A new study finds that the pharmaceutical industry is a “market for lemons,” a market in which the seller knows more than the buyer about the product and can profit from selling products less effective and less safe than consumers are led to believe. These findings, part of an institutional analysis of the pharmaceutical industry and how it works, will be presented at the 105th Annual Meeting of the American Sociological Association.
According to the study, independent reviewers found that approximately 85% of new drugs offer few if any new benefits. Yet, toxic side effects or misuse of prescription drugs now make prescription drugs a significant cause of death in the United States.
“Sometimes drug companies hide or downplay information about serious side effects of new drugs and overstate the drugs’ benefits,” said Donald Light, author of the study and professor of comparative health policy at the University of Medicine and Dentistry of New Jersey. “Then, they spend two to three times more on marketing than on research to persuade doctors to prescribe these new drugs. Doctors may get misleading information and then misinform patients about the risks of a new drug. It’s really a two-tier market for lemons.”
Pharmaceutical companies produce “lemons” for three reasons, according to Light. First, they are in charge of testing new drugs. Second, they are provided firewalls of legal protection behind which information about harms or effectives can be hidden. And third, a relatively low bar is set for drug efficacy in order for a new drug to be approved.
Despite extensive requirements for testing the efficacy and safety of each new drug, companies often “swamp the regulator” (ie, the Food and Drug Administration) with large numbers of incomplete, partial, substandard clinical trials, according to Light. For example, in one study of 111 final applications for approval, 42% lacked adequately randomized trials, 40% had flawed testing of dosages, 39% lacked evidence of clinical efficacy, and 49% raised concerns about serious adverse side effects.
“The result is that drugs get approved without anyone being able to know how effective they really are or how much serious harm they will cause,” Light said.