Big Pharma is the nickname given to the world's vast and influential pharmaceutical industry and its trade and lobbying group, the Pharmaceutical Research and Manufacturers of America or PhRMA. These powerful companies make billions of dollars a year by selling drugs and medical devices.
Big Pharma wields enormous influence over the prescription drug and medical device markets around the globe. In fact, in the United States, the industry contributes heavily to the annual budget of the U.S. Food and Drug Administration (FDA), which is charged with regulating drugs and devices made by those same companies.
The industry demonstrates its power, political might and social influence over the nation’s governments and agencies, its health care systems, its doctors and hospitals, as well as the psyche of the American people. With the help of staggering profits and 1,100-plus paid lobbyists, the industry has gained powerful leverage on Capitol Hill.
From 1998 to 2013, Big Pharma spent nearly $2.7 billion on lobbying expenses — more than any other industry and 42 percent more than the second highest paying industry: insurance. And since 1990, individuals, lobbyists and political action committees affiliated with the industry have doled out $150 million in campaign contributions.
The world’s 11 largest drug companies made a net profit of $711.4 billion from 2003 to 2012. Six of these companies are headquartered in the United Sates: Johnson & Johnson, Pfizer, Abbot Laboratories, Merck, Bristol-Myers Squibb and Eli Lilly. In 2012 alone, the top 11 companies earned nearly $85 billion in net profits. According to IMS Health, a worldwide leader in health care research, the global market for pharmaceuticals is expected to top $1 trillion in sales by 2014.
But the large amount of cash Big Pharma bestows on government representatives and regulatory bodies is small when compared with the billions it spends each year on direct-to-consumer advertising. In 2012, the industry invested nearly $3.5 billion into marketing drugs on the Internet, TV, radio and other outlets. The United States is one of only two countries in the world whose governments allow prescription drugs to be advertised on TV (the other is New Zealand).
A single manufacturer, Boehringer Ingelheim, spent $464 million advertising its blood thinner Pradaxa in 2011. The following year, the drug passed the $1 billion sales mark. The money in this business appears to be well-spent.
Who Is Big Pharma?
When it comes to drugs taken and devices used by the American public, a handful of parent companies come into view. Prescription drugs and devices manufactured by these companies bring in billions in profits, but may leave consumers with serious adverse side effects. The suffering experienced by users of the drugs and devices is hard to quantify.
In 2012, the top 10 pharmaceutical companies (by sales) are shown in the accompanying table.
|In 2012, the top 10 pharmaceutical companies (by sales):|
|Johnson & Johnson||$67.2 Billion||$65 Billion|
|Pfizer||$58.9 Billion||$65.3 Billion|
|Novartis||$56.7 Billion||$58.6 Billion|
|Roche||$47.8 Billion||$45.2 Billion|
|Merck||$47.3 Billion||$48 Billion|
|Sanofi||$46.4 Billion||$44.3 Billion|
|GlaxoSmithKline||$39.9 Billion||$41.4 Billion|
|Abbot Laboratories/AbbVie||$39.9 Billion||$38.9 Billion|
|AstraZeneca||$28 Billion||$33.6 Billion|
|Bayer HealthCare||$24.3 Billion||$22.5 Billion|
Operating in more than 150 different countries and employing 110,600 people, Pfizer is one of the world’s largest pharmaceutical companies and manufactures products in five areas:
- Specialty care and oncology
- Animal health
- Primary care
- Consumer health care
In 2009, Pfizer faced both criminal and civil allegations over illegal marketing of drugs like Bextra, Geodon, Zyvox, Lyrica, Neurontin, Detrol and Lipitor. Pfizer was accused of telling doctors that certain drugs could be used for unapproved uses, and defrauding the Medicaid program. The case ended with Pfizer agreeing to a $2.3 billion settlement and a five-year integrity agreement with the Department of Health and Human Services.
Additionally, Pfizer is responsible for selling drugs that can have serious side effects. For example, Effexor, the best-selling antidepressant of 2007 that was used by 17.2 million people that year, and Zoloft, an antidepressant used by 35.7 million people in 2011, have led to birth defects when taken during pregnancy. As a result, many families have sued the pharmaceutical giant.
Johnson & Johnson
Johnson & Johnson (J&J) is a family-centric pharmaceutical company that engenders trust by offering a variety of inexpensive but useful medical products like Band-Aids, Tylenol and Baby Shampoo. J&J is made up of around 250 subsidiaries and 129,000 employees and generated $67 billion in sales in 2012. Some of those subsidiaries, however, created products with disabling side effects.
Ethicon, a subsidiary of J&J, makes sutures and other surgical items, including vaginal mesh implants like Gynecare Prosima, Gynecare TVT Secure and Gynecare Prolift. These products were designed to treat pelvic organ prolapse and stress urinary incontinence, but instead Ethicon is facing more than 1,800 lawsuits over the products, after patients suffered from organ perforation, mesh erosion or other complications.
DePuy, another J&J subsidiary, also sold faulty products. DePuy’s ASR and Pinnacle hip implants contain metal components that can release metal debris into patients. More than 12,000 patients have sued DePuy over its hip implants, and J&J has set aside $1 billion to cover the ASR recall and hip lawsuits.
J&J is expected to be involved in litigation again soon – this time over its blood thinner, Xarelto. Xarelto is similar to another blood thinner, Pradaxa, which is associated with bleeding accidents and heart problems. Since there is no way to control bleeding in patients taking Xarelto or Pradaxa, even minor accidents can be life threatening. Pradaxa lawsuits are mounting, and Xarelto lawsuits could follow.
GlaxoSmithKline (GSK) is one of the world’s largest pharmaceutical companies. Based in Brentford, England, GSK was built through mergers of smaller companies that existed as early as the 1800s. It employs 97,000 people in three departments: pharmaceuticals, vaccines and consumer health care.
GSK’s once-popular diabetes pill, Avandia, is linked to an increased risk of heart attack, stroke and heart failure. The FDA estimates that the drug is responsible for 100,000 heart attacks and severely restricted use of the drug. Glaxo has settled an estimated 50,000 Avandia lawsuits so far.
GSK faced scandal once again when certain drugs, including Paxil and Wellbutrin (antidepressants) and Advair (for asthma), were marketed illegally . The court held GSK responsible for marketing the antidepressants and asthma drug for unapproved uses and also hiding the side effects of Avandia. The case ended in July 2012 with GSK pleading guilty and paying a $3 billion fine – the largest health care fraud settlement to date. Paxil is also associated with serious side effects like birth defects and suicidality.
Merck & Co.
Merck & Co., the second largest U.S. drug company, is a force to be reckoned with. Its parent company opened in Germany in 1668, and the U.S. company was established in 1891. Founded by Friedrich and George Merck, the company has 83,000 employees and its revenue for 2012 was $47.2 billion.
Vioxx brought scandal to the company, as thousands of users reported instances of cardiac side effects, including fatal outcomes. Tens of thousands of lawsuits targeted Merck. The company paid out billions of dollars in settlements.
Merck also faces litigation for Fosamax (to prevent bone loss), Januvia (for type 2 diabetes), NuvaRing (a birth control ring) and Propecia (to prevent male baldness). Using these products has resulted in devastating side effects for thousands of consumers. The Food and Drug Administration has spent time updating safety labels to communicate these dangers, and many people have filed lawsuits against Merck.
The Bayer Group, which celebrated its 150th anniversary in 2013, is a leading global innovator with 280 subsidiaries worldwide in the fields of health care, agriculture, synthetic materials and business services. The company employs 110,500 people and had $39.8 billion in sales in 2012. Bayer HealthCare is responsible for pharmaceuticals, diagnostic imaging, and popular over-the-counter medications and supplements like aspirin, Aleve, Alka-Seltzer and One A Day vitamins.
Bayer HealthCare is also known for its focus on women’s health needs, including its popular birth control pills Yaz and Yasmin and its IUDs Mirena and Skyla. Unfortunately, these products have been linked to serious, life-threatening side effects. The FDA warns that the hormone used in Yaz and Yasmin significantly increases the risk of dangerous blood clots. Mirena can lead to problems like device migration or expulsion, pelvic inflammatory disease and ectopic pregnancy.
Bayer has already spent an estimated $1 billion settling 4,800 Yaz lawsuits over blood clot-related injuries. Bayer faces thousands more lawsuits and has reserved $1.5 billion for settlements. Mirena lawsuits blame Bayer for intentionally selling a defective product. They also claim the company’s advertising misled consumers by exaggerating the benefits and inadequately warning of its risks—something the FDA has warned Bayer about.
Bayer’s blood thinner, Xarelto, could become a liability for the company in the future. Xarelto is similar to Pradaxa, which has been blamed for hundreds of deaths related to uncontrolled bleeding. Xarelto could lead to similar injuries, and lawsuits are expected to follow.
Eli Lilly & Co. is an international pharmaceutical manufacturer based in Indianapolis. Launched in 1876 by cotton-farmer-turned-pharmacist Colonel Eli Lilly, the company raked in total revenue of $22.6 billion in 2012. Eli Lilly employs more than 38,000 people worldwide, markets its products in 125 countries, and has manufacturing plants in 13 countries. The company specializes in the areas of diabetes, bio-medicines, emerging markets, oncology and animal health.
While known for such advancements as selling the first commercially available insulin and being among the first to mass-produce penicillin in its early days, Eli Lilly has also been linked to a variety of drug-related controversies and lawsuits. One of its most popular drugs, Prozac, is the target of multiple lawsuits that claim it can lead to suicidal thoughts and birth defects if used during pregnancy. Eli Lilly also has helped to market controversial products, including the diabetes drugs Actos and Byetta.
Boehringer Ingelheim, the world’s largest family-owned pharmaceutical company, develops and manufactures drugs for a wide range of medical conditions, including cancer, diabetes and hypertension. In addition, Boehringer produces drugs and biologicals veterinarians use for animal health.
Albert Boehringer founded the company in 1885, and its success continues to this day. Headquartered in Ingelheim, Germany, the drugmaker employs more than 46,000 people who operate its 145 branches worldwide. With the combined success of its top-selling drugs Pradaxa, Tradjenta and Spiriva, Boehringer achieved $19.4 billion in sales in 2012.
However, ongoing litigation related to the safety of some of Boehringer’s drugs may chip away at the company’s impressive profits. After reports of thousands of injuries and more than 500 deaths among Pradaxa users over a two-year period, patients have filed more than 1,700 lawsuits against Boehringer. All allege that the company concealed Pradaxa’s bleeding risks.
As Boehringer continues to struggle with regulatory fines over waste disposal and ongoing quality control issues at its factories, the company may also face lawsuits over Tradjenta, a diabetes medication Boehringer developed with Eli Lilly & Co.
Stryker Orthopaedics, which controls about 25 percent of the U.S. hip and knee implant market, started as a small business with a single product: a mobile hospital bed. The orthopaedic division is one part of Stryker Corp., which employs 20,000 people and reached sales of $8.7 billion in 2012.
Some of Stryker’s hip and knee implants have left patients needing costly and traumatic revision surgeries. Two of Stryker’s hip designs, the Rejuvenate and ABG II, come with metal parts that can corrode and cause metal poisoning and intense pain. An estimated 20,000 Americans received one of these devices before they were recalled in 2012. The number of hip lawsuits against Stryker continues to grow.
Stryker also marketed knee implants associated with disabling side effects. The Duracon, Scorpio and EIUS Unicompartmental Knee Systems have all been partially or completely recalled to protect patients. Stryker is facing lawsuits over EIUS implants.
Charles Russell Bard began a medical company in 1907 to help treat urinary discomfort. Today the business, known as C.R. Bard, employs 12,000 people and sells 8,000 products in the fields of oncology, urology and surgery. Operating in 90 countries, Bard brought in sales of 2.8 billion in 2011.
Unfortunately, not all of Bard’s ventures have been successful. Bard sold dangerous products such as heart catheters, mesh surgical patches and transvaginal mesh products. The transvaginal mesh products, which are used to treat incontinence and pelvic organ prolapse in women, have been associated with painful side effects, such as erosion and organ perforation.
Christine Scott filed a lawsuit after receiving a Bard Avaulta mesh product and suffering irreversible injuries. In July 1012, a jury held Bard responsible for $3.6 million in damages. That was the first of around 2,000 Bard mesh lawsuits to go to trial. Federal lawsuits have been consolidated into multidistrict legislation (MDL) in West Virginia.
Boston Scientific is a worldwide manufacturer of medical devices that researches, develops and sells an expansive line of products and technologies used to diagnose and treat medical conditions. The company provides solutions for neurological conditions, cardiovascular disorders, urological and gynecological disorders and diseases of the digestive system, airways and lungs.
Boston Scientific operates 12 manufacturing facilities across the globe and employs approximately 24,000 employees. It invested nearly $900 million in research and development in 2012 and brought in $7.25 billion in revenue. Despite the company’s multibillion-dollar income, Boston Scientific has faced numerous struggles in recent years, including involvement in costly litigation and blowback over complications with its transvaginal mesh products.
From 2010 through 2013, the manufacturer was wrapped up in patent infringement lawsuits with competitors Johnson & Johnson and OrbusNeich over its heart stent products. Starting in 2014, Boston Scientific will defend the first of more than 6,000 lawsuits filed over health complications with Pinnacle and Obtryx, two of the manufacturer’s mesh products.
AbbVie Inc. is a pharmaceutical company that spun off from Abbott Laboratories in 2013 and markets dozens of products. The Illinois-based group generates most of its revenue from Humira, an anti-inflammatory drug that is used to treat arthritis, and from AndroGel, a testosterone replacement therapy (TRT) gel that treats low testosterone (“Low T”) in men.
Humira treats rheumatoid arthritis, psoriasis, Crohn’s disease, ulcerative colitis and other autoimmune diseases. It was the world’s No. 1 drug in 2013, bringing in $10.7 billion. AndroGel generated more than $1.4 billion in 2013, and controls 60 percent of the TRT market. Those numbers will likely fall in 2015, when a generic testosterone gel is set to enter the market.
However, the company’s prized testosterone product could end up costing it a lot of money in court. AbbVie is fighting allegations that it failed to warn consumers about AndroGel’s heart risks for men, which has led to lawsuits against the drugmaker.
Cook Medical, a division of Cook Group Incorporated, is a global manufacturer of minimally invasive medical devices. The company offers approximately 16,000 products for a wide range of clinical specialties, ranging from surgery to oncology and women’s health. Established in 1963, Cook Medical employs nearly 2,500 employees and exceeds $1.7 billion in annual sales.
Personal injury lawsuits over two of Cook Medical’s product lines, Biodesign and Surgisis, have been added to multidistrict litigation related to transvaginal mesh complications. While the company’s surgical grafts are made with biological materials and not synthetic mesh, women have experienced a similar range of side effects, including severe pain, infection and tissue erosion.
Bristol-Myers Squibb (BMS) is one of the largest drug companies in the world, with nearly 30,000 employees and 2013 sales of $16.4 billion. The company is known for innovation in biological and pharmaceutical research, including the antipsychotic Abilify (which it helps market) and its blood thinners: Plavix and Eliquis.
BMS faces growing litigation over two of its diabetes products, Byetta and Bydureon. These injectable drugs are linked to pancreatitis and pancreatic cancer. With $517.7 million in sales in 2011, Byetta was a tremendous success for its developer, Amylin Pharmaceuticals. When Bristol-Myers Squibb acquired Amylin in August 2012, it gained control of its blockbuster diabetes medications – and possibly liability for the drugs.
Endo International is a small, specialty health care company with global headquarters in Dublin, Ireland, and U.S. headquarters in Malvern, Penn. The company employs several thousand employees worldwide. Endo develops manufactures, markets and distributes pharmaceutical products and medical devices through its four operating companies: American Medical Systems (AMS); Endo Pharmaceuticals; Paladin Labs; and Qualitest.
In May 2014, American Medical Systems settled 20,000 federal and state lawsuits over its transvaginal mesh implants for $830 million. A year earlier, the company settled a number of claims for $54.5 million. An estimated 5,000 mesh lawsuits against AMS remain.
Endo Pharmaceuticals, which is known for the narcotic painkiller Percocet, makes three testosterone products: Delatestryl, Fortesta and Aveed. Lawsuits over this controversial therapy are mounting, and this company could be the target of some of them.
Coloplast is a Denmark-based company that supplies “intimate health care products” — including catheters, ostomy bags, wound dressings, skin cleansers, antifungal products and vaginal mesh — to hospitals, retailers and directly to consumers in some markets. The headquarters is in Humlebaek, Denmark, with the U.S. headquarters in Minneapolis. The company employs 8,500 people in 55 countries.
Coloplast’s image took a hit in recent years due to litigation involving its transvaginal mesh products and reports of injuries caused by the implants. The company and several other mesh manufacturers face lawsuits in U.S. federal and state courts from women who report significant injuries from the devices. The total number of lawsuits is over 50,000, with Coloplast facing more than 1,200 in federal court and an unknown number in state courts.
In March 2014, the company settled 400 mesh cases for $16 million, amounting to $40,000 for each woman. The company has set aside DKK 1 billion ($186 million) to cover mesh lawsuits.
Daiichi Sankyo is a global pharmaceutical holding company and the second largest drug company in Japan. It makes pharmaceuticals for people and animals and manufactures medical tools and equipment. It also produces food, food additives, livestock feeds and agrochemicals.
Its top-selling blood pressure drug, Benicar (olmesartan medoxomil), brought in $3.1 billion worldwide in 2013, making up more than a quarter of the group’s sales. The patent expires in 2016, but the drug is already causing legal headaches for the company.
The company claims the drug is superior to other drugs in the angiotensin receptor blocker (ARB) class. However, according to research and the FDA, no other drugs in this class cause severe intestinal issues known as sprue-like enteropathy. Symptoms include chronic diarrhea and weight loss. Patients who suffered from these side effects filed lawsuits against Daiichi Sankyo, claiming they were not warned about the risk.
How Does Big Pharma Work?
Critics contend that Big Pharma uses manipulative, ubiquitous and expensive advertising to sway lawmakers, the FDA and the public, which in turn spurs on hypochondria and raises consumers’ health fears.
The American public is not the only sector of society influenced by Big Pharma’s techniques. Doctors, scientists and research organizations, medical journals, teaching hospitals and university medical schools all exhibit disturbing conflicts of interest between their publicly stated missions and their financial and ideological subservience to Big Pharma.
Doctors are still some of the most trusted people in our society. They study for many years, take an oath to “do no harm” and vow to depend only on accepted medical science to guide and support their professional conduct and decisions they make on behalf of patients.
But doctors complete some of their expert research with funds from Big Pharma. Private charities and foundations account for a mere 5 percent of the estimated $100 billion spent on biomedical research in the United States each year; pharmaceutical and medical device companies contribute approximately 67 percent.
Big Pharma also has a track record of hiring former government workers with valuable connections to gain political clout.
The trade group PhRMA has more than 50 current or former staff members who once served in the political arena, including:
- 36 who worked for a member of Congress
- 13 who worked for a federal agency
- 12 who worked for a congressional committee
- Two who worked for the White House
- One who worked in the courts system
Using these connections to pursue industry goals, Big Pharma has a significant competitive advantage over the public interest.
Big Pharma Sways Opinions
Doctors may be persuaded to allow ghostwriting, which involves Big Pharma paying physicians to attach their names to positive articles about a particular drug with the goal of seeing it published in a reputable medical journal.
Often the commentary is little more than an advertisement penned by a company-paid copywriter showcasing a newer product. Big Pharma used ghostwriting to promote numerous drugs, including the antidepressant Paxil, the recalled weight loss drug Fen-Phen, the anti-epilepsy drug Neurontin, the antidepressant Zoloft and painkiller Vioxx, to name a few.
In addition, even when a medical reviewer, who is an expert in the field, writes a comprehensive assessment of a new drug for a medical journal, it is common practice for those supposedly unbiased professionals to be on Big Pharma’s payroll.
In a 2011 investigation into conflicts of interest in medical literature, an international team of researchers reviewed the funding sources of 29 meta-analyses, or studies of past studies, that involved 509 individual drug trials. Researchers identified seven meta-analyses in which all studies mentioned were funded completely or in part by the manufacturer of the drug being evaluated — or where the study authors had direct financial ties to the drugmaker. In six out of the seven meta-analyses, investigators did not disclose the source of funding.
These slanted studies appear in medical journals that are widely hailed as collections of unbiased scientific evaluation and separated from the long financial arm of pharmaceutical industry influence. Yet Richard Smith, former editor of the British Medical Journal, says, “All journals are bought – or at least cleverly used – by the pharmaceutical industry.”
Big Pharma tends to weaken the objectivity of even the most honest health professionals while encouraging them to overprescribe medications. Consider the numbers:
- Advertising instead of research: For every $1 spent on “basic research,” Big Pharma spends $19 on promotions and advertising.
- Distribution of free drug samples: The United States has one pharmaceutical sales representative for every five office-based physicians.
- Sponsorship of symposiums and medical conventions: Drug and medical device makers spend lavishly on doctors, including covering meals, travel, seminars and conventions that may look more like vacations.
It is not uncommon for Big Pharma to pull its ads when those same journals question the accuracy of an advertisement, or run an article contrary to Big Pharma’s agenda. That kind of hardball intimidation has a chilling effect on editors and publishers who must weigh their scientific objectivity with the requirements of running a business, especially when Big Pharma can make up the vast bulk of a journal’s advertising revenue.
Indeed, many medical journals, including the esteemed Journal of the American Medical Association, actively vie for the attention of Big Pharma advertising dollars, billing themselves as the best way for drug companies to reach their professional readership.
Big Pharma and Researchers
Then there are medical researchers, who are hardly immune to Big Pharma’s financial power. Because drug companies are the principal sponsors of the clinical trials that researchers are paid to administer, too often the academics and scientists are hired hands who supply human subjects and collect data according to the instructions from their corporate employers. Sponsors keep the data, analyze it, write the papers and decide whether and when and where to submit them for publication.
Drug companies have discovered ways to stage-manage trials to produce predetermined outcomes that will put their products in the best light.
Bad drugs can be made to look good by:
- Comparing them with a placebo
- Comparing them to a competitor’s medication in the wrong strength
- Pairing them with a drug that is known to work well
- Shortening a trial before any bad results surface
- Testing in groups too small to provide valid evidence
Another popular research trick is the technique of “data mining,” wherein small subgroups of an unsuccessful trial are scrutinized in search of any group for whom a benefit does emerge, or seems to.
Finally there is selective presentation. A company may conduct 1,000 trials. If two are positive, they get FDA approval and are published. The other 998 never see the light of day.
Medical Schools and Big Pharma
Big Pharma has also infiltrated medical schools. Teachers, department chairs and deans are known to sit on drug companies’ boards of directors, and that influences educational content. Money from Big Pharma supports programs within many medical schools and teaching hospitals, and company reps are given access to young doctors to promote their wares.
The result is doctors not only receive biased information, but also learn a drug-intensive style of medicine. They come to believe that there is a drug for everything and that new drugs (of which they have many free samples) are always better than old ones.
In most states, doctors must also take accredited education courses, called continuing medical education (CME). The pharmaceutical industry provides a substantial proportion of the billions spent on CME annually and continues to use that support as a marketing tool.
In addition, academic centers are able to receive royalties from Big Pharma on any drug or technology they help to create and patent as a result of research, sometimes underwritten with government funds. Columbia University, for example, received nearly $790 million from licensing agreements with biotech and pharmaceutical companies during the 17-year life of its medical school’s patent on a method for synthesizing certain biological products.
There are hopes that the disquieting influence Big Pharma has attained from a lack of appropriate transparency and industry oversight will dwindle as new provisions from President Obama’s Affordable Care Act begin to take effect.
Since August 2013, applicable manufacturers of drugs, medical devices, biological agents and medical supplies have been required to collect specific information on ownership, investment interests, payments, and other items of value given to doctors and teaching hospitals. By March 31, 2014, companies must report this data to the Centers for Medicare & Medicaid Services (CMS), or else face punitive fines as high as $1 million per year. CMS is slated to publish records of these payments to a public website by September 31, 2014.
Lawsuits also reveal monetary persuasion offered to doctors. For example, two patients fitted with faulty hips manufactured by Stryker Orthopaedics discovered that the manufacturer paid their surgeon between $225,000 and $250,000 for “consultation services,” and between $25,000 and $50,000 for other services.
Big Pharma appears less interested in the health of the American public than it is in fulfilling its fiduciary responsibility to its shareholders. And because Big Pharma’s influence is so extensive, and self-interest is the motive of its giant network, the well-being of society may be in serious jeopardy.