118. Crony Capitalism. The Pharmaceutical Industry.

The use of drugs is an integral component of the conventional approach to modern medicine. Invariably a visit to your GP results in a prescription for at least one pill or potion. A similar treatment is often associated with a stay in hospital. The fundamental principle which underpins this strategy is that these medicines will be beneficial to the patient’s health. Furthermore while it is accepted that there may be side-effects, these can be tolerated if the benefits are genuinely worthwhile. The entire basis of the approach is dependent on regulatory processes that are rigorous in their assessments of the effects the drugs have on people who are treated.

Unfortunately a huge amount of evidence has emerged in recent years, which shows that there are serious deficiencies in the regulation of drugs and there are even suggestions that the process has been corrupted.

A recent book published in the US entitled “Crony Capitalism in America 2008-2012” (1) has a whole chapter devoted to the relationship between the pharmaceutical industry and the Food and drugs Administration (FDA). This has been reproduced on the Alliance for Natural Health website (2). This blog will focus on some of the key points. Although the book refers to the US many of the companies operate in the UK and it would not be in the least surprising if the relationship between the companies and the UK/EU regulatory authorities is essentially the same. Here are some of the hard realities of this business:

  1. Drug companies do not usually use natural compounds because it is impossible to patent them. As it costs somewhere around $billion to obtain approval, patenting is essential in order to recoup the costs involved.
  2. To facilitate approval process, the companies regularly hire staff with experience of working for the FDA. Many of the experts in the field who may be employed by universities and research organisations act as both advisers to the FDA and consultants to the industry.
  3. This engenders a cosy relationship between the both sides who participate in the regulation of the drugs
  4. According to a quote from the “Economist”:

Pharmaceutical companies bury clinical trials which show bad results for a drug and publish only those that show a benefit. The trials are often run on small numbers of unrepresentative patients, and the statistical analyses are massaged to give as rosy a picture as possible. Entire clinical trials are run not as trials at all, but as under-the-counter advertising campaigns designed to persuade doctors to prescribe a company’s drug.”

The “Economist” continues:

“Medical journals frequently fail to perform basic checks on the papers they print, so all sorts of sharp practice goes uncorrected. Many published studies are not written by the academics whose names they bear, but by commercial ghostwriters paid by drug firms. Doctors are bombarded with advertising encouraging them to prescribe certain drugs.”

5.       Knowledge of what is happening with respect to the progress of individual applications for approval can have major financial implications. An FDA chemist charged with criminal offences has pleaded guilty to leaking information about drug approvals or company mergers. Over a 5-year period the chemist had been involved with 25 companies and benefited to the tune of almost $4 million dollars.

6.       Once a drug has been approved it may be prescribed on a large scale, especially by official bodies such as the US government’s Medicare. Annual treatment costs for these approved drugs may be as high as $500,000 per patient. On the other hand, drugs which have not been approved are effectively banned in the US and doctors who prescribe them risk being stuck off and may even be prosecuted

7.       Although there may be compelling anecdotal evidence, including numerous case studies which indicate that naturally-occurring substances can be used successfully to treat a variety of diseases and conditions, the FDA insists that they can only be approved if the complete testing programme is implemented. Since there is no organization or company prepared to spend the money needed, there is no way that these substances will ever be approved. The position is re-inforced by the stance of the American Medical Association (AMA) which as a general rule is opposed to the use Complementary therapy but is also dependent on the pharmaceutical industry for much of its funding

8.       The use of generic drugs ought to be an effective means of reducing the costs of many drugs but this approach is to some extent stymied because the FDA insists that bioequivalence is demonstrated which adds to the costs. More significantly the FDA has a huge backlog of about 1900 applications for generics and the average time for a decision on approval is 26 months,

9.       In the US the government is very careful to avoid charging any leading pharmaceutical company with criminal misconduct. This is because conviction under the current law would mean that the government would no longer be able to purchase any products from that company. The government is too closely integrated with the drug/vaccine industry to allow that to happen. Thus, when Merck was found to have misled about its painkiller Vioxx, alleged to have caused at least 55,000 deaths (some estimates are much higher), the settlement with plaintiffs reached $4.9 billion. But Merck continued partnering with and selling to government without any interruption or even question.

This is just one example of crony capitalism in which government and industry become so interdependent on each other that there is really no effective control and the only beneficiaries are those individuals who have their “snout in the trough”. In essence the normal rules of competition are suspended and inefficiencies are rampant. It is of course the ordinary citizens who suffer because it is their taxes which are used to fund these excesses. They also miss out from the continued improvement in the quality of products coupled with a steady reduction in prices. As an example, compare the pharmaceutical industry with the mobile phone industry which advances in leaps and bounds. By contrast there is reliable evidence that there are very few new drugs which actually perform significantly better than those already on the market and some which are worse, but no doubt are promoted as “wonderful”.


  1. Hunter Lewis (2013) “Crony Capitalism in America 2008-2012” ISBN 978-09887627-2-7
  2. http://www.anh-usa.org/big-pharma-and-fda-a-marriage-not-made-in-heaven/



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