Corruption of Pharmaceutical Markets: Addressing the Misalignment of Financial Incentives and Public Health

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A blockbuster drug is normally defined as a drug with sales of more than $1 billion per year.

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See Gagnon Lexchin , supra note 1.

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See Egilman Ardolino , supra note 14; Gagnon M.-A. , “Corporate Influence over Clinical Research: Considering the Alternatives,” Prescrire International 21, no. 129 (2012): 191–194.

See Gagnon , supra note 2.

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EFPIA, The Pharmaceutical Industry in Figures (EFPIA-Various years), available at <http://www.efpia.eu/documents/80/61/The-Pharmaceutical-Industry-in-figures-Edition-2013> (last visited June 26, 2013); David E. Tramontin T. Zemmel R. , “Pharmaceutical R&D: The Road to Positive Returns,” Nature Reviews Drug Discovery 8, no. 8 (2009): 609–610. For a discussion of the misalignment of incentives for research and development, see Rodwin M. A. , “Five UnEasy Pieces to Pharmaceutical Policy Reform,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 581–589.

Patented Medicines Price Review Board, Annual Report 2011 (Ottawa: PMPRB, 2012); Prescrire, “L'année 2012 du medicament; Progrès en berne, mesures timides pour la protection des patients,” Prescrire 33, no. 352 (February 2013): 134–137; Light D. Lexchin J. , “Pharmaceutical Research and Development: What Do We Get for All That Money,” BMJ 345, no. e4348 (August 2012): 22–28. Note that Light and Lexchin contend that there is no innovation crisis in terms of the number of new drugs arriving on the market, but that there is a real innovation crisis in terms of the therapeutic innovation that these new drugs represent. See also, Light D. W. Lexchin J. Darrow J. , “Institutional Corruption of Pharmaceuticals and the Myth of Safe and Effective Drugs,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 590–600.

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For more information on methods, see Gagnon , supra note 2.

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See Sismondo , supra note 9.

See Spielmans Parry , supra note 9.

Norris S. , “Characteristics of Physicians Receiving Large Payments from Pharmaceutical Companies and the Accuracy of Their Disclosures in Publications: An Observational Study,” BMC Medical Ethics 13, no. 24 (September 2012): 1–7; Pear R. , “U.S. to Force Drug Firms to Report Money Paid to Doctors,” New York Times, January 16, 2012. For discussions of the limitations of transparency, and its potential benefits, see in this issue of JLME 41, no. 3 (2013): Sismondo S. , “Key Opinion Leaders and the Corruption of Medical Knowledge: What the Sunshine Act Will and Won't Cast Light On,” 635–643; Feldman Y. Gauthier R. Schuller T. , “Curbing Misconduct in the Pharmaceutical Industry: Insights from Behavioral Ethics and the Behavioral Approach to Law,” at 620–628; Brown A. , “Understanding Pharmaceutical Research Manipulation in the Context of Accounting Manipulation,” at 611–619; Cosgrove L. Wheerler E. E. , “Drug Firms, Codification of Diagnostic Categories & Bias in Clinical Guidelines,” at 644–653.

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See Almashat Wolfe , supra note 33.

IMS Health data about sales for each drug are available the following website: <http://www.drugs.com/stats/top100/2011/sales> (last visited June 17, 2013). Data about total sales for antipsychotic drugs are available on the IMS Health website: <http://www.imshealth.com/portal/site/ims/menuitem.5ad1c081663fdf9b41d84b903208c22a/?vgnextoid=fbc65890d33ee210VgnVCM10000071812ca2RCRD&vgnextfmt=default> (last visited June 17, 2013).

See Goldacre supra note 7, at 346.

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For example, in his testimony for the US Senate Finance Committee, Graham David J. , Associate Director for Science and Medicine in FDA's Office of Drug Safety, estimated that the drug Vioxx caused between 88,000 and 137,000 excess cases of heart attacks in the United States. Of these between 30% and 40% died. The drug was marketed by Merck between May 1999 and June 2004 in the United States. To promote the drug Merck organized a ghostwriting campaign involving around 96 scientific articles. Key ones omit mentioning the death of some patients during clinical trials. During a class action lawsuit against Vioxx in Australia in 2009, it was discovered that the company had created a fake medical journal for Merck – the Australasian Journal of Joint and Bone Medicine, published by Elsevier. Merck's internal e-mails, revealed during the class lawsuit, exposed that the company drew up a hit list of “rogue” researchers who needed to be “discredited” or “neutralized.” Eight researchers at Stanford complained that they received threats from Merck after publishing unfavorable results. In the United States, the only charges against the company have been charges of unlawful promotion, for which the company agreed to pay $950 M in an out-of-court settlement. Between 1999 and 2004, sales amounted to $11 billion in the United States. See Gagnon M.-A. Sismondo S. , “The Ghosts of Medical Research,” Genetic Engineering and Biotechnology News 30, no. 10 (May 15, 2010); Loftus P. Kendall B. , “Merck to Pay $950 Million in Vioxx Settlement,” Wall Street Journal, November 23, 2011.

Braithwaite J. , Corporate Crime in the Pharmaceutical Industry (London: Routledge, 1984): At 308.

Pigou A. , The Economics of Welfare (New York: Macmillan, 1920). The clearest example of a negative externality is environmental pollution: A manufacturer can sell his product according to his private cost of production, but if the production process generates pollution (for example by spilling mercury in drinking water), this social cost is not included in the private cost that the manufacturer has to pay. This external social cost, which is not included in the cost of production of the manufacturer, is a negative externality.

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See AIFA Research and Development Working Group, supra note 42.

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Current pricing incentives also encourage promotion of off-label prescribing. For a discussion of how to change reimbursement for drugs prescribed off label, see Rodwin M. A. , “Rooting Out Institutional Corruption to Manage Inappropriate Off-Label Drug Use,” Journal of Law, Medicine & Ethics 41, no. 3 (2013): 654–664.

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See Lee , supra note 49.

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See Gorry Montalban Smith , supra note 19.

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