How the Placebo Effect & Marketing Can Improve Health & Increase Pharma Profits

Big pharmaceutical companies are drastically cutting back on research and development. The economics just do not support the model that has been the driving force of the drug industry over the past 15 years.

According to a Forbes analysis reported by Matthew Herper, "The average drug developed by a major pharmaceutical company costs at least $4 billion, and it can be as much as $11 billion" (see "The Truly Staggering Cost Of Inventing New Drugs").

Some pundits suggest that lowering the cost of performing clinical trials will help get more drugs to market faster. Andrew von Eschenbach, former FDA Commissioner and now employed as chairman of conservative think tank Manhattan Institute's Project FDA initiative, suggested that instead of the FDA asking pharma companies to complete "laborious clinical trials proving efficacy, after proof of concept and safety testing, the product could be approved for marketing with every eligible patient entered in a registry so the company and the FDA can establish efficacy through post-market studies" (see here).

However, Herper points out that the "main expense is failure. AstraZeneca (AZ) does badly by this measure because it has had so few new drugs hit the market." AZ spent about $59 billion on R&D between 1997 and 2011, but only managed to get 5 new drugs approved. According to simple arithmetic, that means each of these 5 drugs cost about $11.8 billion to develop.

That's an interesting number. A very similar number came up during last night's 60 Minutes segment on "Treating Depression: Is there a placebo effect?" (see it here). It turns out that antidepressants sales in the U.S. bring in $11.3 billion a year to pharmaceutical companies that sell them -- including AstraZeneca!

Could it be that the drug industry is merely "breaking even" in the anti-depressant market?

I suspect they are probably making a pretty good profit -- but that profit may be diminishing as more and more anti-depressants go off patent. In fact, it has been suggested that 60 Minutes dared to air this expose -- four years after the research was first published -- because the "news" can no longer harm the drug companies that CBS depends upon for advertising -- most of the drugs mentioned are off patent (see “You’re telling me this now?” Why the news is suddenly critical of statins and antidepressants).

I did a blog post about antidepressants and the placebo effect two years ago in January 2010 (read "A Common Goal of Research and Marketing: Fool the Doctor"). In that post, it was noted that clinical evidence suggests these drugs are not any more effective than a placebo in patients with less severe depression. But drug company marketing to physicians does not mention this. Thus, physicians are led to believe that the drugs ARE effective for all patients with depression.

As pointed out in the 60 Minutes piece, "a clinician who cares, who takes the time, who listens to you, who asks questions about your condition and pays attention to what you say, that's the kind of care that can help facilitate a placebo effect." That goes double if the clinician actually believes what he or she is prescribing is a drug with proven efficacy.

Consequently, marketing to physicians along with direct marketing to consumers can play a huge role in "facilitating" a placebo effect. Which leads me to this idea: pharmaceutical companies should be in the business of developing placebos rather than dangerous, ineffective chemical compounds. There would be no need for expensive clinical trials and it would be easy for FDA to adopt von Eschenbach's idea to approve these new "drugs" before they are proven effective. It will be up to marketing to make them effective by facilitating the placebo effect!

Of course, to be successful, this new approach to drug development must be done surreptitiously and the FDA must conspire with the drug industry (not too much of a stretch there). After all, if everyone knows that the drug industry is manufacturing placebos, the game is up -- doctors will know that they are prescribing placebos and so would patients. That knowledge will render the placebo ineffective. This is a case where a knowledgeable patient is at a disadvantage.

It should be noted, however, that many physicians in some countries knowingly prescribe placebos. Results of a survey published in the British Medical Journal (BMJ) indicate that "about half of the surveyed internists and rheumatologists reported prescribing placebo treatments on a regular basis. Furthermore," say the researchers, "physicians who use placebo treatments most commonly describe them to patients as a potentially beneficial medicine or treatment not typically used for their condition; only rarely do they explicitly describe them as placebos" (read this).