The Truth about the Pharmaceutical Industry

Posted: July 27, 2015 in Economics

The Pharmaceutical industry has developed an array of miraculous concoctions over the last few centuries. Sadly, the birth of this industry can be juxtaposed to the discovery of fission in the 1930’s. Fission was seen as a practical way to generate energy and electrical power from a small mass, but was ultimately used to create the “Atomic Bomb”.

Nearly 75% of prescription drug overdoses are caused by prescription opioid painkillers; these drugs are involved in more deaths than cocaine and heroin combined. In 2010, pharmaceutical drug overdoses were established as one of the leading causes of death in the US; drug overdoses were more lethal than firearms or motor vehicle accidents.

The Pharmaceutical Industry is giant money making, for profit sector of the global economy. Consider the fact that it takes an average cost of about $800 Million (research, patents, lobbying, and production) to bring a new drug into the market. Consider also that a new drug patent will protect a company that developed a particular drug for only about 12 years. After that, all the other companies can jump in and start producing cheaper “generic” substitutes, which will eventually shrink the profits of the initial developer. I can tell you with financial certainty that the cost of developing a close to $1 Billion dollar product will put pressure on almost any public company, pharmaceutical or otherwise. The solution? Sell, Sell, Sell…. no matter what the cost.


History of the Pharmaceutical Industry

Human beings have attained an evolutionary intuition from experimentation with plants, animals, and minerals which contain medicinal properties. Records of medicinal preparations date back to 28th century BC by the Chinese “Red Emperor”, Shennong. Shennong described, in ancient scripts, the anti-fever capabilities of a plant named “chang shan”. Many plant-derived medications employed by the ancients are still in use today and are referred to as “Traditional” or “Eastern” medicine. Egyptians have historically treated constipation with castor oil and indigestion with peppermint.

The Society of Apothecaries (pharmacists) was founded in the 15th century. This marked the emergence of pharmacy as a distinct and separate entity. The separation of apothecaries from grocers was authorized by King James I, who also mandated that only a member of the society could keep an apothecary (pharma) shop. Not much has changed today as pharmacy spaces are heavily regulated and an individuals entrance into the modern Society of Apothecaries is usually preceded by a Pharmacy degree. As technology exponentially evolved over the years, so did the research and development of drugs.

The Pharma industry’s modern era – isolation and purification of compounds and chemical synthesis – is widely believed to have begun in the 19th century. The isolation and purification of medicinal compounds was of tremendous importance for several reasons. Accurate dosages, toxicity reduction, and knowledge of the chemical structure of drugs would enable more intricate manipulations in the future.  Merck, the oldest Pharma Company in the world, successfully isolated morphine from opium in 1805. Merck also helped produce and market cocaine in this time period. Pfizer successfully developed citric acid in the mid 1800’s, which is used as a pH adjusting agent in gels and creams. When launched in 1886, Coca-Cola’s two key ingredients were cocaine and caffeine. The cocaine was derived from the coca leaf and the caffeine from kola nut, leading to the name Coca-Cola (the “K” in Kola was replaced with a “C” for marketing purposes). The pharmacy and retail industry have always been heavily intertwined in the modern era, with little regard for the consumers well-being. King James would be disappointed.

Legalization of drugs has never been about protecting you, the individual. It has always been about protecting corporations and their profits. Pharmaceutical companies would much rather you be medicating your depression with Prozac and making them rich, instead of medicating with an illegal narcotic and making a drug lord rich – both inefficacious decisions in my opinion.


Many doctors today fresh out of medical school are approached by “agents” of Pharma companies. These agents will bribe young doctors drowning in debt, offering to pay for their educational debt in exchange for promoting a certain product. Pharma companies will do whatever it takes to gain market dominance.

In 2004, Generics UK, (Merck’s former British subsidiary) paid £12M pounds in a settlement over a price fixing cartel. The NHS (UK National Health Service) alleges various drugs companies exploited the oligopolistic market conditions, forcing the NHS to pay inflated prices for drugs. NHS fraud investigators believe there was a conspiracy to limit the supply of 30 of its most commonly prescribed drugs, including a class of penicillin antibiotics and to a generic version of best-selling ulcer treatment Zantac. Many other pharmaceutical companies have also been accused of corruption in recent times. Pfizer, Eli Lilly and Johnson & Johnson have all settled foreign bribery cases in the last three years.

Eli Lilly is the Pharma Company that developed Prozac (anti-depressant) in the 1970s. After making a highly successful and profitable career in the pharmaceutical industry, Dr. Virapen decided to come clean in terms of corruption within Eli Lilly. Virapen shared the truth behind the industry and how he helped to get Prozac, one of the most highly prescribed anti-depressant drugs in the world on the market. Virapen also admitted that the pharmaceutical industry “are not interested in curing any disease that you may have, they are more interested in making you have disease. They are interested in symptomatic treatments.” Pharma companies benefit the most from symptomatic illnesses such as: diabetes, arthritis and cardiovascular disease.

According to textbook economics, the enormous gap between the price and marginal cost of these drugs gives their manufacturers an enormous incentive to lie, cheat, steal and find other ways to get more people to buy their drugs. The Pharma industry is spending a fortune trying to mislead doctors about the safety and effectiveness of their drugs so they will prescribe them more widely. They also spend billions of dollars lobbying to congressmen in order to keep the FDA docile and unable to operate in the interest of consumers.

Pharma companies exaggerate most diseases and even fabricate them to make money off of the fears of the general public. The swine flu pandemic, also known as H1N1, in 2009 was a fabricated disease propagated by drug companies to make money worldwide. In fact the Parliamentary Assembly of the Council of Europe (PACE) stated in its 2010 report that the handling of the H1N1 pandemic by the World Health Organization (WHO), along with European Union agencies and national governments, resulted in a “waste of large sums of public money, and unjustified scares and fears about the health risks faced by the European public.”


There is a fundamental difference between the approach of modern medical science and one based on traditional (eastern) medical science. The former hides the symptoms of the basic illnesses and does not deal with the root causes. Most diseases are derivatives of a dozen illnesses. Herbal medicine attacks the roots of these diseases. A primary example is the patient that decides to medicate a cold with Nyquil, instead of medicating with green tea. The former will do nothing but numb the patients’ symptoms, while the ladder will actually speed up the detoxification process and aide the immune system. Another example is the patient that medicates depression with Prozac, instead of reaching out to friends and family or different aid groups. The former will mask the underlying issues related to depression, while the ladder will help remedy the root cause of the depression.

There are, of course, extreme cases in which modern medical science is necessary. Unfortunately, widespread abuse and reliance on modern medicine has ruined the lives of so many people that it is almost impossible to fully embrace. Instead, people need to fully inform themselves before introducing foreign substances into their bodies. People would be shocked to realize that – more often than not – they are just walking, talking chemistry experiments.



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