Jeremy Laurance: Health Check

Life-saving drugs can be a nice little earner
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Indy Lifestyle Online

This may sound perverse but sometimes I feel sorry for the drug industry. It has produced medicines for diseases that have blighted humankind for millennia – and cured them. Most of us would be sicker and die sooner without its nostrums. Yet instead of praising its success we complain about its profits.

Last week the Association of the British Pharmaceutical Industry called a press conference to explain why medicines in the UK are really rather cheap. It was an oddly hostile affair with a sceptical press goading Trevor Jones, the director of the association, and Bill Fullagar, the chairman of Novartis, to say something shocking such as "yes, we're interested in selling drugs".

The presentations were quite persuasive. We spend less in the UK on medicines than most of our European neighbours, spending is rising more slowly than elsewhere and the profit on NHS sales was just 17.4 per cent last year compared with an average of 44.5 per cent for the top 250 companies in the FTSE index.

It was slick, it was professional but it was also economical – with the truth. When journalists asked what the overall profitabilty of the pharmaceutical industry was – on exports as well as sales to the NHS which, in the case of a company such as GlaxoWellcome, account for over 90 per cent of their turnover – no figure was forthcoming. Mr Fullagar even appeared to have temporarily forgotten what profit his own company, Novartis, earned.

Everybody knows that the pharmaceutical industry is not short of a bob or two. Share prices of the major companies have soared in the past five years and spending on marketing in the sector is fabled for its lavishness. The industry thinks nothing of flying 1,000 psychiatrists half way round the world for a dose of data on a schizophrenia drug and a round of golf.

It was left to a drugs expert at the back of the room to volunteer eventually that overall profits of the companies ranged from below 10 per cent to "well over" 100 per cent. By then, some members of the press corps were sounding distinctly tired and emotional.

The drug industry has a major battle on its hands to win hearts and minds – and not only among hard-nosed reporters. I received a call this week from Professor Alyn Morice, the head of the drug and therapeutics committee of the Hull and East Yorkshire Hospitals NHS Trust, who was infuriated by the behaviour of companies that are bent, in his view, on stitching up markets to the detriment of the NHS.

What had angered him and his colleagues were decisions by three companies to withdraw well-known and widely used medicines – one for high blood pressure, and another two for coughs and allergies – and replace them with slightly altered substitutes.

By chance, all three of the original drugs happen to be nearing the end of their patents and in Professor Morice's view this was a cynical attempt by the drug companies to persuade doctors to switch their patients on to the new drugs – which will remain longer under patent because they are newer – before the patents on the old drugs expire and the market is opened up to manufacturers of cheaper generic alternatives.

"I think these are dirty tricks. It's a scam and it is reprehensible," Professor Morice said. In response, the drug companies say that the new drugs are cleaned up and improved versions of the old ones and that they will be better for the patients.

The old versions of the drugs, they say, are being withdrawn so as to reduce confusion, and the fact that these happen to be near the end of their patent life is merely a coincidence.

To me this has the ring of another economy with the truth. It is activities like this that give the industry a bad name. But I also happen to believe that a profit-based industry is the most likely to deliver new drugs. The industry should stop pretending otherwise and be more up-front about it.

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