Drug Marketing Continues to be Criminal

One of my many pet peeves is drug marketing. Even though Big Phama likes to tout how much it spends on R&D as a justification for high drug prices, it spends more on marketing as a percentage of revenues than it does on R&D. Think about it: in what other industry are the margins high enough to support in person selling to small businessmen? And I read once (in the FT? I have been notably unsuccessful in finding the source, despite multiple efforts) that over 88% of the so-called “new drug applications:” in the last 10 year have not been for new drugs, but new uses for existing drugs, and to extend the patent on existing drugs.

Drug companies are masters of this art. At Pfizer, which sets the gold standard for drug selling methods, each salesman markets only three drugs in his territory. So if a doctor is a candidate for more than three, he has more than one salesman calling on him. The scripts are highly refined, with a 15 second pitch that rolls into a one minute pitch that rolls into a longer chat if the drug detailman can get the time. All drug companies keep current records on how much each doctor is buying of each drug. Another tactic is “You aren’t prescribing as much of XXX as your peers are….”

They also give lots of little goodies (pens, notepads, desk toys). There is ample research that shows that giving even minor gifts is effective (doubters please read Robert Cialdini’s classic, Influence: The Art of Persuasion). And drug companies do all kinds of small scale research on existing drugs (as in this has no medical benefit, it’s just a sales tool, but those studies no doubt get lumped in the R&D total) to give the salesmen something fresh to talk about with existing drugs.

Salesmen must also adhere very strictly to their sales pitches (unlike most other types of sales, where the reps have latitude and develop their own approaches) because the products are regulated (if a rep exaggerated the efficacy of a drug, that would be a regulatory violation). Many drug companies like to hire former military personnel, since they find they will comply with instructions but also be persistent.

And that’s before we get to TV ads, something I particularly despise….

So why the strict controls? Salesmen are permitted to pitch drugs ONLY for uses approved by the FDA. But doctors can prescribe drugs any way they fit. If some doctor had a theory that Viagra would treat schizophrenia, he’s free to give it to a patient for that reason. That sort of prescription is called an “off label use.” The biggest buyers of cannulas (plastic tubes, basically, to provide or remove fluids during surgery) is plastic surgeons for liposuction, and that is off label.

Now there are legit off label uses. For instance, many autoimmune diseases are pretty obscure. Most of the research is done on the most common one, rheumatoid arthritis, so a doctor might look and see if there were any new developments or treatments for RA and might use them on a patient that had scleroderma. But that still means it is absolutely not kosher to market them for unapproved uses.

So why is prosecutor Michael Loucks up in arms? Pfizer has in the past pled guilty to criminal charges for just this sort of behavior, paid substantial fines, and engage in the very same conduct on other products right on the heels of the 2004 settlement. Moreover, Pfizer has a new instance of alleged illegal drug sales practices. And as a Bloomberg story discusses, Pfizer has plenty of company.

It seems pretty clear, given its recidivist behavior, that even multi-hundred million dollar fines are no deterrent. In other words, it still must pay, even after the big fines, for Pfizer to flout the law. I bet they even have a financial analysis worked up on the tradeoff.

Maybe it’s time for the prosecutors to haul out RICO charges….

From Bloomberg:

Prosecutor Michael Loucks remembers clearly when lawyers for Pfizer Inc., the world’s largest drug company, looked across the table and promised it wouldn’t break the law again…Loucks was head of the health-care fraud unit of the U.S. Attorney’s Office. One of Pfizer’s units had been pushing doctors to prescribe an epilepsy drug called Neurontin for uses the Food and Drug Administration had never approved…

New York-based Pfizer agreed to pay $430 million in criminal fines and civil penalties, and the company’s lawyers assured Loucks and three other prosecutors that Pfizer and its units would stop promoting drugs for unauthorized purposes.

What Loucks, who’s now acting U.S. attorney in Boston, didn’t know until years later was that Pfizer managers were breaking that pledge not to practice so-called off-label marketing even before the ink was dry on their plea.

On the morning of Sept. 2, 2009, another Pfizer unit, Pharmacia & Upjohn, agreed to plead guilty to the same crime. This time, Pfizer executives had been instructing more than 100 salespeople to promote Bextra, a drug approved only for the relief of arthritis and menstrual discomfort, for treatment of acute pains of all kinds.

For this new felony, Pfizer paid the largest criminal fine in U.S. history: $1.19 billion. On the same day, it paid $1 billion to settle civil cases involving the off-label promotion of Bextra and three other drugs with the U.S. and 49 states.

“At the very same time Pfizer was in our office negotiating and resolving the allegations of criminal conduct in 2004, Pfizer was itself in its other operations violating those very same laws,” Loucks, 54, says. “They’ve repeatedly marketed drugs for things they knew they couldn’t demonstrate efficacy for. That’s clearly criminal.”

The penalties Pfizer paid this year for promoting Bextra off-label were the latest chapter in the drug’s benighted history. The FDA found Bextra to be so dangerous that Pfizer took it off the market for all uses in 2005…

Since May 2004, Pfizer, Eli Lilly & Co., Bristol-Myers Squibb Co. and four other drug companies have paid a total of $7 billion in fines and penalties. Six of the companies admitted in court that they marketed medicines for unapproved uses…

In January 2009, Indianapolis-based Lilly, the largest U.S. psychiatric drug maker, pleaded guilty and paid $1.42 billion in fines and penalties to settle charges that it had for at least four years illegally marketed Zyprexa, a drug approved for the treatment of schizophrenia, as a remedy for dementia in elderly patients.

In five company-sponsored clinical trials, 31 people out of 1,184 participants died after taking the drug for dementia — twice the death rate for those taking a placebo…

“Marketing departments of many drug companies don’t respect any boundaries of professionalism or the law,” says Jerry Avorn, a professor at Harvard Medical School in Boston… “The Pfizer and Lilly cases involved the illegal promotion of drugs that have been shown to cause substantial harm and death to patients.”…

“It’s an unbearable cost to a system that’s going broke,” says Avorn, who heads the pharmacology economics unit of Brigham and Women’s Hospital in Boston. “We can’t even afford to pay for effective, safe therapies.”

About 15 percent of all drug sales in the U.S. are for unapproved uses without adequate evidence the medicines work, according to a study by Randall Stafford, a medical professor at Stanford University in Palo Alto, California….

In pushing off-label use of drugs, companies find ready and willing partners in physicians. Under the fragmented system of medical regulation in the U.S., it’s legal for doctors to prescribe FDA-approved drugs for any use.

The FDA has no authority over doctors, only over drug companies, regarding off-label practices. It’s up to the 50 states to oversee physicians.

“I think the physician community has to take some ownership responsibility and do their own due diligence beyond the sales and marketing person,” says Boston’s former U.S. Attorney Michael Sullivan….

Pharmaceutical companies have showered doctors with cash to persuade them to use drugs off-label, according to their guilty pleas.

Pfizer’s marketing program offered doctors up to $1,000 a day to allow a Pfizer salesperson to spend time with the physician and his patients, according to a whistle-blower lawsuit filed by John Kopchinski, who worked as a salesman at Pfizer from 1992 to 2003.

“By ‘pairing up’ with a physician, the sales representative was able to promote over a period of many hours, without the usual problems of gaining access to prescribing physicians,” Kopchinski says. “In essence, this amounted to Pfizer buying access to physicians.”

This is an excellent article, and the examples above are only the tip of the iceberg of the conduct it describes.

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  1. Advocatus Diaboli

    Since when did you believe that capitalists without supervision would be any better than covetous monkeys?

  2. Francois T

    As an FYI, there is a treasure trove of Pharma malfeasance in three blogs I can’t recommend highly enough to anyone who want to know more about that.

    http://carlatpsychiatry.blogspot.com by Dr. Daniel Carlat specifically discuss in great detail the marketing of psychiatric drugs. (it’s not pretty!)

    http://hcrenewal.blogspot.com who tackles, on top of the usual suspects, the mega-jerkwads that are health care information systems vendors (It is even less pretty!)

    http://brodyhooked.blogspot.com by Howard Brody has a special emphasis on the ethics of medicine and lack thereof.

    All three explain very well to what extent pharma and medical device companies will go to market their products. As for the IT health care vendors, there ought to be a special place in hell for these asshats. When I see Obama ready to spend 19 billion in the field, there should be much more stringent regulations and standards attached to this moolah.

  3. CrocodileChuck

    1)the purported ‘logic’ for the mega mergers in Big Pharma earlier this decade was to reduce the costs of bringing their products to market. with the emphasis on expanding the applications of their current drugs, increasingly off label, it looks like they have achieved their objective

    2)in the ’70’s, pharma CEO’s were researchers.
    in the 80’s and 90’s they were marketers. Today?

    Corporate lawyers.

    1. Vinny G.

      “in the ’70’s, pharma CEO’s were researchers.
      in the 80’s and 90’s they were marketers. Today?”

      Today they are gangbangers, pushing Adderall by day and meth by night, usually to the same children… YOUR children, that is…

      Vinny G.
      PS — chemically speaking, Aderall and meth are pretty much the same thing.

  4. dbt

    This basically elides the fundamental point which is that unrestricted profit-seeking in a drug industry isn’t conducive either to research (which is expensive and often doesn’t pan out) or to good health outcomes (because your goal is to sell as much product as possible, not help people). Drug companies are really dealing with “peak drug” at the moment- most of the low-hanging fruit have long since been picked, in terms of drug targets. The big hype in the 90s and surrounding pharmacogenomics and individualized drug therapy, high throughput drug screening, gene therapy, etc never really panned out, at least not financially. Most drug companies are selling a few big drugs that they’re trying desperately to find new uses for as their existing patents approach expiry. To be honest, the whole model is broken. Much more money needs to be invested in R&D and the reward structure needs to be changed so that these companies are incentivized to do real, unbiased, peer-reviewed & published research, and to actually provide a net health benefit to the taxpayer.

  5. attempter

    I hope America will eventually learn the lesson, and especially apply it to the banks:

    You CANNOT “regulate” entrenched rackets.

    They are existential criminals who can never be rehabilitated or controlled.

    They are incorrigible and will wage the endless war of attrition (bribery, lobbying, capture, regulatory arbitrage, evasion, and outright lawbreaking) which even the few regulators who start out full of public interest willpower must eventually lose.

    All rackets have to be smashed.

    (In the case of Big Drug, the answer is the same as for health insurance. Health care is a social good and cannot be a free-fire zone for gangster profiteers. The profit motive has to be purged.)

  6. not_scottbot

    Not really on topic, except in a broad sense, but the flu vaccine page is old at this point, and this information is at least current –

    ‘Nineteen patients with the new H1N1 virus admitted to intensive care units from April 28 to Oct. 3 stayed an average of 25 days, Irish health officials said in a study yesterday. More than half were still in ICU on Oct. 13, when the study was being prepared, marking one patient’s 62nd day of critical care.

    The findings show how H1N1 is stretching medical services even as the majority of patients recover within days and the number of deaths has so far been a fraction of the seasonal-flu toll. In Australia and New Zealand, where epidemics peaked in July and August, the virus drove a 15-fold increase in intensive care admissions for viral lung inflammation, especially among pregnant women, the obese and people with chronic lung disease.’
    To repeat – swine flu has a ‘number of deaths a fraction of the seasonal flu toll’ – bird flu it isn’t. Till now, it is isn’t as bad as normal seasonal flu, though it is quite possible that this will not remain true, as influenza is notable for its ability to shift over time (one reason vaccination tends to be less useful even for its intended influenza strain than for many other diseases).

    ‘From late April to early October, 205 confirmed H1N1 patients were hospitalized in Ireland, with 9 percent admitted to an intensive-care unit, the authors said. Four of the hospitalized patients died.’
    Meaning 2% of those hospitalized in Ireland have died, a number quite at variance from 10%, not to mention known cases of bird flu having a 2009 mortality rate of 29% (from a tiny number of cases), or 60% since first being identified (with virtually none of the deaths being attributed to human to human transmission).

    ‘Swine flu sufferers who developed life-threatening complications during the pandemic’s initial wave in Ireland occupied intensive-care beds for weeks, pointing to a potential area of strain from any winter surge in cases.’
    This will remain the real weak spot, regardless of how any vaccine is distributed – as noted before, my mother would almost certainly have been one of the fatalities, vaccine or not, but then, she would never have survived without a respirator in 1957 or 1968 to become a fatality during those flu pandemics. We have been spared from a normal influenza pandemic for more than a generation, and the number of fatalities will likely be higher merely from that fact alone, the same way I would expect the number of flu deaths in the next several years to be measurably lower (though possibly not very significantly).


    1. Yves Smith Post author

      You again choose to misrepresent data and my remarks to score points, and bring up an old topic on an unrelated thread. I never said this was a bird flu or pandemic, nor did anyone on that thread. This is an intellectually dishonest way to argue.

      I said very clearly that the fatality rate was 10% of those hospitalized:

      “As for H1N1 being overdone, its mortality rate among those who are hospitalized is much higher than for normal flus. This article from Nursing Times on November 4 says that the mortality rate among those hospitalized is over 10%, much higher than for seasonal flus, and adds: ‘The findings, published in the Journal of the American Medical Association, suggest that swine flu is potentially more dangerous than many people believe.'”

      That article was dated November 4 and cited a bona fide medical source.

      The time frame for the AMA study similar and with a much larger sample. Are you a medical researcher? Analysis based on a Bloomberg report with data from one country is far from conclusive. And you incorrectly imply that the deaths from swine flu are, like conventional flus, concentrated among the old (implication: they were goners anyhow, no big deal). H1N1 has a higher than usual mortality rate among the young.


  7. Cynthia

    I find it puzzling why federal drug enforcers slapped Pfizer with a multi-billion dollar fine for promoting off-label uses for drugs, while they still allow physicians to prescribe drugs for off-label uses. If off-label using is such a crime, meaning it’s endangering patients’ lives, why aren’t physicians also being slapped with fines for prescribing drugs for off-label uses? I realize that the FDA is doing this because they are allowing physicians to exercise their so-called “best judgment” when prescribing drugs. But why won’t the FDA allow pharmaceuticals to also exercise their best judgment when promoting drugs? To me, the FDA is wrongly assuming that: 1) prescribing drugs have nothing to do with promoting them and 2) physician, like banksters, are so damn God-like that they should be treated as if they are above the law! So I definitely see an unsettling double standard at work here in that pharmaceuticals, unlike physicians, must base what they do on sound science. In other words, I find it deeply unsettling that physicians are free to use their judgment when prescribing drugs, while pharmaceutical are forbidden from using their judgment when promoting drugs. In fact, it’s my opinion that if physicians continue this practice of putting their so-called “best judgment” over sound science, their profession will soon fall into the hands of quacks!

    1. Francois T

      “If off-label using is such a crime, meaning it’s endangering patients’ lives, why aren’t physicians also being slapped with fines for prescribing drugs for off-label uses?”

      Hmmm! Let’s clarify a couple of concepts here.

      The “label” of any prescription drug in the USA refers to the indications listed in the package insert (PI) that comes with any container of medication. The writing of any label is a considerable exercise in data analysis of case reports, clinical trials, basic science and what have you. And let’s not talk about all the legalese involved, a topic that would necessitate several books to deal with it appropriately.

      It goes without saying that a considerable weight is given to the clinical trial data. However, said clinical trial data are, by their very nature, limited in scope. A X-year trial of rigorously selected patients receiving precise doses under defined conditions specified in an agreed upon strict protocol has severe limitations when it comes to generalize the conclusions to the population at large.

      What the label says, is a compendium of the known effects of the drug at the time of publication. Of course, we’re assuming truthful and complete disclosure of all the relevant clinical trial data, but that is another topic altogether.

      However, no matter how well designed, careful and ethical a particular drug research could be, there is an inherent margin of uncertainty built in a drug that hits the market. Rare side effects that didn’t manifest during the trials can suddenly appear when a much larger population receive the drug; Trovan is a great example of that. Long-term subtle, but cumulative side effects can easily escape detection for a long time.

      On the other hand, physicians can observe unexpected benefits of drugs in certain class of patients treated for other unrelated ailments. In other words, not every effect of any drug can be known before going “legit” that is, FDA-approved. In this case, physicians, anxious to genuinely help patients caught with very difficult medical problems can (and should within reason) try medications for an indication that is legally “off-label”. If physicians didn’t have the legal permission to prescribe off-label, patients that could benefit would be left hanging dry.

      Yes, but why not make this indication “on-label” you ask? It’d be nice! Alas, to get an indication on-label, the drug maker must go through the whole process of protocol design, clinical trial, submission for NDI (New Drug Indication) etc., etc. Costly, time consuming, uncertain outcome and often times not worth it, unless the evidence is quite powerful and the number of potential patients who could benefit is high. Another disincentive is that should the trial for this new indication yield negative results, sales for this off-label indication would drop to next to nothing. As a rational economic actor, why should a drug maker take that risk if the probable payout is highly uncertain?

      As we can see, off-label prescription is not necessarily a nefarious behavior. What is nefarious tough, is the encouragement by the drug maker to promote such a behavior. Drug makers are subject to draconian rules when it comes to promotion of their wares. Alas, too many of them have tried (and still try as the Pfizer case show) to use doctors, medical societies and advocacy groups (astroturfing is not limited to politics) as promotional agents of off label prescribing.

      Hope this helps

  8. Adam

    Whining about big paharma and regulation or thelack thereof is childish. The question that should be asked is “Where the hell is small pharma?”

    1. Vinny G.

      American Small Pharma, my friend, is the guy with those nasty tattoos supplying YOUR kids with coke, crack, heroin, meth, pot, Adderall, and rat poison, for distribution in your otherwise pristine neighborhood. This way your kids can afford the iPod and all the long-sleeve black clothes you would not buy him/her.

      Oh, I almost forgot. Small Pharma also engages in considerable charitable work, as it also supplies YOUR kids with free heroin for his/her daily use. And, btw, the long sleeves are to cover up the track marks. Look into it, pops…

      That’s Small Pharma.


  9. i on the ball patriot

    Yves said – “One of my many pet peeves is drug marketing.”

    One of my pet peeves is that everything is a scam in scamerica, especially the RICO laws which will never be productively applied to Big Pharma and all of its complicit gangster scum bag doctors who dole out these life degrading shit pills like candy.

    Scamerica has past the tipping point. Deception has far outpaced perception. The scamerican lexicon is a lexicon of meaningless decoy words that serve to mask the gangsters.

    Freedom is feedom.
    Krugman is a shill,
    If you believe otherwise,
    You are ripe for the kill …

    Deception is the strongest political force on the planet.

    1. DownSouth

      i on the ball patriot,

      Your invocation of “Scamerica” is consonant with something my brother frequently says, which is that “everything’s a scam now.”

      The other day in a comment you said “we can no longer afford all of these overpriced lawyers, doctors, generals, admirals, corporate CEOs, billionaire entrepreneurs, etc. that in the aggregate represent a parasitic drag on all of the rest of us.”

      Your comment very much reminded me of this passage from Dicken’s A Tale of Two Cities:

      Military officers destitute of military knowledge; naval officers with no idea of a ship; civil officers without a notion of affairs; brazen ecclesiastics, of the worst world worldly, with sensual eyes, loose tongues, and looser lives; all totally unfit for their several callings, all lying horribly in pretending to belong to them, but all nearly or remotely of the order of Monseigneur, and therefore foisted on all public employments from which anything was to be got; these were to be told off by the score and the score. People not immediately connected with Monseigneur or the State, yet equally unconnected with anything that was real, or with lives passed in travelling by any straight road to any true early end, were no less abundant. Doctors who made great fortunes out of dainty remedies for imaginary disorders that never existed, smiled upon their courtly patients in the ante-chambers of Monseigneur. Projectors who had discovered every kind of remedy for the little evils with which the State was touched, except the remedy of setting to work in earnest to root out a single sin, poured their distracting babble into any ears they could lay hold of, at the reception of Monseigneur. Unbelieving Philosophers who were remodelling the world with words, and making card-towers of Babel to scale the skies with, talked with Unbelieving Chemists who had an eye on the transmutation of metals, at this wonderful gathering accumulated by Monseigneur. Exquisite gentlemen of the finest breeding, which was at that remarkable time—and has been since—to be known by its fruits of indifference to every natural subject of human interest, were in the most exemplary state of exhaustion, at the hotel of Monseigneur…

      The leprosy of unreality disfigured every human creature in attendance upon Monseigneur.

      1. i on the ball patriot

        DownSouth — That is an interesting passage and not an unfamiliar lament that is seen throughout the history of literature. It supports my theory that throughout all of evolution deception is the prime mover and perception is its mitigating force. A pity that Marx, and so many others, got us all off on tangents that preclude looking at self deception as it is a key to understanding the deception of others.

        Those who deceive have us all in boxes, with each box comprised of ever more boxes, that keep us all lost in so much detail and decoying complexity that we fail to see the big deceptive picture and the role we play in it.

        Fuck the box of law, and the box of big pharma, and the box of big finance that funds it all … and the box of free markets, and the box of patriotism, and the box of religion, and the god box, etc. … the big picture is that we are exploited and enslaved by the intentionally deceptive complexity that has been put into each box so as to co-opt it and use it for self serving gain.

        Cleansing perception will eventually get the co-opting complexity out of the boxes, but not before one sees the deception in self and understands its role in the overall dynamic.

        Your brother is very perceptive …

        Deception is the strongest political force on the planet.

      2. DownSouth

        Adding a little bit more fuel to the fire is a letter in today’s NY Times critical of so many university presidents who make more than $1 million a year:

        If higher salaries for administrators could be shown to enhance the fundamental purposes of a university — teaching and research — then the raises might be justified. But there is an important sense in which the higher pay actually does the opposite: it undermines those basic functions.


        We seem to be a nation of perverse values and rewards, and once a culture has reached this level of decadence, righting it will prove to be a true test of willpower.

        1. i on the ball patriot

          Scamerica IS a nation of perverse values and rewards, and this again is another interesting passage you have posted, as it supports what I have been saying in the past about; ‘vanilla greed and pernicious greed’; the neocon driven sea change in societal conditioning over the past forty years; the Aristotle descending and Plato rising; the use of the ‘noble’ lie for societal change, etc.

          How so you ask?

          Because … these more recent way out of whack high salaries — now perniciously high as opposed to vanilla greed high — support the societal conditioning of values that propagandize us all to accept an elite at the top of every box. The high salary justification by sell out media shills in each and every box is the noble lie used to condition us to that ever closer, two tier, ruler and ruled world, with the ruled engaged in a perpetual conflict with each other. I am sure you have heard me speak of that two tier structure many times before. These high salaries are a way of conditioning us to an elite at the top of that two tier structure.

          Righting the situation first requires perception of the situation — perception of the deception, perception of the use of the noble lie — and then recognizing the deception in self that allows that deception to continue …

          Our past vanilla greed conditioning has led most all of us to believe that we live in the land of freedom and opportunity and if we apply ourselves diligently and honestly we would succeed. That we would get a greater share of the crumb supply (that is why I often refer to the scamerican ideology as crumbunism). For the most part that was true. The vanilla greed, multi-tiered pecking order, allowed for that. The new, two tier pecking order that we are sliding into, by neocon design, will provide no crumbs, only a very harsh perpetual conflict within the masses. It will not be pretty.

          It is this past vanilla greed conditioning that facilitates our slide into the now rapidly developing, pernicious greed, two tier, perpetual conflict in the masses, future, i.e., we all think this is just just another cycle of plain old vanilla greed crumbunism and everything will be hunky dory real soon. It is NOT just another cycle of vanilla greed crumbunism.

          Exacerbating this situation is the fact that scamerican plain old vanilla greed crumbunism itself — and the plain old vanilla greed crumbunism of other western nations with similar large middle class pecking order systems — that has allowed a relatively small number of individuals to control and consume a disproportionate amount of the world’s resources, predominately through war and deception, is really an extremely unfair situation. And, it of course has created a very large body of middle class individuals that, in the aggregate, are the biggest block of resource consumers on the planet. The wealthy ruling elite, who are now predominantly control driven in this new paradigm (as opposed to profit driven), and, being the deceptive and devious fuckers that that they are, have trashed the global financial system and shut down the world’s economy. They, and they alone, will now restore and consolidate the global financial system so as to effect the new two tier social structure they desire.

          That is why I say with great certainty that things will not change until that self deception in us all is perceived and eliminated.

          Deception truly is the strongest political force on the planet.

      3. john

        From the article:

        The $2.3 billion in fines and penalties Pfizer paid for marketing Bextra and three other drugs cited in the Sept. 2 plea agreement for off-label uses amount to just 14 percent of its $16.8 billion in revenue from selling those medicines from 2001 to 2008.

        The total of $2.75 billion Pfizer has paid in off-label penalties since 2004 is a little more than 1 percent of the company’s revenue of $245 billion from 2004 to 2008.

        Seems paying fines is just another line-item.

  10. Larry Headlund

    You ask the rhetorical question “in what other industry are the margins high enough to support in person selling to small businessmen?”

    From my own personal knowledge I can name two: The prescription eyeglass business were frame manufacturers, lens manufacturers and wholesale laboratories all have in person sales forces and the niche of vertical software applications. In the former case I’m not sure it is the margins or entrenched custom that supports the in person selling.

  11. Tristram

    Barry Groves has an excellent book out called: Trick and Treat. In it he examines the policies of drug companies and the medical profession in the context of human diet and the effects of various foods on physiology.

    It is an eye opener, and gets to the heart of the marketing issue. Alot of poor advice for those that are healthy, and worse advice for many afflicted.


  12. ian

    When I worked at Crocker Bank in San Francisco, I was at a corporate communications meeting where one of the top bank executives in attendance. We talked. I jokingly told him I should have gone into a life of crime if I wanted to make more money. His response was interesting. He laughed and said, “Son, if you want to commit crimes, start with the legal ones.”

    Over the years, as I’ve watched bankers, financiers, real estate agents, lawyers, politicians and used car salesman, I’ve never forgotten that remark.

  13. DoctoRx

    Gross margins (not counting the container) of brand pharmaceuticals do indeed reach 98-99%. That exceeds the reported gross margin on printing dollar bills (95-96%).

    1. Vinny G.

      That explains why the same exact drugs, in the same exact boxes, manufactured in the same exact place cost one fifth or even one tenth in other countries then what they cost in the US.

      You know, I always laugh when, at the end of one of the trillions of drug-related commercials I see on the tube every evening, this line comes up: “If you can’t afford your medication, Astra Zeneca may be able to help.” Of course, that line usually comes before they give you all the side effects… you know, little inconveniences like death, suicide ideation, seizures, blood clots, strokes, hallucinations, kidney failure, respiratory arrest, brain damage, to mention just a few.

      Yeah, aren’t American drugs just great? “Good shit, dude.” Trust us. It’s been fully tested… really… in clinical trials only half of the rats heard voices… the other half just died…LOL

      Vinny, MD, PhD

  14. Hugh

    I find it hard to write on medical issues here because there is so much talking past one another. But here are a few comments.

    The reason that there is only one or two manufacturers of flu vaccines is that drug companies hate to make them. Think about it. A flu vaccine is only for one season and it is generally a one shot deal. Next year there will be different strains of flu and so the vaccine has to be completely reformulated. Compare that to having a patent on a prescription medication that people will have to take one to several of a day over the years of a patent’s lifetime.

    Off-label prescribing does not change the patent limits. A new indication is not the same as off-labeling and it can be a way to create a market for a new drug that is having trouble breaking into an established market. Sometimes this is because it just wasn’t as good as the established drug.

    If you look at all the SSRIs, proton pump inhibitors, ACE inhibitors, statins, benzodiazipines, beta-blockers, cephalosporins, etc. “Me too” drugs have been around for a long time. Change a methyl group here or there and you have a new patentable drug.

    Then there is dosage frequency. Take the original drug that needs to be taken 3 times a day and reformulate so it only needs to be taken once a day and poof! a whole new patent. Encourage physicians to prescribe it handing out lots of “free” samples, establish a patient base, and you have succeeded in blowing new life into an old medication.

    Off-label uses can become the dominant use for some drugs, especially the psycho-active ones. Many anti-convulsants have found other uses from chronic pain, to migraine, to mood stabilization. And of course there was a drug like Viagra which was mediocre for blood pressure but was known to have an interesting side effect.

    1. Skippy

      Aww, it has been a sport of many of my friends to collect pharmaceutical pens, especially the nefarious ones.

      Skippy…just have to be careful when signing that speeding ticket lol.

  15. Sigh

    This article isn’t really that accurate. Drug reps don’t give gifts any more, and off label usage doesn’t occur because doctors are dumb (dur dur 11+years of education post high school but a simple sales ploy fools us) but rather because there is some evidence the off label use might be effective.

    Also we don’t make mad bank for prescribing some drug over the other. We care for patient health and want the best outcome for our patients. Prescribing drug x over drug y, or drug x instead of nothing has no impact on my income. At all. Zero. None. There is no incentive to do anything but try and make patients’ lives better.

    1. Yves Smith Post author


      I have been told (by doctors) that doctors do not get training in statistical methods, and are thus not well equipped to evaluate drug research. Perhaps more important, there is considerable evidence that most doctors are too busy to keep on top of drug research and therefore do wind up being influence by salesmen.

      Re off label uses, I have seen this personally. I have seen doctors re fatigue, and once they ascertain I am not anemic, that my thyroid dosage looks fine, and I don’t fit the profile for chronic fatigue syndrome, they want to prescribe anti-depressants or Adderal. This is with NO psychological evaluation and they are NOT psychiatrists.

    2. Vinny G.

      Well, well… as you obviously omitted to also provide us with details about your background, please allow me to do that for you:

      You are an unlicensed doctor that graduated from an online medical school somewhere in the Caribbeans, but when you could not secure a residency in the US, you were left with no option but to settle on an entry-level sales job at Pfizer & Gang. But then again, Pfizer has been good to you, as I’m told you just bought your first gold Rolex to add to your growing collection of Breitlings and Omegas, and you also just got that second Lexus SUV for your wife… But this Lexus is a hybrid, so you feel really good about yourself as you now save not only people’s lives with your drugs, but you also save the entire planet from Global Warming… Gosh, you’re a real superhero…LOL

      Tell me it isn’t so.


  16. Sigh

    Also the idea that because a company gives me a pen I’m going to prescribe their drug for a dangerous, ineffective off-label use is bullsh*t.

    You expect doctors to be perfect every day and never make a mistake or we get our asses sued for millions, but you don’t trust us to be swayed by the allure of high quality pens? God I hate the healthcare debate. I wish there was some way to fix health care without a public option because I don’t trust even intelligent caring people to meddle with HC.

  17. Sigh

    While I’m at it, I think all drug advertising and sales calls should be banned simply because they are a waste of resources and increase drug prices. Spend that money on research (especially more on basic science!).

  18. Paul Kostel

    I work in the BioPharmaceutical industry, BioMarin Pharmaceutical.
    We do not make New Chemical Entities (NCE) like big Pharma but make human enzymes for rare diseases.

    Other countries, such as England, Australia and Canada do not allow direct to patient advertizing.
    An important reason for this is a new drug would slowly move into the market while data from patients receiving it would be collected and this would be essentially an informal Phase IV clinical trial.
    This would give an early warning in the case of a drug like Viox. This was a me-too drug, another NSAID that had use for patients that had digestive proglems with aspirin, ibroprophen and naprosyn. Had there been no direct to patient advertising, there would have been probably less than 1/10th number of deaths. All those extra deaths were due to short term profit and patent issues for a drug with very little to offer.
    This is due to “Corporatism” the union between corporate and state power. Short term profit is more important than human life and may soon be more important than all human life. Corporate law must be changed so corporations are no longer individuals and management can be held accountable.
    The creators of our Constitution did not imagine there could be an “individual” that could cause more damage in a day than a person could do in a lifetime.

  19. sdbri

    Well the root of the problem is it’s illegal for drug companies to market something which is perfectly legal for doctors to prescribe for. Be consistent one way or the other and problem solved – make it illegal for doctors, or make it legal for marketers.

    This issue is way overblown. It’s like how it’s illegal to sell shower heads without flow restrictors to limit 2.5 gpm (true) but making it totally legal for consumers to remove said restrictors once they bring it home. Sure, throw one party in jail and let the real culprit in practice off the hook.

    1. Yves Smith Post author

      With all due respect, did you read the post, or better yet, the Bloomberg article? I suggest you make a minimal effort before weighing in. First, drugs are federally regulated while states license doctors. Second, comparing prescribing drugs to shower heads is a spurious analogy. The consequences are trivial there, while (if you had bothered reading before opining) the consequences of off label drug sales have been serious, including fatalities, and more than a handful, I might add.

  20. Vinny G.


    Thank you so much for this posting. This is an issue I feel very strongly about. To call the American pharmaceutical industry criminal is an understatement. There are no words that describe these people. Mass murderers, perhaps, I don’t know.

    What I will write below is from my direct clinical experience meant not to debate anybody here, but to warn individuals, especially parents, about the evil that pharmaceuticals have become in this country. As my specialty is mental illness, I will try to restrict my comments to that area, which is in fact a huge segment of the entire pharma industry. Below I will mention some of the creepiest practices every parent needs to be aware of.

    First, the FDA is equally criminal as these drug corporations. They are entirely in their pockets. Do not trust the FDA.

    Second, parents, beware. It is not just the crack pusher outside your child’s school that is preying upon your children. That low-class loser is easy to spot and avoid. Rather, it is now the entire American pharmaceutical industry that is after your child. These corporations are now approaching teachers and school psychologists, brainwashing them to refer a child for a medication evaluation as soon as that child shows even the slightest signs of hyperactivity, inattention, or conduct issues. Now, if there are any corrupt FDA morons reading this, why don’t you look into this issue – look into the practice of pharma reps “educating” teachers. Creepy, huh?!

    Parents, do not allow teachers to diagnose your child. They like to do that, and bring many useless arguments such as “I see your kid 6 hours a day, so I know better”. ADHD (like all mental disorders) is largely a made-up syndrome in order to push drugs on kids. In fact, the entire DSM-4 (psychiatrist’s diagnosis manual) is a concoction of garbage science meant to make it easy and convenient to push psychotropic drugs on people.

    In addition to ADD/ADHD, there are more and more criminal doctors who are diagnosing children with bipolar disorder. This is absolutely insane. It is creepy. Diagnosing 4-year olds with Bipolar I or II disorder and putting them on mood stabilizers is 100% criminal. But it is happening more and more. And, what is worse is that the next version of the DSM which is now being written up under unusually strict secrecy, is likely to legitimize the push of adult mental disorders on children. Yes, children — that’s the next frontier. I bet in a few years we’ll have 3 year olds on Haldol. Somebody tell me that isn’t criminal. Somebody tell me those doctors don’t deserve the electric chair.

    Parents, besides not allowing teachers to diagnose your kids, do not even think about taking your child to a psychiatrist. Psychiatry is a criminal profession at this point, and I personally think it will soon become obsolete. All they do is push drugs on people. In their overly-inflated sense of ego, psychiatrists think they can observe a child for 5 minutes and be able to diagnose ADHD. Yes, five (5) minutes! Please, take your kids to a licensed psychologist (not a “school psychologist”, because those are not real clinicians and their training is much shorter). State-licensed psychologists are much better trained diagnosticians than any psychiatrist can ever hope to be.

    Another thing to be aware of is that most psychotropic medication is not even prescribed by psychiatrists, rather by general practitioners who have almost no training in mental illness. They are completely unqualified to prescribe psychotropics. They are completely unqualified to diagnose ADHD or bipolar or anything else above the neck level. If you trust them with your brains, why not go to them for your next root canal too, and see how they fare with that procedure.

    To illustrate just how brainwashed about psychotropic drugs doctors have become nowadays, it is important to point out that the trend has been to diagnose by trying different medications until one works. The diagnosis is made not based on signs and symptoms, but on the response to a given drug. It goes like this:

    “Yeah, looks like depression. Let’s try a little Zoloft.”

    A few months later: “What, you tried to kill yourself after I put you on Zoloft? OK, on second thought, now that I take a better look at you, it looks more like schizoaffective disorder. Let’s go Zyprexa next.”

    A few more months later: “What, still no help? And you once heard a dog bark at the office? And you’re sure it wasn’t your secretary’s new phone ringtone, right? OK, then it’s definitely schizophrenia. We’ll attack with Haldol next. Yeah, it’s good stuff. Trust me. Here’s a free Zyprexa pen too… Ain’t that great!”

    Years later: “What do you mean you’ve got the “shakes”? Yeah, it’s called Tardive Dyskinesia. Yeah, it’s permanent, sorry. No problem, it’s just a minor side-effect. Kind of like Parkinson’s. What, you have bad dreams from Vietnam? How come you didn’t mention that in our initial 5-minute appointment 10 years ago. No, you’re not schizophrenic. Looks like you just got a little PTSD from Vietnam. Sorry, we have nothing for that. Just deal with it. Keep busy. Better if you avoid watching Platoon and Saving Private Ryan. And get a hobby or something. Yes, collecting guns is a great hobby – go for it.”

    Vinny here: as you can see above, that is how mental illness is being diagnosed nowadays. Based on one’s response to a series of criminal drug. And it’s done with kids as much as with adults. Somebody tell me that American doctors aren’t brainwashed into thinking drugs are the panacea to all human illness?

    And more often than not, when a drug does not work or it has side effects, another drug is added to the menu. I had clients refereed to me who were on 30+ drugs or more. And any doctor or pharmacist knows that beyond 3 or 4 drugs in the system we have no way to predict the interactions. Incidentally, you often see that kind of vicious overmedication at the VA and in prisons, where the taxpayers foot the drug bill.

    Personally, I gave up on psychiatry and drugs in my work a long time ago. I call myself an analyst or family therapist now. I listen and talk to my patients for a whole 50 minutes. I do family psychotherapy. Even some of my sickest patients with Bipolar I, after proper psychotherapy and family interventions were stable when taken off Lithium. There are proven non-medication interventions out there for any problem. It’s a much more honorable line of work (although not nearly as profitable as prescribing drugs).

    Once again. Parents beware. The murderers running the pharmaceutical corporations and their accomplices at the FDA are after your kids. I repeat, do not, under any circumstances, believe in the ADHD diagnosis, or Bipolar, or even depressive disorder in your kids. Stop browsing the psychology section for ADD books at Borders or Barnes and Noble — most of those books are full of junk science and were written simply because it’s profitable.

    Remember, the human brain is not fully developed until well into the 20s. It is normal for kids, teens, and even young adults to be impulsive, inattentive, daydream for long periods of time, to feel sad or hypomanic at times, to feel grandiose, and to experience mood fluctuations. By all means, do not sledge-hammer your child’s or teenager’s developing brain with psychoactive drugs. If you pump up your kids with Ritalin or Adderall or Strattera or Lithium, you are an even bigger criminal than the creeps running Big Pharma. If you do, you might as well give them cocaine or roll up a joint with them.

    If your child has conduct, impulse, attention, or hyperactivity problems, it is far more likely that there is something unhealthy going on in his or her life or family that can be addressed without medication. As I said above, the brain is an organ that is not fully developed until around age 25, so give it time to develop. Fathers, take your sons fishing so they learn to be still. Mothers, teach your daughters embroidery, so they can maintain focused attention. Spend time with your family. Show affection to your kids and also establish a set of rules they need ot follow — this is the key to proper child development. Turn off the TV. Throw away the Play Station. And, if necessary go to family psychotherapy. But do not pump up your kids’ developing brains with psychoactive substances of any type, legal or illegal.

    Additionally, if your adolescent was diagnosed with any psychotic type disorder (schizophrenia, schizoaffective disorder, etc), be aware of the simple fact that the treatment of this type of disorders is far more effective with family and community-based interventions than with medication. Much poorer nations than the US, where people can’t afford drugs have devised community and family-based interventions that offer much, much better outcomes. Look into that before you put your kids on antipsychotics and ruin their lives. And make sure they’re not using illicit drugs.

    And, one more thing. If you ever run into a clinician that labels your kids with a personality disorder (things like borderline, schizoid, to name just a few) it is time to actually punch that clinician in the face on your way out. There is absolutely no valid science to back up the inclusion of personality disorders as diagnosable issues. If it were, this entire nation would suffer from Narcissistic Personality Disorder.

    Like I said, I am not interested in debating any selfish doctors or AMA lobbyists here. What I wrote above is simply as a warning to parents.


    1. bob goodwin

      Thanks for your long comment Vinny, I read it and thought quite a bit about it. I can tell you that I have had some really, really horrible experiences with talk-therapists. I am not qualified to enter a debate, but there are some cogent people that feel that talk therapy does not work. We know that drugs do impact the mind, so they are not placebo’s. I suspect that you are right that many doctors are prescribing by trial and error. But I think you go too far in implying that drugs=bad, talk-therapy=good.

  21. Skippy

    Hay Vinny, whats that Red Dot doing center mass on your chest lol.

    Yes. I concur as someone who grew up in the middle of a medical family with members through out the industry and fields, both practical and industrial Mfg.

    Medicine and profit is a bad mix, totally incompatible. It just seems in todays America that there is just no time or patience to employ strategy’s that don’t need meds ie CBT et al. More of a quick fix, move along, make a buck, jezz your whiny today, I have better things to do world that Americans live in today.

    Skippy…don’t go to Utah, they traded alcohol to become the largest consumer of psychotropics in the USA, ha ha.

    PS disclaimer have spent the last 17 years with a OCD suffer and the needs that go with it, Please run me over next time you drive by and I’m mowing the lawn of normalcy, Pleaseeeee. Her family enables!!!! I’M on my own here, help!!!! lol.

    1. Vinny G.

      I think America is now like China before 1949. China cleaned up its opium problem in less than 10 years. I am confident that if we get a leader with balls here too, he’d clean up the place in no time at all. Maybe reality will hit when we run out of money – perhaps when China goes AWOL from our treasury auctions.

      Sorry to hear about the OCD. It’s tough. CBT helps people a lot to deal with the obsessions/compulsions. Psychoanalysis is useful too, to get to the deeper, developmentally-related causes, such as harsh, rigid parenting. But each case is different. Keep looking until you find a good clinician.


  22. bob goodwin

    Although your article clearly shows illegal activity, and likely immoral activity, there are some unstated issues. There is tolerated criminal activity (wall street? mexican undocumenteds?) And the disfunction of the FDA has invited a certain amount of this. Doctors, in fact, welcome drug companies for reasons different than you state. Drug companies provide information on what is going on. Doctors need and love it.

    I have recently left a middle management position at Amazon to start a medical device company. We are just beginning to engage the FDA, and the word on the street is that the FDA is becoming capricious. The sense is there is political pressure. Your article is part of a trend showing that medical companies are gaming the system, and the FDA is responding.

    In this environment, investors are less willing to invest, and incumbent players further stretch the rules to maintain their rents. In my situation, the medical risks are low, and the benefits well established before we came along. Yet still, our FDA panel is politically stacked and unpredictable.

    No excuses for Pfizer, but a disfunctional regulatory environment can have odd consequences (wall street anyone?)

    1. Skippy

      Bob I don’t agree with you on a number of things, but wish you good fortune in this endeavor.

      Skippy…should be interesting to say the least.

    2. Yves Smith Post author


      Devices are regulated by a completely different part of the FDA than drugs. Historically it has been considered to be company friendly without being a toady (as in they are savvy about the science and do make sure the claims made are legit and the safety studies are properly done).

  23. winterwarlock

    well, I was going to leave a few comments about the drug dealer with a house next to the high school, drug dealers still buying dinner every single week for the hospital workers, people with even more prescriptions than credit cards, and losing circulation for a week after watching the latest on the 4000% increase in bipolar diagnoses among pre-teens for the purpose of administering untested drugs, but I see Vinny is all over this.

    1. winterwarlock

      Oh, I forgot:

      now, they are rolling out strip mall franchises to tell parents how to get their kids on drugs as efficiently as possible, with sales scripts and all.

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