Drug Companies’ Dirty New Markets

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Author: César Chelala

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Faced with declining prescription drug sales in the United States, and having lost patent protection for many profitable drugs, the drug industry is relying increasingly on new markets, such as China and other fast-developing countries, including those in Africa. That expansion, however, is oftentimes tainted by unsavory commercial practices.

The Economist Intelligence Unit estimates $166 billion drug sales in China by 2017, making it a natural market for companies looking for further growth. In Africa, although the size of the market is still small, the rapid growth of many big cities offers interesting opportunities for development.

Pharmaceutical spending in Africa may reach $30 billion by 2016, up from approximately $18 billion now. According to the World Health Organization (WHO,) Africa has 11 percent of the world’s population, yet it accounts for 24 percent of the global disease burden.

The rebound of the economies in several Latin American countries has made the region an attractive market for drug companies. The Latin American market is estimated at $70 billion in sales. Brazil, which is the largest market in the region, grew by 10 percent in 2010, and is now worth $26 billion, according to IMS Health, a company that provides information services and technology to the drug industry.

Allegations in China

In China, relationships between doctors and patients are under stress. One of the reasons is the unethical relations between many doctors and several drug companies. Although the practice of bribing doctors is not new in China, new allegations have surfaced recently against some well-known drug companies. These demand new and more effective measures against this practice. According to some estimates, up to 30 percent of the cost of drugs is kicked back to doctors to increase sales.

There are several ways in which doctors are bribed by drug companies, from cash payments and all-expenses-paid trips, to presents for their families, and even to sexual favors. Drug companies also bribe hospitals to stock their drugs so that doctors can prescribe them.

Among the latest allegations is one against GlaxoSmithKline (GSK), accused that its staff had improperly used cash and other incentives to boost the prescription of Botox in China, which the British group sells under agreement with the patent holder Allergan.

Although China now accounts for only a portion of the company’s total earnings (about $1.2 billion in 2012 out of $40 billion in worldwide sales) the country is one of the company’s fastest growing markets.

Allegations against GSK are not limited to China. Last summer, the company agreed to pay a $3 billion fine to settle criminal and civil charges with U.S. federal and state governments resulting from illegal activities carried out for over 10 years. The British pharmaceutical group was accused of selling antidepressant medications in the United States for unapproved uses on children, while concealing critical evidence from the Food and Drug Administration.

In addition to GSK, several other companies have been accused of rampant bribery, among them Eli Lilly, Pfizer, AstraZeneca, Sanofi, Novartis, Novo Nordisk, and UCB. A former employee of Eli Lilly has accused the company of spending more than $490,000 to bribe doctors in China. Over the last year, both Eli Lilly and Pfizer have been accused of making illegal payments in China. The Swiss drug maker Novartis was also accused of bribing doctors to prescribe its anti-cancer drug Sandostatin LAR.

Africa

In Africa, drug companies have been accused of testing dangerous drugs on children or conducting drug tests without obtaining informed consent. In Nigeria, a panel of medical experts accused Pfizer Inc. of having violated international law during a 1996 meningitis epidemic by testing an unapproved drug for use on children. According to Nigerian officials, Pfizer’s illegal actions killed 11 children and left dozens of children disabled.

Pfizer never obtained authorization from the Nigerian government to give the untested drug to nearly 100 children and infants. Nigerian medical experts stated that an oral form of Trovan, the drug used in the test, had apparently never been given to children with meningitis.

Thirty Nigerian families whose children participated in the Trovan trial filed suit against Pfizer in 2001 under the Alien Tort Claims Act, to have the case heard in the United States instead of in Nigeria. On July 30, 2010, Pfizer agreed to pay $75 million in a settlement to have the charges dropped. According to WikiLeaks, however, Pfizer allegedly conspired to have Nigeria’s attorney general drop the charges instead of having to pay up.

According to a report by the Public Citizen’s Health Research Group in Washington, D.C., four companies (GlaxoSmithKline, Pfizer, Eli Lilly, and Schering-Plough) accounted for more than half of all financial penalties imposed over drug companies in the last two decades.

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