Drugmakers Actually Make Lemons, Not Medicines?

The lemon, of course, is a metaphor and is not a pretty one. But Donald Light, a sociologist and professor of comparative health policy at the University of Medicine and Dentistry of New Jersey, contends that the spate of instances in which drugmakers hid or downplayed info about serious side effects - or overstated benefits - has transformed the market for medicines into one for lemons.

"The basic idea is simple but arresting: just as there are hidden dangers and flaws in used cars, so there are in drugs. And just as used car salesmen have an incentive to profit from not disclosing risks the consumer cannot see under the shiny exterior, so drug companies and their reps have an incentive to profit from not disclosing risks the physician and patient cannot see inside a shiny new pill. In a number of ways, however, drug markets differ from used car markets. One way is that bad drugs do not drive good drugs out of the market, as Akerlof famously predicted in the article that helped him win the Nobel Prize. Rather, they stay in, mixed with higher risk drugs," Light tells us, after presenting a paper on the subject at the American Sociological Association annual meeting last week.

According to his study, which is not yet published, independent reviewers found that about 85 percent of new drugs offer few if any new benefits. At the same time, though, prescription drugs are now a significant cause of death in the US due to toxic side effects or misuse. He notes that drugmakers spend "two to three times more on marketing than on research," which are dollars used to persuade docs to prescribe new drugs. But the docs, he maintains, may get misleading info and then pass along the same info to patients. In his view, this is a "two-tier market" for lemons.

And in his study, Light says drugmakers have taken advantage of this two-tier system information market and monopoly rights to create what can he calls "the risk proliferation syndrome," which consists of corporate, government, and medical practices that maximize the number of drugs put on the market with risks of adverse reactions and then maximize the number of people induced to take them.

Why is this so? He offers three explanations:

...drugmakers are in charge of testing; "firewalls of legal protection" behind which negative info can be hidden, and what he calls a "relatively low bar" for drug efficacy required for new drug approvals. He cited one study of 111 final applications for an approval in which 42 percent clinical trials lacked adequately randomization; 40 percent had flawed testing of dosages; 39 percent lacked evidence of clinical efficacy, and 49 percent raised concerns about serious adverse side effects. "The result is that drugs get approved without anyone being able to know how effective they really are or how much serious harm they will cause," according to Light.

UPDATE: PhRMA sends us this statement: "The notion that new medicines are ‘marginally innovative’ is insulting to patients whose lives are being extended or improved by these breakthrough therapies. The paper, ‘Pharmaceuticals: A Two-Tier Market …’ makes a number of other misstatements of fact, among them: - Disclosing medicines risk: The Food, Drug and Cosmetic Act requires that all significant risks be disclosed in medicines’ approved labeling – even if no causal connection has been proven between the medicine and the observed adverse events. These risks are derived from years of clinical testing, typically in thousands of patients, as well as in postmarket experience. To allege a lack of transparency about the risks of medicines is flatly incorrect and not grounded in the reality that the labeling for FDA-approved medical products typically bear dozens of pages of listings of side effects and warnings.

- Investment in R&D v. marketing spending: America’s biopharmaceutical research companies lead the world in discovering and developing medicines that allow patients to live longer, healthier and more productive lives. Our industry invested an estimated $65.3 billion in 2009 in discovering and developing new medicines. That R&D investment by America’s biopharmaceutical research companies is roughly double the overall annual budget for the National Institutes of Health. And, by contrast, the CBO reported that pharmaceutical manufacturers spent an estimated $20.5 billion on promotional activities in 2008. - 'Low bar’ for regulatory approval: For every 5,000 to 10,000 promising compounds tested, just five medicines will make it to clinical trials involving patients and, of those, only one will eventually receive FDA approval. Our member companies devote an average of 10 years to 15 years on complex research and development and spend up to $1.3 billion on R&D for each new medicine approved. In recent years, clinical trials have become even more complex and more time-consuming, according a Tufts Center for the Study of Drug Development study completed this May.