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Drug Companies and Patents

By Dave W.
Posted on: 1/23/2004

The claim is often made that drug companies can't make money on herbal and other "alternative" medicine. Why, then, are they selling so much of it?

Often, when action by the Food and Drug Administration, or the Federal Trade Commission, negatively affects sales of “natural” products — like vitamins, minerals, or herbs — one can find proponents of such products claiming that the FDA (or FTC) is feeling pressure from the pharmaceutical corporations to put an end to the “competition.” The claim is that the big drug companies cannot make money on a product without a patent, and since you can’t patent herbs or supplements, these pharmaceutical giants throw their weight around to get them banned, in order to sell the public their drugs.

For example, the owner of a store called “All Pro Nutrition LLC” is quoted in this story about the banning of ephedra as saying,
They (pharmaceutical companies) are losing a little piece of the pie. If they can’t patent it, they can’t make money…
Let’s try to put this myth to bed. The economics of the situation are fairly simple. Any public company’s primary motivation, in a captialist society, is to make money for itself and its shareholders. Most drug comapnies are no different, in this respect, from any other type of corporation. (While a lot of people expect pharmaceutical giants to be altruistic and give their products away, that is a subject for a different essay.) Companies which regularly lose money eventually go out of business.

Drug companies are not, by any means, forced to manufacture only prescription drugs. There doesn’t seem to be any law which says that Lilly (for example) is prohibited from also making and selling detergent (“Make sure your whites are Lilly white!” comes to mind as a slogan, but I digress). So, they could be making automobile tires, or shower curtains, or jumper cables, but why would they? What they’ve got is the technical expertise and machinery for making pills. They’ve got the legal and regulatory knowledge for selling products which are aimed at being ingested by consumers.

Thus, it seems only natural that a pharmaceutical company would see the growing customer base for vitamin, mineral and herbal supplements, and say to itself, “Those people don’t want our expensive prescription drugs, and we’ve got all this know-how for selling them pills. Let’s crush some herbs, stuff ’em into capsules, and increase our market.” They’ve done that, and they also sell other non-patentable products.

Take GlaxoSmithKline, for example. Their prescription medications include Augmentin, Avandia, Dexedrine, Flonase, Imitrex, Paxil, Tagamet, Valtrex and Wellbutrin. However, their non-prescription trademarks include Abtei (“the market-leading range of vitamins, minerals and herbal supplements in Germany”), Alluna (herbal sleep aid), Eno (a product invented in the 1850’s and therefore well beyond patent), Horlicks (“The Great Family Nourisher”), Lucozade (“one of the world’s best-known energy drinks”), Os-Cal (calcium supplements), and Scott’s Emulsion (cod-liver oil).

Wyeth makes a large line of prescription drugs, including Effexor and Premarin, but also sells Advil, Centrum vitamins, Chap Stick, Preparation H and Robitussin, to name just a few.

Besides its aspirin, Alka-Seltzer, and One-a-Day vitamins, Bayer also makes and sells a variety of pharmaceuticals.

Abbott Laboratories makes a wide variety of products, including Depakote, Humira, and Synthroid (prescription drugs), and also Ensure, Pedialyte and Similac.

Both McNeil Consumer Products (makers of Tylenol) and Ortho-McNeil Pharmaceuticals (makers of Flexeril) are owned by Johnson & Johnson, a company with a tremendous number of subsidiaries making both prescription drugs and also “nutritionals” like Benecol. They also own Neutrogena, which, for psoriasis, has a line of coal tar shampoos. That particular treatment has been out of patent for at least 130 years.

I’m pretty sure, with the above, the point has been made. There are many large pharmaceutical companies who sell products which are no longer under patent protection, and in fact probably face stiff competition from “store brands” and/or other large drug companies. They also sell vitamin and mineral supplements, and (although rarely) herbal products.

The real difference between the average pharmaceutical giant and the average supplement manufacturer, however, is diversity. If Congress came along tomorrow and outlawed all supplements which aren’t tested to the same level as pharmaceuticals are, the only losers would be those companies which make nothing but vitamin and herbal pills. The Glaxos, Wyeths, and Bayers of the world would still have their pharmaceuticals to fall back on, whereas the GNCs and “All Pros” would be up the creek.

And don’t let the supplement sellers fool you: they’ve also got their own large lobbying associations attempting to get the laws changed to favor them. The Dietary Supplement Health and Education Act of 1994 is one example of their power. With that in mind, complaints that the FDA is run by pharmaceutical companies should be seen as a whining attempt to gain sympathy through appearing (falsely) to be an innocent victim of someone else’s lobbying efforts, and nothing more. The FDA must, after all, follow the laws passed by Congress, not a few members of which are proponents of “alternative medicine” of one form or another.

In conclusion, the idea that the drug giants sell nothing that isn’t patented is a myth (so easily seen to be false it’s probably more apt to call it a lie), spread mostly by those people who’ve got an agenda of their own, about which they’d rather the average consumer not know.

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