In sickness and wealth: drugs firms on trial

Millions owe their lives to their products. So how did their reputation come to fall so low?

And yet the industry's reputation is in tatters. In recent months rows have raged about controversial treatments, from breast cancer drugs to vaccines for bird flu, while the sector has for some time now been accused of sins ranging from skewing the results of clinical trials to putting drugs out of the reach of the poor.

So it is little wonder that many hate drug companies - though, as one analyst wryly notes, only until they get ill. Here The Independent on Sunday looks at both sides of the argument consuming one of the world's most talked-about industries.

Case for the defence

The biggest argument pharmaceutical companies have in their favour is that they make products that not only save lives but have changed the very way we live our lives.

And the industry believes that in this healthier day and age we have lost sight of this. "We have got to educate people as to how this all works," says an insider at GSK. "Not everything is certain and there's a lot of money spent on products that don't make it. But if you do get something on the market, it will be good and it will help millions."

The number of new breakthrough treatments may have slowed but they are by no means behind us. In the 1980s, HIV often led quickly to Aids as there was no way to delay the onset. Now, antiretroviral drugs mean that people with HIV live long, healthy lives. And only this month, Merck unveiled a vaccine for one of the most common forms of cervical cancer, a disease that kills thousands and can leave women unable to have children.

This sort of drug development does not come overnight, or cheap. According to the Association of the British Pharmaceutical Industry (ABPI), the average cost of developing a drug is £550m and it takes 10 to 12 years. Patents, ensuring that no one else can steal all that hard work and knock out cheap copies, last for 20 years - but minus the period spent in development. And if the drug is not a blockbuster, that is scant time in which to cover costs and turn in a profit for shareholders.

Prices for the finished product are also controlled in Western Europe. In the UK, the Pharmaceutical Price Regulation Scheme (PPRS) limits the amount of profit companies can make on sales to the National Health Service. "It's about trying to ensure that the NHS gets medicines at reasonable prices and that the industry gets a fair and reasonable return so it can continue its research into new medicines," explains an ABPI spokesman. "Over a period of time it has meant that the UK has retained a successful research industry while others have lost out. In detail it is arcane but in general it works."

And despite the high costs and risk, research and development is what the industry does best. In the UK, three-quarters of drugs R&D is done by the industry. The rest is carried out by academics, charities, the Medical Research Council (MRC) and the NHS. But a large proportion of that focuses on the actual illnesses rather than finding cures.

Industry is the only body willing to take on the risk, so it is little surprise it expects, at some stage, a healthy return for its pains. As the ABPI spokesman points out, Russia nationalised its R&D function under Communist rule with disastrous results. "In all that time, they came up with one major drug, and nobody can ever remember what it was."

Headlines are full of products that have been through R&D, including clinical trials, and were approved by regulators, only for subsequent side effects to cause the drug to be pulled. But clinical trials, as a matter of scientific course, focus on groups of between 4,000 and 6,000 people. So, for example, a side effect that occurs in one in 10,000 people is unlikely to be discovered.

The industry is not entirely impervious to its reputation, however, and efforts have been made to address it. The ABPI has reviewed the way companies promote and market their products, and has also compiled a global database of clinical trials. Other moves, claim industry experts, include the regulator, the Medicines and Healthcare products Regulatory Agency (MHRA), accepting it needs to be seen to be free of industry influence, and pharmaceutical companies supplying drugs at a cost to poor nations.

Things are also improving on the stock market, and this week's third-quarter numbers from GSK and AstraZeneca are likely to show growth in both volumes and margins, as costs are cut. For all the hype, the drugs, it would seem, really can work.

The case against them

"We have unrealistic expectations of medicine. We're consumed about ideas of our own mortality. The motives, interests and modus operandi [of the pharmaceutical companies] encourage us to believe that drugs are in some sense a route to salvation. They have totally exaggerated the benefits of their products." So argues Charles Medawar, one of the staunchest critics of the industry. He is a director of Social Audit, a charity that is part of the Public Interest Research Centre and has carried out investigations into the growing use of antidepressants. He is not a lone voice. Many, from the man on the street to authorities such as Richard Horton, editor of The Lancet, are growing increasingly, and vocally, disenchanted with the pharmaceutical business.

It is accused of being too powerful, of not being properly controlled, of stifling independent debate and having little transparency. Clinical trials, opponents claim, are flawed but hard marketing ensures doubts are swept under the carpet.

Critics also claim that profits are put before everything, meaning that drugs are overpriced and HIV sufferers in Africa go without. The World Health Organisation wants three million people in developing countries to be on Aids drugs by the end of this year and, after growing public pressure, the companies now sell drugs to African countries at cost. But that is still expensive and they refuse to provide free drugs because they are worried they will be sold on. "They are trying to make themselves look like benefactors by selling at low prices," says Tony Harrison, a senior researcher at the King's Fund health think-tank. "But the companies have got to make money. They will never be free because of the risks of undercutting their own markets in other areas through exports."

The industry's involvement in Africa and the HIV/Aids crisis has been suspect from the start. The pharmaceutical companies caused outrage when they took the South African government to court to try to stop it importing cheaper, and desperately needed, generic copies of HIV and Aids drugs.

And only last week, as the world worried about a possible flu pandemic, Roche's shares soared as investors calculated how much money the company would make from its vaccine Tamiflu (although the company has now agreed to license the drug to generic rivals as demand soars).

Cancer patients, meanwhile, end up in court as they fight to receive the best - but expensive - treatments, as witnessed in the row over the breast cancer drug Herceptin.

The treatments themselves are often just as controversial. A US court recently found against Merck in a case arising from the death of a patient taking Vioxx, its blockbuster painkiller, which has been shown to increase the risk of heart attacks and strokes. During the case, which Merck plans to appeal, documents were produced that appeared to prove the company had deliberately hidden its own concerns about the treatment. The whole issue was brought to light only after a whistleblower at the US Food and Drug Administration went public last year and revealed his concerns.

"The industry has produced some great products, but in the past it has behaved atrociously," says Mr Harrison. "The trend now seems to be turning. There seems to be a general recognition that it has got away with too much. However, it's still not a fundamental change." He believes the Government should be more involved to ensure unprofitable areas of research are not neglected. "The public sector has got to play a bigger role, making sure the gaps the industry will never look at are filled. It must pay, or provide incentives."

Campaigners also want the industry - powerful yet, for many, unaccountable - to clean up its act. That includes publishing the data of ongoing clinical trials and putting less emphasis on profits. "The starting point has to be complete transparency," says Dr Medawar. "The industry is, frankly, running riot. It's like the 19th-century chemical industry in externalised costs: shove the pollution up the chimney and not give a damn about who lives downwind."

Nor is the situation good for investors. Robin Gilbert, an analyst at Numis Securities, says: "Drugs companies globally have been struggling and stock prices have not performed well. They are spending huge sums on research, but are not generating new products."

Generic companies, meanwhile, have gone from strength to strength as governments get tough on prices. Two of the UK's biggest pharmacies, Boots and Alliance UniChem, are set to merge and one of their strategies is to distribute generic drugs across Europe. And in the US the FDA is taking a tougher stance, and lawyers are scenting courtroom success.

Dr Medawar sums up the industry's predicament. "It is a victim of its own success. It has raised expectations extremely high, because in the past 50 years it has produced a few dozen really good drugs. But now [companies] are so big, so influential, so powerful, that they don't have qualitative and quantitative feedback that allows them to see where they are going wrong."

Investors can be won over by the hope of strong sales or a promising pipeline. Yet few others are so easily convinced - and the sector has a mountain to climb to achieve a reputation it can be proud of.

Big Pharma and its Blockbusters

The world's top 10 pharmaceutical companies, listed according to their market value

Pfizer, US, $161bn

Viagra (erectile dysfunction), Celebrex (painkiller), Lipitor (cholesterol lowering), Zoloft (antidepressant)

GlaxoSmithKline, UK, $147bn

Advair (asthma), Paxil CR (antidepressant), Combivir (HIV)

Novartis, Switzerland, $146bn

Diovan (hypertension), Gleevec (cancer)

Roche, Switzerland, $127bn

Tamiflu (influenza), Avastin (colon cancer), Mabthera (lymphoma), Heceptin (breast cancer)

Sanofi-Aventis, France, $114bn

Lovenox (deep vein thrombosis), Plavix (thrombosis), Avapro (hypertension), Ambien (insomnia)

AstraZeneca, UK, $74bn

Crestor (cholesterol lowering), Nexium (ulcers)

Wyeth, US, $62bn

Effexor (antidepressant), Prevnar (meningitis), Enbrel (arthritis)

Merck, US, $59bn

Gardasil (cervical cancer vaccine, to be launched), Zocor (cholesterol lowering), Vioxx (painkiller, withdrawn but FDA to review)

Eli Lilly, US, $58bn

Prozac (antidepressant), Zyprexa (schizophrenia), Gemzar (pancreatic cancer)

Schering-Plough, US, $31bn

Remicade (auto-immune conditions), Clarinex (allergies)