Home      Discussion      Topics      Dictionary      Almanac
Signup       Login
Pharmaceutical company

Pharmaceutical company

Overview
The pharmaceutical industry develops, produces, and markets drug
Drug
A drug, broadly speaking, is any substance that, when absorbed into the body of a living organism, alters normal bodily function. There is no single, precise definition, as there are different meanings in drug control law, government regulations, medicine, and colloquial usage.In pharmacology, a...

s license
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...

d for use as medication
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

s. Pharmaceutical companies are allowed to deal in generic
Generic drug
A generic drug is a drug defined as "a drug product that is comparable to brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use." It has also been defined as a term referring to any drug marketed under its...

 and/or brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...

 medications and medical devices. They are subject to a variety of laws
Legal drug trade
As with other goods object of commerce, in opposition to smuggling or illegal trade, most psychotropic substances´s commerce is under control and taxation by world governments, regardless of the relative perceived danger of the goods that are object of legislation....

 and regulations regarding the patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....

ing, testing and ensuring safety and efficacy and marketing of drugs
Legal drug trade
As with other goods object of commerce, in opposition to smuggling or illegal trade, most psychotropic substances´s commerce is under control and taxation by world governments, regardless of the relative perceived danger of the goods that are object of legislation....

.

The earliest drugstores
Pharmacy
Pharmacy is the health profession that links the health sciences with the chemical sciences and it is charged with ensuring the safe and effective use of pharmaceutical drugs...

 date back to the Middle Ages
Middle Ages
The Middle Ages is a periodization of European history from the 5th century to the 15th century. The Middle Ages follows the fall of the Western Roman Empire in 476 and precedes the Early Modern Era. It is the middle period of a three-period division of Western history: Classic, Medieval and Modern...

. The first known drugstore was opened by Arabian pharmacists
Islamic medicine
In the history of medicine, Islamic medicine, Arabic medicine or Arabian medicine refers to medicine developed in the Islamic Golden Age, and written in Arabic, the lingua franca of Islamic civilization....

 in Baghdad
Baghdad
Baghdad is the capital of Iraq, as well as the coterminous Baghdad Governorate. The population of Baghdad in 2011 is approximately 7,216,040...

 in 754, and many more soon began operating throughout the medieval Islamic world
Islamic Golden Age
During the Islamic Golden Age philosophers, scientists and engineers of the Islamic world contributed enormously to technology and culture, both by preserving earlier traditions and by adding their own inventions and innovations...

 and eventually medieval Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

.
Discussion
Ask a question about 'Pharmaceutical company'
Start a new discussion about 'Pharmaceutical company'
Answer questions from other users
Full Discussion Forum
 
Unanswered Questions
Encyclopedia
The pharmaceutical industry develops, produces, and markets drug
Drug
A drug, broadly speaking, is any substance that, when absorbed into the body of a living organism, alters normal bodily function. There is no single, precise definition, as there are different meanings in drug control law, government regulations, medicine, and colloquial usage.In pharmacology, a...

s license
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...

d for use as medication
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

s. Pharmaceutical companies are allowed to deal in generic
Generic drug
A generic drug is a drug defined as "a drug product that is comparable to brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use." It has also been defined as a term referring to any drug marketed under its...

 and/or brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...

 medications and medical devices. They are subject to a variety of laws
Legal drug trade
As with other goods object of commerce, in opposition to smuggling or illegal trade, most psychotropic substances´s commerce is under control and taxation by world governments, regardless of the relative perceived danger of the goods that are object of legislation....

 and regulations regarding the patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....

ing, testing and ensuring safety and efficacy and marketing of drugs
Legal drug trade
As with other goods object of commerce, in opposition to smuggling or illegal trade, most psychotropic substances´s commerce is under control and taxation by world governments, regardless of the relative perceived danger of the goods that are object of legislation....

.

History


The earliest drugstores
Pharmacy
Pharmacy is the health profession that links the health sciences with the chemical sciences and it is charged with ensuring the safe and effective use of pharmaceutical drugs...

 date back to the Middle Ages
Middle Ages
The Middle Ages is a periodization of European history from the 5th century to the 15th century. The Middle Ages follows the fall of the Western Roman Empire in 476 and precedes the Early Modern Era. It is the middle period of a three-period division of Western history: Classic, Medieval and Modern...

. The first known drugstore was opened by Arabian pharmacists
Islamic medicine
In the history of medicine, Islamic medicine, Arabic medicine or Arabian medicine refers to medicine developed in the Islamic Golden Age, and written in Arabic, the lingua franca of Islamic civilization....

 in Baghdad
Baghdad
Baghdad is the capital of Iraq, as well as the coterminous Baghdad Governorate. The population of Baghdad in 2011 is approximately 7,216,040...

 in 754, and many more soon began operating throughout the medieval Islamic world
Islamic Golden Age
During the Islamic Golden Age philosophers, scientists and engineers of the Islamic world contributed enormously to technology and culture, both by preserving earlier traditions and by adding their own inventions and innovations...

 and eventually medieval Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

. By the 19th century, many of the drugstores in Europe and North America
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...

 had eventually developed into larger pharmaceutical companies.

Most of today's major pharmaceutical companies were founded in the late 19th and early 20th centuries. Key discoveries of the 1920s and 1930s, such as insulin
Insulin
Insulin is a hormone central to regulating carbohydrate and fat metabolism in the body. Insulin causes cells in the liver, muscle, and fat tissue to take up glucose from the blood, storing it as glycogen in the liver and muscle....

 and penicillin
Penicillin
Penicillin is a group of antibiotics derived from Penicillium fungi. They include penicillin G, procaine penicillin, benzathine penicillin, and penicillin V....

, became mass-manufactured and distributed. Switzerland, Germany and Italy had particularly strong industries, with the UK, US, Belgium and the Netherlands following suit.

Legislation was enacted to test and approve drugs and to require appropriate labeling. Prescription and non-prescription drugs became legally distinguished from one another as the pharmaceutical industry matured. The industry got underway in earnest from the 1950s, due to the development of systematic scientific approaches, understanding of human biology (including DNA
DNA
Deoxyribonucleic acid is a nucleic acid that contains the genetic instructions used in the development and functioning of all known living organisms . The DNA segments that carry this genetic information are called genes, but other DNA sequences have structural purposes, or are involved in...

) and sophisticated manufacturing techniques.

Numerous new drugs were developed during the 1950s and mass-produced and marketed through the 1960s. These included the first oral contraceptive, "The Pill", Cortisone, blood-pressure drugs and other heart medications. MAO Inhibitors, chlorpromazine
Chlorpromazine
Chlorpromazine is a typical antipsychotic...

 (Thorazine), Haldol (Haloperidol) and the tranquilizers ushered in the age of psychiatric medication. Valium (diazepam), discovered in 1960, was marketed from 1963 and rapidly became the most prescribed drug in history, prior to controversy over dependency and habituation.

Attempts were made to increase regulation and to limit financial links between companies and prescribing physicians, including by the relatively new U.S. Food and Drug Administration (FDA). Such calls increased in the 1960s after the thalidomide
Thalidomide
Thalidomide was introduced as a sedative drug in the late 1950s that was typically used to cure morning sickness. In 1961, it was withdrawn due to teratogenicity and neuropathy. There is now a growing clinical interest in thalidomide, and it is introduced as an immunomodulatory agent used...

 tragedy came to light, in which the use of a new tranquilizer in pregnant women caused severe birth defects. In 1964, the World Medical Association issued its Declaration of Helsinki
Declaration of Helsinki
The Declaration of Helsinki is a set of ethical principles regarding human experimentation developed for the medical community by the World Medical Association . It is widely regarded as the cornerstone document of human research ethics...

, which set standards for clinical research and demanded that subjects give their informed consent before enrolling in an experiment. Pharmaceutical companies became required to prove efficacy
Efficacy
Efficacy is the capacity to produce an effect. It has different specific meanings in different fields. In medicine, it is the ability of an intervention or drug to reproduce a desired effect in expert hands and under ideal circumstances.- Healthcare :...

 in clinical trials before marketing drugs.

Cancer drugs were a feature of the 1970s. From 1978, India took over as the primary center of pharmaceutical production without patent protection.

The industry remained relatively small scale until the 1970s when it began to expand at a greater rate. Legislation allowing for strong patents, to cover both the process of manufacture and the specific products, came in to force in most countries. By the mid-1980s, small biotechnology firms were struggling for survival, which led to the formation of mutually beneficial partnerships with large pharmaceutical companies and a host of corporate buyouts of the smaller firms. Pharmaceutical manufacturing became concentrated, with a few large companies holding a dominant position throughout the world and with a few companies producing medicines within each country.

The pharmaceutical industry entered the 1980s pressured by economics and a host of new regulations, both safety and environmental, but also transformed by new DNA chemistries and new technologies for analysis and computation. Drugs for heart disease and for AIDS were a feature of the 1980s, involving challenges to regulatory bodies and a faster approval process.

Managed care
Managed care
...intended to reduce unnecessary health care costs through a variety of mechanisms, including: economic incentives for physicians and patients to select less costly forms of care; programs for reviewing the medical necessity of specific services; increased beneficiary cost sharing; controls on...

 and Health maintenance organization
Health maintenance organization
A health maintenance organization is an organization that provides managed care for health insurance contracts in the United States as a liaison with health care providers...

s (HMOs) spread during the 1980s as part of an effort to contain rising medical costs, and the development of preventative and maintenance medications became more important. A new business atmosphere became institutionalized in the 1990s, characterized by mergers and takeovers, and by a dramatic increase in the use of contract research organizations for clinical development and even for basic R&D. The pharmaceutical industry confronted a new business climate and new regulations, born in part from dealing with world market forces and protests by activists in developing countries. Animal Rights
Animal rights
Animal rights, also known as animal liberation, is the idea that the most basic interests of non-human animals should be afforded the same consideration as the similar interests of human beings...

 activism was also a challenge.

Marketing changed dramatically in the 1990s, partly because of a new consumerism. The Internet made possible the direct purchase of medicines by drug consumers and of raw materials by drug producers, transforming the nature of business. In the US, Direct-to-consumer advertising proliferated on radio and TV because of new FDA regulations in 1997 that liberalized requirements for the presentation of risks. The new antidepressants, the SSRIs, notably Fluoxetine
Fluoxetine
Fluoxetine is an antidepressant of the selective serotonin reuptake inhibitor class. It is manufactured and marketed by Eli Lilly and Company...

 (Prozac), rapidly became bestsellers and marketed for additional disorders.

Drug development progressed from a hit-and-miss approach to rational drug discovery in both laboratory design and natural-product surveys. Demand for nutritional supplements and so-called alternative medicines created new opportunities and increased competition in the industry. Controversies emerged around adverse effects, notably regarding Vioxx in the US, and marketing tactics. Pharmaceutical companies became increasingly accused of disease mongering
Disease mongering
]Disease mongering is a pejorative term for the practice of widening the diagnostic boundaries of illnesses, and promoting public awareness of such, in order to expand the markets for those who sell and deliver treatments, which may include pharmaceutical companies, physicians, and other...

 or over-medicalizing personal or social problems.

Research and 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
Serendipity
Serendipity means a "happy accident" or "pleasant surprise"; specifically, the accident of finding something good or useful without looking for it. The word has been voted as one of the ten English words hardest to translate in June 2004 by a British translation company. However, due to its...

 discovery. Modern biotechnology
Biotechnology
Biotechnology is a field of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fields requiring bioproducts. Biotechnology also utilizes these products for manufacturing purpose...

 often focuses on understanding the metabolic pathway
Metabolic pathway
In biochemistry, metabolic pathways are series of chemical reactions occurring within a cell. In each pathway, a principal chemical is modified by a series of chemical reactions. Enzymes catalyze these reactions, and often require dietary minerals, vitamins, and other cofactors in order to function...

s related to a disease
Disease
A disease is an abnormal condition affecting the body of an organism. It is often construed to be a medical condition associated with specific symptoms and signs. It may be caused by external factors, such as infectious disease, or it may be caused by internal dysfunctions, such as autoimmune...

 state or pathogen
Pathogen
A pathogen gignomai "I give birth to") or infectious agent — colloquially, a germ — is a microbe or microorganism such as a virus, bacterium, prion, or fungus that causes disease in its animal or plant host...

, and manipulating these pathways using molecular biology
Molecular biology
Molecular biology is the branch of biology that deals with the molecular basis of biological activity. This field overlaps with other areas of biology and chemistry, particularly genetics and biochemistry...

 or biochemistry
Biochemistry
Biochemistry, sometimes called biological chemistry, is the study of chemical processes in living organisms, including, but not limited to, living matter. Biochemistry governs all living organisms and living processes...

. 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
Formulation
Formulation may refer to:* Clinical formulation* Formulations * Formulation science* Pharmaceutical formulation:** Galenic formulation* Pesticide formulation...

 and Dosing
Dosing
Dosing generally applies to feeding chemicals or medicines in small quantities into a process fluid or to a living being at intervals or to atmosphere at intervals to give sufficient time for the chemical or medicine to react or show the results....

, as well as to establish safety. Research in these areas generally includes a combination of in vitro
In vitro
In vitro refers to studies in experimental biology that are conducted using components of an organism that have been isolated from their usual biological context in order to permit a more detailed or more convenient analysis than can be done with whole organisms. Colloquially, these experiments...

 studies, in vivo
In vivo
In vivo is experimentation using a whole, living organism as opposed to a partial or dead organism, or an in vitro controlled environment. Animal testing and clinical trials are two forms of in vivo research...

 studies, and clinical trials. The amount of capital required for late stage development has made it a historical strength of the larger pharmaceutical companies. Suggested citation: Tufts Center for the Study of Drug Development, Annual Impact Report, http://csdd.tufts.edu/

Often, large multinational corporations exhibit vertical integration
Vertical integration
In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or service, and the products combine to...

, 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.

The cost of innovation


Drug companies are like other companies in that they manufacture products that must be sold for a profit in order for the company to survive and grow. They are different from some companies because the drug
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

 business is very risky. For instance, only one out of every ten thousand discovered compounds actually becomes an approved drug for sale. Much expense is incurred in the early phases of development of compounds that will not become approved drugs
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

.
In addition, it takes about 7 to 10 years and only 3 out of every 20 approved drugs
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

 bring in sufficient revenue to cover their developmental costs, and only 1 out of every 3 approved drugs generates enough money to cover the development costs of previous failures. This means that for a drug company to survive, it needs to discover a blockbuster (billion-dollar drug) every few years.

Drug
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

 discovery and development is 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
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

 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 in pre-clinical development
Pre-clinical development
In drug development, pre-clinical development is a stage of research that begins before clinical trials can begin, and during which important feasibility, iterative testing and drug safety data is collected....

 and clinical trial
Clinical trial
Clinical trials are a set of procedures in medical research and drug development that are conducted to allow safety and efficacy data to be collected for health interventions...

s, as well as a commitment to ongoing safety monitoring
Safety monitoring
Safety monitoring of a clinical trial is conducted by an independent physician with relevant expertise. This is accomplished by review of adverse event, immediately after they occur, with timely follow-up through resolution....

. 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
New chemical entity
A new chemical entity , or new molecular entity , is, according to the U.S. Food and Drug Administration, a drug that contains no active moiety that has been approved by the FDA in any other application submitted under section 505 of the Federal Food, Drug, and Cosmetic Act.An active moiety is a...

 or NCE), has been estimated at about 1.3 billion USD(not including marketing expenses
Pharmaceutical marketing
Pharmaceutical marketing , sometimes called medico-marketing, is the business of advertising or otherwise promoting the sale of pharmaceuticals or drugs. There is some evidence that marketing practices can negatively affect both patients and the health care profession...

).

Industry-wide research and investment reached a record $65.3 billion in 2009.

A study by the consulting firm Bain & Company
Bain & Company
Bain & Company is a global management consulting firm headquartered in Boston, Massachusetts. Bain is considered one of the most prestigious consulting firms in the world, with 47 offices in 30 countries and over 5,500 professionals on staff globally...

 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.

These estimates also take into account the opportunity cost
Opportunity cost
Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen . It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices. The opportunity cost is also the...

 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. Some approved drugs, such as those based on re-formulation of an existing active ingredient
Active ingredient
An active ingredient is the substance of a pharmaceutical drug or a pharmaceutical ingredient and bulk active in medicine; in pesticide formulations active substance may be used. Some medications and pesticide products may contain more than one active ingredient...

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

Calculations and claims in this area are controversial because of the implications for regulation and subsidization of the industry through tax credits and federally funded research grants.

"Me-too" drugs


Competition between pharmaceutical companies has resulted in "me-too" drugs, which are defined as chemically-similar compounds or compounds with the same mechanism of action as an existing, approved chemical entity. According to an FDA report in 2004, there were 941 new drug and biologics license application approvals between 1995 and 2004, of which only 311 were "new" biologics or New Molecular Entities, defined by the FDA as “containing an active substance that has never before been approved for marketing in any form in the United States”.

Critics of the pharma industry point out that "me-too" drugs are only brought to market because their development is cheaper and less risky. However proponents point to the cost benefits of market competition between similar drugs
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

. It may take 10 or more years for a drug
Medication
A pharmaceutical drug, also referred to as medicine, medication or medicament, can be loosely defined as any chemical substance intended for use in the medical diagnosis, cure, treatment, or prevention of disease.- Classification :...

 to go from discovery to FDA Approval, and if a new clinical pathway
Clinical Pathway
Clinical pathways, also known as care pathways, critical pathways, integrated care pathways, or care maps, are one of the main tools used to manage the quality in healthcare concerning the standardization of care processes. It has been proven that their implementation reduces the variability in...

 is discovered, multiple companies often will research a compound to treat within this pathway
Clinical Pathway
Clinical pathways, also known as care pathways, critical pathways, integrated care pathways, or care maps, are one of the main tools used to manage the quality in healthcare concerning the standardization of care processes. It has been proven that their implementation reduces the variability in...

 leading to several similar or "me-too" drugs to arrive in what seems to be nearly at the same time. This is why some suggest that much of the “me-too” drug phenomenon is a result of parallel research at rival companies.

Controversy about drug development and testing


Due to accusations and findings that some clinical trials conducted or funded by pharmaceutical companies may report only positive results for the preferred medication, the industry has been looked at much more closely by independent groups and government agencies.

In response to specific cases in which unfavorable data from pharmaceutical company-sponsored research was not published, the Pharmaceutical Research and Manufacturers of America
Pharmaceutical Research and Manufacturers of America
Pharmaceutical Research and Manufacturers of America , founded in 1958, is a trade group representing the pharmaceutical research and biopharmaceutical companies in the United States. PhRMA's stated mission is advocacy for public policies that encourage the discovery of new medicines for patients...

 have published new guidelines urging companies to report all findings and limit the financial involvement in drug companies of researchers. US congress signed into law a bill which requires phase II and phase III clinical trials to be registered by the sponsor on the clinical trials.gov website run by the NIH.

Drug researchers not directly employed by pharmaceutical companies often look to companies for grants, and companies often look to researchers for studies that will make their products look favorable. Sponsored researchers are rewarded by drug companies, for example with support for their conference/symposium costs. Lecture scripts and even journal articles presented by academic researchers may actually be 'ghost-written' by pharmaceutical companies. Some researchers who have tried to reveal ethical issues with clinical trials or who tried to publish papers that show harmful effects of new drugs or cheaper alternatives have been threatened by drug companies with lawsuits.

Product approval in the US


In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

, 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
Investigational New Drug
The United States Food and Drug Administration's Investigational New Drug program is the means by which a pharmaceutical company obtains permission to ship an experimental drug across state lines before a marketing application for the drug has been approved...

 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
Toxicity
Toxicity is the degree to which a substance can damage a living or non-living organisms. Toxicity can refer to the effect on a whole organism, such as an animal, bacterium, or plant, as well as the effect on a substructure of the organism, such as a cell or an organ , such as the liver...

 using healthy volunteers. Phase II can include Pharmacokinetics
Pharmacokinetics
Pharmacokinetics, sometimes abbreviated as PK, is a branch of pharmacology dedicated to the determination of the fate of substances administered externally to a living organism...

 and Dosing
Dosing
Dosing generally applies to feeding chemicals or medicines in small quantities into a process fluid or to a living being at intervals or to atmosphere at intervals to give sufficient time for the chemical or medicine to react or show the results....

 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
New drug application
The New Drug Application is the vehicle in the United States through which drug sponsors formally propose that the Food and Drug Administration approve a new pharmaceutical for sale and marketing...

 is submitted to the FDA. The FDA review 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.
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. Questions continue to be raised regarding the standard of both the initial approval process, and subsequent changes to product labeling (it may take many months for a change identified in post-approval surveillance to be reflected in product labeling) and this is an area where congress is active.

The FDA provides information about approved drugs at the Orange Book site.

Orphan drugs



There are special rules for certain rare diseases ("orphan diseases") involving fewer than 200,000 patients in the United States, or larger populations in certain circumstances.
Because 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), regardless of whether the drug is protected by patents.

Legal issues


Where pharmaceutics have been shown to cause side-effects, civil action has occurred, especially in countries where tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...

 payouts are likely to be large. Due to high-profile cases leading to large compensations, most pharmaceutical companies endorse tort reform
Tort reform
Tort reform refers to proposed changes in common law civil justice systems that would reduce tort litigation or damages. Tort actions are civil common law claims first created in the English commonwealth system as a non-legislative means for compensating wrongs and harm done by one party to...

. Recent controversies have involved Vioxx and SSRI antidepressants.

Product approval elsewhere


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 efficiency (in terms of the cost per QALY) of the technologies in question rather than their efficacy. In England NICE
NICE
NICE may refer to:* National Independent Cadres and Elites in Iraq* National Institute for Coordinated Experiments, a fictional organisation in C.S...

 approval requires technologies be made available by the NHS, whilst similar arrangements exist with the Scottish Medicines Consortium
Scottish Medicines Consortium
The Scottish Medicines Consortium has the role of providing advice to NHS Boards and their Area Drug and Therapeutics Committees about all newly licensed medicines....

 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. There is much speculation that a NICE style framework may be implemented in the USA to ensure Medicare and Medicaid spending is focused to maximize benefit to patients and not excessive profits for the pharmaceutical industry.

In the UK, the British National Formulary
British National Formulary
The British National Formulary is a medical and pharmaceutical reference book that contains a wide spectrum of information and advice on prescribing and pharmacology, along with specific facts and details about all medicines available on the National Health Service , including indication,...

 is the core guide for pharmacists and clinicians.

Industry revenues


For the first time ever, in 2006, global spending on prescription drugs topped $643 billion, even as growth slowed somewhat in Europe and North America. The United States accounts for almost half of the global pharmaceutical market, with $289 billion in annual sales followed by the EU and Japan.(pdf) Emerging markets such as China, Russia, South Korea and Mexico outpaced that market, growing a huge 81 percent.

US profit growth was maintained even whilst other top industries saw little or no growth. Despite this, "..the pharmaceutical industry is — and has been for years — the most profitable of all businesses in the U.S. In the annual Fortune 500 survey, the pharmaceutical industry topped the list of the most profitable industries, with a return of 17% on revenue."

Pfizer's cholesterol pill Lipitor
Atorvastatin
Atorvastatin , sold by Pfizer under the trade name Lipitor, is a member of the drug class known as statins, used for lowering blood cholesterol. It also stabilizes plaque and prevents strokes through anti-inflammatory and other mechanisms...

 remains a best-selling drug world wide. Its annual sales
Annual pharmaceutical drug sales
-Annual Sales :...

 were $12.9 billion, more than twice as much as its closest competitors: Plavix
Clopidogrel
Clopidogrel is an oral, thienopyridine class antiplatelet agent used to inhibit blood clots in coronary artery disease, peripheral vascular disease, and cerebrovascular disease. It is marketed by Bristol-Myers Squibb and Sanofi-Aventis under the trade name Plavix. The drug works by irreversibly...

, the blood thinner from Bristol-Myers Squibb and Sanofi-Aventis; Nexium
Esomeprazole
Esomeprazole is a proton pump inhibitor developed and marketed by AstraZeneca which is used in the treatment of dyspepsia, peptic ulcer disease , gastroesophageal reflux disease and Zollinger-Ellison syndrome...

, the heartburn pill from AstraZeneca; and Advair
Fluticasone/salmeterol
The combination preparation fluticasone/salmeterol is a formulation containing fluticasone propionate and salmeterol xinafoate used in the management of asthma and chronic obstructive pulmonary disease...

, the asthma inhaler from GlaxoSmithKline.

IMS Health
IMS Health
IMS Health is an international company that supplies the pharmaceutical industry with sales data and consulting services. IMS Health was founded in 1954 by Bill Froch and David Dubow. Today IMS has operations in more than 100 countries, a global workforce of 7,600+ employees, and revenues of $2...

 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.

Teradata Magazine predicted that by 2007, $40 billion in U.S. sales could be lost at the top 10 pharmaceutical companies as a result of slowdown in R&D innovation and the expiry of patents on major products, with 19 blockbuster drugs losing patent.

Market leaders in terms of revenue



The following is a list of the 20 largest pharmaceutical and biotech companies ranked by healthcare revenue. Some companies (e.g., Bayer
Bayer
Bayer AG is a chemical and pharmaceutical company founded in Barmen , Germany in 1863. It is headquartered in Leverkusen, North Rhine-Westphalia, Germany and well known for its original brand of aspirin.-History:...

, Johnson and Johnson and Procter & Gamble
Procter & Gamble
Procter & Gamble is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods....

) have additional revenue not included here. The phrase Big Pharma is often used to refer to companies with revenue in excess of $3 billion, and/or R&D expenditure in excess of $500 million.

Revenue Rank 2008 Company Country Total Revenues (USD millions) Healthcare R&D 2006 (USD millions) Net income/ (loss) 2006 (USD millions) Employees 2006
1 Pfizer
Pfizer
Pfizer, Inc. is an American multinational pharmaceutical corporation. The company is based in New York City, New York with its research headquarters in Groton, Connecticut, United States...

USA 67,809 7,599 19,337 122,200
2 Novartis
Novartis
Novartis International AG is a multinational pharmaceutical company based in Basel, Switzerland, ranking number three in sales among the world-wide industry...

Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

53,324 7,125 11,053 138,000
3 Merck & Co.
Merck & Co.
Merck & Co., Inc. , also known as Merck Sharp & Dohme or MSD outside the United States and Canada, is one of the largest pharmaceutical companies in the world. The Merck headquarters is located in Whitehouse Station, New Jersey, an unincorporated area in Readington Township...

USA 45,987 4,783 4,434 74,372
4 Bayer
Bayer
Bayer AG is a chemical and pharmaceutical company founded in Barmen , Germany in 1863. It is headquartered in Leverkusen, North Rhine-Westphalia, Germany and well known for its original brand of aspirin.-History:...

Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

44,200 1,791 6,450 106,200
5 GlaxoSmithKline
GlaxoSmithKline
GlaxoSmithKline plc is a global pharmaceutical, biologics, vaccines and consumer healthcare company headquartered in London, United Kingdom...

United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

42,813 6,373 10,135 106,000
6 Johnson and Johnson USA 37,020 5,349 7,202 102,695
7 Sanofi France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

35,645 5,565 5,033 100,735
8 Hoffmann–La Roche Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

33,547 5,258 7,318 100,289
9 AstraZeneca
AstraZeneca
AstraZeneca plc is a global pharmaceutical and biologics company headquartered in London, United Kingdom. It is the world's seventh-largest pharmaceutical company measured by revenues and has operations in over 100 countries...

United Kingdom 26,475 3,902 6,063 50,000+
10 Abbott Laboratories
Abbott Laboratories
Abbott Laboratories is an American-based global, diversified pharmaceuticals and health care products company. It has 90,000 employees and operates in over 130 countries. The company headquarters are in Abbott Park, North Chicago, Illinois. The company was founded by Chicago physician, Dr....

USA 22,476 2,255 1,717 66,800
11 Bristol-Myers Squibb
Bristol-Myers Squibb
Bristol-Myers Squibb , often referred to as BMS, is a pharmaceutical company, headquartered in New York City. The company was formed in 1989, following the merger of its predecessors Bristol-Myers and the Squibb Corporation...

USA 17,914 3,067 1,585 60,000
12 Eli Lilly and Company
Eli Lilly and Company
Eli Lilly and Company is a global pharmaceutical company. Eli Lilly's global headquarters is located in Indianapolis, Indiana, in the United States...

USA 15,691 3,129 2,663 50,060
13 Amgen
Amgen
Amgen Inc. is an international biotechnology company headquartered in Thousand Oaks, California. Located in the Conejo Valley, Amgen is the world's largest independent biotech firm. The company employs approximately 17,000 staff members. Its products include Epogen, Aranesp, Enbrel, Kineret,...

USA 14,268 3,366 2,950 48,000
14 Boehringer Ingelheim Germany 13,284 1,977 2,163 43,000
15 Schering-Plough
Schering-Plough
Schering-Plough Corporation was a United States-based pharmaceutical company. It was founded in 1851 by Ernst Christian Friedrich Schering as Schering AG in Germany. In 1971, the Schering Corporation merged with Plough to form Schering-Plough. On November 4, 2009 Merck & Co...

USA 10,594 2,188 1,057 41,500
16 Baxter International
Baxter International
Baxter International Inc. , is an American health care company with headquarters in Deerfield, Illinois. The company primarily focuses on products to treat hemophilia, kidney disease, immune disorders and other chronic and acute medical conditions...

USA 10,378 614 1,397 38,428
17 Takeda Pharmaceutical Co. Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

10,284 1,620 2,870 15,000
18 Genentech
Genentech
Genentech Inc., or Genetic Engineering Technology, Inc., is a biotechnology corporation, founded in 1976 by venture capitalist Robert A. Swanson and biochemist Dr. Herbert Boyer. Trailing the founding of Cetus by five years, it was an important step in the evolution of the biotechnology industry...

USA 9,284 1,773 2,113 33,500
19 Procter & Gamble
Procter & Gamble
Procter & Gamble is a Fortune 500 American multinational corporation headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods....

USA 8,964 n/a 10,340 29,258
SUM 497,519 70,843 110,077 1,342,700
AVERAGE 24876 3542 5504 67135

Market leaders in terms of sales


The top 15 pharmaceutical companies by 2008 sales
Annual pharmaceutical drug sales
-Annual Sales :...

 are:
Rank Company Sales ($M) Based/Headquartered in
1 Pfizer
Pfizer
Pfizer, Inc. is an American multinational pharmaceutical corporation. The company is based in New York City, New York with its research headquarters in Groton, Connecticut, United States...

 
43,363 US
2 GlaxoSmithKline
GlaxoSmithKline
GlaxoSmithKline plc is a global pharmaceutical, biologics, vaccines and consumer healthcare company headquartered in London, United Kingdom...

36,506 United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

3 Novartis
Novartis
Novartis International AG is a multinational pharmaceutical company based in Basel, Switzerland, ranking number three in sales among the world-wide industry...

 
36,506 Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

4 Sanofi-Aventis
Sanofi-Aventis
Sanofi S.A. is a multinational pharmaceutical company headquartered in Paris, France, the world's fourth-largest by prescription sales. Sanofi engages in the research and development, manufacturing and marketing of pharmaceutical products for sale principally in the prescription market, but the...

 
35,642 France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...

5 AstraZeneca
AstraZeneca
AstraZeneca plc is a global pharmaceutical and biologics company headquartered in London, United Kingdom. It is the world's seventh-largest pharmaceutical company measured by revenues and has operations in over 100 countries...

 
32,516 United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

6 Hoffmann–La Roche  30,336 Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....

7 Johnson & Johnson
Johnson & Johnson
Johnson & Johnson is an American multinational pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886. Its common stock is a component of the Dow Jones Industrial Average and the company is listed among the Fortune 500....

 
29,425 US
8 Merck & Co.
Merck & Co.
Merck & Co., Inc. , also known as Merck Sharp & Dohme or MSD outside the United States and Canada, is one of the largest pharmaceutical companies in the world. The Merck headquarters is located in Whitehouse Station, New Jersey, an unincorporated area in Readington Township...

 
26,191 US
9 Abbott
Abbott Laboratories
Abbott Laboratories is an American-based global, diversified pharmaceuticals and health care products company. It has 90,000 employees and operates in over 130 countries. The company headquarters are in Abbott Park, North Chicago, Illinois. The company was founded by Chicago physician, Dr....

 
19,466 US
10 Eli Lilly and Company
Eli Lilly and Company
Eli Lilly and Company is a global pharmaceutical company. Eli Lilly's global headquarters is located in Indianapolis, Indiana, in the United States...

 
19,140 US
11 Amgen
Amgen
Amgen Inc. is an international biotechnology company headquartered in Thousand Oaks, California. Located in the Conejo Valley, Amgen is the world's largest independent biotech firm. The company employs approximately 17,000 staff members. Its products include Epogen, Aranesp, Enbrel, Kineret,...

 
15,794 US
12 Wyeth
Wyeth
Wyeth, formerly one of the companies owned by American Home Products Corporation , was a pharmaceutical company. The company was based in Madison, New Jersey, USA...

 
15,682 US
13 Teva
Teva Pharmaceutical Industries
Teva Pharmaceutical Industries Ltd. , is an international pharmaceutical company headquartered in Petah Tikva, Israel. It specializes in generic and proprietary pharmaceuticals and active pharmaceutical ingredients...

 
15,274 Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...

14 Bayer
Bayer
Bayer AG is a chemical and pharmaceutical company founded in Barmen , Germany in 1863. It is headquartered in Leverkusen, North Rhine-Westphalia, Germany and well known for its original brand of aspirin.-History:...

 
15,660 Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

15 Takeda
Takeda Pharmaceutical Company
is the largest pharmaceutical company in Japan and Asia and a top 15 pharmaceutical company. The company has over 19,000 employees worldwide and achieved $15.7 billion USD in revenue during the 2008 fiscal year...

 
13,819 Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...


Patents and generics


Depending on a number of considerations, a company may apply for and be granted a patent
Chemical patent
A chemical patent or pharmaceutical patent is a patent for an invention in the chemical or pharmaceuticals industry. Strictly speaking, in most jurisdictions, there are essentially no differences between the legal requirements to obtain a patent for an invention in the chemical or pharmaceutical...

 for the drug, or the process of producing the drug, granting exclusivity rights typically for about 20 years. 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. Patent protection enables the owner of the patent to recover the costs of research and development through high profit margins for the brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...

ed drug. When the patent protection for the drug expires, a generic drug
Generic drug
A generic drug is a drug defined as "a drug product that is comparable to brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use." It has also been defined as a term referring to any drug marketed under its...

 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. 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.

Medicare Part D


In 2003 the United States enacted the Medicare Prescription Drug, Improvement, and Modernization Act
Medicare Prescription Drug, Improvement, and Modernization Act
The Medicare Prescription Drug, Improvement, and Modernization Act is a federal law of the United States, enacted in 2003. It produced the largest overhaul of Medicare in the public health program's 38-year history.The MMA was signed by President George W...

 (MMA), a program to provide prescription drug benefits to the elderly and disabled. This program is a component of Medicare (United States)
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...

 and is known as Medicare Part D
Medicare Part D
Medicare Part D is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States. It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and went into effect on January 1, 2006.- Eligibility and...

. This program, set to begin in January 2006, will significantly alter the revenue models for pharmaceutical companies. Revenues from the program are expected to be $724 billion between 2006 and 2015.

Pharmaceuticals developed by biotechnological processes often must be injected in a physician's office rather than be delivered in the form of a capsule taken orally. Medicare payments for these drugs are usually made through Medicare Part B (physician office) rather than Part D (prescription drug plan).

Mergers, acquisitions, and co-marketing of drugs


A merger, acquisition
Mergers and acquisitions
Mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or...

, or co-marketing
Co-marketing
Co-marketing is a marketing practice where two companies cooperate with separate distribution channels, sometimes including profit sharing. It is frequently confused with co-promotion....

 deal between pharmaceutical companies may occur as a result of complementary capabilities between them. A small biotechnology
Biotechnology
Biotechnology is a field of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fields requiring bioproducts. Biotechnology also utilizes these products for manufacturing purpose...

 company might have a new drug but no sales or marketing capability. Conversely, a large pharmaceutical company might have unused capacity in a large sales force due to a gap in the company pipeline of new products. It may be in both companies' interest to enter into a deal to capitalize on the synergy between the companies.

Prescriptions


In the U.S., prescriptions have increased over the past decade to 3.4 billion annually, a 61 percent increase. Retail sales of prescription drugs
Annual pharmaceutical drug sales
-Annual Sales :...

 jumped 250 percent from $72 billion to $250 billion, while the average price of prescriptions has more than doubled from $30 to $68.

Retail prescription drug sales 1995 to 2006 PDF from www.census.gov

Publications


The drug company Merck & Co.
Merck & Co.
Merck & Co., Inc. , also known as Merck Sharp & Dohme or MSD outside the United States and Canada, is one of the largest pharmaceutical companies in the world. The Merck headquarters is located in Whitehouse Station, New Jersey, an unincorporated area in Readington Township...

 publishes the Merck Manual of Diagnosis and Therapy
Merck Manual of Diagnosis and Therapy
The Merck Manual of Diagnosis and Therapy, often called simply The Merck Manual, is the world's best-selling medical textbook. First published in 1899, it is now in its 19th edition.-Professional Edition:...

, the world's best-selling medical textbook, and the Merck Index
Merck Index
The Merck Index is an encyclopedia of chemicals, drugs and biologicals with over 10,000 monographs on single substances or groups of related compounds. It also includes an appendix with monographs on organic name reactions. It is published by the United States pharmaceutical company Merck & Co...

, a collection of information about chemical compounds.

Marketing



Pharmaceutical companies commonly spend a large amount on advertising, marketing and lobbying. In the US, drug companies spend $19 billion a year on promotions. 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 sales people (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
Prescription Drug Marketing Act (PDMA)
The Prescription Drug Marketing Act of 1987 is a law of the United States federal government. It establishes legal safeguards for prescription drug distribution to ensure safe and effective pharmaceuticals. It's designed to discourage the sale of counterfeit, adulterated, misbranded, subpotent,...

.

To healthcare professionals


Currently, there are approximately 81,000 pharmaceutical sales reps in the United States pursuing some 830,000 pharmaceutical prescribers. A pharmaceutical representative will often try to see a given physician every few weeks. Representatives often have a call list of about 200-300 physicians with 120-180 targets that should be visited in 1-2 or 3 week cycle. The number of pharmaceutical sales reps has been shrinking between 2008 and 2010, an estimated 30% industry wide reduction has occurred and current estimates are there may only be 60,000 pharmaceutical sales reps in the United States.

To insurance and public health bodies


Private insurance or public health bodies (e.g. the NHS in the UK) decide which drugs to pay for, and restrict the drugs that can be prescribed through the use of formularies. Public and private insurers restrict the brands, types and number of drugs that they will cover. Not only can the insurer affect drug sales by including or excluding a particular drug from a formulary, they can affect sales by tiering or placing bureaucratic hurdles to prescribing certain drugs as well. In January 2006, the U.S. instituted a new public prescription drug plan through its Medicare program known as Medicare Part D
Medicare Part D
Medicare Part D is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States. It was enacted as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and went into effect on January 1, 2006.- Eligibility and...

. This program engages private insurers to negotiate with pharmaceutical companies for the placement of drugs on tiered formularies.

To retail pharmacies and stores


Commercial stores and pharmacies are a major target of non-prescription sales and marketing for pharmaceutical companies.

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.

Internationally, many pharmaceutical companies market directly to the consumer rather than going through a conventional retail sales channel. For example, Japan-based Kenrico
Kenrico
Kenrico is a pharmaceutical company headquartered in Shimada, Shizuoka, Japan. Established in 1985, the company focuses on pharmaceuticals related to nutrition, alternative medicine, toxin extraction, and organic green teas...

 markets largely though its company website.

Controversy about drug marketing and lobbying


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; 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); sponsorship of medical school
Medical school
A medical school is a tertiary educational institution—or part of such an institution—that teaches medicine. Degree programs offered at medical schools often include Doctor of Osteopathic Medicine, Bachelor/Doctor of Medicine, Doctor of Philosophy, master's degree, or other post-secondary...

s or nurse training; sponsorship of continuing educational events, with influence on the curriculum; and hiring physicians as paid consultants on medical advisory boards.

To help ensure the status quo on U.S. drug regulation and pricing, the pharmaceutical industry has thousands of lobbyists in Washington, DC that lobby Congress and protect their interests. The pharmaceutical industry spent $855 million, more than any other industry, on lobbying activities from 1998 to 2006, according to the non-partisan Center for Public Integrity.

Some advocacy groups, such as No Free Lunch
No Free Lunch (organization)
No Free Lunch is a US-based advocacy organization that holds that marketing methods employed by drug companies influence the way doctors and other healthcare providers prescribe medications...

, 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.

There have been related accusations of disease mongering
Disease mongering
]Disease mongering is a pejorative term for the practice of widening the diagnostic boundaries of illnesses, and promoting public awareness of such, in order to expand the markets for those who sell and deliver treatments, which may include pharmaceutical companies, physicians, and other...

 (over-medicalising) to expand the market for medications. An inaugural conference on that subject took place in Australia in 2006. In 2009, the Government-funded National Prescribing Service
National Prescribing Service
Established in March 1998, the National Prescribing Service is a non-profit organisation, funded by the Government of Australia's Department of Health and Ageing. Since July 2010, the organisation has been officially known as NPS.-Overview:...

 launched the "Finding Evidence - Recognising Hype" program, aimed at educating GPs on methods for independent drug analysis.

A 2005 review by a special committee of the UK government came to all the above conclusions in a European Union context whilst also highlighting the contributions and needs of the industry.

There is also huge concern about the influence of the pharmaceutical industry on the scientific process. Meta-analyses have shown that studies sponsored by pharmaceutical companies are several times more likely to report positive results, and if a drug company employee is involved (as is often the case, often multiple employees as co-authors and helped by contracted marketing companies) the effect is even larger. 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
Diagnostic and Statistical Manual of Mental Disorders
The Diagnostic and Statistical Manual of Mental Disorders is published by the American Psychiatric Association and provides a common language and standard criteria for the classification of mental disorders...

 and the expansion of the criteria represents an increasing medicalization of human nature, or "disease mongering
Disease mongering
]Disease mongering is a pejorative term for the practice of widening the diagnostic boundaries of illnesses, and promoting public awareness of such, in order to expand the markets for those who sell and deliver treatments, which may include pharmaceutical companies, physicians, and other...

", driven by drug company influence on psychiatry. The potential for direct conflict of interest
Conflict of interest
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other....

 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. The president of the organization that designs and publishes the DSM, the American Psychiatric Association
American Psychiatric Association
The American Psychiatric Association is the main professional organization of psychiatrists and trainee psychiatrists in the United States, and the most influential worldwide. Its some 38,000 members are mainly American but some are international...

, recently acknowledged that in general American psychiatry has "allowed the biopsychosocial model to become the bio-bio-bio model" and routinely accepted "kickbacks and bribes" from pharmaceutical companies.

Developing world


The role of pharmaceutical companies in the developing world is a matter of some debate, ranging from those highlighting the aid provided to the developing world, to those critical of the use of the poorest in human clinical trials, often without adequate protections, particularly in states
State (polity)
A state is an organized political community, living under a government. States may be sovereign and may enjoy a monopoly on the legal initiation of force and are not dependent on, or subject to any other power or state. Many states are federated states which participate in a federal union...

 lacking a strong rule of law
Rule of law
The rule of law, sometimes called supremacy of law, is a legal maxim that says that governmental decisions should be made by applying known principles or laws with minimal discretion in their application...

. Other criticisms include an alleged reluctance of the industry to invest in treatments of diseases in less economically advanced countries, such as malaria
Malaria
Malaria is a mosquito-borne infectious disease of humans and other animals caused by eukaryotic protists of the genus Plasmodium. The disease results from the multiplication of Plasmodium parasites within red blood cells, causing symptoms that typically include fever and headache, in severe cases...

; Criticism for the price of patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....

ed AIDS
AIDS
Acquired immune deficiency syndrome or acquired immunodeficiency syndrome is a disease of the human immune system caused by the human immunodeficiency virus...

 medication, which could limit therapeutic options for patients in the Third World
Third World
The term Third World arose during the Cold War to define countries that remained non-aligned with either capitalism and NATO , or communism and the Soviet Union...

, where most of the AIDS infected people are living.

In September 2008 the Open Source Drug Discovery Network was launched in India to combat infectious diseases common to developing countries.

Patents



Patents have been criticized in the developing world, as they are thought to reduce access to medicines. However, under the TRIPS agreement of the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...

, countries must allow pharmaceutical products to be patented. In 2001, the WTO adopted the Doha Declaration
Doha Declaration
The November 2001 Doha Declaration on the TRIPS Agreement and Public Health was adopted by the WTO Ministerial Conference of 2001 in Doha on November 14, 2001...

, 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.

In March 2001, 40 multi-national pharmaceutical companies brought litigation against South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...

 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. HIV was and is an epidemic in South Africa, and ARVs at the time cost between 10,000 and 15,000 USD 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. The Indian pharmaceutical company Cipla
Cipla
Cipla Limited is a prominent Indian pharmaceutical company, best-known outside its home country for manufacturing low-cost anti-AIDS drugs for HIV-positive patients in developing countries...

 audaciously offered to make the drugs at 350 USD per patient per year, roughly 1/40th of the lowest price available from a patent holder, which stunned the world community. After massive international protest in favour of public health rights (including the collection of 250,000 signatures by MSF
MSF
MSF may refer to:* Mail Summary File , file extension used by Earthlink, Mozilla Thunderbird, and Netscape mail clients to store folder data in Mork.* Marvel Super Heroes vs...

), 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.

Nigerian clinical trial



In 1996, a pediatric clinical trial conducted on behalf of Pfizer
Pfizer
Pfizer, Inc. is an American multinational pharmaceutical corporation. The company is based in New York City, New York with its research headquarters in Groton, Connecticut, United States...

 tested the antibiotic Trovan
Trovafloxacin
Trovafloxacin is a broad spectrum antibiotic that inhibits the uncoiling of supercoiled DNA in various bacteria by blocking the activity of DNA gyrase and topoisomerase IV. It was withdrawn from the market due to the risk of hepatotoxicity...

 allegedly without first obtaining the informed consent of participants or their parents.

Charitable programmes


Charitable programs and drug discovery & development efforts are routinely undertaken by pharmaceutical companies. Some examples include:
  • "Merck
    Merck & Co.
    Merck & Co., Inc. , also known as Merck Sharp & Dohme or MSD outside the United States and Canada, is one of the largest pharmaceutical companies in the world. The Merck headquarters is located in Whitehouse Station, New Jersey, an unincorporated area in Readington Township...

    's Gift," wherein billions of River Blindness drugs were donated in Africa
  • Pfizer
    Pfizer
    Pfizer, Inc. is an American multinational pharmaceutical corporation. The company is based in New York City, New York with its research headquarters in Groton, Connecticut, United States...

    's gift of free/discounted fluconazole
    Fluconazole
    Fluconazole is a triazole antifungal drug used in the treatment and prevention of superficial and systemic fungal infections. In a bulk powder form, it appears as a white crystalline powder, and it is very slightly soluble in water and soluble in alcohol. It is commonly marketed under the trade...

     and other drugs for AIDS
    AIDS
    Acquired immune deficiency syndrome or acquired immunodeficiency syndrome is a disease of the human immune system caused by the human immunodeficiency virus...

     in South Africa
    South Africa
    The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...

  • GSK
    GlaxoSmithKline
    GlaxoSmithKline plc is a global pharmaceutical, biologics, vaccines and consumer healthcare company headquartered in London, United Kingdom...

    's commitment to give free albendazole tablets to the WHO for, and until, the elimination of lymphatic filariasis worldwide.
  • In 2006, Novartis
    Novartis
    Novartis International AG is a multinational pharmaceutical company based in Basel, Switzerland, ranking number three in sales among the world-wide industry...

     committed USD 755 million in corporate citizenship initiatives around the world, particularly focusing on improved access to medicines in the developing world through its Access to Medicine projects, including donations of medicines to patients affected by leprosy
    Leprosy
    Leprosy or Hansen's disease is a chronic disease caused by the bacteria Mycobacterium leprae and Mycobacterium lepromatosis. Named after physician Gerhard Armauer Hansen, leprosy is primarily a granulomatous disease of the peripheral nerves and mucosa of the upper respiratory tract; skin lesions...

    , tuberculosis
    Tuberculosis
    Tuberculosis, MTB, or TB is a common, and in many cases lethal, infectious disease caused by various strains of mycobacteria, usually Mycobacterium tuberculosis. Tuberculosis usually attacks the lungs but can also affect other parts of the body...

    , and malaria
    Malaria
    Malaria is a mosquito-borne infectious disease of humans and other animals caused by eukaryotic protists of the genus Plasmodium. The disease results from the multiplication of Plasmodium parasites within red blood cells, causing symptoms that typically include fever and headache, in severe cases...

    ; Glivec patient assistance programmes; and relief to support major humanitarian organisations with emergency medical needs.


However, some NGOs such as Médecins Sans Frontières
Médecins Sans Frontières
' , or Doctors Without Borders, is a secular humanitarian-aid non-governmental organization best known for its projects in war-torn regions and developing countries facing endemic diseases. Its headquarters are in Geneva, Switzerland...

 do not routinely accept corporate donations of medicines. More precisely, they do not become reliant on such supplies of medicines because the supply is dependent upon the fluid, profit-driven charities of said pharmaceutical companies, and thus may dry up during a critical or otherwise important time. The book An Imperfect Offering: Humanitarian Action for the 21st Century by ex-MSF president James Orbinski
James Orbinski
James Jude Orbinski, OC, OOnt, MSC is a Canadian physician, writer, and humanitarian activist. He is an associate professor of Medicine at the University of Toronto and a Fellow at the Munk School of Global Affairs. In January 2011, he also assumed the Chair of Global Health at the Dalla Lana...

 describes this in detail.

Pharmaceutical industry in popular culture


As for many other major industries since the middle of the twentieth century, the pharmaceutical industry has been portrayed as a global shadowy force in numerous western fiction works. Notorious films such as The Fugitive
The Fugitive (1993 film)
The Fugitive is a 1993 American thriller film based on the television series of the same name. The film was directed by Andrew Davis and stars Harrison Ford and Tommy Lee Jones. The film was one of the few movies associated with a television series to be nominated for the Academy Award for Best...

 (1993) and Resident evil and novels/films such as The Constant Gardener
The Constant Gardener
The Constant Gardener is a 2001 novel by John le Carré. It tells the story of Justin Quayle, a British diplomat whose activist wife is murdered...

 characterize this trend.

Industry associations

  • European Confederation of Pharmaceutical Entrepreneurs
    EUCOPE
    The European Confederation of Pharmaceutical Entrepreneurs AISBL was founded in autumn 2008. It is a trans-European Association for Pharmaceutical Entrepreneurs...

     (EUCOPE)
  • Drug Information Association
    Drug Information Association
    The Drug Information Association is a nonprofit, worldwide association that aims to foster innovation, improve public health globally and provide a forum for knowledge exchange...

     (DIA)
  • European Federation of Pharmaceutical Industries and Associations
    European Federation of Pharmaceutical Industries and Associations
    European Federation of Pharmaceutical Industries and Associations is a Brussels-based trade union founded in 1978 representing the research-based pharmaceutical industry operating in Europe....

     (EFPIA)
  • European Pharmaceutical Market Research Association (EphMRA)
  • International Federation of Pharmaceutical Manufacturers and Associations (IFPMA)
  • Japan Pharmaceutical Manufacturers Association
    Japan Pharmaceutical Manufacturers Association
    The Japan Pharmaceutical Manufacturers Association or JPMA is the organization representing the research-based pharmaceutical industry operating in Japan.The JPMA has 74 members including 20 overseas affiliates .- See also :...

     (JPMA)
  • New York Health Products Council (NYHPC)
  • Pharmaceutical Research and Manufacturers of America
    Pharmaceutical Research and Manufacturers of America
    Pharmaceutical Research and Manufacturers of America , founded in 1958, is a trade group representing the pharmaceutical research and biopharmaceutical companies in the United States. PhRMA's stated mission is advocacy for public policies that encourage the discovery of new medicines for patients...

     (PhRMA)
  • Irish Pharmaceutical Healthcare Association
    Irish Pharmaceutical Healthcare Association
    The Irish Pharmaceutical Healthcare Association represents manufacturers of prescription medicines and non-prescription or consumer health care medicines in Ireland....

     (IPHA)

Regulatory authorities


  • International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH)
  • European Medicines Agency
    European Medicines Agency
    The European Medicines Agency is a European agency for the evaluation of medicinal products. From 1995 to 2004, the European Medicines Agency was known as European Agency for the Evaluation of Medicinal Products.Roughly parallel to the U.S...

     (EMEA)
  • Therapeutic Goods Administration (Australia)
    Therapeutic Goods Administration
    The Therapeutic Goods Administration is the regulatory body for therapeutic goods in Australia . It is a Division of the Australian Department of Health and Ageing established under the Therapeutic Goods Act 1989 ...

     (TGA)
  • U.S. Food and Drug Administration (FDA)
  • Ministry of Health, Labour and Welfare (Japan)
    Ministry of Health, Labour and Welfare (Japan)
    The ' is a cabinet level ministry of the Japanese government. It is commonly known as Kōrō-shō in Japan. This ministry provides regulations on maximum residue limits for agricultural chemicals in foods, basic food and drug regulations, standards for foods, food additives, etc.It was formed with...

  • Medicines and Healthcare products Regulatory Agency
    Medicines and Healthcare products Regulatory Agency
    The Medicines and Healthcare products Regulatory Agency is the UK government agency which is responsible for ensuring that medicines and medical devices work and are acceptably safe....

     (MHRA)
  • Central Drugs Standards Control Organisation (India) (CDSCO)
  • Ukrainian Drug Registration Agencyhttp://www.drugmed.gov.ua/
  • Medicines Authority (Malta)http://www.medicinesauthority.gov.mt/

See also

  • Clinical trial
    Clinical trial
    Clinical trials are a set of procedures in medical research and drug development that are conducted to allow safety and efficacy data to be collected for health interventions...

  • Contract Research Organization
    Contract research organization
    A contract research organization, also called a clinical research organization, is a service organization that provides support to the pharmaceutical and biotechnology industries in the form of outsourced pharmaceutical research services...

  • Drug development
    Drug development
    Drug development is a blanket term used to define the process of bringing a new drug to the market once a lead compound has been identified through the process of drug discovery...

  • Drug design
    Drug design
    Drug design, also sometimes referred to as rational drug design or structure-based drug design, is the inventive process of finding new medications based on the knowledge of the biological target...

  • Drug discovery
    Drug discovery
    In the fields of medicine, biotechnology and pharmacology, drug discovery is the process by which drugs are discovered or designed.In the past most drugs have been discovered either by identifying the active ingredient from traditional remedies or by serendipitous discovery...

  • Inverse benefit law
    Inverse benefit law
    The Inverse Benefit Law states that the ratio of benefits to harms among patients taking new drugs tends to vary inversely with how extensively a drug is marketed...

  • List of pharmaceutical companies
  • Pharmaceutical industry in India
  • Pharmaceutical marketing
    Pharmaceutical marketing
    Pharmaceutical marketing , sometimes called medico-marketing, is the business of advertising or otherwise promoting the sale of pharmaceuticals or drugs. There is some evidence that marketing practices can negatively affect both patients and the health care profession...

  • Pharmacy
    Pharmacy
    Pharmacy is the health profession that links the health sciences with the chemical sciences and it is charged with ensuring the safe and effective use of pharmaceutical drugs...


Further reading

  • Coyne J. Lessons in conflict of interest: "The construction of the martyrdom of David Healy and the dilemma of bioethics." American Journal of Bioethics 5 (1): W3-W14, 2005.
  • Greene, Jeremy A., and Scott H. Podolsky, "Keeping Modern in Medicine: Pharmaceutical Promotion and Physician Education in Postwar America," Bulletin of the History of Medicine, 83 (Summer 2009), 331–77
  • Marcia Angell: The truth about the drug companies. Random House, New York, 2004, 305 S. ISBN 0-375-50846-5.
  • Ajai R. Singh, Shakuntala A. Singh: "Medical practice and the pharmaceutical industry: and ever the duo shall meet", Mens Sana Monographs
    Mens Sana Monographs
    The Mens Sana Monographs is an open-access peer-reviewed medical journal-cum-monographic series. It is Devoted to the Understanding of Medicine, Mental Health, Mind, Man and their Matrix. The Mens Sana Monographs (MSM) is an open-access peer-reviewed medical journal-cum-monographic series. It is...

    , 2007, 5(1). Retrieved 2011-03-27. ISBN 978-81-89753-14-6

Economics of the industry

  • Merrill Goozner: The $800 million pill. University of California Press, Berkeley, 2004, 297 S. ISBN 0-520-23945-8.

Relationship between pharma and the medical profession


Relationship between pharma and consumers (general public)

  • Ray Moynihan, Alan Cassels: Selling sickness: How the world's biggest pharmaceutical companies are turning us all into patients. Nation Books, New York, 2005.

Industry trends