Tuesday, April 04, 2006

Meds feds and brain deds

Man alive, do I ever NOT want to defend the pharmaceutical industry. Of course, with an introduction like that, you know I will…

Last Tuesday was a show on French CBC (Radio-Canada) called La Facture. I taped it and watched it this weekend. This is a weekly consumer-protection show. You send in your grievance, they investigate. More often than not, the person or company you had grievance against will either settle, or at the very least your file will be moved to the top of the pile. A great equalizer if there is one.

Then this episode happened.

To make a long story short, there is a prescription product on the Canadian market, which has gone up in price by some 300%. This pill’s increase was due to a change in manufacturer. The new manufacturer uses the price increase to finance its customer support (something near and dear to my own heart) and for clinical studies in the U.S.

The bitch is that the clinical studies are for the American market, which has not yet gotten FDA – Food and Drug Administration approval for the product.

Oh, scandal of scandals!

This becomes of massive spider web of all that is wrong with the Canadian psyche.

There are so many incongruities jumping over themselves that it’s difficult to know where to begin!

I’ll start with the pharmaceutical companies. They make billions of dollars of profits every year. Notwithstanding that profit is a loosely used term in the media meaning either: revenue, brut profit or net profit, depending on which is the more damning.

I don’t want to discuss how much profit is enough. Everyone has a diverging opinion on this. Canadians, in particular, are allergic to net profits in excess of 2 or 3%. This probably has something to do with the amount of taxes we pay. It’s OK for the government to rake in obscene amounts from its populace, whereas a company trying to make a living is frowned upon. This is a self-defeating dichotomy that I have touched on in the past and may yet entertain fully in another blog entry.

Billions of dollars are spent in lobbying for sure, but also research and development, tests both clinical and field trials. Then the lawsuits come, and they cost millions or better. Then production and manufacturing costs enter the fray, especially for the esoteric and bizarre medicines.

Depot-Lupron is one of my favourite bizarre meds. It has side effects leading up to and including death! Its application is a complicated manoeuvre that has to be done or taught by trained medical personnel. Its uses are select, and when prescribed for a just cause, there is no alternative to it. By and large it is some seriously nasty shit, but it is necessary. Just Google it on the internet, and hang on to your britches.

The lawsuits alone, stemming from the side effects and field trials would instantly dissolve medium sized countries’ governments! It’s about 1200$ a crack in Canada, for a one month dose. There is no way a pharmaceutical company can defend itself against lawsuits on this product for just 1200$ a dose, given it’s limited scope. We are not talking about Tylenol here.

Now, assuming the lawsuits don’t destroy the product for the people who still need it, how is further research going to be funded to improve or to replace it? There is no way at 1200$ a dose. Kinda fucks up a monthly mortgage don’t it?

The true cost of putting something this dicey to market is insanely high. It needs to be financed by the other products in the company’s line. The smaller the company, the less product lines it has, the higher the overall cost will be. A one-trick company will die unless it happens upon a Holy Grail, and even then, this might not be enough.

In any research and development, you can count on 7 to 1, or worse, success ratio (I am quoting this old number from memory and I do forget the source, I’m sorry). That means that for every 7 products that you seriously invest in, only one will work. This was certainly the case at Nortel, which I observed first hand, while I was there. One case in point that I remember: a 17$million lab for a next generation optical transport system that never made it. And that’s just the laboratory!

Tightly controlled risk management will reduce the investment into the unsuccessful ones, but by the same token, stumbling upon the Holy Grail is also reduced. The business case being a guiding factor in risk management. So it becomes imperative that the products that do make it to market be sufficiently profitable to pay for the 6 others that failed, and to establish some financing for the future.

Note that the stock market seems to be a halfway decent solution to finance the product when it begins to look promising. But it’s not so good for the rest, especially if lawsuits are involved, like the Depot-Lupron.

For sure, the pharmaceutical companies aren’t hurting, I have no love lost there. And the billions of dollar may be too much money, I just don’t know. But after my own experience in R&D I’d say it’s probably just adequate for our future welfare.

Now back to the panicked lady on the show. She was bitching and grieving that she shouldn’t have to pay the 300% increase for lobbying the FDA for the Americans. I paraphrase: “They have lots of money, they should pay for their own lobbying. It’s scandalous!”

Obviously, she was reacting to the singular piece of information that she was given about the new manufacturer covering the cost of lobbying with the price hike. I’d react the same way in the same circumstances. It hits too close to home for her to be rational. This is quite understandable.

But reality is staggeringly different. Most of the, so-called rich, American research is handed over to Canada basically for free. We Canadians profit largely from American research monies, while our contribution is to screw their research companies as fast as possible.

I don’t know all the details, but I do know that generic medicine makers in Canada are not subject to the same copyrights as in the U.S. In essence, we can go generic some 10 (I think) years before they can. So we get to pay much less for our meds a lot sooner.

In fact, the Quebec government even had a publicity campaign waged against the brand named meds in favour of the generic ones. “They cost much less”, the ads would say. The conspiracy here is simple: the Quebec government through a well played but ill-conceived revenue gambit seized the pharmaceutical insurance industry. It is now in their best interest to reduce the cost of meds paid through their insurance programs.

A second possible conspiracy, and this is hypothesis on my part, is that the generic makers contributed to campaign funds, whereas the brand-name companies didn’t.

By the way, the insurance gambit is costing the government dearly. They are losing their shirts in this stupid deal. More taxes to come, I’m sure.

So this approach is actually screwing the American research into the ground because generic meds are now available on the internet some 10 years before they were supposed to be. That’s 10 years of research funding undercut, simply for being gracious.

In any other realm this would be defined as underhanded, dishonest and downright, well, scandalous. Very un-Canadian in my book.

Back to our good lady and her crippled husband, and about the medicine he so badly needs to live any kind of life.

You see this coming right?

It is made in the U.S… but it’s not an available prescription to Americans!


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