March 2004: Tackling Our Worst Drug Addiction

Big Pharma's hold on our health care system must be broken
March 1, 2004

Parliament’s Standing Committee on Health has identified many important and disturbing issues related to prescription drugs in Canada, including the rising costs, the review and control of prices, the approval of new drugs, the monitoring of adverse effects and prescribing practices, the marketing to and lobbying of physicians and other dispensers, direct-to-consumer advertising, the access to drugs, and the misuse, abuse and addiction within the general population.

It is still difficult, however, to appreciate the full extent and consequences of the pharmaceutical industry’s hold on our health care system, the medical profession, Health Canada’s Therapeutic Products Directorate, and our political institutions. The pharmaceutical giants are among the most powerful corporate institutions in the world.

In the value system of the marketplace, only those with money are respected. Pfizer is a $48-billion-a-year business and made $9.1 billion in profits last year (Fortune, April 14, 2003). Drug profits are twice the R&D costs. In a typical example, GlaxoSmithKline spent 37% of its revenues on marketing and administration and only 14% on R&D, while making a 28% profit.

The brand-name pharmaceutical industry touts itself as being “innovative.” While it has brought important new drugs to market--first in the United States, not Canada-- over the past few decades, many of them stemmed from basic research that was publicly funded at the U.S. National Institutes of Health. According to Harvard’s Dr. Arnold Relman, the number of innovative drugs reaching the market in the past five years has actually declined. The pharmaceutical giants are now putting a major part of their resources into the development and marketing of “me-too” drugs--variants of drugs already on the market, but introduced at inflated prices.

According to Fortune, the industry has a woeful underachievement in R&D--“most puzzling for an industry supposedly in the vanguard of 21st century science. . . Indeed, drug research is quite possibly the least efficient endeavour in the world of business.” (April 14, 2003)

Far from being an exemplar of competition and the “free” market, the pharmaceutical industry enjoys monopoly patent protection and many other forms of government protection, subsidies, and significant tax breaks. Government intervention in the workings of the market is obviously not a problem for Big Pharma. It is a symptom of the drug industry’s political clout that even basic cost-benefit analysis is not carried out before governments invest massive amounts in pharmaceutical subsidies.

What are we getting in return? The reality is we don’t know. What is the therapeutic value of the approximately $18 billion Canadians spend on prescriptions drugs each year? The Canadian Institute of Health Information cannot answer this question. Where else in government do we approve multi-billion-dollar expenditures annually without any evidence that we are getting value for money?

The lack of accountability is far worse than it may appear. There is also the fact that Health Canada has no monitoring in place for adverse drug reactions in Canada. In the U.S., death by adverse drug reaction (estimated at 106,000 people in 1994), is the fourth most common cause of death, after heart disease, cancer, and stroke.

The drug industry has products that enjoy a 17-to-20-year monopoly patent. Once a drug gets this patent protection and is given a brand name, no one else can sell it and the company is free to charge whatever the market will bear without fear of competition. Prescription drug costs have skyrocketed over 300% (unadjusted for inflation) from 1985 to 2000. Over the same period, total health spending as a percentage of GDP went up only 0.8%. No wonder the brand name industry devotes enormous sums of money to protecting their interests. They have the largest lobby in Washington, and are also well represented in Ottawa.

In the year 2000, in the U.S. alone, drug companies spent $8 billion and employed 83,000 sales representatives to woo doctors with gifts, meals and trips, and spent another $8 billion in free drug samples. When Dr. Relman appeared before the Senate’s Kirby Committee in February 2002, he reminded the Senators: “Remember what ‘Deep Throat’ said to the investigators of the Watergate scandal: ‘Follow the money’.” The total amount that is spent by pharmaceutical firms in the form of financial contributions to members of Parliament and political parties in Canada is not publicly available information. In Ottawa, like Washington, Big Pharma spends huge sums to ensure that no regulatory barriers stand in the way of its profits.

In the United States, half of the Food and Drug Administration’s budget for the evaluation of new drugs now comes from drug company user fees, making the agency dependent on the industry it regulates. This same conflict of interest (cost-recovery) exists at Health Canada’s Therapeutic Products Directorate (TPD). The difference in Canada is that Health Canada hides the budget figures for drug evaluation and only provides Parliament with the budget for the entire Health Products and Food Branch. Why is this? The TPD is one of 15 sub-sections of the Branch. Gross planned expenditures for the entire Health Products and Food Branch for 2003-2004 is $189.9 million. Cost recovery (“expected re-spendable revenues”) is $40.7 million. We don’t know, but should, what percentage of Health Canada’s TPD budget the $40.7 million in cost-recovery represents.

Cost recovery at Health Canada for drug evaluations ushered in a new operational principle in the Therapeutic Products Directorate: CLIENT = INDUSTRY. The public is now relegated to being just one of many “stakeholders.” The cost-recovery policy came at the expense of in-house, independent scientific and laboratory research. The entire Bureau of Drug Research was disbanded in 1997. Before the systematic erosion of the scientific capacity in drug evaluation, Health Canada drug scientists used to be recognized internationally for research on drug quality, toxicity, bio-equivalence, and clinical application of drugs. Now, the pharmaceutical industry doesn’t even bother sending top scientists to drug review meetings at Health Canada.

The industry is now entering into commercial agreements with universities and hospitals that threaten the objectivity and credibility of clinical research. Cash- starved universities are marketing themselves to wealthy corporations because the federal government no longer funds independent research. The Government of Canada now has a policy whereby the goal of health research is, in effect, “commercialization.” If an area in health research can’t be commercialized, the Canadian government does not want to fund it.

The federal policy of commercializing the research agenda may well lead to the end of independent scientific research in Canada. In making such a commercialization of health research a primary policy objective, Canada will cut itself off from the scientific process. An endeavour is “scientific” when it is transparent, systematic, peer-reviewed, independent, accountable, and open to learning. When health research is opaque, ad hoc, partisan, secretive, and unaccountable, you are not dealing with science any more. It is something else that negatively affects the integrity of research, academic freedom, and patient safety.

The threat to the integrity of clinical research is illustrated in the cases of two internationally eminent medical researchers, haematologist Nancy Olivieri and psychiatrist David Healy. The institutional players in the scandal are the University of Toronto, the Hospital for Sick Children, and the Centre for Addiction and Mental Health. The Olivieri and Healy case studies have become international reference points for discussing the threat to academic freedom, research integrity and patient safety posed by university-industry “partnerships.”

The lesson learned form the Olivieri and Healy cases is simple: if universities and teaching hospitals are for sale, then the buyers will call the shots. They decide what research will be conducted, and which finding will see the light of day. They decide which researchers will be rewarded, and which are blacklisted from the profession. This may be a clever policy for the pharmaceutical industry, but it is neither “scientific” nor ethical.

When Dr. Olivieri attempted to communicate an unexpected risk discovered in her research on a particular drug, as she was legally and ethically obliged to do, she was issued a legal warning from the drug company developing the drug. The Hospital for Sick Children and the University of Toronto did not provide effective support for Dr. Olivieri. To make a bad situation worse, the regulators at Health Canada also refused to provide any support to Dr. Olivieri in the performance of her legal duty. In fact, Health Canada had officials from the drug company present when they finally agreed to meet Dr. Olivieri at her request. Why was the Minister of Health silent in the face of this deplorable treatment of a respected scientist?

Dr. Olivieri said: “It shouldn’t be this difficult to win support for the safety of my patients and the integrity on my research.” She is right. The predatory nature of the pharmaceutical industry in Canada and its undue influence on medical research is so extensive and disturbing that it calls for nothing less than a full public inquiry.

Accordingly, the Canadian Health Coalition recommends the establishment of an independent public inquiry into the pharmaceutical industry in Canada.

Areas that need to be investigated include:

• the integrity of clinical research and commercialization of health research;

• the pricing and profitability levels in the industry and its impact on Medicare;

• the abuse of patent protection measures and the impact on access to essential medicines and the sustainability of Medicare;

• independent assessment of the costs and benefits of pharmaceutical “R&D”;

• the integrity of the federal regulatory process and cost-recovery;

• the lack of independent scientific research capacity at Health Canada;

• the lack of post-market surveillance and adverse drug reactions; and

• the effects of promotion, marketing, advertising, and prescribing practices.

Such a Public Inquiry into the Pharmaceutical Industry in Canada must precede any decisions pertaining to the federal government’s plans to: a) “renew” health protection legislation; b) speed up the drug approval process; c) permit direct-to-consumer drug advertising; and d) “adapt its intellectual property framework to enable Canada to be a world leader on emerging issues such as new life forms.”


(Michael McBane is national coordinator of the Canadian Health Coalition. This article was adapted from his recent submission to the Standing Committee on Health, the full text of which can be found at