Outsourcing the Drug Industry

As "Blockbuster Drug" Bubble Bursts, Big Pharma Takes Jobs Overseas

by MARTHA ROSENBERG

It is no consolation to the roughly one out of 600 families who lost their homes in the U.S. but Wall Street made a lot of money slicing and dicing mortgages it knew would implode, while hiding risks. Financial giants, like AIG, are still buzzing along and neither penalties or new laws will prevent a future crash, say financial analysts, because the risky business models have not really changed.

A similar Big Pharma bubble, leavened with risky blockbuster drugs that also blew up, is now bursting. Like Wall Street’s bundled high risk loans, the “tide” created by Big Pharma’s high risk drugs raised many ships during the 2000s from advertising, public relations and medical communication agencies to TV and radio stations, medical journals and doctor/pitchmen who shoveled in its marketing budgets. But now the joyride is over and Pharma is shedding jobs and settling billions in claims without changing its risky business model, like Wall Street.

In Europe, governments are no longer willing to pay the high prices for drugs that they once did say published reports and some countries are drafting laws making drug makers “prove their drugs are effective or risk having them dropped from the coverage list, or covered at a lower rate.” Imagine.

Germany has already saved 1.9 billion euros in 2011 by refusing to pay higher prices for drugs unless they are clearly superior to existing medicines, and Pharma worries that other countries will also get tough and want scientific proof for drug effectiveness instead of marketing and spin. 

In the U.S. and elsewhere, a drug only needs to be superior to no drug (placebo) to be approved by regulators–yet “new” is conveyed as “better than any drug to date” in advertising.  Some clinicians say Haldol, an inexpensive antipsychotic and lithium, a similar affordable bipolar drug are better than blockbuster antipyschotics and bipolar drugs that created Pharma’s 2000′s bubble.

Before the Vioxx scandal and major settlements over blockbuster drugs like Zyprexa, Bextra, Celebrex, Geodon and Seroquel, being a Pharma rep was probably the next best thing to working on Wall Street. Direct-to-consumer advertising did your pre-sell for you, and all you had to do was show up with your snappy Vytorin tote bag and samples case. Some Pharma reps had their own reception room with ice water, swivel chairs, and laptop ports at medical offices, and most waltzed in to see the doctor right in front of waiting and sick patients. (It didn’t hurt that reps were usually “hotties,” both men or women).

But, by 2011, the bloom had fallen off Pharma reps’ roses. The number of prescribers willing to see most reps fell almost 20 percent, the number refusing to see all reps increased by half, and eight million sales calls were “nearly impossible to complete,” reported ZS Associates.

Blockbuster drugs that were found to be unsafe after their big sales push or even withdrawn altogether, did not help the reps’ credibility with doctors. After the aggressively marketed hormone therapy was linked to high incidences of cancer, stroke and heart attack, Wyeth (now Pfizer) announced it was eliminating 1, 200 jobs and closing its Rouses Point, New York plant where Prempro products were manufactured.

As government and private insurers increasingly say, “You want us to cover what?” about expensive, dangerous drugs that are not even proven effective, Pharma bubble jobs are evaporating. Almost 20,000 jobs have vanished at AstraZeneca, Novartis and Pfizer in the last 12 months alone. (AstraZeneca scrapped 21,600 more since 2007). Meanwhile, Pharma is outsourcing more of its operations to poor countries.

Workers and people willing to be trial subjects are both a bargain in poor countries where many can’t understand drug risks or refuse them if they did (and most can’t afford the very drugs they help sell). In January the Argentinian Federation of Health Professionals accused drug maker GlaxoSmithKline of misleading participants and pressuring poor families into joining a trial for the Synflorix vaccine, which the company says protects against bacterial pneumonia and meningitis, reported CNN. In 2010, 10 deaths occurred during Pfizer and AstraZeneca drug trials at the Bhopal Memorial Hospital and Research Centre which was ironically built for survivors of the 1984 Bhopal gas disaster, reports MSNBC. 3,878 workers perished in Bhopal when chemicals leaked at a Union Carbide pesticide plant.

Outsourcing drug manufacturing to cheap venues also contributes to Pharma’s cascade of “quality control” problems in which drugs are mislabeled, contaminated or otherwise made dangerous. It is speculated that Johnson & Johnson’s CEO William Weldon “was pushed to retire because of all of the quality issues at McNeil as well as with the company’s hip implant products, which have resulted in a raft of litigation,” reports FiercePharma.

Like the Wall Street bubble, the Pharma bubble was built on products that industry, but not the public, knew were risky, sold for quick profits. Now regulators are examining some of these “assets” more closely and with disturbing findings. The FDA now warns that bestselling statin drugs like Lipitor and Crestor, even approved for children, are linked to memory loss and diabetes associated with. The equally well selling proton pump inhibitors like Nexium and Prilosec for acid reflux disease (GERD) are now believed to increase the risk of bone fractures by 30 percent.

In March, the FDA even rejected a Merck drug that combines the active drug in Lipitor with the active drug in Zetia and Vytorin, a drug that Forbes calls Son of Vytorin. Vytorin (the father) was advertised to treat both food and family “sources of cholesterol” until results from a study that Merck and Schering-Plough appeared to withhold from regulators showed the drug had no effect on the buildup of plaque in the arteries (believed to correlate with heart attack and stroke). There was such a gap between marketing and science, Sen. Chuck Grassley (R-Iowa) asked the General Accounting Office to investigate why the FDA was approving “drugs that appear to have little to no effect in protecting lives and increasing health.”

Yet even as clouds develop over Pharma’s top-selling drugs, some say the FDA is too hard on new drugs, not too easy. “The FDA is impeding useful innovations in the U.S.,” says former FDA deputy commissioner Scott Gottlieb in the a Wall Street Journal oped, and lagging behind other countries. Former FDA commissioner Andrew Von Eschenbach, also writing in the WSJ, agrees. The FDA should improve U.S. drug competitiveness by allowing drugs “to be approved based on safety, with efficacy to be proven in later trials,” while the public is already taking the drugs. Isn’t that what’s happening now? (Insane!--jef)

Biodiversity Versus Biotech

Politics and Direct Action in the 21st Century
By ALEXANDER REID ROSS

There are many different campaigns to preserve biodiversity here on Earth, and they all seemed to come together when two spunky Florida Atlantic University alumnus decided to climb a tree and fight for 700 acres of endangered Florida forest. While the activists remain perched in their tree, protecting a hand-made, 12”x8” banner reading “Protect This Forest!”, the Scripps Research Institute undergoes the final stages in the process to gain permission to slash and burn some of the purest Florida pinelands in South Florida.

Called the Briger Forest, this rare pine flatwoods ecosystem straddles the I-95 amidst the gaping sprawl of Miami. In spite of its precarious situation, it is one of the last habitats of endangered hand fern and gopher tortoise left in the USA, and the FAU graduates, who are also members of the radical environmental group, Everglades Earth First!, intend to keep it that way. Since their campaign got off its feet (and into the trees), the Briger Forest has come to represent open space, a side of Florida relatively unscathed by development, versus the selling off of nature, piece by piece, to companies that wish to control our way of life, our land and our species.

The fight against Scripps has a history down in the muggy, mosquito infested land of Southern Florida. Three years ago, Scripps tried to clear out orange grove land to open up a lab in 19,191-acre Mecca Farms, West Palm Beach. With their sights set on a “biotech city” consisting of 11,000 homes, research labs and spin-off shopping franchises, Scripps failed to navigate the political terrain of farmers, locals, and activists, in particular, the scrappy direct action-oriented Everglades Earth First!, and their biotech city idea was shot down in court.

In efforts to ameliorate the debt that the State of Florida incurred to Scripps during the loss, Scripps was allowed to purchase a piece of property alongside the campus of FAU, where they have since erected the contemporary Bauhaus-style, concrete-glass-and-brick monstrosity that is now the largest biotech facility in Florida. Their dream of a Scripps City has now led them onto new grounds — the neighboring Briger Forest, where FAU and the State of Florida promises to fund their wild exploits out of taxpayer dollars. There they will be allowed to pursue animal testing on primates as well as rodents, cats and dogs using government funds and University assistance.

Recently, the National Institute of Health gave Scripps $3.45 million to collaborate with Novartis Pharma AG on a project called, “National Cooperative Drug Discovery Group for the Treatment of Mood Disorders or Nicotine Addiction". In an ironic twist worthy of A Brave New World, Scripps boasts on its website that “this new research may generate new models of depression.” With its reputation for funding the notorious animal testing lab, Huntingdon Life Sciences (HLS), the name Novartis indicates that the network of international animal cruelty is, indeed, sadly spreading.

Extensive research done by rigorous activists has uncovered scientists working in the area, who have sourced their primates through the infamous company, Primate Products, whose brutal methods were uncovered in leaked photos last Summer. Scripps, itself, has been sited by the Food and Drug Administration for cruel practices used on chimpanzees undergoing testing for Hepatitis C and the street drug, Ecstasy. Furthermore, their ongoing collaborative relationship with the notoriously corrupt and paranoid multinational seed company Monsanto the devil, raises questions about a third party — the possible use of private security firms like Blackwater to investigate environmental activists. But the reach of Scripps goes far deeper than biotech alone.

The Scripps family is well connected. H.W. Scripps Company was started by its namesake with $10,000 way back, about a century ago, and has become the ninth largest mass-media conglomerate in the US with ties to a myriad of newspapers as well as television networks and other forms of media. In 2006, news broke that a journalist working for the Scripps Howard Media Service received $60,000 from Monsanto the devil in exchange for pro-biotech articles, revealing the depth of informal relationships between the newspaper conglomerate and animal testing as well as GMO products in general.

More revealingly, H.W. Scripps owns the Home and Garden cable TV station, with 85 million subscribers, along with a shop at home network and the Food Network, while being ensconced in the interests of the largest seed and pharmaceutical corporations in the world. From the animal testing labs to Monsanto the devil and Novartis to your television set in one great whirlwind. This is, of course, not to mention the Scripps family's ties to hospitals and “permanent cosmetics” companies. (According to one website, “A 'Wellness Day' will be coming to a Scripps Hospital near you.”)

To round out the portrait of monopolization and graft, H.W. Scripps owns a small conglomerate of at least six newspapers in South East Florida — one of which, the Jupiter Courier, is the weekly rag that serves the same city where all this is taking place: Jupiter, Florida. Suffice it to say, until the treesit came up, coverage of Scripps had been one dimensional to say the least, but the reigns of human nature are starting to slip from the grasp of industry.

Risking SLAPP suits and charges under the Animal Enterprise Terrorism Act, activists maintained a 56-hour vigil outside of the Scripps Research Institute with rotating protests in solidarity with the treesit. The combination of on-the-ground direct action, media work, letter writing, and months of grassroots organizing has paid off with surprisingly good coverage from local television stations and newspapers that are not in line with the Scripps family. Scripps has even dug themselves into a little hole in the eyes of the public by reneging on their promise to employ locals to staff their lab, so the campaign is likely to generate support from more diverse sectors of society than it otherwise would.

Although Scripps employees are up to their necks in Greenwashing, joining international symposiums on biodiversity while animals from all around the world are dieing in their labs, the public is becoming increasingly savvy in avoiding the quagmire of public relations and lies upholding their logic. Recognizing the urgent need to reclaim urbanizing spaces from miserablist biopolitics, Everglades Earth First! and other activists are taking a stand against development by occupying the last bits of wild heritage left through peaceful methods and holding onto it, quite literally, for dear life.

Drug Industry Fraud

The Whistle Has Been Blown, But Where's the Enforcement?
By RALPH NADER

The corporate defrauding of taxpayers (eg. Medicaid and Medicare) and prescription drugs with skyrocketing prices was the subject of a report by Public Citizen's Dr. Sidney Wolfe and his associates (see citizen.org).

Dr. Wolfe's team compiled a total of 165 federal and state settlements since 1991 totaling $19.8 billion in penalties. A key finding is that the drug industry's penalties under the Federal False Claims Act exceed even those assessed against the overcharging defense industry for fraud.

Before we become overly impressed with the cumulative amount of the penalties, specialists in corporate crime law enforcement believe that adding more federal cops on the corporate crime beat, backed by a determined law and order Justice Department with White House backing, would have greatly increased the number of cases and imposition of penalties on these drug industry giants.

Nonetheless, Dr. Wolfe's study shows that the pace of penalties has picked up over the past five years. This is due to "a combination of increased violations by companies and increased law enforcement on the part of federal and state governments," says the report.

Many of these cases were initiated by company whistleblowers, who under the False Claims Act can receive a share of the settlements. Since the corporate bosses of these drug firms are almost never prosecuted, what these executives fear the most are company employees who go public with the evidence of corporate misdeeds.

These violations do more than financial damage to consumers and government health insurance programs. One of the worst violations involves companies promoting unproven, often dangerous uses for their medicines. Last year, Pfizer paid $1.2 billion for illegal off-label promotion -the largest criminal fine in U.S.history. Other major corporate violators were GlaxoSmithKline, Eli Lilly, Schering-Plough, Bristol-Myers Squibb, AstraZeneca, TAP Pharmaceutical, Merck, Serono, Purdue, Allergan, Novartis, Cephalon, Johnson & Johnson, Forest Laboratories, Sanofi-aventis, Bayer, Mylan, Teva and King Pharmaceuticals.

The violations by these and other drug companies point to the wide range of impacts, including taking many lives of patients, which stems from these recurrent activities. These criminal or civil illegalities cover (1) overcharging government health programs, (2) unlawful promotion, (3) monopoly practices, (4) kickbacks, (5) concealing study findings, (6) poor manufacturing practices, (7) environmental violations, (8) financial violations and (9) illegal distribution.

Outside the purview of the Public Citizen study are the ravages of counterfeit drugs and poorly inspected ingredients in drugs, now mostly coming from China and India, due to the outsourcing by U.S. and European drug companies in their thirst for even greater profits.

Drug company sales are huge, growing from $40 billion in 1990 to $234 billion in 2008, and far exceeding inflation with their annual price gouging. To make matters worse, in 2003, the Congressional Republicans, with decisive support from some Democrats, passed the drug benefit bill which explicitly prohibited Uncle Sam, the payer, from bargaining for volume discounts with drug companies.

With over 400 full-time drug company lobbyists putting pressure on Congress, and tens of millions of dollars flowing into the legislators' campaign coffers, budgets for federal investigators, prosecutors and inspectors are kept to a minimum. Unfortunately, crime in the suites pays over and over again, despite occasional penalties.

A bright spot is the increasing enforcement action at the state level.

By last year, 32 states had enacted false claims acts, including fourteen states that qualified as strong laws by federal standards.

Still, the Wolfe report concludes that the "current system of enforcement is not working." He gives the examples of the $7.44 billion in financial penalties assessed over the past twenty years on GlaxoSmithKline and Pfizer, as compared to their combined total of $16.5 billion in global net profits in one year alone.

What would deter these illegal practices and risks to public safety? Dr. Wolfe says "the lack of criminal prosecution that would result in jailing of company executives." is key. Moreover, the report notes that "a felony conviction could result in their companies becoming ineligible for reimbursement from federal and state health programs, a critical source of pharmaceutical company revenues."

A flicker of hope that a little change is on the way came from the Food and Drug Administration's Deputy Chief Counsel for Litigation, Eric Blumberg. He indicated that the government is considering going after drug company executives for violations such as off-label promotions. He stated: ".unless the government shows more resolve to criminally charge individuals-at all levels in the corporate hierarchy--.we can not expect to make progress in deterring off-label promotion."

The problem is that the final operating decision is in the hands of the Justice Department-historically short-staffed and short-willed to entreaties for prosecution by the FDA and other regulatory agencies.

Furthermore, for over 30 years, the Justice Department has stone-walled requests that it start a corporate crime database as it has done with street crimes. Congress likes it this way, as it continues to cash corporate campaign checks.

Just last week, however, outgoing Judiciary Committee Chairman, Democrat John Conyers introduced a bill (H.R. 6545) to create such a corporate crime data base in the Justice Department. Well, as the saying goes, everything starts with a gesture!