Pharma Industry At Its Dawn - Outdated Antibiotics Market and Legal Concerns?
"The rewards are so great, it would seem, that pharma companies have continually been prepared to push the boundaries of legality". This article focuses its attention on the Pharma Industry, specifically stressing the market for antibiotics and its downsides, and other issues involving the industry
Highly Valuable/Profiting Industry
The pharmaceutical industry entered an exciting new era in medicine development and impacts our everyday life. The industry has already contributed to significant improvements in patient's well-being. Today's European citizens can expect to live up to 30 years longer than they did a century ago. It is a key asset of the European economy and its research and development is one of Europe's top performing high-technology sectors.
In fact, the industry described above is responsible for the development of medicines to save lives and alleviate suffering, not the generation of profit for its own sake.
Pharmaceutical companies have developed the vast majority of medicines known to humankind, but they have profited handsomely from doing so, and not always by legitimate means.
Industry Insight: Talking in Numbers
Pharmaceuticals are potentially lifesaving and life threatening. Pharmaceutical production requires precise standards, quality control, a highly skilled labor base, capital, national regulatory capacity, and management. Modern pharmaceutical production often uses raw materials that are most economical in the international market, which means that high quality, low-cost medicines are not likely to be produced from the raw materials stage in countries that do not have the required market size and resources in terms of skilled people, technology, and quality control. While on average, only one to two of every 10,000 substances synthesised in laboratories will successfully pass all stages of development required to become a marketable medicine.
The European Federation of Pharmaceutical Industries and Associations estimated the pharmaceutical production at 294,000 $ million in 2017. The cost of researching and developing a new chemical or biological entity was estimated at $ 2,558 million in 2016. The global pharmaceuticals market will reach $1170 billion in 2021, growing at 5.8%, according to a recent pharma market research report by The Business Research Company.
Constant Arms Race: Fragile, Yet Worthy Branch of Pharma
One of the most worthy and, at the same time, unstable within the field of pharmaceuticals is the branch of the antibiotic market. Rise in the cases of infectious diseases along with the imbalance of demand-supply of antibiotics is the main factor driving the growth of this market. The global antibiotics market size was valued at USD 45.31 billion in 2018 and is projected to expand at an annual growth rate of 4% over the forecast period.
However, the antibiotic market is one of the most fluctuating ones since the bacterial pathogens are able to undergo spontaneous mutations to become resistant to pre-existing antibiotics. The constant arms race "antibiotics VS pathogen" is leading to the pan-drug-resistant bacterial infections which are resistant to all the types of antibiotics.
According to WHO, antimicrobial resistance has been estimated to be responsible for over 700,000 deaths per year. Thus, antibiotic resistance is a growing public health concern.
The growth in antibiotic drug launches in developing countries is boosting the antibiotic resistance marker. An increasing percentage of bacterial infections has led to the launch of various antibiotic drugs, thereby propelling the growth of the market globally. A growing need to reduce/eliminate the effectiveness of antibiotics is boosting the demand for antibiotic drugs.
Various governments are taking initiatives towards introducing clinically advanced antibiotic drugs in order to overcome bacterial infections or diseases. For instance, the Food and Drug Administration (FDA) launched several initiatives such as drug labeling regulations, emphasizing the prudent use of antibiotics to address infectious diseases. On the other hand, with increased attention through various public health campaigns, people are becoming aware of the overuse of antibiotics. In order to protect patients from dangerous implication of unapproved, unsuitable antimicrobial drugs, there must be more government regulation committees.
Dramatic Failure: Does Pharma Underinvest?
Even though the constant evolution of bacterial pathogens creates a stable growth for the antibiotic market, there is a rising concern of only-antibiotic treatment which seems to be less effective within patients every year due to the widespread and inappropriate use of antibiotics by patients. Big pharma starts to walk away from investment in new antibiotics and there are alarmingly few useful new drugs in the pipeline to deal with the worsening crisis of antibiotic resistance, according to the World Health Organization, 17 Jan 2020.
Unfortunately, it is tough to have any further improvements on antibiotics via existing drugs. The big pharmaceutical companies are not investing in antibiotic research because there is not a lucrative market for them. A novel drug needs to be kept for cases of dire necessity, not sold widely. Overusing the new drugs will develop resistance to them inevitably, and although the world badly needs the new antimicrobial treatments, new classes of antibiotics are difficult to find.
A Glimpse Into The Future: Alternatives to Antibiotics?
Current statistical reports highlight the urgent need to find options to sustainably fund antibiotics innovation. To tackle the issue, there are other alternatives to antibiotic therapy e.g. bacteriophage therapy, antibody therapy, and phage-antibiotic synergy therapy. Antibiotics are relatively inexpensive in research and production whereas the high costs of alternative therapies may restrain the global antimicrobial market growth during the forecast period. For instance, in the Phage Therapy Centre at Georgia, phage therapy costs would range from US$ 2,500 for outpatient care to US$ 20,000 for in-patient treatment.
One of the arising solutions is the bacteriophage and antibiotic treatments combined. From the biological perspective, this therapy could delay or even prevent the resistance from developing in the bacterial pathogens. The clinical trials have been conducted since 2010, and at least a few clinical cases were reported to be successful in 2019. Maybe in the future, the antimicrobial market will change its focus from antibiotic treatment to its alternatives? We will see. For now, the conclusion is that the global pharmaceutical market is still one of the worthy even if the branch of antimicrobial treatment seems to be unstable.
High Costs, Bribery, and Corruption?
With some drugs costing more than $100,000 for a full course, and with the cost of manufacturing just a tiny fraction of this, it's not hard to see why the prices for drugs are so high.
Drug companies justify the high prices they charge by arguing that their research and development costs are huge. On average, only three in 10 drugs launched are profitable, with one of those going on to be a blockbuster with $1bn-plus revenues a year. Many more do not even make it to the market.
But do high prices lie behind the high costs of R&D? The true answer might actually be that Pharma is one of the most at-risk industries for bribery and corruption enforcement. In 2016 Teva Pharmaceutical paid $519 million to settle U.S. charges of bribery in Mexico and Ukraine. This is still the eighth-highest Foreign Corrupt Practice Act related fine of all time. Another example from September 2019 is that French firm Sanofi agreed to pay more than $25 million to settle charges that its Kazakhstan and the Middle East subsidiaries made corrupt payments to win business.
Patents and Legal Deals: More Money - Better Prescription?
Since every drug is patented and registered, the law has a crucial role in the pharmaceutical industry. New formulations, combining two existing drugs to give a wider use, and enantiomers - a mirror image of the same compound - are some of the legal ways to eke out patents. But some drug companies, including the UK's GSK, have been accused of more underhand tactics, such as paying generics to delay the release of their cheaper alternatives. As the loss of sales at the big pharma companies far outweighs the revenue made by the generics, this can be an attractive arrangement for both parties.
Sadly, drug companies have been accused of, and admitted to, far worse. Until recently, they were paying bribes to doctors to prescribe their drugs was commonplace at big pharma, although the practice is now generally frowned upon and illegal in many places. One example is the GSK that was fined 490m dollars in China in September 2019 for bribery and has been accused of similar practices in Poland and the Middle East.
The rules on gifts, educational grants, and sponsoring lectures, for example, are less clear cut, and these practices remain commonplace in the US. Indeed a recent study found that doctors in the US receiving payments from pharma companies were twice as likely to prescribe their drugs.
This may well exacerbate the problem of overspending on drugs by governments. A recent study by Prescribing Analytics suggested that the UK's National Health Service could save up to £1bn a year by doctors switching from branded to equally effective generic versions of the drugs. It is important to mention that the forced usage of more expensive generics does not create a significant level of danger to patients. This only affects their wallets. However, such a phenomenon of bribery may change when new rules in the US and UK will force doctors to disclose all gifts and payments made by the industry.
Should We Be Concerned?
The pharmaceutical industry is one of the most fast-rising and worthy industries worldwide. However, with that success, there is a dark side, which includes pushing the boundaries of legality when it comes to drug promotion and distribution. The companies are now getting better controlled by different independent committees, such as WHO, so their actions would not affect the public health sector. Meanwhile, the pharma sector still seems to be an interesting field to invest in since it shows high growth potential in the nearest future.
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Up to 08.02.2020
References:
Paper - DiMasiet al, Journal of Health Economics, January 2016
https://apps.who.int/medicinedocs/en/m/abstract/Js19584en/
https://www.lexisnexis.com/communities/lexisnexis_biz/b/bizblog/archive/2019/01/07/bribery-in-pharma-what-you-need-to-know.aspx