Pharmaceutical industry

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A drug manufacturer inspection by the US Food and Drug Administration

The pharmaceutical industry discovers, develops, produces, and

markets drugs or pharmaceutical drugs for use as medications to be
administered to patients (or self-administered), with the aim
to cure them, vaccinate them, or alleviate symptoms.  Pharmaceutical [1][2]

companies may deal in generic or brand medications and medical

devices. They are subject to a variety of laws and regulations that
govern the patenting, testing, safety, efficacy using drug testing
and marketing of drugs. The global pharmaceuticals market produced
treatments worth $1,228.45 billion in 2020 and showed a compound
annual growth rate (CAGR) of 1.8%. [3]

Contents

 1History
o1.1Mid-1800s – 1945: From botanicals to the first synthetic drugs
 1.1.1Epinephrine, norepinephrine, and amphetamine
 1.1.2Discovery and development of the barbiturates
 1.1.3Insulin
 1.1.4Early anti-infective research: Salvarsan, Prontosil,
Penicillin and vaccines
 1.1.5Unsafe drugs and early industry regulation
o 1.2The post-war years, 1945–1970
 1.2.1Further advances in anti-infective research
 1.2.2Development and marketing of antihypertensive drugs
 1.2.3Oral Contraceptives
 1.2.4Thalidomide and the Kefauver-Harris Amendments
o 1.31970–1980s
 1.3.1Statins
 2Research and development
o 2.1The cost of innovation
 3Product approval
o 3.1Orphan drugs
 4Global sales
 o 4.1Patents and generics
o 4.2Prescriptions
 5Marketing
o 5.1To healthcare professionals
o 5.2Direct to consumer advertising
 6Controversies
o 6.1Drug marketing and lobbying
o 6.2Medication pricing
o 6.3Regulatory issues
o 6.4Pharmaceutical fraud
o 6.5Physician roles
o 6.6Response to COVID-19
 7Developing world
o 7.1Patents
o 7.2Charitable programs
 8See also
 9References
 10External links

History[edit]
Main article: History of pharmacy
Mid-1800s – 1945: From botanicals to the first synthetic
drugs[edit]
The modern era of pharmaceutical industry began with local
apothecaries that expanded from their traditional role of distributing
botanical drugs such as morphine and quinine to wholesale manufacture
in the mid-1800s, and from discoveries resulting from applied research.
Intentional drug discovery from plants began with the isolation between
1803 and 1805 of morphine - an analgesic and sleep-inducing agent -
from opium by the German apothecary assistant Friedrich Sertürner,
who named this compound after the Greek god of dreams, Morpheus.
 By the late 1880s, German dye manufacturers had perfected the
[4]

purification of individual organic compounds from tar and other mineral

sources and had also established rudimentary methods in organic
chemical synthesis.  The development of synthetic chemical methods
[5]

allowed scientists to systematically vary the structure of chemical

substances, and growth in the emerging science
of pharmacology expanded their ability to evaluate the biological effects
of these structural changes.
Epinephrine, norepinephrine, and amphetamine[edit]

By the 1890s, the profound effect of adrenal extracts on many different

tissue types had been discovered, setting off a search both for the
mechanism of chemical signaling and efforts to exploit these
observations for the development of new drugs. The blood pressure
raising and vasoconstrictive effects of adrenal extracts were of particular
interest to surgeons as hemostatic agents and as treatment for shock,
and a number of companies developed products based on adrenal
extracts containing varying purities of the active substance. In
1897, John Abel of Johns Hopkins University identified the active
principle as epinephrine, which he isolated in an impure state as the
sulfate salt. Industrial chemist Jōkichi Takamine later developed a
method for obtaining epinephrine in a pure state, and licensed the
technology to Parke-Davis. Parke-Davis marketed epinephrine under the
trade name Adrenalin. Injected epinephrine proved to be especially
efficacious for the acute treatment of asthma attacks, and an inhaled
version was sold in the United States until 2011 (Primatene Mist).  By
[6][7]

1929 epinephrine had been formulated into an inhaler for use in the
treatment of nasal congestion.
While highly effective, the requirement for injection limited the use of
epinephrine  and orally active derivatives were sought. A
[clarification needed]

structurally similar compound, ephedrine, (actually more similar

to norepinephrine,) was identified by Japanese chemists in the Ma
Huang plant and marketed by Eli Lilly as an oral treatment for asthma.
Following the work of Henry Dale and George Barger at Burroughs-
Welcome, academic chemist Gordon Alles synthesized amphetamine
and tested it in asthma patients in 1929. The drug proved to have only
modest anti-asthma effects but produced sensations of exhilaration and
palpitations. Amphetamine was developed by Smith, Kline and
French as a nasal decongestant under the trade name Benzedrine
Inhaler. Amphetamine was eventually developed for the treatment
of narcolepsy, post-encephalitic parkinsonism, and mood elevation in
depression and other psychiatric indications. It received approval as a
New and Nonofficial Remedy from the American Medical Association for
these uses in 1937  and remained in common use for depression until
[8]

the development of tricyclic antidepressants in the 1960s. [7]

Discovery and development of the barbiturates[edit]

Diethylbarbituric acid was the first marketed barbiturate. It was sold by Bayer under the trade name
Veronal

In 1903, Hermann Emil Fischer and Joseph von Mering disclosed their

discovery that diethylbarbituric acid, formed from the reaction of diethyl
malonic acid, phosphorus oxychloride and urea, induces sleep in dogs.
The discovery was patented and licensed to Bayer pharmaceuticals,
which marketed the compound under the trade name Veronal as a sleep
aid beginning in 1904. Systematic investigations of the effect of
structural changes on potency and duration of action led to the discovery
of phenobarbital at Bayer in 1911 and the discovery of its potent anti-
epileptic activity in 1912. Phenobarbital was among the most widely
used drugs for the treatment of epilepsy through the 1970s, and as of
2014, remains on the World Health Organizations list of essential
medications.  The 1950s and 1960s saw increased awareness of the
[9][10]

addictive properties and abuse potential of barbiturates and

amphetamines and led to increasing restrictions on their use and
growing government oversight of prescribers. Today, amphetamine is
largely restricted to use in the treatment of attention deficit disorder and
phenobarbital in the treatment of epilepsy. [11][12]

Insulin[edit]

A series of experiments performed from the late 1800s to the early

1900s revealed that diabetes is caused by the absence of a substance
normally produced by the pancreas. In 1869, Oskar
Minkowski and Joseph von Mering found that diabetes could be induced
in dogs by surgical removal of the pancreas. In 1921, Canadian
professor Frederick Banting and his student Charles Best repeated this
study and found that injections of pancreatic extract reversed the
symptoms produced by pancreas removal. Soon, the extract was
demonstrated to work in people, but development of insulin therapy as a
routine medical procedure was delayed by difficulties in producing the
material in sufficient quantity and with reproducible purity. The
researchers sought assistance from industrial collaborators at Eli Lilly
and Co. based on the company's experience with large scale purification
of biological materials. Chemist George B. Walden of Eli Lilly and
Company found that careful adjustment of the pH of the extract allowed
a relatively pure grade of insulin to be produced. Under pressure from
Toronto University and a potential patent challenge by academic
scientists who had independently developed a similar purification
method, an agreement was reached for non-exclusive production of
insulin by multiple companies. Prior to the discovery and widespread
availability of insulin therapy the life expectancy of diabetics was only a
few months. [13]

Early anti-infective research: Salvarsan, Prontosil, Penicillin and vaccines[edit]

The development of drugs for the treatment of infectious diseases was a

major focus of early research and development efforts; in
1900,pneumonia, tuberculosis, and diarrhea were the three leading
causes of death in the United States and mortality in the first year of life
exceeded 10%. [14][15]

In 1911 arsphenamine, the first synthetic anti-infective drug, was

developed by Paul Ehrlich and chemist Alfred Bertheim of the Institute of
Experimental Therapy in Berlin. The drug was given the commercial
name Salvarsan.  Ehrlich, noting both the general toxicity of arsenic and
[16]

the selective absorption of certain dyes by bacteria, hypothesized that

an arsenic-containing dye with similar selective absorption properties
could be used to treat bacterial infections. Arsphenamine was prepared
as part of a campaign to synthesize a series of such compounds and
found to exhibit partially selective toxicity. Arsphenamine proved to be
the first effective treatment for syphilis, a disease which prior to that time
was incurable and led inexorably to severe skin ulceration, neurological
damage, and death. [17]

Ehrlich's approach of systematically varying the chemical structure of

synthetic compounds and measuring the effects of these changes on
biological activity was pursued broadly by industrial scientists,
including Bayer scientists Josef Klarer, Fritz Mietzsch, and Gerhard
Domagk. This work, also based in the testing of compounds available
from the German dye industry, led to the development of Prontosil, the
first representative of the sulfonamide class of antibiotics. Compared to
arsphenamine, the sulfonamides had a broader spectrum of activity and
were far less toxic, rendering them useful for infections caused by
pathogens such as streptococci.  In 1939, Domagk received the Nobel
[18]

Prize in Medicine for this discovery.  Nonetheless, the dramatic

[19][20]
decrease in deaths from infectious diseases that occurred prior to World
War II was primarily the result of improved public health measures such
as clean water and less crowded housing, and the impact of anti-
infective drugs and vaccines was significant mainly after World War II.
[21][22]

In 1928, Alexander Fleming discovered the antibacterial effects

of penicillin, but its exploitation for the treatment of human disease
awaited the development of methods for its large scale production and
purification. These were developed by a U.S. and British government-led
consortium of pharmaceutical companies during the Second World War.
[23]

Early progress toward the development of vaccines occurred throughout

this period, primarily in the form of academic and government-funded
basic research directed toward the identification of the pathogens
responsible for common communicable diseases. In 1885, Louis
Pasteur and Pierre Paul Émile Roux created the first rabies vaccine. The
first diphtheria vaccines were produced in 1914 from a mixture
of diphtheria toxin and antitoxin (produced from the serum of an
inoculated animal), but the safety of the inoculation was marginal and it
was not widely used. The United States recorded 206,000 cases of
diphtheria in 1921 resulting in 15,520 deaths. In 1923, parallel efforts
by Gaston Ramon at the Pasteur Institute and Alexander Glenny at the
Welcome Research Laboratories (later part of GlaxoSmithKline) led to
the discovery that a safer vaccine could be produced by treating
diphtheria toxin with formaldehyde.  In 1944, Maurice Hilleman of
[24]

Squibb Pharmaceuticals developed the first vaccine against Japanese

Encephalitis.  Hilleman would later move to Merck where he would play
[25]

a key role in the development of vaccines

against measles, mumps, chickenpox, rubella, hepatitis A, hepatitis B,
and meningitis.
Unsafe drugs and early industry regulation[edit]
In 1937 over 100 people died after ingesting a solution of the antibacterial sulfanilamide formulated in
the toxic solvent diethylene glycol

Prior to the 20th century, drugs were generally produced by small scale
manufacturers with little regulatory control over manufacturing or claims
of safety and efficacy. To the extent that such laws did exist,
enforcement was lax. In the United States, increased regulation of
vaccines and other biological drugs was spurred by tetanus outbreaks
and deaths caused by the distribution of contaminated smallpox vaccine
and diphtheria antitoxin.  The Biologics Control Act of 1902 required
[26]

that federal government grant premarket approval for every biological

drug and for the process and facility producing such drugs. This was
followed in 1906 by the Pure Food and Drugs Act, which forbade the
interstate distribution of adulterated or misbranded foods and drugs. A
drug was considered misbranded if it contained alcohol, morphine,
opium, cocaine, or any of several other potentially dangerous or
addictive drugs, and if its label failed to indicate the quantity or
proportion of such drugs. The government's attempts to use the law to
prosecute manufacturers for making unsupported claims of efficacy were
undercut by a Supreme Court ruling restricting the federal government's
enforcement powers to cases of incorrect specification of the drug's
ingredients. [27]

In 1937 over 100 people died after ingesting "Elixir Sulfanilamide"

manufactured by S.E. Massengill Company of Tennessee. The product
was formulated in diethylene glycol, a highly toxic solvent that is now
widely used as antifreeze.  Under the laws extant at that time,
[28]

prosecution of the manufacturer was possible only under the technicality

that the product had been called an "elixir", which literally implied a
solution in ethanol. In response to this episode, the U.S. Congress
passed the Federal Food, Drug, and Cosmetic Act of 1938, which for the
first time required pre-market demonstration of safety before a drug
could be sold, and explicitly prohibited false therapeutic claims. [29]

The post-war years, 1945–1970[edit]

Further advances in anti-infective research[edit]

The aftermath of World War II saw an explosion in the discovery of new

classes of antibacterial drugs  including the cephalosporins (developed
[30]

by Eli Lilly based on the seminal work of Giuseppe Brotzu and Edward

Abraham),  streptomycin (discovered during a Merck-funded research
[31][32]

program in Selman Waksman's laboratory ), the [33]

tetracyclines  (discovered at Lederle Laboratories, now a part of Pfizer),

[34]

erythromycin (discovered at Eli Lilly and Co.)  and their extension to an

[35]

increasingly wide range of bacterial pathogens. Streptomycin,

discovered during a Merck-funded research program in Selman
Waksman's laboratory at Rutgers in 1943, became the first effective
treatment for tuberculosis. At the time of its discovery, sanitoriums for
the isolation of tuberculosis-infected people were an ubiquitous feature
of cities in developed countries, with 50% dying within 5 years of
admission. [33][36]

A Federal Trade Commission report issued in 1958 attempted to quantify

the effect of antibiotic development on American public health. The
report found that over the period 1946–1955, there was a 42% drop in
the incidence of diseases for which antibiotics were effective and only a
20% drop in those for which antibiotics were not effective. The report
concluded that "it appears that the use of antibiotics, early diagnosis,
and other factors have limited the epidemic spread and thus the number
of these diseases which have occurred". The study further examined
mortality rates for eight common diseases for which antibiotics offered
effective therapy (syphilis, tuberculosis, dysentery, scarlet fever,
whooping cough, meningococcal infections, and pneumonia), and found
a 56% decline over the same period.  Notable among these was a 75%
[37]

decline in deaths due to tuberculosis. [38]

Measles cases reported in the United States before and after introduction of the vaccine.

Percent surviving by age in 1900, 1950, and 1997. [14]

During the years 1940–1955, the rate of decline in the U.S. death

rate accelerated from 2% per year to 8% per year, then returned to the
historical rate of 2% per year. The dramatic decline in the immediate
post-war years has been attributed to the rapid development of new
treatments and vaccines for infectious disease that occurred during
these years.  Vaccine development continued to accelerate, with the
[21][22]

most notable achievement of the period being Jonas Salk's 1954

development of the polio vaccine under the funding of the non-profit
National Foundation for Infantile Paralysis. The vaccine process was
never patented but was instead given to pharmaceutical companies to
manufacture as a low-cost generic. In 1960 Maurice Hilleman of Merck
Sharp & Dohme identified the SV40 virus, which was later shown to
cause tumors in many mammalian species. It was later determined that
SV40 was present as a contaminant in polio vaccine lots that had been
administered to 90% of the children in the United States.  The [39][40]

contamination appears to have originated both in the original cell stock

and in monkey tissue used for production. In 2004 the United States
Cancer Institute announced that it had concluded that SV40 is not
associated with cancer in people. [41]

Other notable new vaccines of the period include those for measles
(1962, John Franklin Enders of Children's Medical Center Boston, later
refined by Maurice Hilleman at Merck), Rubella (1969, Hilleman, Merck)
and mumps (1967, Hilleman, Merck)  The United States incidences of
[42]

rubella, congenital rubella syndrome, measles, and mumps all fell by

>95% in the immediate aftermath of widespread vaccination.  The first [43]

20 years of licensed measles vaccination in the U.S. prevented an

estimated 52 million cases of the disease, 17,400 cases of mental
retardation, and 5,200 deaths. [44]

Development and marketing of antihypertensive drugs[edit]

Hypertension is a risk factor for atherosclerosis,  heart failure, [45]

 coronary artery disease,  stroke,  renal disease,  and peripheral

[46] [47][48] [49] [50][51]

arterial disease,  and is the most important risk

[52][53]

factor for cardiovascular morbidity and mortality, in industrialized
countries.  Prior to 1940 approximately 23% of all deaths among
[54]

persons over age 50 were attributed to hypertension. Severe cases of

hypertension were treated by surgery. [55]

Early developments in the field of treating hypertension included

quaternary ammonium ion sympathetic nervous system blocking agents,
but these compounds were never widely used due to their severe side
effects, because the long-term health consequences of high blood
pressure had not yet been established, and because they had to be
administered by injection.
In 1952 researchers at Ciba discovered the first orally available
vasodilator, hydralazine.  A major shortcoming of hydralazine
[56]

monotherapy was that it lost its effectiveness over time (tachyphylaxis).

In the mid-1950s Karl H. Beyer, James M. Sprague, John E. Baer, and
Frederick C. Novello of Merck and Co. discovered and
developed chlorothiazide, which remains the most widely used
antihypertensive drug today.  This development was associated with a
[57]

substantial decline in the mortality rate among people with hypertension.

  The inventors were recognized by a Public Health Lasker Award in
[58]

1975 for "the saving of untold thousands of lives and the alleviation of
the suffering of millions of victims of hypertension". [59]

A 2009 Cochrane review concluded that thiazide antihypertensive drugs

reduce the risk of death (RR 0.89), stroke (RR 0.63), coronary heart
disease (RR 0.84), and cardiovascular events (RR 0.70) in people with
high blood pressure.  In the ensuring years other classes of
[60]

antihypertensive drug were developed and found wide acceptance in

combination therapy, including loop diuretics (Lasix/furosemide, Hoechst
Pharmaceuticals, 1963),  beta blockers (ICI Pharmaceuticals, 1964)
[61]

 ACE inhibitors, and angiotensin receptor blockers. ACE inhibitors

[62]

reduce the risk of new onset kidney disease [RR 0.71] and death [RR
0.84] in diabetic patients, irrespective of whether they have
hypertension. [63]

Oral Contraceptives[edit]

Prior to the second world war, birth control was prohibited in many
countries, and in the United States even the discussion of contraceptive
methods sometimes led to prosecution under Comstock laws. The
history of the development of oral contraceptives is thus closely tied to
the birth control movement and the efforts of activists Margaret
Sanger, Mary Dennett, and Emma Goldman. Based on fundamental
research performed by Gregory Pincus and synthetic methods for
progesterone developed by Carl Djerassi at Syntex and by Frank
Colton at G.D. Searle & Co., the first oral contraceptive, Enovid, was
developed by E.D. Searle and Co. and approved by the FDA in 1960.
The original formulation incorporated vastly excessive doses of
hormones, and caused severe side effects. Nonetheless, by 1962, 1.2
million American women were on the pill, and by 1965 the number had
increased to 6.5 million.  The availability of a convenient form of
[64][65][66][67]

temporary contraceptive led to dramatic changes in social mores

including expanding the range of lifestyle options available to women,
reducing the reliance of women on men for contraceptive practice,
encouraging the delay of marriage, and increasing pre-marital co-
habitation. [68]

Thalidomide and the Kefauver-Harris Amendments[edit]

Malformation of a baby born to a mother who had taken thalidomide while pregnant.

In the U.S., a push for revisions of the FD&C Act emerged from
Congressional hearings led by Senator Estes Kefauver of Tennessee in
1959. The hearings covered a wide range of policy issues, including
advertising abuses, questionable efficacy of drugs, and the need for
greater regulation of the industry. While momentum for new legislation
temporarily flagged under extended debate, a new tragedy emerged that
underscored the need for more comprehensive regulation and provided
the driving force for the passage of new laws.
On 12 September 1960, an American licensee, the William S. Merrell
Company of Cincinnati, submitted a new drug application for Kevadon
(thalidomide), a sedative that had been marketed in Europe since 1956.
The FDA medical officer in charge of reviewing the compound, Frances
Kelsey, believed that the data supporting the safety of thalidomide was
incomplete. The firm continued to pressure Kelsey and the FDA to
approve the application until November 1961, when the drug was pulled
off the German market because of its association with grave congenital
abnormalities. Several thousand newborns in Europe and elsewhere
suffered the teratogenic effects of thalidomide. Without approval from
the FDA, the firm distributed Kevadon to over 1,000 physicians there
under the guise of investigational use. Over 20,000 Americans received
thalidomide in this "study," including 624 pregnant patients, and about 17
known newborns suffered the effects of the drug. [citation needed]

The thalidomide tragedy resurrected Kefauver's bill to enhance drug

regulation that had stalled in Congress, and the Kefauver-Harris
Amendment became law on 10 October 1962. Manufacturers henceforth
had to prove to FDA that their drugs were effective as well as safe
before they could go on the US market. The FDA received authority to
regulate advertising of prescription drugs and to establish good
manufacturing practices. The law required that all drugs introduced
between 1938 and 1962 had to be effective. An FDA - National
Academy of Sciences collaborative study showed that nearly 40 percent
of these products were not effective. A similarly comprehensive study of
over-the-counter products began ten years later. [69]

1970–1980s[edit]
Statins[edit]
Main article: Discovery and development of statins
In 1971, Akira Endo, a Japanese biochemist working for the
pharmaceutical company Sankyo, identified mevastatin (ML-236B), a
molecule produced by the fungus Penicillium citrinum, as an inhibitor of
HMG-CoA reductase, a critical enzyme used by the body to produce
cholesterol. Animal trials showed very good inhibitory effect as in clinical
trials, however a long-term study in dogs found toxic effects at higher
doses and as a result mevastatin was believed to be too toxic for human
use. Mevastatin was never marketed, because of its adverse effects of
tumors, muscle deterioration, and sometimes death in laboratory dogs.
P. Roy Vagelos, chief scientist and later CEO of Merck & Co, was
interested, and made several trips to Japan starting in 1975. By 1978,
Merck had isolated lovastatin (mevinolin, MK803) from the
fungus Aspergillus terreus, first marketed in 1987 as Mevacor. [70][71][72]

In April 1994, the results of a Merck-sponsored study, the Scandinavian

Simvastatin Survival Study, were announced. Researchers
tested simvastatin, later sold by Merck as Zocor, on 4,444 patients with
high cholesterol and heart disease. After five years, the study concluded
the patients saw a 35% reduction in their cholesterol, and their chances
of dying of a heart attack were reduced by 42%.  In 1995, Zocor and [73]

Mevacor both made Merck over US$1 billion. Endo was awarded the
2006 Japan Prize, and the Lasker-DeBakey Clinical Medical Research
Award in 2008. For his "pioneering research into a new class of
molecules" for "lowering cholesterol," [sentence fragment][74][75]

Research and development[edit]

Main articles: Drug discovery and Drug development
Drug discovery is the process by which potential drugs are discovered or
designed. In the past, most drugs have been discovered either by
isolating the active ingredient from traditional remedies or
by serendipitous discovery. Modern biotechnology often focuses on
understanding the metabolic pathways related to a disease state
or pathogen, and manipulating these pathways using molecular
biology or biochemistry. A great deal of early-stage drug discovery has
traditionally been carried out by universities and research institutions.
Drug development refers to activities undertaken after a compound is
identified as a potential drug in order to establish its suitability as a
medication. Objectives of drug development are to determine
appropriate formulation and dosing, as well as to establish safety.
Research in these areas generally includes a combination of in
vitro studies, in vivo studies, and clinical trials. The cost of late-stage
development has meant it is usually done by the larger pharmaceutical
companies. [76]

Often, large multinational corporations exhibit vertical integration,

participating in a broad range of drug discovery and development,
manufacturing and quality control, marketing, sales, and distribution.
Smaller organizations, on the other hand, often focus on a specific
aspect such as discovering drug candidates or developing formulations.
Often, collaborative agreements between research organizations and
large pharmaceutical companies are formed to explore the potential of
new drug substances. More recently, multi-nationals are increasingly
relying on contract research organizations to manage drug development.
[77]

The cost of innovation[edit]

Drug discovery and development are very expensive; of all compounds
investigated for use in humans only a small fraction are
eventually approved in most nations by government-appointed medical
institutions or boards, who have to approve new drugs before they can
be marketed in those countries. In 2010 18 NMEs (New Molecular
Entities) were approved and three biologics by the FDA, or 21 in total,
which is down from 26 in 2009 and 24 in 2008. On the other hand, there
were only 18 approvals in total in 2007 and 22 back in 2006. Since 2001,
the Center for Drug Evaluation and Research has averaged 22.9
approvals a year.  This approval comes only after heavy investment
[78]

in pre-clinical development and clinical trials, as well as a commitment to

ongoing safety monitoring. Drugs which fail part-way through this
process often incur large costs, while generating no revenue in return. If
the cost of these failed drugs is taken into account, the cost of
developing a successful new drug (new chemical entity, or NCE), has
been estimated at US$1.3 billion  (not including marketing expenses).
[79]

Professors Light and Lexchin reported in 2012, however, that the rate of
approval for new drugs has been a relatively stable average rate of 15 to
25 for decades. [80]

Industry-wide research and investment reached a record $65.3 billion in

2009.  While the cost of research in the U.S. was about $34.2 billion
[81]

between 1995 and 2010, revenues rose faster (revenues rose by $200.4
billion in that time). [80]

A study by the consulting firm Bain & Company reported that the cost for
discovering, developing and launching (which factored in marketing and
other business expenses) a new drug (along with the prospective drugs
that fail) rose over a five-year period to nearly $1.7 billion in 2003.
 According to Forbes, by 2010 development costs were between $4
[82]

billion to $11 billion per drug. [83]

Some of these estimates also take into account the opportunity cost of

investing capital many years before revenues are realized (see Time-
value of money). Because of the very long time needed for discovery,
development, and approval of pharmaceuticals, these costs can
accumulate to nearly half the total expense. A direct consequence within
the pharmaceutical industry value chain is that major pharmaceutical
multinationals tend to increasingly outsource risks related to fundamental
research, which somewhat reshapes the industry ecosystem with
biotechnology companies playing an increasingly important role, and
overall strategies being redefined accordingly.  Some approved drugs,
[84]

such as those based on re-formulation of an existing active

ingredient (also referred to as Line-extensions) are much less expensive
to develop.

Product approval[edit]
In the United States, new pharmaceutical products must be approved by
the Food and Drug Administration (FDA) as being both safe and
effective. This process generally involves submission of
an Investigational New Drug filing with sufficient pre-clinical data to
support proceeding with human trials. Following IND approval, three
phases of progressively larger human clinical trials may be conducted.
Phase I generally studies toxicity using healthy volunteers. Phase II can
include pharmacokinetics and dosing in patients, and Phase III is a very
large study of efficacy in the intended patient population. Following the
successful completion of phase III testing, a New Drug Application is
submitted to the FDA. The FDA reviews the data and if the product is
seen as having a positive benefit-risk assessment, approval to market
the product in the US is granted. [85]

A fourth phase of post-approval surveillance is also often required due to

the fact that even the largest clinical trials cannot effectively predict the
prevalence of rare side-effects. Post marketing surveillance ensures that
after marketing the safety of a drug is monitored closely. In certain
instances, its indication may need to be limited to particular patient
groups, and in others the substance is withdrawn from the market
completely.
The FDA provides information about approved drugs at the orange Book
site.
[86]

In the UK, the Medicines and Healthcare products Regulatory

Agency approves and evaluates drugs for use. Normally an approval in
the UK and other European countries comes later than one in the USA.
Then it is the National Institute for Health and Care Excellence (NICE),
for England and Wales, who decides if and how the National Health
Service (NHS) will allow (in the sense of paying for) their use. The British
National Formulary is the core guide for pharmacists and clinicians.
In many non-US western countries, a 'fourth hurdle' of cost effectiveness
analysis has developed before new technologies can be provided. This
focuses on the 'efficacy price tag' (in terms of, for example, the cost
per QALY) of the technologies in question. In England and Wales NICE
decides whether and in what circumstances drugs and technologies will
be made available by the NHS, whilst similar arrangements exist with
the Scottish Medicines Consortium in Scotland, and the Pharmaceutical
Benefits Advisory Committee in Australia. A product must pass the
threshold for cost-effectiveness if it is to be approved. Treatments must
represent 'value for money' and a net benefit to society.
Orphan drugs[edit]
Main article: Orphan drug
There are special rules for certain rare diseases ("orphan diseases") in
several major drug regulatory territories. For example, diseases involving
fewer than 200,000 patients in the United States, or larger populations in
certain circumstances are subject to the Orphan Drug Act.  Because
[87]

medical research and development of drugs to treat such diseases is

financially disadvantageous, companies that do so are rewarded with tax
reductions, fee waivers, and market exclusivity on that drug for a limited
time (seven years), regard

Global sales[edit]
Top 26 drug companies by sales (2010)[88]

Pharma sales
Company
($ million)

Pfizer  45,083

GlaxoSmithKline  40,156

Sanofi  38,555

Roche  27,290

AstraZeneca  / 26,475
Johnson & Johnson  23,267

Novartis  22,576

Merck & Co  20,375

Unilever  24,395

Wyeth  16,884

Lilly  15,691

Bristol-Myers Squibb  13,861

Boehringer Ingelheim  13,860

Amgen  13,858

Abbott Laboratories  12,395

Bayer  10,162

Takeda  8,716

Schering-Plough  8,561

Teva  7,821

Genentech  7,640

Astellas  7,390
 Novo Nordisk  7,087

Daiichi Sankyo  6,790

Baxter International  6,461

Merck KGaA  5,643

Eisai  4,703

In 2011, global spending on prescription drugs topped $954 billion, even as growth slowed
somewhat in Europe and North America. The United States accounts for more than a third of
the global pharmaceutical market, with $340 billion in annual sales followed by the EU and
Japan.[89] Emerging markets such as China, Russia, South Korea and Mexico outpaced that
market, growing a huge 81 percent.[90][91]
The top ten best-selling drugs of 2013 totalled $75.6 billion in sales, with the anti-
inflammatory drug Humira being the best-selling drug worldwide at $10.7 billion in sales. The
second and third best-selling were Enbrel and Remicade, respectively.[92] The top three best-
selling drugs in the United States in 2013 were Abilify ($6.3 billion,) Nexium ($6 billion) and
Humira ($5.4 billion).[93] The best-selling drug ever, Lipitor, averaged $13 billion annually and
netted $141 billion total over its lifetime before Pfizer's patent expired in November 2011.
IMS Health publishes an analysis of trends expected in the pharmaceutical industry in 2007,
including increasing profits in most sectors despite loss of some patents, and new
'blockbuster' drugs on the horizon.[94]

Patents and generics[edit]

Depending on a number of considerations, a company may apply for and be granted
a patent for the drug, or the process of producing the drug, granting exclusivity rights
typically for about 20 years.[95] However, only after rigorous study and testing, which takes 10
to 15 years on average, will governmental authorities grant permission for the company to
market and sell the drug.[96] Patent protection enables the owner of the patent to recover the
costs of research and development through high profit margins for the branded drug. When
the patent protection for the drug expires, a generic drug is usually developed and sold by a
competing company. The development and approval of generics is less expensive, allowing
them to be sold at a lower price. Often the owner of the branded drug will introduce a generic
version before the patent expires in order to get a head start in the generic market.
[97]
 Restructuring has therefore become routine, driven by the patent expiration of products
launched during the industry's "golden era" in the 1990s and companies' failure to develop
sufficient new blockbuster products to replace lost revenues.[98]

Prescriptions[edit]
In the U.S., the value of prescriptions increased over the period of 1995 to 2005 by 3.4 billion
annually, a 61 percent increase. Retail sales of prescription drugs jumped 250 percent from
$72 billion to $250 billion, while the average price of prescriptions more than doubled from
$30 to $68.[99]
Marketing[edit]
Advertising is common in healthcare journals as well as through more mainstream media
routes. In some countries, notably the US, they are allowed to advertise directly to the
general public. Pharmaceutical companies generally employ salespeople (often called 'drug
reps' or, an older term, 'detail men') to market directly and personally to physicians and other
healthcare providers. In some countries, notably the US, pharmaceutical companies also
employ lobbyists to influence politicians. Marketing of prescription drugs in the US is
regulated by the federal Prescription Drug Marketing Act of 1987.
The pharmaceutical marketing plan incorporates the spending plans, channels, and thoughts
which will take the drug association, and its items and administrations, forward in the current
scene.

To healthcare professionals[edit]
The book Bad Pharma also discusses the influence of drug representatives, how ghost-
writers are employed by the drug companies to write papers for academics to publish, how
independent the academic journals really are, how the drug companies finance doctors'
continuing education, and how patients' groups are often funded by industry.[100]

Direct to consumer advertising[edit]

Main article: Direct-to-consumer advertising
Since the 1980s, new methods of marketing for prescription drugs to consumers have
become important. Direct-to-consumer media advertising was legalised in the FDA Guidance
for Industry on Consumer-Directed Broadcast Advertisements.

Controversies[edit]
Drug marketing and lobbying[edit]
Main articles: Pharmaceutical marketing and Pharmaceutical lobby
There has been increasing controversy surrounding pharmaceutical marketing and
influence. There have been accusations and findings of influence on doctors and other
health professionals through drug reps including the constant provision of marketing 'gifts'
and biased information to health professionals;[101] highly prevalent advertising in journals and
conferences; funding independent healthcare organizations and health promotion
campaigns; lobbying physicians and politicians (more than any other industry in the US[102]);
sponsorship of medical schools or nurse training; sponsorship of continuing educational
events, with influence on the curriculum;[103] and hiring physicians as paid consultants on
medical advisory boards.
Some advocacy groups, such as No Free Lunch and AllTrials, have criticized the effect of
drug marketing to physicians because they say it biases physicians to prescribe the
marketed drugs even when others might be cheaper or better for the patient.[104]
There have been related accusations of disease mongering[105] (over-medicalising) to expand
the market for medications. An inaugural conference on that subject took place in Australia
in 2006.[106] In 2009, the Government-funded National Prescribing Service launched the
"Finding Evidence – Recognising Hype" program, aimed at educating GPs on methods for
independent drug analysis.[107]
Meta-analyses have shown that psychiatric studies sponsored by pharmaceutical companies
are several times more likely to report positive results, and if a drug company employee is
involved the effect is even larger.[108][109][110] Influence has also extended to the training of
doctors and nurses in medical schools, which is being fought.
It has been argued that the design of the Diagnostic and Statistical Manual of Mental
Disorders and the expansion of the criteria represents an increasing medicalization of
human nature, or "disease mongering", driven by drug company influence on psychiatry.
[111]
 The potential for direct conflict of interest has been raised, partly because roughly half the
authors who selected and defined the DSM-IV psychiatric disorders had or previously had
financial relationships with the pharmaceutical industry.[112]
In the US, starting in 2013, under the Physician Financial Transparency Reports (part of the
Sunshine Act), the Centres for Medicare & Medicaid Services has to collect information from
applicable manufacturers and group purchasing organizations in order to report information
about their financial relationships with physicians and hospitals. Data are made public in the
Centres for Medicare & Medicaid Services website. The expectation is that relationship
between doctors and pharmaceutical industry will become fully transparent.[113]
In a report conducted by OpenSecrets, there were more than 1,100 lobbyists working in
some capacity for the pharmaceutical business in 2017. In the first quarter of 2017, the
health products and pharmaceutical industry spent $78 million on lobbying members of the
United States Congress.[114]

Medication pricing[edit]
Further information: Medication costs § Factors
It has been argued that the pricing of pharmaceuticals is becoming a major challenge for
health systems.[115]

Regulatory issues[edit]
Ben Goldacre has argued that regulators – such as the Medicines and Healthcare products
Regulatory Agency (MHRA) in the UK, or the Food and Drug Administration (FDA) in the
United States – advance the interests of the drug companies rather than the interests of the
public due to revolving door exchange of employees between the regulator and the
companies and friendships develop between regulator and company employees.[116] He
argues that regulators do not require that new drugs offer an improvement over what is
already available, or even that they be particularly effective.[116]
Others have argued that excessive regulation suppresses therapeutic innovation and that
the current cost of regulator-required clinical trials prevents the full exploitation of new
genetic and biological knowledge for the treatment of human disease. A 2012 report by the
President's Council of Advisors on Science and Technology made several key
recommendations to reduce regulatory burdens to new drug development, including 1)
expanding the FDA's use of accelerated approval processes, 2) creating an expedited
approval pathway for drugs intended for use in narrowly defined populations, and 3)
undertaking pilot projects designed to evaluate the feasibility of a new, adaptive drug
approval process.[117]

Pharmaceutical fraud[edit]
See also: List of largest pharmaceutical settlements in the United States
The examples and perspective in this section deal primarily
with the United States and do not represent a worldwide
view of the subject. You may improve this section, discuss
the issue on the talk page, or create a new section, as
appropriate. (August 2015) (Learn how and when to remove this
template message)

Pharmaceutical fraud involves deceptions which bring financial gain to a pharmaceutical

company. It affects individuals and public and private insurers. There are several different
schemes[118] used to defraud the health care system which are particular to the
pharmaceutical industry. These include: Good Manufacturing Practice (GMP) Violations, Off
Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and
Manufactured Compound Drugs.[119] Of this amount $2.5 billion was recovered through False
Claims Act cases in FY 2010. Examples of fraud cases include the GlaxoSmithKline $3
billion settlement, Pfizer $2.3 billion settlement and Merck & Co. $650 million settlement.
Damages from fraud can be recovered by use of the False Claims Act, most commonly
under the qui tam provisions which rewards an individual for being a "whistleblower",
or relator (law).[120]
Every major company selling atypical antipsychotics—Bristol-Myers Squibb, Eli Lilly and
Company, Pfizer, AstraZeneca and Johnson & Johnson—has either settled recent
government cases, under the False Claims Act, for hundreds of millions of dollars or is
currently under investigation for possible health care fraud. Following charges of illegal
marketing, two of the settlements set records in 2009 for the largest criminal fines ever
imposed on corporations. One involved Eli Lilly's antipsychotic Zyprexa, and the other
involved Bextra, an anti-inflammatory medication used for arthritis. In the Bextra case, the
government also charged Pfizer with illegally marketing another antipsychotic, Geodon;
Pfizer settled that part of the claim for $301 million, without admitting any wrongdoing.[121]
On 2 July 2012, GlaxoSmithKline pleaded guilty to criminal charges and agreed to a $3
billion settlement of the largest health-care fraud case in the U.S. and the largest payment by
a drug company.[122] The settlement is related to the company's illegal promotion of
prescription drugs, its failure to report safety data,[123] bribing doctors, and promoting
medicines for uses for which they were not licensed. The drugs involved
were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses. Those
and the drugs Imitrex, Lotronex, Flovent, and Valtrex were involved in the kickback scheme.
[124][125][126]

The following is a list of the four largest settlements reached with pharmaceutical companies
from 1991 to 2012, rank ordered by the size of the total settlement. Legal claims against the
pharmaceutical industry have varied widely over the past two decades, including Medicare
and Medicaid fraud, off-label promotion, and inadequate manufacturing practices.[127][128]

Laws
allegedly
Settleme Yea violated
Company Violation(s) Product(s)
nt r (if
applicabl
e)

Off-label False
GlaxoSmithKline [ promotion/ 201 Avandia/Wellbutrin/ Claims
$3 billion
129]
failure to disclose 2 Paxil Act/FDC
safety data A

False
Off-label
$2.3 200 Bextra/Geodon/ Claims
Pfizer[130] promotion/kickba
billion 9 Zyvox/Lyrica Act/FDC
cks
A

Abbott $1.5 Off-label 201 Depakote False

Laboratories[131] billion promotion 2 Claims
 Act/FDC
A

False
$1.4 Off-label 200 Claims
Eli Lilly [132]
Zyprexa
billion promotion 9 Act/FDC
A

Physician roles[edit]
In May 2015, the New England Journal of Medicine emphasized the importance of
pharmaceutical industry-physician interactions for the development of novel treatments, and
argued that moral outrage over industry malfeasance had unjustifiably led many to
overemphasize the problems created by financial conflicts of interest. The article noted that
major healthcare organizations, such as National Centre for Advancing Translational
Sciences of the National Institutes of Health, the President's Council of Advisors on Science
and Technology, the World Economic Forum, the Gates Foundation, the Welcome Trust,
and the Food and Drug Administration had encouraged greater interactions between
physicians and industry in order to improve benefits to patients.[133][134]

Response to COVID-19[edit]
In November 2020 several pharmaceutical companies announced successful trials of
COVID-19 vaccines, with efficacy of 90 to 95% in preventing infection. Per company
announcements and data reviewed by external analysts, these vaccines are priced at $3 to
$37 per dose.[135] The Wall Street Journal ran an editorial calling for this achievement to be
recognized with a Nobel Peace Prize.[136]
Doctors Without Borders warned that high prices and monopolies on medicines, tests, and
vaccines would prolong the pandemic and cost lives. They urged governments to prevent
profiteering, using compulsory licenses as needed, as had already been done by Canada,
Chile, Ecuador, Germany, and Israel.[137]
On 20 February, 46 US lawmakers called for the US government not to grant monopoly
rights when giving out taxpayer development money for any coronavirus vaccines and
treatments, to avoid giving exclusive control of prices and availability to private
manufacturers.[138]
In the United States the government signed agreements in which research and development
and/or the building of manufacturing plants for potential COVID-19 therapeutics was
subsidized. Typically, the agreement involved the government taking ownership of a certain
number of doses of the product without further payment. For example, under the auspices of
Operation Warp Speed in the United States, the government subsidized research related to
COVID-19 vaccines and therapeutics at Regeneron,[139] Johnson and Johnson, Moderna,
AstraZeneca, Novavax, Pfizer, and GSK. Typical terms involved research subsidies of $400
million to $2 billion, and included government ownership of the first 100 million doses of any
COVID-19 vaccine successfully developed.[140]
American pharmaceutical company Gilead sought and obtained orphan drug
status for remdesivir from the US Food and Drug Administration (FDA) on 23 March 2020.
This provision is intended to encourage the development of drugs affecting fewer than
200,000 Americans by granting strengthened and extended legal monopoly rights to the
manufacturer, along with waivers on taxes and government fees.[141][142] Remdesivir is a
candidate for treating COVID-19; at the time the status was granted, fewer than 200,000
Americans had COVID-19, but numbers were climbing rapidly as the COVID-19
pandemic reached the US, and crossing the threshold soon was considered inevitable.[141]
[142]
 Remdesivir was developed by Gilead with over $79 million in U.S. government funding.
[142]
 In May 2020, Gilead announced that it would provide the first 940,000 doses of
remdesivir to the federal government free of charge.[143] After facing strong public reactions,
Gilead gave up the "orphan drug" status for remdesivir on 25 March.[144] Gilead retains 20-
year remdesivir patents in more than 70 countries.[137] In May 2020, the company further
announced that it was in discussions with several generics companies to provide rights to
produce remdesivir for developing countries, and with the Medicines Patent Pool to provide
broader generic access.[145]

Developing world[edit]
Patents[edit]
Patents have been criticized in the developing world, as they are thought[who?] to reduce
access to existing medicines.[146] Reconciling patents and universal access to medicine would
require an efficient international policy of price discrimination. Moreover, under
the TRIPS agreement of the World Trade Organization, countries must allow pharmaceutical
products to be patented. In 2001, the WTO adopted the Doha Declaration, which indicates
that the TRIPS agreement should be read with the goals of public health in mind, and allows
some methods for circumventing pharmaceutical monopolies: via compulsory
licensing or parallel imports, even before patent expiration.[147]
In March 2001, 40 multi-national pharmaceutical companies brought litigation against South
Africa for its Medicines Act, which allowed the generic production of antiretroviral drugs
(ARVs) for treating HIV, despite the fact that these drugs were on-patent.[148] HIV was and is
an epidemic in South Africa, and ARVs at the time cost between US$10,000 and US$15,000
per patient per year. This was unaffordable for most South African citizens, and so the South
African government committed to providing ARVs at prices closer to what people could
afford. To do so, they would need to ignore the patents on drugs and produce generics
within the country (using a compulsory license), or import them from abroad. After
international protest in favour of public health rights (including the collection of 250,000
signatures by Médecins Sans Frontières), the governments of several developed countries
(including The Netherlands, Germany, France, and later the US) backed the South African
government, and the case was dropped in April of that year.[149]
In 2016, GlaxoSmithKline (the world's sixth largest pharmaceutical company) announced
that it would be dropping its patents in poor countries so as to allow independent companies
to make and sell versions of its drugs in those areas, thereby widening the public access to
them.[150] GlaxoSmithKline published a list of 50 countries they would no longer hold patents
in, affecting one billion people worldwide.

Charitable programs[edit]
In 2011 four of the top 20 corporate charitable donations and eight of the top 30 corporate
charitable donations came from pharmaceutical manufacturers. The bulk of corporate
charitable donations (69% as of 2012) comes by way of non-cash charitable donations, the
majority of which again were donations contributed by pharmaceutical companies.[151]
Charitable programs and drug discovery & development efforts by pharmaceutical
companies include:

 "Merck's Gift", wherein billions of river blindness drugs were donated in Africa[152]

 Pfizer's gift of free/discounted fluconazole and other drugs for AIDS in South
Africa[153]
 GSK's commitment to give free albendazole tablets to the WHO for, and until, the
elimination of lymphatic filariasis worldwide.
 In 2006, Novartis committed US$755 million in corporate citizenship initiatives
around the world, particularly focusing on improving access to medicines in the
developing world through its Access to Medicine projects, including donations of
medicines to patients affected by leprosy, tuberculosis,
and malaria; Glivec patient assistance programs; and relief to support major
humanitarian organisations with emergency medical needs.[154]