Media Misinformation About Echinacea / Another Blow to Truth in Reporting Article 7/31/05

The American Botanical Association (ABC) has alerted us that a flawed study on Echinacea, is going to be reported all over the media .
The report states that " echinacea doesn't help colds ". 

Unfortunately , with few exceptions such as PBS, the media is in the hands of BIG PHARMA and will be used to persuade the public to go back to pharmaceutical products. Let me warn you to be prepared to see more attacks against natural medicine from now on.
BIG PHARMA, as you will see from the analysis of the report, has the money to buy unscrupulous scientists and even government agencies such as the NIH and the FDA.

To make it veritable they convinced a branch of the National Institute of Health ( NIH ) to conduct the study and they choose a researcher who had been in the past a consultant for a pharmaceutical company that makes antibiotics to led such a study.

Lets now analyze the flawed study

1) Choice of an inappropriate researcher:
One of the ethical principal in research demands that a researcher who has had previous contacts with competing products disqualifies himself. Echinacea potentially encroaches the economical interests of a pharmaceutical company that makes antibiotics. 

In this case the researcher not only didn't disqualify himself he actually led the design of the study and saw it through.

2) They used the wrong species:
This study used extracts made from the roots of Echinacea angustifolia rather than the flowers and roots of Echinacea purpurea Which has been shown to be effective in treating colds?

3) They also used inadequate doses:

The World Health Organization (WHO) recommends 3,000 Mg a day. They only used 300 Mg.

4) Biased research sample:
In research it is well known that the choice of people one studies can make it or brake it. They choose for the research college students. Young people have most likely strong immune-systems. This was a double blind placebo study and, since Echinacea works by boosting immunity, the difference between the placebo and the inadequate Echinacea group would have been definitely negligible. The study should have included older people with more compromised immunity. In such case even the totally inadequate dosage might have shown some difference between the placebo and the Echinacea group.

In summary this study was designed to prove what they wanted, rather than scientific truth.

It is interesting and sad to see to what extreme BIG PHARMA is willing to go to cut competition.

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Influence of Big Pharma on Health Policy-UK report  / 4/5/2005

The Health Committee of the British House of Commons issued a scathing report on the influence of the pharmaceutical industry on the health policies of the government agencies set up to regulate and administer health care-in Britain all healthcare is provided by a government agency called the National Health Service. 

In Britain (UK) the government subsidizes political candidates and parties and limits campaigns to a short period of time. As a result many politicians are not as subject to the overwhelming influence of contributions from drug companies. Britain is also the home base of the Alliance for Natural Health that is leading the fight against the European Union Food Supplement Directive that will severely limit dosage and even availability of many supplements now permitted on the market. They had a very popular grass roots campaign against the proposed regulations that made poloiticians sensitive to the issue.
The report is 127 pages long, but I will summarize some of the important conclusions that can apply even more to the United States where the unique ability to charge very high prices not comparable anywhere else in the world enables unlimited amounts of money to be poured into marketing, public relations, educational grants, building patient-consumer support and of course political contributions. The Report found: 

The commercial success of the industry is not in doubt, nor is its ability to produce excellent science and important drugs; however, its ability to put the health of the nation consistently before the needs and expectations of its shareholders may be questioned. The evidence to this inquiry indicated that, in recent years, large pharmaceutical companies have become ever more focused on a marketing-based approach. In our view, this is the source of many of the problems we have identified. However, these problems are global and we received no evidence that the situation in the UK was worse than in other countries.

Following are comments by Arnold Gore Arnoldgore@aol.com

Read the report - "House of Commons Health Committee - THE INFLUENCE OF THE PHARMACEUTICAL INDUSTRY"
  

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Grassley Tells FDA not to Retaliate Against Whistleblower  / 11/30/04

The chairman of the Senate Finance Committee warned the FDA not to retaliate against Dr. David Graham, an agency scientist, for his public criticism of the agency's handling of drug safety. The letter from Sen. Charles Grassley, R-Iowa, was prompted by rumors that Graham, who testified before the Finance Committee on the Vioxx recall, might be fired or reassigned to an administrative post against his wishes. An FDA spokesman said the agency, "does not condone any form of employee retaliation." 

The Wall Street Journal (11/30)

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FDA to allow Drugging of Healthy Children - Action to Stop it

Dear Paul,

If it seems as if kids have been under attack lately…they have! In late September, two separate FDA advisory committees gave the okay to administer a powerful stimulant ­ dextroamphetamine ­ to healthy children as young as nine as part of a study on ADHD. They, along with children already diagnosed with ADHD, would be given this drug and their brains would be monitored by MRI.

When I read that the Pediatric Advisory Committee had agreed to use healthy kids as guinea pigs, it made me wonder if these people had any ethical values left. Their reasoning is that the advancement of science far outweighs the risks posed by drugging healthy children. Hogwash!

What’s even more unbelievable is that this decision was made despite a March 2004 decision by the National Institutes of Health Internal Review Board. They found that “the administration of dextroamphetamine posed more than minimal risks to healthy children.”

Drugs are not the answer to ADD and ADHD, and drugging healthy children is just wrong.

You can help me fight the FDA on this one. The final decision on whether to turn our kids into guinea pigs lies in the hands of Tommy Thompson, the head of the Department of Health and Human Services. Allowing this to happen would set a dangerous precedent. I urge you to e-mail Tommy Thompson at tommy.thompson@nih.hhs.gov and encourage him to “Just Say No” for the sake of our children and grandchildren.

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The Truth about the Drug Companies; How They Deceive Us and What to do About It / Book Review 

From the New England Journal of Medicine, October 7, 2004

In this book, her most recent, Marcia Angell explores pharmaceutical research, deplores the rapidly expanding involvement (and distortion of truth) of Big Pharma, and implores us all (physicians, patients, politicians) to do something about it. The dust-jacket blurb asserts that Angell, "during her two decades at [the Journal] had a front-row seat on the growing corruption of the pharmaceutical industry." Perhaps, but since leaving the Journal, she's gone behind the curtains of Big Pharma, Big University, and Big Faculty. Drawing on her own work and on her thoughtful analysis of research, company financial statements, and investigative reports into drug development and marketing, Angell writes with the unambiguous and unyielding style that Journal readers came to expect and trust. 

By Angell's account, the current slide toward the commercialization and corruption of clinical research coincided with the election of President Ronald Reagan in 1980 and the passage of the Bayh-Dole Act, a new set of laws that permitted and encouraged universities and small businesses to patent discoveries from research sponsored by the National Institutes of Health (NIH). Research paid for by the public to serve the public instantly became a private, and salable, good, one that is producing drug sales of more than $200 billion a year. Commercialization had both specific and broad effects. Readers of this journal and others are familiar with investigations into the control that research sponsors at pharmaceutical companies exert on the design and analysis of clinical trials (including the distortion of primary outcome measures in trials) and the issue of reporting, non-reporting, and biased reporting of results. Angell reminds us of the increasingly cozy relationships between big industry and the faculties of universities. Not only are narcissistic donors renaming the medical schools; they are buying access to the best minds of their faculties. Angell's examples of the large consulting fees paid by industry to individual faculty members and to NIH scientists and directors are astounding. The broader effects are felt in the commercialization of universities, medical faculties, and our profession. 

In 2000, in a letter written in response to Angell's Journal editorial, "Is Academic Medicine for Sale?" a reader supplied the answer: "No. The current owner is very happy with it." The increasing intrusion of industry into medical education and the almost complete domination of continuing medical education (especially regarding drugs) by the marketing departments of large pharmaceutical companies are a scandal. The same companies also spend heavily to lobby governments. 

According to Angell, Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry's U.S. trade association, has "the largest lobby in Washington," which in 2002 employed 675 lobbyists (including 26 former members of Congress) at a cost of more than $91 million. The result has been above-average growth in corporate profits during both Republican and Democratic administrations. 

The most recent and (at least to observers outside the United States) perplexing lobbying effort caused Congress explicitly to prohibit Medicare from using its huge purchasing power to get lower prices for drugs, thus opening up a dollar pipeline, in the form of higher drug prices, directly from taxpayers to corporate coffers. These changes, along with the cave-in by the Food and Drug Administration (FDA) in 1997 that permitted direct-to-consumer advertising to bypass mention in their ads of all but the most serious side effects, have further augmented profits. 

The overall effect has been a corruption not only of science but also of the dissemination of science. Angell documents that, contrary to what they claim, large pharmaceutical companies have "paltry output" in innovative research. In fact, as permitted by Bayh-Dole, pharmaceutical companies buy discoveries coming out of the basic-science enterprises, including universities and publicly funded granting agencies. 

The real costs of research on drugs by pharmaceutical companies are much less than the oft-quoted $800 million or so per new drug brought to market. Most of their research is on me-too drugs -- unoriginal, tax-deductible (and thus paid for in lost taxes by the public), and mostly unnecessary, except for corporate profits and executive bonuses. 

The Big Pharma companies are, in essence, manufacturing and marketing companies. Angell's concluding chapter, the least convincing one in an otherwise fascinating and penetrating book, contains the solutions, all of them predictable (and probably unattainable): control me-too drugs, re-empower the FDA, oversee Big Pharma's clinical research, curb patent length and abuse, keep Big Pharma out of medical education, make company financial statements transparent (so we can tell what the costs of research really are, as distinct from marketing), and impose price controls or guidelines. Granted, the problems are so prevalent and the corporate tentacles so entwined with our way of being that it is hard to see what else to recommend. 

But perhaps Angell is right. We must change the way we manage research and the development and distribution of new drugs. Not only are health and health care at risk, but so are the research enterprise and the reputations of universities and governments. The integrity of scientific research is too important to be left to the invisible hand of the marketplace. 

John Hoey, M.D.
Copyright © 2004 Massachusetts Medical Society. 

All rights reserved. The New England Journal of Medicine is a registered trademark of the MMS.

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The Darkening Age of MEDICINE / Mark Sircus AC., OMD

THE DARKENING AGE OF MEDICINE

The Darkening Age of Medicine

International Medical Veritas Association
Mark Sircus AC., OMD - http://www.imva.info/

Authors note: Almost a year ago I wrote the Dark Ages of Medicine but nothing could have prepared me for what I read yesterday from Reuters Health News on an essay published in Pediatric medical journal. If there is any article that single-handedly destroys the integrity of modern medicine and the field of pediatrics we have it in hand. It really is a sad day for medical science and medical journals for what has been published destroys the concept of peer review and the integrity of epidemiological studies and evidence. For those who might find, like I did, the following to be absolutely unbelievable you can verify at: LINK 

Click here to Read the Complete Article

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Lawmaker Says F.D.A. Held Back Drug Data - Sept.10, 2004 / By GARDINER HARRIS

WASHINGTON, Sept. 9 - The chairman of a House committee angrily accused the Food and Drug Administration on Thursday of withholding documents on the effects of antidepressants on children.

Holding a copy of an e-mail message from an agency official instructing others in the agency not to unearth the documents, Representative Joe L. Barton, Republican of Texas and chairman of the House Energy and Commerce Committee, said it demonstrated that the agency was deliberately defying the panel. He threatened to ask police officers to go to the agency's offices to retrieve the records.

"The F.D.A.'s lack of cooperation with the committee in obtaining relevant and responsive information in a timely fashion on a matter that involves the safety of our children leaves me wondering whether this is sheer ineptitude or something far worse," Mr. Barton said.

The warning came at a hearing of the Energy and Commerce Subcommittee on Oversight and Investigations into why the agency and seven drug makers had failed for years to warn doctors and patients that most antidepressants have not proved effective in treating depression in children and that some studies suggest they may cause some children to become acutely suicidal. In 2002, nearly 11 million prescriptions for the drugs were given to children, 2.7 million of them to children under 12.

Mr. Barton said the e-mail message was sent by Patrick McGarey, an official with the drug agency's Office of Liaison.

Later on Thursday, Jason Brodsky, an F.D.A. spokesman, denied that the agency had withheld documents. "We have provided all the information requested by the chairman's letter," Mr. Brodsky said, adding that the material provided ran to "thousands of pages."

The hearing comes in the midst of a growing controversy about not only the safety of antidepressant therapy in children but also the drug industry's longtime tendency to suppress the results of clinical trials that might undermine the sales of their drugs.

Seven top executives from drug giants like Pfizer, Wyeth and GlaxoSmithKline were sharply questioned about why the companies had collectively failed to publish or publicize results of studies showing that their drugs had not proved effective in treating teenagers and children. 

Late in the hearing, Representative Greg Walden, Republican of Oregon, read an internal memorandum from a GlaxoSmithKline marketing executive promoting the results of a study of the drug Paxil as showing "remarkable" efficacy in treating depressed teenagers and children. Actually, the study had failed to prove that Paxil was effective.

Dr. David Wheadon, a senior vice president at GlaxoSmithKline, responded that he "would not have used these particular words" to describe the study.

Representative Charles Bass, Republican of New Hampshire, asked an executive from Forest Laboratories why his company had published a study that showed a positive outcome for its drug Celexa while failing to publish - or discuss in the published study - a second trial that showed no benefit.

Dr. Lawrence Olanoff, a Forest executive vice president, said the published study was focused entirely on the one positive trial and was not intended to serve as a survey of other studies.

All the executives said they supported a proposal made this week by the Pharmaceutical Research and Manufacturers of America, the industry's trade group, to publicize all clinical trials in a timely fashion on a collective Web site. But some members of the committee said that such a voluntary agreement was not enough and that legislation requiring disclosure was needed. Bills are expected to be submitted within days in both House and Senate. 

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The Dirty Little Secret between the FDA and Drug Industry - August 26, 2004 / $1.2 billion to buy the FDA?

What you say! - NEVER? - well read the following.  This is yet again proof that the governments work for the industry under the pretense of looking after our interests.  Most new drugs are produced with expediency at the expense of safety and efficacy.  Frequently, they are not as effective as the older one's that they may be replacing...

Secrecy & Conflict of Interest

Why the Government "just said no" to Less Sugar

by Chris Gupta

"The Dirty Little Secret of the FDA and Drug Industry" article reprinted here and on the bottom of the page on this link:  www.agora-inc.com - article.

The Food and Drug Administration is at it again. It has recently become dependent on the multibillion-dollar drug industry that it's supposed to be policing.

With virtually no public debate, Congress has passed a law that dramatically increases the FDA's dependence on large drug companies for its funding. It's an expansion of a law passed in 1992 intended to speed up the approval process for new AIDS medications.

But this time the emergency was of a different sort. The FDA was running out of money to keep its new employees. Going before Congress and asking for more money amidst a war on terrorism was going to be a tough fight. And the drug companies offered an easier solution.

Negotiate a deal in secret, attach it to the widely popular bioterrorism bill, and the drug companies would pay for the FDA's new employees and more.

The details of discussions leading to this 'solution' were never made public.

 According to a recent article in the Washington Post, the program was created in private meetings between the industry and the FDA. It was never debated or voted on in either chamber before going to the negotiators.   And it's moving forward before a General Accounting Office review of the current program can be finished and made public.

According to the Post, the user fees from pharmaceutical and biotechnology companies would add almost 500 employees to the FDA centers that review proposed new drugs. That would bring the FDA workforce funded by the drug industry to at least 1530. And that would constitute more than 55 percent of the FDA staff involved in reviewing drug applications.

'What was the price of the FDA sellout? $1.2 billion over the next five years.

The report that's due from the GAO is supposed to tell us how well the public has faired under the current smaller program of drug company support for the FDA's drug approval process. But the truth probably won't come out:

	Over the last 10 years, the FDA has approved nine drugs that proved to have deadly side effects.
	The Journal of the American Medical Association estimates that 125,000 Americans die each year from the side effects of FDA approved drugs.
	The FDA approved the sale of Baycol (later found to cause fatal rhabdomyolysis) and continues to approve the use of other 'statin drugs' to lower cholesterol that are also associated with this deadly side effect.
	Beefed up by drug company funds, the FDA has aggressively suppressed natural alternatives to drugs. Red yeast rice, for example, known to be a safe and effective alternative to cholesterol-lowering drugs, was banned by the FDA in 2001.

The next time you are offered a drug, ask questions. Why do I have to take it? If I take it, what's the plan to get me back off? Are there alternatives? What are the side effects? How can I get more information?

Most importantly, keep yourself healthy. If you need help to get back to good health, choose as natural a therapy as possible. You will be less vulnerable to these dangerous products of a questionable approval process.

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Business Week - August 18, 2004 / Drugmakers "Blackmail the Public"

Author Marcia Angell says her research shows their huge influence over Congress, the FDA, and doctors is harming Americans.

After she stepped down in June, 2000, as interim editor-in-chief of the New England Journal of Medicine (NEJM), Dr. Marcia Angell decided to write a book about biases in clinical trials. As she was doing her research and writing, she realized that "all roads led back to drug companies."

Angell decided there was a bigger story to tell -- about the vast influence the pharmaceutical industry has over how medicine is practiced today.

During her 20-year career at NEJM, Angell had watched drugmakers expand their sway. They became the main sponsors of clinical testing and physician education and are also a critical source of funding for the Food & Drug Administration. "I finally decided just to bite the bullet and write about [the industry]." The result is The Truth about Drug Companies: How They Deceive Us and What to Do About It, which arrives in bookstores in late August.

The book provides a detailed account of the intimate interconnections between drug companies and every other player in the health field --including medical journals, doctors, government agencies, Congress, universities -- and how such relationships harm the public. Dr. Angell recently spoke with Business Week Online reporter Amy Tsao. Edited excerpts of their conversation follow:

Q: You give a very troubling account of the drug industry's practices. What, in your view, are the big truths that it doesn't want the public to understand?
A: I would say they're threefold. One, they spend relatively little on R&D -- less than they make in profits and far less than they spend on marketing and administration. What the industry does is essentially to blackmail the public. It says: "We're the source of your miracles, of your innovative drugs, and therefore don't mess with us."

The second truth is that they're not particularly innovative. Their major product is "me-too" drugs -- and even the innovative drugs that they do produce are almost always based on research that's been done at taxpayer expense [and] funded by the NIH [National Institutes of Health].

The third truth is that they have pretty much had their own way because of their control and influence over the institutions in society that really ought to be checking them. They have pretty much bought and paid for Congress. They have a lot of influence over the FDA through user fees they pay [to have their drugs reviewed by the agency], and they have way too much influence over doctors and the medical profession generally.

Q: You mentioned that in other countries drug companies can sell medication for a profit, [but] there are price controls. What's the difference between the profit margins in the U.S. vs. countries where there are price controls?
A: I don't know the answer to that. That's another way they're very secretive. We do know that they make a profit in other countries because they aren't charities. They don't give drugs away. But let's assume that they did.

Look at the year 2002, when the profit margin for the 10 [drug]companies on the Fortune 500 list was 17% of sales, and sales in this country amounted to about half of their worldwide sales. You can calculate even if they made no profit whatsoever in the rest of the world, they would still come out with at least an 8.5% profit margin. And that would be higher than the median of the other Fortune 500 companies that year, which was 3.1%.

Q: What role should physicians play in curbing some of the industry's marketing influence?
A: I think my harshest criticism, perhaps, was not for the industry but for my fellow physicians and the medical profession. After all, the industry is in business to make money, but that isn't what doctors and medical schools should be doing. They don't have to be in bed with the drug companies. But they are.

Drug companies finance most of the continuing medical education of doctors, as well as meetings of professional societies. They lavish all manner of gifts on doctors in practice, including dinners in luxurious restaurants and trips (ostensibly for educational purposes) to exotic resorts. And they provide speakers and meals for interns and residents in teaching hospitals. The profession should acknowledge that this is all a form of marketing, which adds to the prices of prescription drugs. Doctors should take responsibility for their own education and buy their own meals.

Q: What about medical journals? Are there enough safeguards in place to make sure that the right research is published?
A: There are two issues in that question. One, is the research valid, and can we trust it? And I'm concerned that increasingly, we can't – that the sponsors introduce all kinds of bias in the designs and analyses of the study and that some of the more interesting data are suppressed.

The second issue is whether journals are publishing the most medically and scientifically important research or whether they're publishing studies that are preferentially favorable to the industry. The answer depends a lot on the journal.

I don't think the big distinguished journals, the reputable journals, like the New England Journal of Medicine or the Journal of the American Medical Assn. are selecting papers to publish because they're favorable to sponsors. Not at all. [But] I think many journals are publishing papers that are favorable to the industry because they're totally dependent on the industry for advertising revenues.

Q: We're seeing many individuals -- even whole states -- buying drugs from abroad. What will be the impact of this?
A: I think the industry is going to use trade agreements to force other countries to let their prices rise. This is something that Mark McClellan, former FDA commissioner, talked about last year. Already, a recent trade agreement with Australia was designed to do that, and it gives the drug companies the right to prevent importing drugs from Australia. I think the intention is for other bilateral trade agreements do the same thing.

The real answer is to regulate prices here in some way, not to require them to go up [elsewhere].

Q: Is that a possibility?
A: Not as long as the pharmaceutical industry has the largest lobby in Washington and contributes so generously to political campaigns.

Q: What about legislative solutions?
A: The most important and most doable solution in many ways is to require that companies, to get FDA approval, have to compare [the new product] with older drugs already in the market, not just with placebos. The new drug should be shown to be superior in some way to existing treatments – more effective, safer, or substantially more convenient. This would pull the rug out from the me-too industry.

Q: What about the recent talk of clinical trial registries. Is that a solution?
A: All clinical trials should be registered in one central place. It should be a condition of enrolling human subjects. After all, human subjects don't sign onto clinical trials just for fun. They are hoping that this will yield knowledge. If that knowledge is suppressed, then they've been used in a misleading way. Research must be registered, and it should be done so at the inception of the study. The reason for registering it at the beginning is that it doesn't allow companies to shift the goal post as the trial goes on.

Q: What can individuals do to fight back?
A: One recommendation is to be aware that this industry speaks through many voices, and whenever anyone makes a pronouncement about drug prices or anything else dealing with prescription drugs, people ought to ask themselves if there is a conflict of interest. Often there is.

Patients have to become much more skeptical about claims that drugs will cure whatever ails them. There's reason to believe that some new drugs are not nearly as good as they're claimed to be, that doctors believe the claims as much as their patients do, and we have to remember that almost any drug has a risk of side effects. This isn't to say that there aren't important drugs on the market. They can be very helpful and even life-saving.

I'm not trying to say never take a drug -- but I'm saying that people should be reluctant to take drugs unless they're pretty sure that they're needed.

Edited by Thane Peterson

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New York Magazine Article - August 23, 2004 / Forecast on the Future of the Pharmaceutical Industry by James J. Cramer

Health-care stocks are headed downward whether Bush or Kerry wins this fall. 

How did these companies become the whipping boys of both parties, and Main Street and Wall Street? First, they deserved it.”

FOR A BRIEF moment, when the Labor De­partment reported that god-awful July jobs number showing an Uk-ok deceleration in the econ­omy, you saw investors reach for the drug stocks. For decades, when the economy softened, when a recession beckoned-as it surely does now-Big Money has bought Big Pharma because nothing's more recession-proof than drug-company earnings. Regardless of whether you are employed or out of work, you have to take, and pay for, costly medicines.

And then saner heads pre­vailed, the heads that realized that if this economy can't create more than 32,000 jobs per month in an election year, a new president-one even less healthy for the drug companies than the current one-might inhabit the White House five months from now. Immedi­ately, these once-loved equities sank like the stones they have been all year.

Rarely in all of the 25 years I have trad­ed stocks-including the years of the aborted Clintonista health-care plan - ­have drug stocks been as cheap as they are now. They trade at multiples to earn­ings-Wall Street mumbo-jumbo for relative-valuation yardsticks-that re­semble those you typically get for an Alcoa or a Dow Chemical or other former growth businesses that are now totally hostage to the vicissitudes of the U.S. economy. Despite their "cheapness;' they can't lift on good days and they go down harder than the market on bad ones. And if the election stays close, or if anyone believes for a moment that the Democrats will gain control of Congress, they will continue to trade even lower, perhaps much, much lower, right through to Elec­tion Day, because this industry has become public enemy No.1 for the

Democrats. And a Bush win hardly por­tends an instant cure. The Republicans, who see the same poll numbers, the ones that show big drug companies as less liked than even pump-gouging multina­tional oil companies, aren't about to stick their necks out to save pharma either.

Don't get me wrong. I love these com­panies. They are fantastic innovators that have created life-saving drugs-and thou­sands of jobs-for years. They are among our most valuable industrial jewels, wor­shipped by portfolio managers since the bull market began in 1982 for their fan­tastic growth and predictability. So how did they become the whipping boys of both parties, and Main Street and Wall Street? Why, after years of fending off pricing regulation through intensive lob­bying and political donations, have the drug companies at last been dealt a losing hand in Washington?

First, they deserved it. These companies have put through price increase after price increase year after year to meet the prom­ises of double-digit growth they have repeatedly made to Wall Street. Their in­ability to create new, blockbuster drugs has caused them to rely on those increases to make the esti­mates they live by. When they can't make the estimates, it seems they stuff the channel with product (as the SEC recent­ly alleged Bristol-Myers did; the company didn't admit guilt, but it settled the case earlier this month), or effectively give kick­backs to insurance companies, as Schering-Plough just pleaded guilty to doing. (Both companies agreed to pay gigantic fines for their shenanigans.) Drug com­panies have also acted terribly when their products come off patent, doing everything they can to fool the consumer into continuing to pay higher prices for so-called new formulas that aren't really new at all. They've also constantly sued generic manufacturers to block the in­troduction of copycat drugs af­ter the patents expire.

Second, with the big Medicare benefit just passed, the federal government will soon be buying 50 percent of the nation's drugs, up from 16 percent currently. It's true that the Feds don't negotiate direct­ly with the manufacturers to get bargains (which, of course, is just plain stupid, but the drug lobby won out on the issue). But if Kerry comes in, and Congress changes hands, you can bet that law will change. The result would be prices reduced by 50 percent for many, if not most, drugs. That would be cataclysmic for drug companies' earnings, and even though the stocks have taken a beating, they are nowhere near reflecting such an earnings crunch.

Third, the drug companies are the eas­iest link in the health-care chain for the Feds to beat up on, something that's nec­essary given that 14 percent of the GDP is now health care, 46 percent of that spending is done by the Feds, and health­care costs are rising faster than all other costs. It's much harder for the Feds to rein in the cost of hospitals or the cost of the caregivers than it is to control the prices of the drugs the Feds buy. Even though pharma pricing represents a much smaller percentage of the federal health-care budget than do these other elements, the drug companies have failed miserably at explaining to the public why their products cost so much, especially when they cost so little in other coun­tries. Surveys hatched by broker Sanford C. Bernstein & Co. in a recent cautionary report about pharma stocks spotlight the issue starkly: Drug costs rank above corporate misconduct and the federal budget, voters say, as a source of their economic woes; most adults fear they won't be able to afford new drugs; and 73 percent of adults say prescription drugs are a key factor in how they intend to vote. Worse, polls show over and over again that most voters simply don't un­derstand the value proposition of life­saving drugs-that the companies should be able to recoup the cost of R&D over the twenty years of a patent's life. In oth­er words, the public despises the drug companies, no matter how many life­saving ads they bombard us with.

Finally, the drug companies have been their own worst enemy, headline-wise, of late. Hardly a day goes by when one of them isn't accused of hiding negative data about antidepressants and teenage suicide, or exaggerating the claims of the patented anti-congestive-heart-failure drugs versus generics, or understating the side effects of expensive anti-arthritis drugs.

So what should you do? To use the methodology I employed successfully for years at my old hedge fund, I'd short these stocks into the oblivion they are headed to, and I wouldn't cover until the week before the election (by that point, health stocks should all be so thoroughly dis­counted for the worst-case scenario that it won't matter who wins; they will all rally). And then I would sell them again, be­cause under Bush or Kerry (and especial­ly under Kerry)-with the government now buying such a large portion of the nation's drugs, with price controls and the concomitant dramatic reduction in earn­ings- this sector is going to get sicker be­fore it gets well.

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Bloomberg - July 13, 2004 / U.S. House Democrat Says Agency Aiding Drugmakers

The U.S. Food and Drug Administration interceded in lawsuits on behalf of drug- and medical-device makers including Pfizer Inc. in cases alleging the companies' products harmed patients, a move Congressman Maurice Hinchey said is a ``radical new direction'' for the agency.

Hinchey, a New York Democrat on the House appropriations subcommittee that oversees the FDA, said agency General Counsel Daniel Troy has filed briefs aiding the cases of Pfizer, GlaxoSmithKline Plc and other manufacturers. The FDA said Troy acted properly and complied with legal and ethical standards. 

Read the whole story - click here 

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A Psychiatrist fights back / Dr. Stefan P. Kruszewski claims he was fired for blowing the whistle on drug company fraud

A psychiatrist has filed a federal lawsuit alleging that children have been harmed and even killed by the misuse of drugs he blames on aggressive marketing by drug manufacturers.

HARRISBURG, Pa. -  July 11, 2004:  A psychiatrist has filed a federal lawsuit alleging that children have been harmed and even killed by the misuse of drugs he blames on aggressive marketing by drug manufacturers.

Dr. Stefan P. Kruszewski claims he was fired in July 2003 from a consulting job at the Pennsylvania Department of Public Welfare because he reported "fraud and other violations of civil and criminal law constituting pervasive abuses."

Kruszewski accuses the drug companies of distorting statistics, violating regulations and exaggerating the effect of their psychotropic products - practices he says have victimized juvenile wards of the state, mental patients and prisoners.

Allegedly "corrupt practices" by drug companies described in the suit include overmedication of patients, fraudulent billing, abuses of Pennsylvania's involuntary commitment law and "mistreatment of children resulting in deaths in Pennsylvania, Texas and Oklahoma."

Don Bailey, Kruszewski's lawyer, said patient confidentiality rules prevented giving specific examples of patients who have died as a result of the alleged practices. 

Defendants include Public Welfare Secretary Estelle B. Richman; Columbus
Medical Services, the consulting company Kruszewski worked for; and drug makers Pfizer Inc., Johnson & Johnson, Novartis, AstraZeneca, GlaxoSmithKline and Eli Lilly & Co. The drugs at issue include Paxil, Neurontin, Gortan, Seroquel, Topmax, Risperdal, Trileptal and Zyprexa.

The suit was filed Thursday in Harrisburg federal court. The defendants or their spokesmen either did not return phone messages or declined comment Tuesday.

The suit says Kruszewski conducted medical reviews and appeals for Public Welfare and served as a medical-psychiatric consultant for the department's Bureau of Program Integrity.

Kruszewski seeks damages of more than $1 million for future lost wages and for allegedly being deprived of his right to speak out on matters of public concern without retaliation. He also alleges fraud, defamation and conspiracy.

Kruszewski did not return a phone message seeking comment on Tuesday.

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