Quantcast

Millions for Viagra, Pennies for Diseases of the Poor | The Nation

  •  

Millions for Viagra, Pennies for Diseases of the Poor

  • Share
  • Decrease text size Increase text size

Contributing to this trend is the wave of mergers that has swept the industry over the past decade. Merck alone now controls almost 10 percent of the world market. "The bigger they grow, the more they decide that their research should be focused on the most profitable diseases and conditions," one industry watcher says. "The only thing the companies think about on a daily basis is the price of their stocks; and announcing that you've discovered a drug [for a tropical disease] won't do much for your share price."

About the Author

Ken Silverstein
Ken Silverstein is a Washington, DC–based investigative reporter.

Also by the Author

The buyers come from all over the globe, bearing cash and complicated pasts.

Here are a few recent buyers of high-end Miami properties.

That comment came from a public health advocate, but it's essentially seconded by industry. "A corporation with stockholders can't stoke up a laboratory that will focus on Third World diseases, because it will go broke," says Roy Vagelos, the former head of Merck. "That's a social problem, and industry shouldn't be expected to solve it."

Drug companies, however, are hardly struggling to beat back the wolves of bankruptcy. The pharmaceutical sector racks up the largest legal profits of any industry, and it is expected to grow by an average of 16 to 18 percent over the next four years, about three times more than the average for the Fortune 500 [see sidebar]. Profits are especially high in the United States, which alone among First World nations does not control drug prices. As a result, prices here are about twice as high as they are in the European Union and nearly four times higher than in Japan.

"It's obvious that some of the industry's surplus profits could be going into research for tropical diseases," says a retired drug company executive, who wishes to remain anonymous. "Instead, it's going to stockholders." Also to promotion: In 1998, the industry unbuckled $10.8 billion on advertising. And to politics: In 1997, American drug companies spent $74.8 million to lobby the federal government, more than any other industry; last year they spent nearly $12 million on campaign contributions.

Just forty-five years ago, the discovery of new drugs and pesticides led the World Health Organization (WHO) to predict that malaria would soon be eradicated. By 1959, Garrett writes in The Coming Plague, the Harvard School of Public Health was so certain that the disease was passé that its curriculum didn't offer a single course on the subject.

Resistance to existing medicines--along with cutbacks in healthcare budgets, civil war and the breakdown of the state--has led to a revival of malaria in Africa, Latin America, Southeast Asia and, most recently, Armenia and Tajikistan. The WHO describes the disease as a leading cause of global suffering and says that by "undermining the health and capacity to work of hundreds of millions of people, it is closely linked to poverty and contributes significantly to stunting social and economic development."

Total global expenditures for malaria research in 1993, including government programs, came to $84 million. That's paltry when you consider that one B-2 bomber costs $2 billion, the equivalent of what, at current levels, will be spent on all malaria research over twenty years. In that period, some 40 million Africans alone will die from the disease. In the United States, the Pentagon budgets $9 million per year for malaria programs, about one-fifth the amount it set aside this year to supply the troops with Viagra. For the drug companies, the meager purchasing power of malaria's victims leaves the disease off the radar screen. As Neil Sweig, an industry analyst at Southeast Research Partners, puts it wearily, "It's not worth the effort or the while of the large pharmaceutical companies to get involved in enormously expensive research to conquer the Anopheles mosquito."

==> to Page 3

Public $, Private Gain

The drug companies defend their extraordinary profit margins, and their neglect of tropical disease, by pointing to the risks and costs of R&D. According to PhRMA, the costs run to an average of about $500 million per new drug, a figure routinely regurgitated in news stories.

Many public health activists believe the number is wildly inflated. PhRMA gets the $500 million figure by extrapolating from a controversial 1987 Tufts University study that factored in such variables as "opportunity costs"--i.e., the amount of money companies forgo by not investing their R&D funds in, say, the stock market--pegged to an outrageous 9 percent rate of inflation. One of the chief researchers on the Tufts study was Dr. Louis Lasagna, whose work has been heavily subsidized by the industry. Asked by a member of Congress at a 1992 hearing if he considered Lasagna to be "knowledgeable," Sidney Wolfe of Public Citizen replied, "He's knowledgeable in getting money from the drug industry."

The lion's share of new drug development costs involve preclinical research, and much of that is performed by universities and government-funded research facilities, not industry. Taxol, an important cancer drug, was discovered, tested and manufactured by the National Cancer Institute (NCI) and then turned over to Bristol-Myers Squibb for marketing. The company had an inside track on its bid to win marketing rights because it had taken the precaution of hiring Dr. Robert Wittes, an NCI official familiar with the Institute's Taxol program, to help prepare its application. In return, Bristol-Myers was required only to supply the government with Taxol for clinical trials. The company purchased 400 kilos of the drug from the NCI's supplier, Hauser Chemical, for which it paid 25 cents per milligram. When the FDA approved Taxol for sale in late 1992, the company announced a wholesale price of $4.87 per milligram. Today, Taxol brings in more than $1 billion annually for Bristol-Myers.

--K.S.

Click here to return to the feature article.

  • Share
  • Decrease text size Increase text size