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"STRONG MEDICINE" AUTHOR ARTHUR HAILEY's OBSERVATIONS ON THE DRUG INDUSTRY

Executive Summary

Novelist Arthur Hailey's new bestseller "Strong Medicine" is based on over a year's research on the pharmaceutical industry. The following are the author's personal conclusions about the drug industry drawn from his work in preparing the novel. Hailey discussed his opinions in a recent talk to PMA's Public Relations Section meeting at the Greenbrier. No piece of writing can be free from bias, no matter how fair the writer tries to be. Therefore this author, after a year of investigating the pharmaceutical industry, has set down the following conclusions and opinions. The purpose is to clarify his thoughts and review some of the prejudices which, inevitably, will permeate the novel. 1. The pharmaceutical industry, despite negative and sometimes venal practices within it, makes a tremendous and valuable contribution to mankind in terms of human health, lessened suffering and lengthened life. A U.S. pharmaceutical executive described the industry as a "national treasure." While critics would disagree, in the author's opinion this is not too much an overstatement. 2. Despite the foregoing, the industry is overcriticized, and praised much less than it should be. 3. The pharmaceutical industry has demonstrated itself to be incapable of effective self regulation. Therefore some govt. regulation must exist. 4. Govt. regulation, while necessary, sometimes translates itself into overregulation. Thus, while protecting the public from excessively dangerous drugs, regulatory bodies like the FDA are over-cautious in delaying new drugs, some with lifesaving benefits. Expressed another way: It is easier to count the Thalidomide-deformed babies than the people who have suffered or died because drugs, held back by the regulatory delays, failed to reach them. 5. No drug can ever be risk free. Almost every drug taken by a human being is an alien substance in the body. The equation to be decided in advance of prescribing or taking a drug is: risk vs. benefit. 6. The risk vs. benefit concept is poorly understood by the public, including the media. Large segments of the public do not understand it at all. 7. Doctors, generally, are poorly informed about drugs, especially adverse side effects and the interactions of one drug with others. Doctors are not well educated about drugs during their medical training. In practice, many busy doctors rely too much on drug company salespersons for their drug information, and doctors are heavily influenced by drug company advertising. Yet on the other hand, doctors who refuse to see drug salespeople, or ignore drug advertising, alos lose out because they may not otherwise hear of new, important medicines. Some of the greatest critics of doctors' inadequate knowledge about drugs are doctors themselves. 8. Prescription drugs are heavily overprescribed. Drug companies admit this, and officially deplore it. Yet it is their own sales pressure and advertising which contribute largely to the situation. If drug companies really wanted to reduce needless sales, they could. Also contributing to overprescribing is the custom of many physicians to terminate a patient interview by writing a prescription. And there are patients who feel deprived if they leave a doctor's office without a prescription. 9. On the trade brand drugs vs. generics issue: (a) The dangers from generic drugs are overstated by the trade brand companies and the Pharmaceutical Mfrs. Assn.While there have been incidents involving badly manufactured generic drugs, necessitating recalls by generic companies, there are also -- with surprising frequency -- major recalls for the sam reason by trade brand mfrs. (b) Charges that the trade brand companies might not be able to continue research if generic manufacturing persists are not borne out by facts. Innovation is not declining. Major trade brand mfrs. continue to prosper despite generic competition. (Canada is an exception to this . . .). Moreover, generic drugs exercise a reasonable price restraint and provide competition in the marketplace. The balance between U.S. trade brand and generic companies is being maintained by the tactics of both, and seems likely to remain that way, with the public benefiting. (c) Doctors could prescribe generic drugs more than they do. Some reasons they don't are: (i) Doctors do not take the trouble to inform themselves about the cost to patients of medical services other than the doctors' own, and many doctors are simply inconsiderate in such matters. (ii) Doctors can be very narrow in their views and knowledge; many are unaware that the quality of generic drugs has improved in recent years and is now generally high. (iii) Doctors are lazy about learning generic names, which are often hard to memorize, or are unwilling to look them up in a patient's presence. In contrast, trade brand names are short and simple. 10. Despite the foregoing, the author will always insist on trade brand prescription drugs for his own use and for his family. 11. A new drug marketed by a trade brand company can be one of three kinds: (i) A genuinely new development and product. (ii) A second (or third, etc.) generation drug which is a positive improvement on what preceded it. (iii) Merely a "me too" or "copycat" drug, developed for commercial reasons only, to compete with the successful product of a competitor. There is overlapping between the above categories and highly qualified people in the industry say it is sometimes hard to tell the difference between (ii) and (iii). Just the same, much criticism is directed at companies producing "me too" drugs. (The process of producing this type drug without infringing on a competitor's patent is known as "molecular roulette"). The charge is made that since, even with a "me too," much research is involved, there is a waste of scientific effort which could be put to better use. On the whole, this is probably true. However, in a free enterprise society there are trade-offs and the "me too" drug is one. The companies which produce "me toos" also produce, from time to time, some of the great breakthrough drugs and, in between the breakthroughs, "me toos" help keep companies solvent. There are also instances where researchers, setting out to make a "me too" product, have stumbled on something important and new. It is the author's view that "me too" drugs represent a reasonable price to pay for a healthy, innovative pharmaceutical industry. 12. There is little wrong, if anything, with pharmaceutical companies making substantial profits. (After-tax profits of major drug firms average 20.3%). It is in the public interest for such companies to be strong financially. There is also a convincing argument that big rewards are justified by high risks the companies take in funding long term research. (In 1960 it cost approximately $2 mil. to bring a new, major drug to market; in 1982 the average is $70 mil.). Not to be forgotten either, in this context, is the public benefit which successful drugs confer. SmithKline provides an example of the high risk situation mentioned above. In 1975, SK was a weak and ailing company, in part because over the preceding eight years it invested $65 mil. in research doomed to failure. But finally, in 1976, "Tagamet" proved miraculous in curing ulcers and brought SmithKline world acclaim. It also caused an increase of 266% in company profits over the next four years and raised the SK share price from $10 to $60. No one, especially the grateful former sufferers from ulcers, is on record as begrudging SmithKline its reward. It is noticeable that people who talk glibly and accusingly about "excess" or "windfall" profits invariably see them as profits the "other guy" makes. Such people are delighted if a stock they bought last month is worth twice as much a month later. That's different, of course -- or so they delude themselves. 13. While opinions differ about medical-scientific progress through the remainder of this century, there is a consensus which believes: (i) Research will concentrate on the causes of disease, then seek medications to arrest or anticipate them. This was the method used with betablockers and "Tagamet" and contrasts earlier trialand-error research when a succession of chemical substances were experimented with to see what they would do. (ii) While there is unlikely to be an overall "cure" for cancer, great progress is being made in attacking certain types of cancers. Already some types can be cured and steady progress will continue, probably with one type of cancer at a time. (iii) The brain and central nervous system are the most promising areas for exciting new developments. (iv) Because of their financial strength and desire for profit, pharmaceutical companies will finance most of the above -- a continuing example of effective free enterprise and enlightened self-interest.

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