Updated February 2008

Pharmaceutical Industry

Public Health Impact

The pharmaceutical industry both saves lives and put lives at risk. Through its research and drug development activities, it brings new drugs to market that have the potential to improve the treatment of many conditions, prevent others and prolong life and quality of life. For example, a recent study in the New England Journal of Medicine attributed a significant part of the major decline in cardiovascular deaths in the last three decades to improved medical treatments, including pharmacotherapy.

However, the pharmaceutical industry also aggressively promotes drugs that are later proven to be unsafe, e.g. Vioxx; encourages use of drugs for conditions for which they are not determined to be effective; creates diseases in order to sell the cure it has also created, a process labeled disease-mongering; prices some drugs out of reach of those who could benefit; and invests far more money in profitable but less essential treatments (e.g. Viagra or drugs to prevent baldness) than in conditions that harm population health. Recent books by Jerry Avorn, Marcia Angell, Ray Moynihan and others describe how the pharmaceutical industry adversely effects well-being.

According to the Center for Public Integrity, the pharmaceutical industry has become one of the most powerful lobbies in the nation. Currently, the industry makes $11.3 million in political contributions. In 2002, the industry employed 675 lobbyists, approximately seven lobbyists for each US Senator, many of whom were former government employees and insiders. In addition to their influence on Congress, the industry has direct influence on the agency that is intended to regulate their business. It is not uncommon for the pharmaceutical industry to sponsor travel of FDA employees or to encourage passage of FDA policies that benefit the industry. One such example is the 1992 Prescription Drug User Fees Act, which allowed pharmaceutical companies to pay the FDA a fee in return for a faster review period. In 1996, the industry succeeded in relaxing the FDA restrictions on direct-to-consumer advertising of prescription drugs, allowing ads to refer consumers elsewhere to find risk information instead of including it in the ads themselves. Most recently, in 2005, the industry succeeded in defeating California's Proposition 79, an initiative that would have cost drug companies millions of dollars in mandatory discounts and could have set a precedent for other states seeking to exercise price controls on prescription drugs.

The trend of direct-to-consumer advertising and increasing marketing to medical professionals has affected consumer demand for prescriptions and influenced medical professionals' practice. Literature in the field demonstrates that the influence of drug marketing representatives on medical professionals is substantial, affecting the frequency and manner in which they prescribe and increasing prescription drug costs for their patients. Some studies indicate that physician requests for adding certain drugs to a hospital formulary were strongly associated with their interaction with drug representatives promoting the drug. As a result, patients may not be getting the drug or treatment that is best suited for their health and paying more for it. In addition, in a practice known as "disease mongering," pharmaceutical companies create or promote certain diagnoses, then market the drug designed to control this condition.

Social and Economic Costs

For more than 20 years, the pharmaceutical industry has succeeded in protecting its profits in direct opposition to the public's health and the common good. While rising drug costs continue to put a financial squeeze on insurance plans and individuals' pockets, the pharmaceutical industry defends its practice of increasing prices for brand-name drugs and lobbies vigorously against federal and state price controls. According to a 2002 report from Public Citizen, the drug industry increased prices by an average of 4 percent, nearly double the rate of inflation. Pharmaceutical companies often claim that profits generated by rising drug prices are invested in research and development of new drugs. However, the Public Citizen report demonstrates that as a whole, drug companies committed only 14.1 percent of revenues into research and development versus the 17 percent of revenue that was channeled directly into profits. Of increasing concern is the trend of direct-to-consumer (DTC) marketing for existing drugs. According to a Congressional Research Service study of the industry, DTC marketing increased from $791 million in 1996 to $3.2 billion in 2003. A Harvard-MIT study also revealed that for every dollar the industry invested in DTC marketing, companies achieved $4.20 in sales. More recently, profit margins in the pharmaceutical industry have declined, putting new pressures on executives to find the jackpot drug that will generate a billion or more dollars in annual revenues. These pressures may contribute to inadequate testing of new drugs and increased efforts to limit the regulatory capacity of the US Food and Drug Administration.

Resources

Top 3 Pharmaceutical Companies

Pfizer Inc.
2007 Revenues: $48.6 Billion
2007 Lobbying expenditures: $7,220,000
2008 Election cycle political contributions
      by Pfizer Inc. PAC: $518,918

GlaxoSmithKline Plc
2006 Revenues: $45.7 Billion
2007 Lobbying expenditures: $3,620,000
2008 Election cycle political contributions
      by GlaxoSmithKline PAC: $383,370

Sanofi-Aventis (and Subsidiary Sanofi Pasteur)
2006 Revenues: $41.5 Billion
2007 Lobbying expenditures: $4,210,000
2008 Election cycle political contributions
      by Sanofi-Aventis PAC: $14,000

Industry Spending on Lobbying: Overview

• Pharmaceuticals/health products industry PAC
        Contributions to 2007-2008 Federal
        Candidates (so far): $4,775,323
• The pharmaceutical industry spends more on lobbying
        than any other industry. Total lobbying spending
        for pharmaceuticals/health products in 2007 was
        $114,315,695.
(SOURCE: The Center for Responsive Politics)

Industry Allies

Pharmaceutical Research and Manufacturers of America (PHRMA)

Government/Regulatory Agencies

Food and Drug Administration
U.S. House of Representatives
U.S. Senate

NATIONAL RESOURCES

Organizations and Campaigns Challenging Industry Practices

AIDS Treatment Action Coalition (ATAC)
Center for Media and Democracy/SourceWatch
The Center for Public Integrity
Center for Science in the Public Interest
Commercial Alert
Community Catalyst

Prescription Access Litigation (PAL)
The Prescription Project

Consumers Union
No Free Lunch
PharmedOut
Public Citizen: Health Research Group

INTERNATIONAL RESOURCES

Organizations and Campaigns Challenging Industry Practices

CorpWatch
Essential Action: Access to Medicine Project
Global Exchange
Healthy Skepticism
Marketing Overdose
Multinational Monitor

Selected References on Pharmaceutical Industry Practices and Health

Practices of Corporations in the Pharmaceutical Industry and Health [pdf]

This list of references is based on a literature review conducted in 2006 and 2007 by Corporations and Health Watch staff. We invite readers to send us additional references.

 

Archives

View the Corporations and Health  Archives  for more information on the Pharmaceutical Industry.