflect such adverse eventualities.

I am not of the opinion that drug prices can't be reduced a little bit. However, I cannot agree that given the present managerial and institutional setup it can be reduced a lot, even if wanted by one or two samaritan companies or congressmen.

Now, about the "me-too" drugs issue. This is the point which troubles me the most. Particular sections of the population react to different drug compounds differently, even though these drugs belong the same class. Sometimes we know the reason, sometimes we don't. That's why when a patient does not respond to a certain drug, oftentimes the doctor changes the prescription to a different drug, many times belonging to the same class. Me-too drugs are definitely necessary for benefit to a broader section of the population.

As for Marcia Angell's article in NEJM, the same journal had once vaunted Vioxx's safety. Please don't think I disrespect the journal. It is one of the most highly rated medical journals. However, the accuracy of an article should always be tested with prudence.

I should point out that I solicited this opinion from S.D. Keep in mind, of course, that all of this reflects her personal views and not those of her company. Moreover, she's speaking as a scientist, not as a business executive.