Why Read This book?
Takeaways From the Book
- Big Pharma has HUGE margins. The author shows how a drug that is shown to cost $800M for development really turns out to be approximately $100M.
- The same drug costs more in the US than other parts of the world because the market can support it.
- So, why do you think drugs are expensive? Did you say R&D? The pharmaceutical industry spends enormous amounts of its money on marketing and “educating” the public – which is just another way of covering marketing and propaganda costs as R&D.
- Most diseases follow this path: (1) Understanding the disease; (2) Discover and develop a promising chemical composition to cure it; and (3) Commercial development and marketing.
- Understanding the disease: Most research is performed by National Institute of Health (NIH) and the leading universities across the world. NIH is an agency of US Dept of Health and Human Services and is completely funded by the US taxpayers. Big Pharma enters into the picture after a disease is well understood which can take anywhere between a few years to a few decades.
- Discover/Develop a promising chemical composition: It is usually universities and small biotech firms that discover a chemical composition that sounds promising.
- Commercial development and licensing: Big Pharma signs up as licensed manufacturers and distributors taking over from the universities and small biotech firms.
- It is at this point that the Big Pharma patents the drug, runs clinical trials in multiple stages and pushes for FDA approval, commercial development and sale to the public.
- Patents are a big part of the Big Pharma’s expense and source of revenue protection. It is an expenses because drugs usually have to be patented before running trials. Its difficult to keep the recipe a secret once its out in the public domain. Once a drug is successfully trialed, the companies push for fast approval from FDA as they have time limits for the exclusivity due to patents, after which generic drug companies can start releasing copy-cat drugs.
- The me-too or copy-cat drugs need to only show that its effective against placebo not older drugs once patent has expired. Drugs coming off patents usually just remove or tweak the inactive ingredient and get a new patent. Then its just a matter of “educating” doctors and patients of the better drug.
- Changing a disease condition can create or expand the market for drug manufacturers. The author lists how a new market was created by defining a pre-hypertension for people just under the threshold for the hypertension drugs. Similarly, the cut off for cholesterol has been lowered over the years to expand the market for cholesterol drugs.
- The book also discloses extremely controversial and shocking testing conditions where the drug companies take up on the US governments offer of extending patents by 6 months when the study includes children. The drug companies have been reported to test drugs to combat conditions such as heartburn, premenstrual conditions etc which do not affect children in any way.