Dancing To Big Pharma’s Tune

Two researchers writing in the British Medical Journal have concluded that despite what they say, Big Pharma is putting peanuts into developing new drugs. Joel Lexchin, MD, York University Toronto, and Donald Light, PhD, University of Medicine and Dentistry Cherry Hill, N.J. claim that most of the big drug makers put the bulk of their bucks into “tweaking” their big sellers in an effort to stretch their patent rights out as far as possible and that, much more, the real big bucks go into marketing. 

Additional research published by Dr. Lexchin along with Marc-André Gagnon, Université du Québec, Montreal, adds to the evidence that the drug makers’ claims that they spend more, on developing new drugs than in pushing existing best selling drugs are nonsense. The oft quoted $1.3 billion cost to bring a new drug to market breaks down quickly under the researchers’ lens. Half of that figure is what the drug company could have earned had they invested their bucks in a high flying index fund over a 15-year period. Tax deductions and credits make up another quarter (that’s our money), whittling the cost down to $330 million. Wait, even that figure is based on the most expensive new drugs, the top twenty percent. When you figure in all new drugs they come in at about $90 million a pop; a lot of money but a long way from $1.3 billion dollars. 

Meanwhile the real money goes into marketing. While the big drug companies make it really hard to come up with any numbers, Lexchin and Gagnon dug deep into multiple sources and concluded that the most modest estimate they could come up with had the drug companies spending twice as much on promotion as on R&D. This shell game behavior is nothing new; fifty years ago Senator Estes Kefauver came to roughly the same conclusions at the end of his Senate hearings. 

The tons of cash Big Pharma’s “K” Street agents pour into the pockets of the Congress have road-blocked any progress. A House Committee recently blamed FDA regulations for crucial drug shortages. A survey of doctors put the blame on the drug companies. These people are playing with our lives and driving up the cost of healthcare. Senator Bernie Sanders has a great idea; instead of the tax breaks we give the drug companies, offer grants to companies that develop new drugs. The drug companies would score big profits immediately; an incentive to keep working on more new drugs. Drugs that would be available in generic form immediately.

As opposed to a system that now has the drug companies making deals with generic manufacturers that end up holding generics off the market for years. The so-called "pay-for-delay" scheme has generic makers challenging the name brand Pharmas’ patents in court. Then settling for a deal that keeps the patent holder out of the generic market once the patent does expire. The FTC has been fighting this scam for years. Congress even tried to bar the practice, but the “K” Street types cut those efforts off at the pass. And in the end the alley cat ethics of Big Pharma leave us with the bill.                                                                                                 © 2012 GLG

Banking 101

The “K” Street Banker Boys are pouring millions into the political arena in a desperate effort to hold on to the massive Las Vegas style gambling enterprise that characterizes too much of our banking sector today. Banking differs from Vegas in two important ways, however.

1)  When the bets the Wall Street Bankers place against the suckers (AKA “us”)  go against them, they just run to the taxpayers (us) who cover their losses. So they can’t lose. That’s too-big-to-fail banking.

2) The banks managed to get themselves immunized from the state lottery laws, so they can bet on anything. For instance, they could legally bet whether you will make your mortgage payment on time when they have no connection to you or your mortgage.

This set some of our biggest financial institutions onto a path focused on profit and the outrageous bonus structure that this gambling hall culture has spawned. A culture defended haughtily by JPMorgan Chase “Whiner-in-Chief” Jamie Dimon, who chose newspapers to justify the banker’s insane paychecks.

Duded out in his trademark 1950’s “Ducktail” do, Jamie is quoted, “Obviously our businesses have high capital and high human capital,” implying that nobody in newsprint land could compare. What nonsense. And, their capital –cash, that is– is not theirs, it’s ours, the billions we gave the banks to stabilize our economy. So what are they doing with our money? They are rolling the dice again, confident that we will bail them out again, when the dice come up snake-eyes again.

 “Proprietary Trading,” as the bankers like to call it, was a principle cause of the recession. This practice is a recipe for disaster. Here and there the milk-toast mild Dodd Frank Act does have a tooth left. The one dealing with proprietary trading, called the Volcker Rule, is facing a firestorm from the banking lobby. It would pretty much take gambling out of the banking business, push the bankers back into the real world where they can fail, and when they do, fail without taking the country down with them.

When Bill Clinton signed “The Commodity Futures Modernization Act” opening up Wall Street to gambling, Washington unleashed a chain of events that resulted in the collapse of the world economy eight years later. Wall Street began leaping one ethical barrier after another and today everyone but the bankers is suffering.

The folks who actually toil day in and day out for a living, like those struggling to find a workable journalism model, shouldn’t have to put up with sneers from a second-rate punk like Jamie Dimon. Banking at every level has but one reason to exist, to provide the capital that sustains our economic life. Dimon and his lot are clueless when it comes to that kind of banking.