Weekly Comment
Vioxx scandal points to deeper industry issues
high-profile drugs come under the spotlight as drug companies face
legal action over drug safety. It's make or break time for the
pharmaceutical industry as drug companies are possibly facing its
biggest crisis since the thalidomide fiasco almost fifty years ago.
With the prospect of ongoing litigation likely to drag on for decades and share prices in freefall, can the industry recover from the aftermath of this latest scandal and bounce back against the backlash that has eclipsed the importance of innovation and discovering new treatments?
It is the question which industry analysts are deeply divided over. For a long time now the reputation of pharma has been mixed to say the least. At best, the industry is seen as a provider of life saving therapy, pioneering the use of innovative research for the greater good of mankind.
At worst? An image of greedy multinationals, which capitalise on the ills of mankind for profit, seizing an opportune moment to develop and market drugs that knowingly pose a danger to its patients.
If the revelations that came out of the Merck case are to be believed, thenthe latter image predominates. Pharma will have truly hit a new low point.Merck has been accused of deliberately withholding information about the potentially fatal side-effects of Vioxx from regulators on both sides of the Atlantic. In its desire to rush its product on to the market, Merck was also accused of misleading doctors about the risks of the drug.
In an industry where first means everything, Merck's attempt to gatecrash the launch of rival Pfizer's Celebrex has ultimately proved disastrous. Celebrex was just one of a handful of drugs vying to become the first COX-2 treatment to appear on the market.
The profits would have potentially run into billions of pounds, and competing companies were spending millions on making and marketing their drugs. New drug, new class, old rivalries.
The stakes have never been higher. With declining R&D budgets, the lack of potential blockbusters in the pipeline and unrealistic expectations from the public and shareholders, big pharma seems to have succumbed to the pressure - with devastating consequences.
Pharma can point to the changes in the industry that began in the early 1990s. The advent of the blockbuster drugs on which big pharma have increasingly relied on also ushered in an era in which the focus shifted to profit-maximisation through heavy marketing, possibly at the expense of scientific inquiry. With worldwide sales nearly doubling since 1997 to around $500 billion and a healthy pipeline big pharma had little to complain about.
Fast-forward to the present and it is a different story. The industry finds itself in the dock, faced with an avalanche of litigation instigated by users who demand someone be held to account.
Pfizer is another drug giant also suffering from the shadow of the COX-2 cloud. Pfizer faces court action over Bextra, which in April, was pulled from the market because of safety risks. The US Food and Drug Administration also ordered Pfizer and 19 other popular prescription competitors to provide stronger warnings about possible cardiovascular risk in pain relievers.
GlaxoSmithKline and Novartis - who have not completely given upon the drug class - are said to have invested millions in clinical research to prove the safety of new COX-2s. These drugs are likely to be under scrutiny like never before, facing regulation of the highest standards.
Zyprexa, which earned Eli Lilly $4.4 billion (€3.6 billion) in 2004, was the subject of a $690 million settlement with thousands of users for its schizophrenia drug. The users had claimed that it increased their risk of developing diabetes.
In September last year, GSK settled a lawsuit over Seroxat after accusations that the firm were suppressing data showing a link between its product and teenage suicide. Since then, other drug firms have followed GSK's lead and begun to publish the results of clinical trials on the Internet.
Such is the power and influence that big pharma wields, perhaps it is the hesitancy in holding them to account that has resulted in the events of this week. Only now have they bowed to the pressure to disclose clinical data. Indeed, most of big pharma has followed suit in a clear display of openness as well as a sense of unity that is rare amidst the rivalry and competition.
Increased openness by big pharma is a step towards more responsible marketing as is pushing the emphasis back on R&D again. One could say the future of pharma hinges on the court's decisions, as any future outcome will hit drug company profits hard.
One likely outcome may see pharma re-evaluate their aggressive marketing of new drugs as soon as they come to market. This has been the serious subject of contention of which new restrictions are likely to come into play in the future.
They may also want to rethink their heavy reliance on a small, and in some cases dwindling, supply of blockbusters. Analysts have commented that Merck's unpromising pipeline will hurt its profits more than any legal challenges in the long term.
Whatever measures they decide to take, there is no doubt that the Vioxx case is another wake up call for the industry. Pharma has become a victim of its own success, raising the standard to a point where companies have felt the need to engage in questionable practices.
Whatever the court's decision, it will undoubtedly send a clear message to pharma that in the choice of profit vs. patient, the patients should always be the main priority.
