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It costs a company millions of dollars to develop a new medicine. A great many possible medications have to be searched and tested, most turning out to be useless, less effective than existing agents, or too dangerous to consider using. The testing of a promising possible-drug, once it has been identified, is elaborate, costly, and lengthy, gathering data about its benefits, risks, effects, and side-effects, to satisfy the regulatory authorities in each country. Great truckloads of documentation, resulting from years of studies and evaluations, have to be produced for scrutiny.
If they can eventually satisfy the authorities (such as the MCC - Medicines Control Council in South Africa, and the FDA in America) that the drug is effective, and safe enough, they can get permission to market it; and for a period of some years they have the exclusive rights to do so, like the copyright on a book. Their license to market the drug is for the indication (the disease or related problem) for which their data proves efficacy and safety.
Recouping the losses
During this early period, the companies spend very large sums promoting the drug, bringing it to the notice of doctors, sponsoring seminars and conferences to discuss the evidence about it, and sending Drug Reps to visit GPs and specialists, to remind them about the drug. The companies need to make very large profits during this phase, to cover both the costs incurred in developing the drug and getting it licensed, and to pay for their wider research, and for the possible drugs which for various reasons never worked out.
If they were not able to recoup these enormous costs, and make enough profit to keep the company going, and to pay for more research to improve on existing medications, the companies would go bankrupt, the research would stop, and the supply of new drugs would stop. Stop looking for better, safer, more effective medicines, or for cures or treatments for conditions we're not yet able to cure or treat effectively: there would be no more.
This is part of the explanation for the continuing high cost of drugs, and for why the companies get so nervous when the Ministry of Health makes proposals to cut these costs. But of course, there is more than meets the eye. Much of the high cost of medicines also arises from the high non-research expenses by the companies.
Drug reps
Drug reps, though rarely paticularly skilled or effective, earn very high salaries (plus posh cars, cell-phones, and all the other paraphenalia of modern business, necessary or not). They are treated like royalty by the companies (for reasons never entirely clear to me); and are sent on more luxurious all-expenses paid trips to overseas medical conferences (far more often than the average doctor or specialist ever manages, and where they cannot understand what the papers and discussions are about, but can enjoy the cocktails and dinners), and to "Sales Conferences" in luxury venues: Sun City/Lost City if the company is making very drastic economies, but just as easily in Singapore, or Davos.
The companies also spend very lavishly on a few doctors, those they believe to be commercially useful, and/or those who prescribe their products as lavishly as the company spends on them. Such largesse is never spread around evenly, and certainly isn't rewarding excellence of clinical practice, unusually high standards of patient care, or academic and research brilliance.
Last year, a rep who had been discussing her products with me, pulled out her diary to make another appointment to see me. I noticed that every single midday and evening for the next six months, had appointments she had highlighted in glaring Dayglo yellow.
I asked what these recurrent and important events were. "Oh," she said, "Those are all times when I'm taking doctors out to lunch or to dinner - it's getting so difficult to find time for them, I'm booked up for so many months ahead!" The poor dear, it must be Hell, having to drag oneself in and out of luxury restaurants twice a day, day after day. How boring having to face the same wine list so often! She didn't seem to know very much about her drugs: I wondered whether her training had concentrated on Menu French and selecting an appropriate wine? A proper investigation of these curious spending patterns would be most fruitful. Anyhow, all this wining and dining, buying and flying, is exceedingly expensive.
Companies will cheerfully fly a couple of dozen gynaecologists and their wives, (or even some psychiatrists and their wives) to a meeting in Cancun, Mexico or in Budapest, with a stop-over in Cairo to visit the pyramids. (Is this what they call a pyramid scheme?).
Generic drugs
The company faces a problem as they near the end of their "patent period": as they get closer to the date when they will no longer have the exclusive right to sell and profit from the drug they developed. Some very curious practices emerge as this date nears. Once this date is passed, other companies can, if they wish, manufacture a chemically identical version of the drug. After the much cheaper process of doing some rather minor studies to satisfy the drug authorities that their drug is generally clinically equivalent to the original drug, they can then market their own version of the drug, under their own trade name.
As they have had none of the prodigious expenses of the original research to produce and test the drug, their production expenses are far lower, and they are able to sell this "generic" version of the drug at a lower price than the original, giving it some strong competition. Thus, for instance, the chemical Fluoxetine, developed by the Eli Lilly company, was originally marketed by them as Prozac. Since other companies have been allowed to market Fluoxetine, one now sees it also, for example, as Prozyn from another company.
It's a curious reflection on how rational or irrational prescribers can be, that the originating companies, while still marketing their drug under its original name and complaining vociferously about the unfair competition of generics (the chemically equivalent version from other companies) nowadays often also market their very own generic version of the same chemical, most probably from the same factory, maybe even from the same chemical vat! This is called a "branded generic".
Many doctors prefer expensive drugs
Although all the versions available are guaranteed by the MCC as equivalent in their effects on a patient, many doctors still insist on prescribing the original version, the most expensive version (this practice is often a sort of aid package for rich companies). Where this is related to the company's generousness to the doctor in travel, conference funding, etc., one wonders why the authorities so persistently turn a blind eye to such practices.
Other doctors use the cheapest available generic version, thus enabling you to take the same drug, but saving you, the health service, or your medical aid (and thus, ultimately, your medical aid contributions) a substantial sum. Still others insist on prescribing the "branded generic". They are saving you some money, but not as much as could be done.
I have found that drug reps find it difficult to explain why I should prescribe the original or the branded generic version. If their branded generic is absolutely identical to the original version, differing only in the cardboard box it is packed in, there is of course not the faintest rational reason why I should ever prescribe the original version (which would, then, differ only in being more expensive). If, on the other hand, their branded generic is in any way different from the original (they insist that other people's generics are significantly different, absorbed differently, and behaving differently), then if I find such a difference acceptable, why shouldn't I save you more money by prescribing the cheapest generic, rather than their more expensive generic?
I suppose the drug companies may be sincere in their opposition, though. Because I have challenged their peculiar funding of some doctors, and because I am cautious about prescribing drugs, I very rarely if ever get to go on one of those intercontinental shindigs, or even to those lunches and dinners. But I am told, very reliably, that they absolutely never tolerate generic wines or liquors: only the best will do. Mind you, while I doubt whether there are relevant differences between original and generic drugs, I can tell the difference between Crown Royal and Zambian whisky; and between Veuve Cliquot Grande Dame Champagne and supermarket fizzy.
- Prof Michael Simpson, Cybershrink
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