Study: Mismarketing Of Patented Drugs Has Cost Society At Least $380 Billion

from the time-for-a-change dept

Here on Techdirt we've written many times about the problematic nature of drug patents. They are harmful both directly, in terms of the price distortions they cause and seek to spread to new markets, and indirectly, through the lobbying that the pharma industry deploys to strengthen and extend them, notably in trade agreements such as TPP and TAFTA/TTIP.

The standard justification for these patents is that they are needed to provide incentives for costly research and development of new drugs, something that Techdirt has been questioning for many years. A fascinating new paper entitled "Patent Monopolies and the Costs of Mismarketing Drugs" (pdf), by Ravi Katari and Dean Baker at the Center for Economic and Policy Research, explores yet another problem with pharma patents:

in the case of prescription drugs, there are also major costs associated with the enormous asymmetry between the knowledge available to drug companies and the knowledge available to patients and their doctors. As a result of this asymmetry of knowledge, drug companies will often be in a situation to earn large patent rents by concealing information that show their drugs are less effective than they claimed or possibly even harmful.

One way in which drug companies take advantage of this asymmetry is with "off-label" promotion of their drugs. An off-label use of a drug is one which has not been approved by the FDA. While doctors are free to prescribe drugs for off-label uses, drug companies are prohibited from promoting their drugs for off-label uses. If they want to get a drug approved for additional uses then they have to clear a path by seeking FDA approval. However, they routinely avoid this independent assessment by finding ways to promote their drugs for unapproved uses. Promotion of drugs for off-label uses is harmful to the public because it diminishes drug safety regulation, discourages companies from conducting or revealing internal safety studies, and incentivizes them to seek FDA approval for narrow "label use" that is easier to push through the approval process.
The bulk of the paper is concerned with quantifying those costs by looking at five high-profile cases of mismarketing. Here's the final result:
The cumulative costs associated with the increased morbidity and mortality associated with these drugs was $382.4 billion over the 14-year period from 1994–2008. This comes to just over $27 billion a year, an amount that is comparable to what the pharmaceutical industry claims to have been spending on research at the time.
As the paper's authors emphasize, this is only a rough figure, and is likely to underestimate the total negative consequences of this kind of rent-seeking behavior, since it is based on only a small subset of drugs, and uses conservative estimates for key quantities. More important than the specific figure are the policy implications. For example, the deliberate mismarketing is only possible because data is kept secret:
If, for example, this research was all in the public domain and carried through by researchers who had no direct financial interest in the sales of a drug, it is unlikely that they would go to elaborate lengths to misrepresent or conceal research findings, or that they would be successful if they tried. In other words, the costs documented here are the result of the incentives provided by patent monopolies in the same way that the research itself is motivated by patent monopolies.
At the very least, that's an argument for requiring that all research data and clinical trial information should be made freely available for others to analyze. The paper also points out that there are implications for TPP and TAFTA/TTIP:
One of the major goals of the United States in these and other trade pacts currently being negotiated is to strengthen patent and related protections for prescription drugs. The justification is that increased patent rents will provide a greater incentive to the pharmaceutical industry, leading to more innovation.
But as the present study shows, strengthening those protections is likely to encourage more rent-seeking behavior, increased mismarketing, and thus unnecessary deaths and greater costs to society -- hardly something to promote through trade agreements. Finally, the new research adds further weight to the argument that we need to find better ways of funding research into new drugs:
The fact that incentives from patent rents lead firms to promote drugs in ways that impose large costs on patients and society should raise additional questions about the desirability of patent protection as a mechanism for financing research. Other mechanisms for financing research have been proposed, such as a prize system or direct public funding. Of course the U.S. government already spends $30.9 billion annually funding biomedical research through grants administered by the National Institutes of Health, so direct public funding is already an integral part of the drug development process. The proposal is to expand this funding and have NIH’s mission extend to the development and testing of drugs. By having all research in the public domain and taking away the patent rents associated with marketed drugs, direct funding would both remove the incentive and hugely lessen the ability to misrepresent research in order to promote drugs for uses that may not be appropriate.
When so many lives and so much money are at stake, it's surely time to look at this idea more closely.

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Filed Under: drugs, mismarketing, off-label, patents, pharmaceuticals


Reader Comments

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  1. identicon
    Forhan Greg Sheen, 6 May 2015 @ 2:57am

    Well I agree with the points. There are far-reaching implications for TPP and TAFTA/TTIP.

    link to this | view in thread ]

  2. This comment has been flagged by the community. Click here to show it
    icon
    Whatever (profile), 6 May 2015 @ 3:20am

    Anti patent and anti copyright think tank comes out with a study that "proves" what they are saying. Don't think they started with the conclusion and worked backwards?

    God, Techdirt is a cesspool of stupidity at times.

    link to this | view in thread ]

  3. identicon
    Anonymous Coward, 6 May 2015 @ 3:29am

    Re:

    Perhaps they learned from the MPAA's copybook, if that's the case.

    link to this | view in thread ]

  4. identicon
    Anonymous Coward, 6 May 2015 @ 3:36am

    Re:

    Like any study, the first question is - who is paying the bills.

    If you disagree with the study's conclusions, feel free to rebutt with citations. Ideally, also pointing out where the funding for those studies came from.

    Likewise, if you've got evidence that this study was (intentionally) flawed, citations please.

    Without these, you'll be labelled a troll.

    link to this | view in thread ]

  5. identicon
    Anonymous Coward, 6 May 2015 @ 5:03am

    I wish they would ban the damned drug ads from the media, and throw in the lawyer ads for good measure. Alcohol and tobacco were bad enough. The disrespect for government, law enforcement, and Corporate America has reached a boiling point. What will they do with all of that money when it is known to be worthless?

    link to this | view in thread ]

  6. identicon
    Anonymous Coward, 6 May 2015 @ 5:12am

    Re:

    Well, so much for promising to "see you next month".

    God, you are such a horrible liar.

    link to this | view in thread ]

  7. icon
    Whatever (profile), 6 May 2015 @ 7:01am

    Re: Re:

    I couldn't resist this stinky piece of pseudo science, sorry. Someone I know sent it to me with some pretty sharp comments about the slant.

    For that, I will see you in two months, unless your next piece on TorrentFreak is equally as bad.

    link to this | view in thread ]

  8. identicon
    Anonymous Coward, 6 May 2015 @ 7:09am

    Re: Re: Re:

    Classic Whatever, imagining PaulTs everywhere when there aren't any.

    You seem to have the impression that you being gone is somehow meant to be a punishment. Hint: it's not.

    link to this | view in thread ]

  9. icon
    nasch (profile), 6 May 2015 @ 7:39am

    Re: Re: Re:

    For that, I will see you in two months,

    How about six?

    link to this | view in thread ]

  10. identicon
    Anonymous Coward, 6 May 2015 @ 8:01am

    According to the law, off label promotion doesn't happen. It is against the law. No drug company will support the off label promotion of their drug.

    Does it happen? Sure, but officially, it doesn't happen.

    That being said, quite a bit of clinical data is actually out there on the web. Not everything, but we are getting there.

    My question is, with all the data out there, who is going to start doing the research to determine which drugs are best? Keep in mind, some drugs may work better for some sub segments of the population, and even the best in class drug doesn't work for everyone, and will harm a small class.

    Who pays for that research?

    link to this | view in thread ]

  11. identicon
    Anonymous Coward, 6 May 2015 @ 8:33am

    Same AC as above post, that being said, unless you are on your last leg and nothing else has worked, you should never take a drug that isn't approved for what you have. Should only be done as a last resort and the next option is picking out what your casket will look like.

    link to this | view in thread ]

  12. identicon
    Anonymous Coward, 6 May 2015 @ 8:46am

    Re: (AC @0503)

    Nobody needs alcohol and/or tobacco.

    I agree though on banning drug and lawyer ads. Especially the lawyers who are not barred in my state.

    link to this | view in thread ]

  13. identicon
    PyRosflam, 6 May 2015 @ 8:51am

    Off Label

    Just a note: Off Label is not quite what people think it is. This came up in an old abortion debate because Doctors found out that they could do a medical (Pill) abortion with about half the active ingredient that was approved by the FDA. Then they found that most of the bad consequences were less when less active ingredient was given.

    This happens all the time to all kinds of drugs. This is why some kid at 12 with low blood pressure gets Viagra (its on label use was for low blood pressure).

    What is going on is that Doctors are discovering drugs have beneficial effects at different amounts then the FDA tested for OR interactions of various drugs prove to provide a benefit instead of a bad side effect.

    This really brings up the question, Are we in a situation where its Doctors saying "I did X and the patient improved or some desirable outcome was observed" or are we getting things like "Take drug X for your back problems, ignore the fact that the drug is only approved for foot problems". Or is this some strange hybrid thing where companies are paying doctors to write the first one?

    link to this | view in thread ]

  14. icon
    nasch (profile), 6 May 2015 @ 9:06am

    Re: Off Label

    What is going on is that Doctors are discovering drugs have beneficial effects at different amounts then the FDA tested for OR interactions of various drugs prove to provide a benefit instead of a bad side effect.

    The problem is that without controlled studies it's almost impossible to know if it really works and is safe. That's why off label promotion is forbidden. I'm kind of curious why off label prescription is legal. A physician hearing from his golfing buddy that he gave a couple of his patients a drug off label and it worked is not a good substitute for real research.

    link to this | view in thread ]

  15. identicon
    Anonymous Coward, 6 May 2015 @ 9:35am

    "A physician hearing from his golfing buddy that he gave a couple of his patients a drug off label and it worked is not a good substitute for real research."

    Hopefully doctors put a bit more thought into these things than this.

    Companies are aware of a drug showing results for other indications through their clinical trial work, but it is illegal for them to promote off label use.

    link to this | view in thread ]

  16. identicon
    Anonymous Coward, 6 May 2015 @ 9:37am

    Re:

    Who pays for that research?

    The drug companies, who use the cost of research to justify patents and the high cost of drugs.

    link to this | view in thread ]

  17. icon
    John Fenderson (profile), 6 May 2015 @ 9:52am

    Re: Re: Off Label

    "I'm kind of curious why off label prescription is legal."

    Although it's certainly a double-edged sword, I personally want my doctor to be able to write any prescription that he deems medically necessary, off-label or not. I think the practice should remain legal.

    link to this | view in thread ]

  18. identicon
    Anonymous Coward, 6 May 2015 @ 1:13pm

    I don't fully understand how the patent issues and the mis-marketing issues are related.

    link to this | view in thread ]

  19. identicon
    Anonymous Coward, 6 May 2015 @ 5:38pm

    Re: Re: Re:

    No one believes you, bobmail. Why don't you just man up, make a Disqus account and post shit if you're so angry about it? Oh, that's right, you're still butthurt after Typhoid Mary kicked your online ass so hard, you still shit your pants at the thought.

    link to this | view in thread ]

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    Re: Re: Re: Re:

    How about 8000?

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