USA Today reports on the Washington lobbying by US drug companies. They have doubled their spending on lobbying from $79.6 million in 1998 to an estimated $158 million in 2004.

Drug companies and their officials contributed at least $17 million to federal candidates in last year's elections, including nearly $1 million to President Bush and more than $500,000 to his opponent, John Kerry. At least 18 members of Congress received more than $100,000 apiece.

The industry also liberally funds think tanks and patient-advocacy groups that don't bear its name but often take its side; the National Patient Advocate Foundation, for instance, receives financial support from at least 10 drug companies. And the industry isn't above playing hardball, according to David Graham, a Food and Drug Administration scientist who got on its bad side.

Since 1998, drug companies have spent $758 million on lobbying - more than any other industry, according to government records analyzed by the Center for Public Integrity, a watchdog group. In Washington, the industry has 1,274 lobbyists - more than two for every member of Congress.

Of couse, pharmaceutical companies have a rational reason to lobby so hard. Thanks to the corporate welfare they receive, drug companies enjoy the highest profit margins of any US industry, almost four times the Fortune 500 average. It looks likely that, despite the lobbyists, the ban on free trade ("parallel trading") in drugs will be lifted. That will cut costs for American consumers - and without harming research and development of new drugs.

Alex Singleton wrote an interesting article for the Globalisation Institute which we reproduce here.

New drugs to counter the 'diseases of poverty' are hard to come by. As The Economist has pointed out: "About 90% of the planet's disease burden falls on the developing world. Yet only 3% of the research and development expenditure of the pharmaceutical industry is directed toward those ailments." The problem, commonly defined, is that poor people do not have an effective demand for new drugs. They are too poor to be attractive customers for Western pharmaceutical companies.

International Policy Network recently published a report, Incentivising research & development for the diseases of poverty, which makes some important points about the healthcare infrastructure of poor countries. The report's conclusion that the best way of dealing with the problem is for poor countries to become rich. In other words, they don't have an effective demand now: it's really important for them to get that effective demand.

In the shorter-term, the report discusses several ways that drugs to combat 'diseases of poverty' could be developed. One suggestion discussed is that drug companies who do work on third world drugs could gain extensions on the patent lengths of drugs aimed at the developed world. This is an unattractive proposal. Higher prices for pharmaceuticals cause less consumption. Thus, extending patent lengths on drugs in developed countries would have a negative effect on the health of those countries. In the US, where the uninsured pay the highest prices for drugs, it would be the uninsured that would suffer the most. It is perverse to try and help the world's poor by attacking health in the rest of the world.

It is difficult to see the idea working at all well in practice. The likely effect would be that companies would make considerable noise about working on drugs for developing countries in order to extract as much extra patent protection as possible. Pharmaceutical companies' profits would increase, but at the same time causing problems for consumers in the developed world. Their income would not be particularly related to the success of their third world drugs, so the normal market incentives would not exist. Moreover, there is a stack of evidence that pharmaceutical patent lengths are already overkill. Extending them further would be a remarkable thing to do, and politically difficult in America as the high cost of drugs is an important political issue.

So what should we do? Until poor countries have an effective demand, charitable development offers the best solution. Of course, Britain has a prominent charity doing non-profit development called Cancer Research UK. Now we need more such charities, but focussed on the world's poorest. The Economist has featured an interesting development: the Institute for OneWorld Health, which is a non-profit pharmaceutical company dedicated to the diseases of poverty. Charities are a better model than public sector development because there is competition between charities. They have to justify themselves to their supporters. There is distance between them and politics.

There is also a strong case for greater use of an 'open-source' approach to development, a la the Tropic Disease Initiative. A dispersed approach would enable scientists to volunteer some of their time, for charities to contribute to a range of projects, and for the inclusion of developing country scientists, which might in turn help improve the scientific base of the poorest countries.

In the IPN report, it is stressed that open source drugs ought to follow a BSD license rather than a GPL license. These are popular licenses in open source software development and use copyright law to determine what may be done with the software. In drugs, we are talking about patents, not copyright. What the report means is that pharmaceutical companies should be able to take an open-source developed drug, work on it a bit and then patent it. Given that a key purpose of open source development is to provide drugs at marginal cost, I am not sure whether this is going to be a popular idea. Moreover, such patents might have the effect of preventing open source developers from building on their own work. In software, the BSD license merely lets Apple build on BSD software and produce its Mac operating system. Apple's copyright does not prevent others from also building upon BSD software. But in drug development a BSD-style license might enable drug companies - through patents - to stop others from building upon open source drugs. That would not be a desirable outcome.

In the long run, wealth is what will eliminate diseases of poverty. But in the short-run, developing drugs for the poor is not an insurmountable problem.

U.S. states that have looked to Canada to help their residents win steep discounts on prescription drug prices are turning to Europe for the same deals because the Canadian government is considering shutting off the southbound flow. Illinois and three other states already have authorized reimportation programs that recognize shipments of prescriptions from such places as the United Kingdom and Ireland.

It's unclear how successful they and other state legislators might be with that initiative because there have been moves in Europe to restrict access to low-cost drugs across national lines. But lawmakers say it is important to explore every possible avenue toward cheaper prices.

States from Illinois and Wisconsin to New Hampshire and West Virginia have either authorized reimportation of prescription drugs from Canada or explored the idea. Several of them now have added Europe to the mix because Canada's health minister has said the government was considering significantly limiting sales to individual U.S. consumers.

"The idea was to spread the risk" of drug manufacturers cutting off supply to an individual country that reimported prescriptions to the United States, said Caleb Weaver, project manager of I-SaveRX, the initiative launched by Illinois and now available in Wisconsin, Missouri and Kansas. Vermont would join that program.

The European Court of Justice is considering whether manufacturers can limit supplies to countries with cheap prices. That would crack down on consumers who get their drugs cheaper from neighboring countries via "parallel trade" among European Union nations, according to the U.S. National Legislative Association on Prescription Drug Prices. There have been several such challenges in the past.

Patients blame the pharmaceutical industry for efforts to choke off supplies from countries where prices are low because of strict government regulation. They accuse the industry of using its economic muscle to force such national policy decisions.

"You actually have an industry that's bullying around countries," said House Health Care Chairman John Tracy, D-Burlington. "It's bizarre that we're even in this position."

Wanda Moebius, a spokeswoman for the industry trade group Pharmaceutical Research & Manufacturers of America (PhRMA), disingenuosly spins the line that the lobby group is concerned about the safety of drugs being imported to the United States and those concerns are increased by the possibility of importing from Europe. Really Wanda's worry is profits - European drugs are exactly the same and are regulated just as strenuously.

Wanda claims European imports could threaten safety because they could carry labels in languages that consumers don't speak. "There's no guarantee English will be used," Wanda said. "When you start going outside the U.S., you are opening yourself up to a number of safety issues." Wanda seems not to know which language the English speak.

Dr. Peter Rost, a marketing vice president with Pfizer Inc., told Vermont lawmakers Thursday that reimportation from Europe was a logical and viable alternative. Parallel trade, a version of reimportation among European countries, has operated successfully for 20 years, he said.

"Just authorizing a scheme where drugs come from Canada is doomed to fail," said Rost, who emphasized he was not speaking on behalf of his company. "You must look to the European Union." Despite the myriad obstacles, including opposition in Washington, state legislators continue to push for reimportation because consumers can save an average of 50% on the costs of drugs purchased in Canada.

"For very expensive drugs it really can be a lifesaver," said Sharon Treat, executive director of the National Legislative Association. "Unfortunately in this country many people don't have any kind of prescription drug coverage that approaches those savings, or any (coverage) at all."

Prescription drugs are big business and have become a big political issue. A recent federal report said retail sales of prescription drugs amounted to $179.2 billion in 2003. That represented 11% of all health care spending. Precise estimates are hard to come by but between 1 million and 2 million Americans get their drugs from Canada. The Canadian model developed after U.S. Rep. Bernie Sanders, I-Vt., began staging high-profile bus trips to Canada more than five years ago. He took senior citizens to Montreal and its suburbs, where they got so-called maintenance drugs at significant savings. Maintenance drugs are those that patients must take regularly to care for a chronic disease such as high blood pressure.

What has developed since then is an Internet-based system in which a prescription from an American doctor is co-signed by a Canadian physician, filled and then shipped to the United States. Sanders unsuccessfully sought in the federal Medicare bill to explicitly authorize reimportation from Canada and 18 other countries.

"While we don't think it would necessarily be bad if it was just Canada, we think it's important that the state of Vermont as well as the federal government open as many markets as possible so you don't give the government and pharmaceutical companies so much power to manipulate the situation," said Sanders spokesman Joel Barkin. "We are encouraging Vermont and the federal government to look for any licensed pharmacy outside the U.S. where people can find affordable, safe drugs."

The first of the Pharmopoly campaign Critical Commentary on Pharma & Politics is now available to download.
Donald W. Light and Joel Lexchin are the authors of The International War on Cheap Drugs. Donald W. Light is Professor, University of Medicine & Dentistry of New Jersey and Fellow, Center for Bioethics, University of Pennsylvania. Joel Lexchin is Associate Professor, School of Health Policy and Management, York University, Toronto.

The commentary covers the objectives and efforts of Big Pharma to undermine Free Trade Agreements and redefine the language of trade negotiations in their commercial interest. It deals with the myths put out by Big Pharma's lobbyists in Washington for domestic consumption - particularly about Europe's "free ride". It highlights the need for transparency and the links between lobbyists and the politicians they back financially.

Sandoz, the generic manufacturing affiliate of Novartis, is under investigation by the Serious Fraud Office (SFO) for alleged criminal marketing practices. The SFO is investigating activities at Sandoz to ascertain if it broke criminal and competition law while selling its products between January 1996 and December 2000.

Sandoz manufactures an extensive range of generic drugs in the UK, including tamoxifen and ibuprofen. However, both Novartis and the SFO were unable to comment on which drugs are being investigated.

During the four-year period in question, Sandoz traded as Lagap Pharmaceuticals and was not part of the Novartis portfolio but as an affiliate of the Swiss-based pharma company today, if Sandoz is found guilty it could be costly for Novartis. The inquiry into the generic affiliate's activities is part of a widening investigation by the SFO into price-fixing by pharma companies.

In April 2002, the SFO launched a major investigation into a suspected conspiracy to defraud the NHS through price-fixing on prescribed penicillin-based antibiotics and warfarin between January 1996 and December 2000.

The SFO is now planning to interview leading figures, a spokesman for the SFO confirmed that other, so far unnamed, individuals would also be called for interview. News of the investigation came as Novartis chief executive admitted that big pharma had lost the trust of consumers and regulators.

An arthritis drug withdrawn on safety grounds last year probably killed many thousands of patients, a new study suggests. Researchers said the drug Vioxx may have caused between 88,000 and 140,000 serious heart problems in the United States alone since its introduction in 1999.

With heart disease death rates in the US running at 44%, many of these cases were likely to have been fatal, it was claimed. Vioxx, which has the scientific name rofecoxib, was prescribed to 400,000 patients in the UK. It was taken off the market at the end of September after a three year trial linked it to an increased risk of heart disease events.

The study published on-line today by the Lancet medical journal analysed data from 1.4 million Californians who had used various kinds of non-steroidal anti-inflammatory drugs (NSAIDs).

Among them were 27,000 patients who had been taking Vioxx, which belongs to a family of drugs known as Cox-2 inhibitors. A total of 40,000 were given another Cox-2 inhibitor, Celebrex, while others were taking ibuprofen or naproxen. The investigators, led by David Graham from the US Food and Drug Administration's Office of Drug Safety, found that 8,143 had suffered from serious heart disease between 1999 and last September.

Of these, 1,508 died suddenly from a heart problem.

Professor Donald W. Light, a fellow of the Center for Bioethics at the University of Pennsylvannia, says Big Pharma has declared war on the price of patented drugs in Europe, Australia and other affluent countries. It hopes to counter efforts within the U.S. to lower domestic prices, aiming instead to raise prices everywhere to U.S. levels. The goals pursued in the Australian and other Free Trade Agreements (FTAs) are to:

- Restructure internal markets to raise prices on patented drugs
- Extend patent protection and data exclusivity to delay generic competition
- Block cheap exports to the U.S

A feature in this campaign is doublespeak.

"Competitive liberalization" means competitive restrictions, or liberalisation from competition. "Free trade" means restricted trade, or the ability to trade freely at prices set by drug companies. "Free markets" for patented drugs means free from normal competition so that the longer competition is delayed, the "freer" the market is said to be. "Openness" means opening other countries' price setting processes to drug company influence. "Reimportation" refers to the global free trade in drugs, but makes it sound like a bizarre unnatural act.