Drug profits are hard to swallow

The Financial Review

PUBLISHED: 14 Jan 2012

Anna Bernasek New York

On New Year’s Eve, John Capano, an off-duty federal agent, went to his local pharmacy in the middle-class suburb of Seaford, on Long Island, New York, to pick up some prescriptions for himself and his cancer-stricken father.

What seemed like a perfectly mundane Saturday afternoon errand ended his life. A gunman entered Charlie’s Family Pharmacy demanding painkillers and cash.

After the robber left, Capano tried to apprehend him and shot him in the leg before the pair became embroiled in a scuffle. A retired police lieutenant and an off-duty New York City police officer were next to arrive. In the confusion, Capano was shot dead and so was the robber.

A pharmacy robbery in broad daylight is not supposed to happen in the quiet suburbs of Long Island. Seaford is the kind of place to which people moved to get away from all that.

And while much of the public’s attention has focused on the tragedy of the mistaken shooting, the incident at Seaford highlights the disturbing country-wide increase in abuse of prescription drugs. That has fuelled a rise in crime – and bumper profits for pharmaceutical companies cashing in on the epidemic.

The number of deaths from prescription painkillers soared from about 4000 in 1999 to 15,000 in 2008, the Centres for Disease Control and Prevention report.

That’s still less than half the number of road fatalities in the United States in a typical year. But while road deaths have been declining, deaths from prescription drugs have been increasing at an alarming rate.

The Drug Abuse Warning Network says 86,000 emergency department visits in 2009 were associated with the non-medical use of hydrocodone, among the most abused of all the prescription painkillers. That compares with 19,000 visits in 2000.

Prescription drugs are second only to cannabis as the most abused class of drug in the US.

Perhaps most disturbing of all, as drug abuse in the US extends from illegal street drugs to prescription painkillers, pharmaceutical companies are only too eager to find new ways to meet this growing demand.

Four companies – Zogenix, Purdue Pharma, Cephalon and Egalet – say they are developing a potentially more potent form of hydrocodone that could be 10 times stronger than existing medicines. Zogenix plans to file an application for its product with the US Food and Drug Administration early this year.

Hydrocodone is used in combination with a non-addictive painkiller called acetaminophen. Hydrocodone is an opiate from the same family as morphine, heroin, oxycodone, codeine and methadone. These drugs are highly addictive and people taking them on a regular basis often need to step up the dose to provide the same effect.

If you don’t count the tragedy, that makes for a very effective business model.

Pharmaceutical companies argue that a pure form of hydrocodone will help control pain for people with liver problems, as acetaminophen can be toxic to the liver.

Some doctors are sceptical. They say there is little medical need for stronger painkillers and argue that the profession already has the tools at hand to manage pain effectively.

The market for prescription opiates is big business, and estimated to be $US10 billion a year in the US. The number of people who have taken hydrocodone for non-medical reasons is thought to be close to 25 million, a 2009 National Survey on Drug Use and Health found. That’s nearly 10 per cent of the population.

So far, the abuse of hydrocodone and oxycodone seems to be an American phenomenon. The International Narcotics Control Board reports that the US consumes 99 per cent of the world’s hydrocodone and 83 per cent of its oxycodone. The discrepancy may be the result of loopholes in US law.

As it now stands, patients get up to five automatic refills of hydrocodone compared with one for oxycodone.

Another factor is the growing supply and widespread availability of hydrocodone. The Drug Enforcement Administration (DEA) wrote in a recent report that every age group had been affected by easy access to hydrocodone and the perceived safety of those products by medical prescribers.

In the US, the DEA sets quotas for the amount of addictive painkillers pharmaceutical companies can make. So government agencies have approved the big increase in supply of recent years.

The increasing trend of prescription drug abuse results from many factors: a medical culture that promotes pills over other solutions, ineffectual laws, a ready supply of dangerous products – and big profits.

Washington puts the cost of drug trafficking and drug abuse at $US215 billion a year. The human costs are even higher.

Anna Bernasek writes on financial markets, the economy, Wall Street and public policy from New York.