From MSNBC News, January 22, 2007, “Pfizer to Lay Off 10,000, Close Plants,”    by the Associated Press:

“NEW YORK - Pfizer Inc., struggling with fierce competition from makers of generic drugs, announced Monday it will cut 10,000 jobs and close at least five facilities to slash its annual costs by up to $2 billion by next year. The drastic measures by the world’s largest drugmaker highlight the challenges faced by many pharmaceutical companies these days. In addition to patent expirations, big drug companies are struggling with a business climate where insurers and other large purchasers of medicines are demanding lower prices and more evidence of products’ worth.”

Pfizer subsidiary Pharmacia AB of Stockholm Sweden manufacturers Nicorette nicotine gum for distributor British GlaxoSMithKline. In June of this 2006 Johnson & Johnson—whose subsidaidy ALZA Corp. manufacturers NicoDerm CQ for GlaxoSmithKline—announced its purchase of Pfizer Consumer Healthcare for $16.6 billion, including the rights to Nicorette. That transaction was reportedly finalized in December 2006. August 27, 2004 German drug maker Merck KGaA, said that it would buy most of Pfizer's Stockholm-based NM Pharma generic drug operation for 53.8 million euros ($65 million) to become the top seller of generics in Scandinavia. . . . Merck, which is unrelated to the drug maker Merck & Company of the United States, is seeking to become one of the top three generic drug companies. Pfizer is based in New York. The above news reports follows MSNBC News’ December 5, 2006 article, “Pfizer Ends Development of Key Cholesterol Drug.”  Clinical trials on the company’s generic replacement for its patented Lipitor cholesterol drug were halted because of unexpected patient deaths. Hmmmm . . . does that have something to do with a product’s worth? 

Perhaps that is genuinely good news. We may reasonably foresee a day when one can watch television without being bombarded with commercial urgings to “Ask you doctor about Lipitor.” Then again, we still confront a gazillion advertisements per nanosecond for Nirorette, NicoDerm CQ, and Commit Lozenges. Every television commercial for those products reminds us of what tobacco control is really about: a mercantile nicotine replacement agenda, not public health.   

Pfizer recently introduced its Champix nicotine receptor blocker. There’s an interesting contradiction: buy Pharmacia’s Nicorette to ingest nicotine and allegedly get a buzz on, then take Pfizer’s Champix to block its effects on the brain . . . ! Oh boy, here we go again – smoking bans to prohibit smoking in one’s home to coerce consumer choice of Nicorette and Champix as a smoking cessation aid. That makes about as much sense as smoking Philip Morris’ de-nicotineized  NEXT cigarette brand in conjunction with using Nicotine Replacement Therapy products like Nicorette and NicoDerm CQ, as recommended in a study published by the Society for Research on Nicotine & Tobacco a few years ago. I wrote about that in “The Duke of Nicotine,”     published by Forces.org in June of 2001. Consumers who would choose those inferior products are entitled to the quality the buy – zip, squat nada.  

It is encouraging that Pfizer is confronted with common sense market forces. Where they must compete with generics and absent a monopoly they lose. What a shame. I was under the impression that fair, open market competition was what business was about. The Associated Press reports that pharmaceuticals confront a market where “large purchasers of medicines are demanding lower prices and more evidence of products’ worth.” A few studies and news reports bear on those subjects:

 

1. Products’ Worth No. 1: From the journal Tobacco Control (2003;12:21-27), “A Meta-Analysis of the Efficacy of Over-The-Counter Nicotine Replacement”  

“The long term (that is, greater than six months) quit rates for OTC NRT was 1% and 6% in two studies and 8–11% in five other studies. These results were not homogenous; however, when combined the estimated OR was 7%.”

 

7 percent efficacy for Nicotine Replacement Therapy smoking cessation products that are therefore 93 percent ineffective for intended use may have something to do with product worth. 

2. Products’ Worth No. 2: From the journal Tobacco Control (2003;12:310-316) “Persistent Use of Nicotine Replacement Therapy: An Analysis of Actual Purchase Patterns In a Population Based Sample”   

 “. . . . That is, among those who start using nicotine gum, 6.7% are likely to still be using it after six months. Among those who engaged in persistent use in this sample, the duration of such use averages 8.6 months (that is, once users cross the six month threshold, they use for another 8.6 months, on average). Using the formula specified in Kleinbaum et al38 . . .  we estimate that 36.6% of current gum users (in cross section) are engaged in persistent use.” 

Products for which an estimated 36.6 percent of consumers are long term, chronic users may have something to do with costs to large purchasers of medicines. 

3. Product’s Worth No. 3: From Journal of the American Medical Association  (JAMA. 2002;288:1260-1264) Impact of Over-the-Counter Sales on Effectiveness of Pharmaceutical Aids for Smoking Cessation   

“Nicotine replacement therapy is heavily promoted to the general population by both the pharmaceutical industry and tobacco control advocates. . . . California Tobacco Surveys of 1992, 1996, and 1999, including 5247 (71.3% response rate), 9725 (72.9% response rate), and 6412 (68.4% response rate) respondents, respectively. . . . Since becoming available over the counter, NRT appears no longer effective in increasing long-term successful cessation in California smokers.” (Underline added.) (NOTE: NicoDerm CQ and Nicorette were approved for Over-the-Counter sales in 1996.) 

4. Prices No. 1: From MSNBC Market Watch, November 2, 2006, “Pharmaceutical Giants Lose Key Court Ruling on ‘Average Wholesale Price Litigation:”

“BOSTON, Nov 02, 2006 /PRNewswire via COMTEX/ -- Today a U.S. District Court dealt a major blow to a group of pharmaceutical companies . . . denying the companies' motion to dismiss a nationwide class action law suit alleging they defrauded consumers by illegally inflating the cost of prescription drugs. . . . The suit . . . targets the companies' practice of inflating the Average Wholesale Price (AWP) they reported through publications for certain drugs. In turn, Medicare, Medicaid and third-party payers such as insurance companies reimburse pharmacies and physicians for drugs they provide based on the AWP. Individual patients also pay out-of-pocket costs on this basis." (Underline added.) 

It’s about time that someone addressed the pharmaceutical practice of jacking up prices to Medicaid through artificially inflating payment indices. Unfortunately addressing a reported $5 billion cost to Medicaid through such practices took a nationwide class action lawsuit.

 

5. Prices No. 2: From United Press International, October 14, 2006, “Insurance Plan Penalizes Smokers, Obese:”   

WASHINGTON, Oct. 23 (UPI) -- The director of a U.S. anti-smoking organization says smokers and obese people should pay substantially more for health insurance than others. John Banzhaf, director of the Washington organization Action on Smoking and Health said he's urging state governors to adopt his plan in reforming their Medicaid programs. Under the plan, obese people would pay a 10-percent increased health insurance premium, with smokers generally paying an even higher percentage. Those who are obese and smoke would pay nearly 30 percent more to obtain health insurance. ‘While a growing number of health insurance companies are now charging smokers higher premiums, and a few state governments have started charging employees who smoke more for health coverage, this may be the first situation in which the concept is applied to Medicaid," Banzhaf said in a release. While noting increasing the premium penalty beyond a certain point might cause some to do without insurance, Banzhaf said correspondingly lower rates for non-smokers would probably help many of them obtain coverage that was previously financially out of bounds.” (Underline added.)  

Now there’s a brilliant solution: charge “Target” consumers more to make up for pharmaceuticals bilking Medicaid in the name of Medicaid reform, no less . . . ! Gotta hand it to anti-tobacco activists, they’re seasoned pros at inventing new schemes to finance fraudulent Social Marketing on the back of those they choose to negatively label, unfavorably stereotype, and hate. It now extends to “the fat one’s,” too. Once one embraces hate to justify lining their pockets at other’s expense that concept will predictably spread to effect everyone. 

6. Prices No. 3: As tobacco control advocates puff the cost of cigarettes through new taxes, GlaxoSmithKline inhale new profits through parity pricing. For example, when cigarette taxes increased in Washington by $12.00 per carton 2000 to 2006, on a per unit basis GlaxoSmithKline puffed the cost of Nicorette $12.06 per box (see Parity Pricing. 

‘Nuff said. Suffice it to say consumers, insurers, and states’ demands for product value are long overdue. It’s just a shame that 10,000 hardworking employees must now pay for such tomfoolery with their jobs. Will employees who smoke off-the-job be the first in line for termination at Pfizer? 

It’s going to get downright interesting when the smoking cessation product liability class action lawsuits kick in.  

Norman E. Kjono