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Drug Mis-marketing Costs Billions and Has Serious Health Consequences

May 8, 2015

The Center for Economic and Policy Research (CEPR) has issued a scathing report about the high costs and serious health consequences associated with the mis-marketing of prescription drugs.

According to the center, 2014 spending on prescription drugs totaled more than $373 billion (about 12 percent of national health expenditures). Prescription drug costs are now consistently the fastest growing component of health care spending. CEPR says the patent protection afforded to new drugs is a large factor in drug costs, with drug manufacturers often charging high prices for protected drugs.

Drug companies argue that patent protection-which grants the exclusive right to market a drug for a certain number of years-is necessary to spur innovation and research. Manufacturers say they need the protection in order to recoup the high costs of bringing a new drug to market. But CEPR says patent monopolies also provide incentives for companies to engage in improper behaviors.

For the report, CEPR examined five representative cases-the drugs Vioxx, Avandia, Bextra, OxyContin, and Zyprexa-each of which had faced legal actions over the concealment or misrepresentation of evidence about the drug's safety. In each case, there was either a court ruling against the company or a large settlement paid. CEPR calculated cumulative costs associated with the increased morbidity and mortality associated with these five drugs as $382.4 billion from 1994–2008, and this is just a small sample of new prescription drugs in those years.

The mis-marketing can take different forms; in some instances, the manufacturer conceals risks. Avandia (rosiglitazone), manufactured by GlaxoSmithKline, is a drug for the treatment of Type II diabetes, approved in 1999. Researchers discovered a significant increase in the risk of myocardial infarction and other cardiovascular incidents for Avandia users. According to the FDA, Avandia was responsible for approximately 83,000 excess heart attacks between 1999 and 2007. The company withheld the information but did ultimately reach a $3 billion settlement with the Department of Justice in 2012.

For the atypical antipsychotic drug Zyprexa (olanzapine), drug maker Eli Lilly was accused of marketing the drug for use in children and the elderly, two groups not approved by the FDA, making this an off-label use. Lilly was also accused of downplaying such serious side effects as obesity and diabetes. Lilly urged geriatricians to use Zyprexa to sedate elderly patients in nursing homes despite indications that the drug increases the risk of sudden death, heart failure, and serious infection in this population. The company reached a $1.4 billion settlement with the DOJ in January 2009 for off-label marketing. According to CEPR, off-label use can be "harmful to the public because it diminishes drug safety regulation, discourages companies from conducting or revealing internal safety studies, and incentivizes them to seek FDA approval for narrow "label use" that is easier to push through the approval process."

The group Public Citizen found 239 criminal and civil settlements greater than $1 million were reached with pharmaceutical companies between 1991 and 2012. Penalties for off-label marketing and other improper practices totaled about $30 billion. CEPR concludes, "profit margins from off-label marketing are apparently large enough that fines of this size are inadequate to put an end to the practice."

CEPR wants "all available safety data" to be given when a drug is marketed, but the report says patent protection "enables and encourages manufacturers to conceal adverse safety data that might harm sales and to seek approval for the narrowest indications for use, especially when they can promote the drug for off-label uses post-approval."

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