Epilepsy drug power play
An article in a recent Wall Street Journal ("Industry Fights Switch To Generics for Epilepsy". 7/13/07) documents how the power of an oligopoly is used to blunt innovation and maintain pricing levels.
The situation is this. Several major pharmaceutical companies (GlaxoSmithKline, Abbott Laboratories, UCB, Johnson & Johnson) now sell a variety of patented drugs for treating epilepsy, under the names Topramax, Depakote, Lamictal, Lyrica, and others. These drugs bring in $5 billion of gross sales. One problem - the patents will run out over the next few years and a new set of less expensive generics, copycat drugs, are poised to change the market.
Thus begins the epic struggle. The big patent drug companies want to hold on, one way or another, to their exclusivity, holding the clock back on the process of patented drug turning into less expensive generic version.
Now there exists a nonprofit organization called the Epilepsy Foundation, one that acts as an advocate for epilepsy patents, and which has branches in every state. That foundation has acted as a watchdog, according to the article, overseeing the FDA approval of epilepsy drugs, whether patented or generic, and pushing the FDA to do more careful testing about side-effects.
Now it just happens that the Epilepsy Foundation gets much of its support from the same Big Pharma companies whose patents are going to expire. The companies have donated millions of dollars to the non-profit foundation and its branches, and representatives of these companies sit on the national board. And, by some coincidence, the foundation has supported legislation that, if passed, would be a boon for the drug giants.
But now the foundation is campaigning against the use of the new generics on a state-by-state basis. Many state laws allow the pharmacist to substitute an equivalent generic for a brand-name drug, and many insurance companies demand it. The Epilepsy Foundation argues that the new drugs are unsafe, the FDA has rules that it has produced no credible evidence and the generics past its testing.
Foiled at the federal level, the Epilepsy Foundation is taking its campaign to the states, where it is trying to overturn laws that permit generic drug substitution without explicit doctor permission, a law that would make it likelier that users would be forced to use, and pay for, the patent drugs. Initiatives in Illinois, Georgia, and Texas are spelled out in the article. At the same time, Big Pharma is increasing both its lobbying and its campaign contributions in state legislatures.
In fact, the lobbying effort has not been smooth. The reason implied in the article is that generic drug makers like Novartis and pharmacy companies (who reportedly make a bigger profit on generics than on patent drugs) sent in their own armies of lobbyists to oppose it.
State governments are getting very popular with lobbyists. "It isn't the only health issue where states have been the central battleground," notes the article. "Earlier this year, Merck & Co. drew fire for lobbying states to require that preteen girls receive its cervical-cancer vaccine to attend school. Merck stopped its direct lobbying in February, but a group of female state legislators that has received funding from the drug maker continue to push for the laws."
This story illustrates the way in which non-profits can be used as a front for big companies. It also shows the way in which each battle is being fought state by state when one side in a dispute is not pleased with the federal stance. Just as environmentalists have found it easier to bypass an unwilling federal government by passing standards in the several states, so too have major corporations changed their focus to lobbying in far more affordable and often less out-in-the-open state legislatures.
