Big pharma struggles to balance transparency and profits

Mark Lanier is no ordinary trial lawyer. His success has been such that he lives on a 25-acre estate near Houston and hosts lavish parties for hundreds of people each Christmas with entertainment provided in recent years by Miley Cyrus, Bon Jovi and Sting.

So when he was hired to represent a man who claims a diabetes drug caused him to develop cancer, the pharmaceuticals industry should have expected trouble.

Urged on by Mr Lanier's closing argument alleging a "reckless disregard for patient safety", a federal jury in Lafayette, Louisiana, last week ordered Takeda of Japan and Eli Lilly of the US to pay a record $9 billion in damages for hiding evidence of a possible link between their Actos drug and bladder cancer.

"It was a cesspool of rotten behaviour," Mr Lanier told the Financial Times afterwards. "The jury wanted to send a message, loud and clear, that it is not acceptable." For Mr Lanier, an ordained Baptist preacher who trades on his Texan charm, it was the latest in a string of big pharma scalps. He rose to prominence in the US a decade ago by winning a $250 million verdict against Merck & Co on behalf of a widow who blamed her husband's fatal heart attack on its Vioxx painkiller.

His latest victory has set a new bar for drug industry penalties – three times higher than the previous record $3 billion US fine paid by GlaxoSmithKline for marketing abuses in 2012. Analysts say the amount is so high that it is almost certain to be reduced by a judge and could yet be overturned on appeal – Takeda and Eli Lilly insist Actos is safe and have vowed to “vigorously challenge” the verdict.

But the trial, in which jurors heard how Takeda destroyed large volumes of documents related to Actos, has added to a flurry of cases this week that have put the whole pharmaceuticals industry in the dock.

At first glance, there was no direct connection between the Louisiana verdict and the other embarrassing headlines: a bribery probe against GSK in Iraq; a competition inquiry against Novartis and Roche in France; and a report claiming that Roche's costly Tamiflu antiviral medicine was not proved to be better than aspirin.

Yet all of them, in one way or another, support the claims of industry critics who say big pharma puts profits before public health – from cherry-picking clinical trial data to conceal health risks to bribing doctors and blocking cheaper medicines.

Such allegations are fiercely disputed by the companies but even industry leaders admit they have gained resonance among the public.

"The jury is still out on a number of these issues but mud sticks when you're seen as big, bad pharma," says Trevor Jones, who used to head the industry's UK lobby group.

During the two-month Actos trial, Mr Lanier produced emails in which Takeda executives urged colleagues to persuade the US Food and Drug Administration there was no need for a warning about bladder cancer, despite trials having shown a possible link. One said: “Actos is the most important product for Takeda and therefore we need to manage this issue very carefully and successfully not to cause any damage for this product globally.”

When annual sales peaked at $4.5 billion in 2011, the drug accounted for 27 per cent of revenues for Japan's biggest drugmaker. An FDA warning was eventually issued but Takeda and Eli Lilly, which marketed the drug in the US, say the cancer link remains unproved. They insist it is impossible to know what caused the disease in Terrence Allen, the retired shopkeeper who brought the lawsuit.

Disputed clinical data are also at the heart of controversy over Tamiflu, although in this case debate is focused on its questionable efficacy rather than health risks. Roche had for years resisted demands from scientists to open its trial data to scrutiny but relented last year – leading to a report by the Cochrane Collaboration, an independent research network, this month that found no evidence that the drug reduced risk of hospitalisation or death from influenza.

Tom Jefferson, clinical epidemiologist and co-author of the Cochrane review, said "only the tip of the iceberg" of the evidence was made available to regulators when the drug was approved.

David Davis, the Conservative MP who has led UK parliamentary scrutiny of Tamiflu, said that, if the Cochrane study was correct, Roche should repay the £473 million spent by the UK government on stockpiling the drug. The Swiss group said it "fundamentally disagrees" with the findings and pointed to a company-funded study which last month concluded that Tamiflu cut deaths by almost a fifth during the swine flu epidemic of 2009.

But Fiona Godlee, editor-in-chief of the British Medical Journal , which published the Cochrane study, says the case highlights the "irredeemable conflict of interest" between the need for impartial trial data and the industry's commercial interests. "We have evidence time and time again that they overestimate the benefits [of new drugs] and underestimate the harm."

In response to such criticism, drugmakers, including Roche, GSK and Johnson & Johnson, have announced steps over the past year to open their clinical trial data to independent scrutiny. Others remain wary, citing the need to protect intellectual property and patient confidentiality. But the choice is likely to be taken out of companies’ hands: the European parliament recently passed draft legislation requiring detailed summaries of all trial data to be made public.

“This pressure is not going to go away,” says a senior industry figure. “There is a move towards greater transparency in all areas of society. It is impossible to resist.”

This trend is also forcing companies to rethink marketing strategies amid growing scrutiny of their financial ties with doctors. GSK announced in December that it would stop paying for doctors to attend medical conferences or to speak on the company’s behalf about products from the beginning of 2016. It also scrapped individual sales targets for its salesmen.

This was in response both to the group’s $3 billion US fine in 2012 for illegal marketing and to the investigation launched by Chinese authorities last July into its alleged bribery of doctors. The revelation that GSK was facing similar allegations in Iraq and Poland highlighted the global nature of the challenge. But the British group claims its marketing overhaul has put it at the forefront of industry reform.

Others have not rushed to follow GSK but there has been a general decline in payments to doctors for promotional speeches. Pfizer, for example, cut its payments by 62 per cent to $8.3 million between 2011 and 2012, according to ProPublica, which produces independent investigative journalism.

Pharma executives worry that a souring of public opinion towards the industry will make it harder for them to defend premium prices as health budgets are strained across the developed world. Drug costs are the focus of a French competition inquiry announced this week into whether Roche and Novartis colluded to block a cheaper alternative to their blockbuster Lucentis eye treatment.

Even the US – by far the world's most lucrative and liberal drug market – appears to be asking tougher questions amid a recent controversy over the $1,000-a-day price of a new hepatitis C medicine developed by Gilead Sciences. Industry executives acknowledge it will be hard to make the case for more spending on drugs without public trust.

Mr Jones says that, as a fresh wave of drug innovation starts to lift growth prospects, tackling big pharma’s image problem is the next challenge. “We should be known for saving lives not falsifying data and bribing doctors.”

Back in Louisiana, a further 2,700 Actos patients are queueing up to sue Takeda and Eli Lilly, promising plenty more business for Mr Lanier. The companies must now decide whether to keep fighting or seek a settlement – presenting an early dilemma for Christophe Weber, the Frenchman who is about to become Takeda's first foreign president.

Mr Weber, former head of vaccines at GSK, was recruited to help raise the global profile of a company that is a household name in Japan but less well known elsewhere. He cannot have counted on a Texan lawyer helping do the job for him – albeit in a most unwelcome way. – Copyright The Financial Times Limited 2014