Pharmaceutical Industry

The pharmaceutical industry plays a leading role in the development, production and marketing of drugs that are permitted for use as medication. It takes on a cooperative role with governmental oversight agencies (The Food and Drug Administration) and with the health insurance industry, which ensures patient access to medications. One of the most profitable industries in the U.S., the pharmaceutical industry is both praised for its innovative applications against once fatal diseases, as well as criticized for over-advertising and ‘disease-mongering.'

Throughout the 19th century, with the dawn of the industrial revolution and the dramatic shift from sparsely populated agrarian societies to densely populated urban centers, patients were often beset with poor health, malnutrition and infectious disease. In 1900, the top four leading causes of mortality in the U.S. were pneumonia, influenza, tuberculosis and diarrhea. At the onset of the 20th century, the life expectancy of a newborn was 47 years.

Beginning in the second half of the 19th century, scientists such as Louis Pasteur and Robert Koch began making inroads into determining the causative agents of infectious disease. The theory of germs became an accepted principle and the pathogens for anthrax, tuberculosis and cholera were discovered. The concept of inoculation had already been in circulation since 1796, through the work of Edward Jenner who used cowpox to vaccinate against smallpox. In 1928, Alexander Fleming serendipitously discovered the compound penicillin, and clinical trials began six years later. In 1945, Dorothy Hodgkin discovered the chemical structure of the antibiotic compound, and mass production by deep-tank fermentation began by WWII.

Infectious disease was not the only impetus for drug development during this period. In 1894, Felix Hoffman discovered salicylic acid, a chemical derived from willow bark possessing less gastrointestinal side effects, to ease the pain of arthritis afflicting his father. In 1889, Oscar Minkowski and Joseph von Mering established an association between the pancreas (particularly the islets of Langerhans) and diabetes when they noticed and tested the attraction of flies to the urine of a dog that had been de-pancreatized. In 1921, Frederick Banting successfully isolated the hormone insulin from a bovine subject, and the drug company Eli Lilly assisted in its mass production.

Today the pharmaceutical industry plays a major role in drug discovery and development. Whereas traditional drug discovery was often the result of trial and error or fortuitous discovery, modern drug discovery is increasingly targeted by design to the specific biochemical and molecular pathways involved in the pathology of a disease. Drug development is governed by the implementation of safety protocols that must be ensured in order for a pharmaceutical product to reach the consumer. This includes in vitro and in vivo testing, animal pre-clinical trials, and various phases of human clinical trials: sub-therapeutic (phase 0), pharmacokinetic (phase I), dosing and efficacy (phase II) and the definitive comparison with the ‘gold standard' treatment of the disease (phase III). Depending on these results, a drug may be approved for public consumption. Additional trials may be conducted (phase IV or V) after the drug has been approved for additional safety and efficacy when compared to other drugs on the market.

Several criticisms have been lodged against the pharmaceutical industry for the perceived exploitation of the patient in a highly profitable market. In 1998, even though the cost of prescription drugs increased by a little over three percent the total expenditure on pharmaceuticals rose by nearly 16 percent in the same year. The numbers reveal the growing trend in the U.S., that patients are prescribed an increasing number of drugs for a greater number of ailments than in previous decades. The cost of pharmaceuticals, especially for the sector of society most dependent---the elderly on fixed income, has become a hot political button for several election cycles now. Many U.S. companies have started charitable donation programs to subsidize the costs of pharmaceuticals for those who require them.

In 1998 the world pharmaceutical market was $302 billion with the U.S. holding a 30 percent market share. As of 2006, worldwide spending on pharmaceutical drugs approached $650 billion dollars annually with an approximate revenue return of 17 percent. In the U.S., much of these profits are protected by the rigorous patent system for intellectual property rights and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). This has been another source of controversy, especially in third world countries that cannot afford the cost of desperately needed drugs like those required for the treatment of HIV.

Selected full-text books and articles on this topic

The New Medicines: How Drugs Are Created, Approved, Marketed, and Sold
Bernice Schacter.
Praeger, 2006
Strategic Analysis of the World Pharmaceutical Industry
Kesic, Dragan.
Management : Journal of Contemporary Management Issues, Vol. 14, No. 1, January 1, 2009
The $800 Million Pill: The Truth behind the Cost of New Drugs
Merrill Goozner.
University of California Press, 2004
Medicating Modern America: Prescription Drugs in History
Andrea Tone; Elizabeth Siegel Watkins.
New York University Press, 2007
Reputation and Power: Organizational Image and Pharmaceutical Regulation at the FDA
Daniel Carpenter.
Princeton University Press, 2010
Impact of Pharmaceutical Industry Promotion Mix on Doctor's Prescribing Behaviour
Taneja, Girish.
Asia-Pacific Business Review, Vol. 4, No. 4, October-December 2008
An Insider's Perspective: Defense of the Pharmaceutical Industry's Marketing Practices
Johar, Kanika.
Albany Law Review, Vol. 76, No. 1, Fall 2012
Let Them Eat Prozac: The Unhealthy Relationship between the Pharmaceutical Industry and Depression
David Healy.
New York University Press, 2004
The Race to Commercialize Biotechnology: Molecules, Markets, and the State in the United States and Japan
Steven W. Collins.
RoutledgeCurzon, 2004
The Politics of the International Pricing of Prescription Drugs
Christopher Scott Harrison.
Praeger, 2004
Selling Sickness: How the Drug Companies Are Turning Us All into Patients
Ray Moynihan; Alan Cassels.
Allen & Unwin, 2005
Obviating the Obvious? an Appraisal of Pharmaceutical Patents
Bernier, Katelyn J.
The Journal of High Technology Law, Vol. 10, No. 2, July 2010
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