[PART TWO, CLARITIN ARTICLE]
Although the F.D.A. advisory committee recommended approval of loratadine, Straus remained skeptical. In the conclusions of a 321-page "medical officer review" dated Nov. 9, 1987, he described the proposed 10-milligram dose of Claritin as "minimally effective versus placebo" and added that 40 milligrams appeared to be "the minimum effective dose." He also argued that the label "must include sedation as an adverse reaction and include warnings to this effect." A former F.D.A. official, who requested anonymity, said that the agency informally asked Schering to test a higher dose of loratadine but lacked the regulatory authority to mandate it.
By May 1988, however, the F.D.A. had come to the conclusion that the 10-milligram dose was no more sedating than a placebo pill, and by July 1989, as the General Accounting Office report puts it, "a consensus had developed at F.D.A. that 10 milligrams was effective." It is impossible to determine whether Sherwin Straus had changed his mind. Around the time he was assessing loratadine, according to former colleagues, he developed multiple sclerosis and became seriously ill, eventually dying of the disease.
"Schering-Plough always believed that loratadine was safe and effective at the 10-milligram dose," William O'Donnell, a company spokesman, wrote in reply to a question, "and felt that the clinical studies that were done fully supported that conclusion."
Pharmaceutical executives rarely talk about luck as a feature in the process of drug development, but in 1989 alone, Claritin's fortunes were buffeted like a grain of pollen in an early spring breeze. In September of that year, the acting division director at the F.D.A., reviewing the drug's status, concluded that all outstanding issues regarding safety, efficacy and the equivalence of tablets and capsules had been resolved. Claritin should have been nearing approval. But earlier in the year, as part of an F.D.A. reorganization, the Claritin application was transferred to a different division within the F.D.A.; with the transfer came a new pharmacology reviewer. This reviewer revisited some toxicology issues Schering thought had been settled.
Around this time, according to Schering, tests on other products being conducted at the F.D.A.'s National Center for Toxicological Research in Jefferson, Ark., were showing that high doses of doxylamine, an antihistamine and sleep aid, produced liver tumors in rodents. These findings apparently prompted the F.D.A. to reconsider results of animal experiments with both loratadine and cetirizine (the active ingredient in Zyrtec); they, too, had shown increases in liver adenomas, abnormal growths that were then considered to be a "larval" form of malignant tumor.
The stakes for Claritin were high. If a prescription drug caused cancer in animals but was of medical importance, and if no satisfactory alternative existed, the usual procedure would be to approve the drug and describe the findings on the drug's label, said Paula Botstein, then a deputy F.D.A. director, at a 1991 meeting. But if similar drugs were already on the market and were not carcinogens, she said, the F.D.A. would "ordinarily" not approve a new drug if it caused cancer in animals. Both Seldane and Hismanal were already on the market, and neither caused cancer in animals. Because of this situation, said a former F.D.A. official who asked not to be named, the Claritin approval was "certainly" in doubt -- even after an advisory panel concluded that it was unlikely to pose a cancer risk to humans. (The other two drugs, doxylamine and cetirizine, were also cleared of suspicion.) Nevertheless, the F.D.A. still insisted on further tests, which eventually convinced agency officials that the drug was safe. Schering-Plough has always insisted that Claritin is not a carcinogen.
While these safety concerns were being investigated, a fateful new chapter in the Claritin story began to unfold. On a night in November 1989, in what first looked like an unrelated event, a 39-year-old woman was brought to the National Naval Medical Center in Bethesda, Md., after fainting while driving on the Washington Beltway. She had lost consciousness four times in a two-day period. She was taking the antihistamine Seldane (not for allergies but for a sinus condition) and then began using an antifungal drug, ketoconazole, to prevent a vaginal yeast infection. "And that turned out to be a deadly combination," recalled Dr. Brian P. Monahan, who treated the woman for potentially fatal cardiac arrhythmias.
As doctors investigated this unusual case, they uncovered previous reports of dangerous irregularities in heartbeat among Seldane patients. Later they found that risk in Seldane patients to be associated with ketoconazole or erythromycin, a widely used antibiotic. In August 1990, at the F.D.A.'s urging, Seldane's manufacturer, Marion Merrell Dow, sent letters to doctors warning of these potentially fatal drug interactions, and in 1992 the F.D.A. ordered warning statements, outlined by a prominent black box, to appear at the top of the label and packaging on Seldane and Hismanal.
This turned out to be very good news for Claritin. Because of growing concerns about the two other nonsedating antihistamines, the F.D.A. "started to believe that it would be beneficial to have Claritin for sale," according to G.A.O. investigators. (Schering said in a statement, "We do not believe that loratadine was the result of a balancing of product-safety issues.")
In the span of several years, therefore, Claritin had gone from being a me-too drug, to one that looked possibly unapprovable, to the only game in town. This regulatory roller coaster finally came to a rest in April 1993 when, 77 months after Schering applied, the F.D.A. approved loratadine.
At least one analyst, Mara Goldstein of C.I.B.C. World Markets, estimates that Schering-Plough lost $4billion in revenues because of the delay. But I heard
a different view from a pharmacologist who, although insisting on anonymity, was familiar with these unfolding events. "I think they've grossly benefited from the delay at the agency," this researcher told me. "Because terfenadine" -- the generic name for Seldane -- was getting blasted, they looked like a good alternative, and I think they actually got a much larger share when they hit the market because of it."
Since Claritin's approval, the marketing campaign for the drug has rewritten the rules for pharmaceutical promotion. The brand is ubiquitous: watching the World Series in 1999, viewers frequently saw Claritin proclaimed the "official allergy medication of Major League Baseball"; the bag the pharmacist gives you when you fill almost any prescription suggests that you "ask your pharmacist about Claritin-D 24 Hour."
The direct-to-consumer ads seen on TV and in magazines are only the tip of the iceberg. The bulk of pharmaceutical marketing goes on behind closed doors, where drug salesmen tout their products to doctors, and pharmaceutical companies now spend more than $13 billion a year on such promotion, according to I.M.S. Health, a company that tracks the pharmaceutical business. The language of those presentations is constrained by the language on the F.D.A.-approved label -- in other words, all the battles over efficacy and sedation at those obscure F.D.A. meetings in the 1980's define the sales vocabulary of the 1990's.
Once again, Claritin was the beneficiary of some lucky timing. In August 1997, the F.D.A. relaxed its rules governing television advertising; rather than having to run the same fine print required in magazine ads, commercials could satisfy F.D.A. rules by giving a toll-free number, mentioning a magazine advertisement and instructing viewers to "ask your doctor" for more information. In a daring move closely watched by the rest of the industry, Schering-Plough poured $322 million into pitching Claritin to consumers in 1998 and 1999, far more than any other brand, according to the National Institute for Health Care Management Foundation, a nonprofit group in Washington.
"That campaign was a landmark," says the group's Steven D. Findlay. "The Claritin campaign, along with Viagra, Prilosec and a few other high-profile drugs, was very influential. Claritin was clearly the most visible, the most expensive and skillfully executed, and the bottom-line results were immediately apparent. It had a huge impact, because everybody is watching everybody else very closely." Drug companies spent an estimated $2.5 billion on consumer advertising in 2000; these ads may have brought in as much as a $5-to-$6 return for each dollar spent.
Yet critics point out that direct-to-consumer advertising illustrates an embarrassing paradox: marketing may be most indispensable in categories where new drugs may actually be less innovative. "Marketing is meant to sell drugs," Marcia Angell wrote in an editorial in The New England Journal of Medicine last June, "and the less important the drug, the more marketing it takes to sell it. Important new drugs do not need much promotion. Me-too drugs do."
But promotion works. Sales in the United States of the entire Claritin family -- not just the 10-milligram tablets, but a syrup, quick-dissolving RediTabs and both 12-hour and 24-hour Claritin-D versions with a decongestant -- which stood at $1.4 billion in 1997, jumped to $2.6 billion by 2000. It accounts for nearly 30 percent of Schering-Plough's annual revenues.
Schering had a magnificent cash cow. Now the trick was to milk it as long as possible.
Almost from the moment Claritin was approved in 1993, with only five years remaining on its basic patent at the time, Schering-Plough and its competitors began to tussle over the drug's afterlife -- and, more important, when it would begin. Generic drug companies typically gear up to produce a cheap version of a drug about five to seven years before a patent is due to expire. Schering, at that same time, began to mount its expensive legislative campaign to extend Claritin's patent. This fundamental conflict, played out in Congress and in court, is shaping the golden years of Claritin's already eventful career as a drug.
The Claritin patent has been extended several times already, each extension reflecting laws passed by Congress in the last two decades that have modernized the F.D.A. review process and significantly extended the effective life of drug patents. The extensions began with the Drug Price Competition and Patent Term Restoration Act of 1984, known informally as the Hatch-Waxman Act. Despite its dense legal provisions, Hatch-Waxman is an essential element of any conversation about drug prices in this country. The law was a legislative high-wire act designed to reward innovation at major pharmaceutical companies and protect intellectual property while at the same time promoting lower drug costs, primarily by making it easier for generic drug makers to get to the American marketplace. As part of Hatch-Waxman, new drugs being developed after the law was enacted in 1984 could receive automatic patent extensions of five years. More than 100 drugs, including Claritin, were already in development when the law was passed; these products, known as "pipeline" drugs, were eligible for only two years. That reset the clock for Claritin's patent expiration to the summer of 2000.
In 1994, the Uruguay Round Agreements Act, an obscure addendum to the GATT treaty, added 22 months to the patent life of Claritin, pushing the expiration back to June 2002. And just last August, the basic patent on Claritin was extended yet another six months, to December 2002, because Schering-Plough conducted pediatric trials of the drug. If six months doesn't sound like a lot, consider the economic incentive here: for the price of a modest clinical trial in children (costing at most $3 million), Schering can extend the life of its basic patent half a year and earn close to $1billion. By one unofficial estimate, these three patent extensions will ultimately translate into additional Claritin revenues totaling about $13 billion.
Since 1996, there have been at least a half dozen attempts to extend Claritin's patent life even more. There was an attempt, for instance, in the summer of 2000 to slip language at the last minute into a military-appropriations bill. Schering's lobbying efforts have not been the most persistent, "just the crudest," according to Bruce Downey, C.E.O. of Barr Laboratories, a generic drug maker based in Pomona, N.Y., who has also testified against extending the Claritin patent.
Representative Waxman has derided the legislation proposed to provide Schering relief as the "Claritin Monopoly Relief Act." But the case for some of the pipeline drugs may not be as outrageous as some critics have suggested. Peter Barton Hutt, the former chief counsel at the F.D.A. and now a lawyer at the Washington firm Covington & Burling, has argued that limiting loratadine and several other pipeline drugs to a two-year extension was "completely arbitrary" and assumed much speedier approval.
As has been true of so much of this drug's history, however, timing is everything, and Schering-Plough's efforts to extend its monopoly has coincided with surging public discontent about the cost of drugs. As a result, each attempt by the company to get Congressional patent relief has become a rallying cry for opponents, including consumer watchdogs, health insurers and generic drug makers. Since the 1996 election, Schering has spent $19.9 million on lobbying and campaign contributions, according to the watchdog group Public Citizen. Yet the most tangible achievement to date of that $20 million lobbying campaign may be the way that it has galvanized the generic drug industry and attracted the attention of lawmakers. Last fall, Senators John McCain and Charles Schumer introduced legislation designed to close loopholes in Hatch-Waxman.
For all the closed-door maneuvering in Washington, an equally revealing pharmaceutical endgame has been playing out, slowly, in a courtroom in New Jersey.
A chilly day in January, about two dozen dark-suited patent attorneys gathered in the United States District Court in Newark, in what has become a typical chain of events toward the end of a prescription drug's life: patent litigation. Unlike the arguments made by Schering-Plough's lobbyists in Washington, however, those made by its lawyers in court documents maintain that Claritin's patent protection extends beyond 2002.
Last August, Teva Pharmaceuticals became the first company to receive tentative approval from the F.D.A. to market a generic version of Claritin. The key word here is "tentative." Teva must wait for the basic loratadine patent to expire next year. It must wait for the resolution of a lawsuit filed against it by Schering, which could conceivably stretch into 2003. And it must wait for Geneva Pharmaceuticals, a generic company based in Broomfield, Colo., to bring its version of Claritin to market; Geneva is entitled to an exclusive 180-day run as the only generic in the market, a monopoly that the company receives as Hatch-Waxman's reward for being the first generic drug maker to challenge a brand drug's patent. The moment the first generic enters the market, industry experts estimate, the cost of generic Claritin will drop to about 80 percent of current prices. When everyone else jumps in six months later, the price will fall off a cliff. "With so many competitors," one generic executive told me, "the price will drop to $10 very quickly."
Generic companies fill about 42 percent of all drug prescriptions in this country, but the price disparity with brand-name drugs is striking. That market share accounted for slightly less than $20 billion in drug sales in 1999; brand company sales accounted for more than $90 billion. Industry advocates claim that if generic sales inched up to 52 percent, American consumers would save an estimated $11 billion a year in drug costs. If the generic industry is beginning to mature, as some maintain, one of the main factors in that process has been, oddly, Schering-Plough. "I think loratadine is one of the first examples," said Dr. Carole Ben-Maimon, head of the Generic Pharmaceutical Industry Association and until recently a vice president at Teva. "We were really able to make it an issue."
Much of the industry's current disgruntlement involves patent litigation -- or as George S. Barrett, president and C.E.O. of Teva USA puts it, "the way the patent system has just been abused." When Congress devised the language of Hatch-Waxman back in 1984, the notion of a drug coming "off patent" was as simple as it sounds: once the patent for a basic compound expired, other companies were free to enter the market. But it's not that simple anymore, said Ben-Maimon, a physician who now heads a research division at Barr.
Brand companies now patent the process of manufacturing the raw material. They patent the medical uses to which the drug can be applied. They patent the formulation of the medicine (the other ingredients used to stabilize the drug). They can patent what's known in the industry as "trade dress" -- the color, size and shape of the pill. They patent metabolites -- the chemicals into which a drug breaks after being metabolized by the human body.
So drugs don't come "off patent" the way the 1984 law envisioned; they come off as a series of strategically staggered patents, a practice known as layering. And here's where Hatch-Waxman has inadvertently turned into a playbook for complicated, time-consuming -and, according to generic drug makers, frivolous -- patent litigation.
On Feb. 5, 1998, Geneva Pharmaceuticals filed what's known as an abbreviated new drug application, or ANDA, seeking F.D.A. permission to sell a generic version of Claritin. Several days later, as obliged by Hatch-Waxman, Geneva notified the patent holder, Schering, of its plans. On March 19, Schering-Plough sued Geneva and its parent corporation, Novartis, claiming that two of its Claritin patents had been infringed. Since then, seven other drug makers -- Zenith Goldline, Teva Pharmaceuticals, Mylan, Andrx, Impax, American Home Products and Apotex-Novex -- have gone to the F.D.A. seeking approval to sell generic versions of Claritin. Although the issues vary from case to case, Schering has sued all of them.
Some critics make the case that since Hatch-Waxman, an inordinate amount of innovation has been displaced from research to litigation strategies. A lawsuit is far cheaper (about $5million per case) and less risky than research, and the return on investment can be very high. "It's always cheaper to litigate than to lose market share," said a former top-level F.D.A. official who asked not to be named. "If you can keep a generic off the market for one day, three days, five days, two months or two years, that's a lot of revenue. Certainly a lot more than it would cost to pay your lawyers." A Schering spokesman says, "Schering-Plough believes that its patents are valid and enforceable."
William Fletcher, president of Teva North America, knows how frustrating this can be. "You know, people here have asked us several times, 'Why bother doing Claritin?"' he said. "There are going to be at least 10 competitors out there. The price is going to be, you know, 5 percent of Claritin. Why bother doing it? One reason is that we are a broad-line supplier, and we have to have every product in our line. The other reason is that we're just bloody-minded about it, quite frankly. Stubborn. You know, you're damned if you're going to let Schering-Plough get away with it!"
There's a larger game in play in the Newark courtroom, too, according to the generic companies, and it became more interesting a few weeks ago. As Schering-Plough holds the generics at bay with one hand, it had hoped to receive F.D.A. approval in time to introduce desloratadine, its second-generation version of Claritin that will be marketed as Clarinex, this spring. "The longer the litigation is dragged out," says Elliot F. Hahn, president of Andrx, "the more opportunity they have to market desloratadine to physicians and switch them from the Claritin line to the desloratadine line." But that plan ran into a major snag in mid-February, when Schering-Plough revealed that the approval of desloratadine was being held up until the company corrects manufacturing deficiencies cited by the F.D.A. at four of its plants.
What to do in a crisis? Market! Several days later, as the company's stock plunged and attorneys hustled to organize shareholder lawsuits, Schering-Plough announced big new "consumer education" and pharmacy programs for Claritin -- the "largest and most comprehensive allergy initiative of its kind." The company plans to distribute 35 million free drug samples to doctors, 6 million allergy brochures, 65,000 drugstore displays and, yes, 350 million more of those little blue pharmacy bags.
Finally, an edifying case of sticker shock. Late last fall, my allergist prescribed a month's supply of Claritin-D to clear up some congestion before I started my first round of allergy desensitization shots. The pharmacy had misplaced my insurance number, so when I went to pick up the prescription, the clerk handed me a bill for $103. This is the consumer's trickle-down tab for the roughly $250 million in drug development, more than $100 million a year in consumer advertising, many millions in closed-door marketing, $20 million in lobbying and political contributions, $5 million a year for litigation. I was stunned that it was so expensive, and I asked myself a question that is a normal part of every marketplace but health care. If I had to pay $103 out of my own pocket, would I buy this medicine? Was it worth it?
With the exception of elderly people on Medicare and the uninsured, most of us never ask that question. In a recent conversation, Gillian Shepherd, a Manhattan allergy specialist, addressed the same point, noting that antihistamines like Claritin and Allegra are about equal in potency to over-the-counter drugs like Chlor-Trimeton. And while some patients experience sedation with these drugs, many do not. "Fifty percent of the population can tolerate most of them without any sedation," she explained. "The feeling is that if there's a chance of sedation and third parties are paying, why not use the nonsedating drugs? If people were paying out of pocket, the story would be completely different."
As I labored to sort through all the clinical data and all the confusing advertising, I found myself wishing that we had reviewers who would talk bluntly about new drugs, who could discuss efficacy, safety and value from the consumer's point of view, who could deconstruct the advertising, who would include cost as a criterion. But those are medical judgments, some would say, and only doctors should dispense them. True, but many doctors, it turns out, have largely abdicated that responsibility -- they rarely know what a drug costs, and as Shepherd mentioned, many learn about the properties of a given drug not from the medical literature but from company salesmen, who are paid to tell one-sided stories.
And so what? Richard Kogan, Schering's C.E.O., testified before Congress two years ago that drug companies need constant and ample revenue streams to support their enormous and dicey R&D enterprise, and he's right. In order to be competitive in this post-genomic era, large pharmaceutical companies need to spend $2 billion to $4 billion a year on research to develop new drugs. The industry has developed many remarkable medicines, and more are on the way.
But if high drug prices are a kind of innovation tax for American consumers, we should at least demand innovation in return. Many high-priced, successful drugs, like Zyrtec, are developed overseas and simply marketed here by American companies. Moreover, a significant amount of pharmaceutical innovation currently occurs in the biotech sector, where small, cutting-edge companies typically license their discoveries to big pharma, which has the marketing expertise. What innovative new drugs does Schering, for example, have in the pipeline, subsidized by the billions of dollars earned from Claritin? Financial analysts are mixed on the company's potential treatments -- for cancer, asthma, high cholesterol and several other major diseases -- but a leading candidate for future blockbuster status is . . . desloratadine, the chemical that is the principal metabolite, or breakdown product, of Claritin. Anyone who has taken Claritin has already had desloratadine in his or her body.
No one has seen much clinical data on the new drug, but many pharmacologists told me that metabolites rarely possess significantly more potency than their parent compounds, and one allergist confided, not for attribution: "The only reason I can see scientifically for bringing this out is that their patent is about to expire. There have been about 20 abstracts published for desloratadine, all from Schering and all saying there's a little edge here, a little edge there, none of which strike me as terribly important." But then, as the Claritin story makes clear, it's not always about innovation but rather about finding little edges here and there and then marketing the hell out of them.
Meanwhile, the laboratory of Raymond Woosley of Georgetown University has done research on an over-the-counter antihistamine, Schering's own Chlor-Trimeton -- the same one my father shared with me decades ago. The lab has shown through sophisticated molecular-binding experiments that Chlor-Trimeton is more potent at grabbing and hanging onto the histamine receptor than any other antihistamine it has tested. For several years, the lab has wanted to test a lower -- and possibly nonsedating -- dose of the drug, to no avail. "We did a grant for four years for the N.I.H., and we didn't get it funded," Woosley said. "We assumed the innovator company didn't want to do it because they were making Claritin, and the generic companies didn't want to do it because it would cut into their profit margins even more."
Woosley's study might work; it might not. The issue is that our health-care system has evolved to the point where there is no economic incentive even to try. For an industry that prides itself on taking risk, the risk of discovering that cheaper, older medicines might be just as good, and perhaps even better, than expensive new versions is apparently one risk too great to take.
Stephen S. Hall is a contributing writer for the magazine. He is working on a book about the molecular biology of aging. |
