Khaya Sithole: Drug firms addicted to profit, not cure

The 4th of July represents a seminal moment in American history. Back in 1776, the United States declared independence from Great Britain. Founded on the premise of being the “land of the free and home of the brave”, the US would — over the next quarter of a millennium — declare itself the world’s greatest nation on the back of its commercial and political successes — and a few wars in between.

Its key driver — unbridled capitalism — was at the heart of an email exchange that took place exactly 242 years later on 4 July 2018. That morning, Martin Elling, a partner in charge of the pharmaceutical practice at McKinsey, wrote to fellow partner, Arnab Ghatak, referring to a charge sheet issued by the Massachusetts attorney general against Purdue Pharmaceuticals and its directors. 

At the heart of the charge sheet was the damning allegation that Purdue had played an instrumental role in fuelling the opioid epidemic that has cursed the US since 1999.

In data compiled by the Centre for Disease Control and Prevention, overdoses from opioids — or painkillers — had led to the death of more than 450 000 people since 1999. The epidemic had manifested in three waves. The first related to the rapid rise in painkiller prescriptions in the 1990s. The second wave — from 2010 — was fuelled by the surge of use of an illegal opioid — heroin. The most recent wave, traced back to 2013, showed a rise in use of new opioids such as fentanyl.

In 1996 Purdue launched its record-breaking painkiller drug, OxyContin. The drug, coming in various dosages, had a little-known problem — it could be highly addictive. OxyContin became popular and widely prescribed, much to the joy of the company, its bankers and its owners, the billionaire Sackler family. 

Part of the drug’s success related to its aggressive marketing campaigns that sought to persuade doctors to prescribe it and discourage the use of alternatives. A fundamental problem lay in the business and the clinical model — how to keep the drugs and the cash flowing. This formed the heart of a series of strategy sessions from 2009, where the Purdue board was treated to presentations by McKinsey. 

By this time patient addiction to painkillers had become a problem for the US and overdoses escalated. As more patients became addicted and demanded the painkillers — even when clinical advice dictated otherwise — a black market for alternatives such as fentanyl and heroin was created. 

The addiction crisis had become a public interest matter and doctors and pharmacists were under increasing pressure to justify prescribing such painkillers to their patients. The risk to Purdue was that such elevated levels of scrutiny would lead to less OxyContin being distributed. 

McKinsey’s solution was to simply eliminate the anxiety where it mattered the most — the financial risk. The management consulting firm suggested a rebate mode: for every doctor who had prescribed OxyContin where an adverse event such as an overdose or death had occurred, Purdue would pay that doctor an amount equal to at least the annual cost of OxyContin. Doctors could continue to prescribe OxyContin with no worries about the financial risks. 

But a lesser-explored problem related to the link between OxyContin, addiction and overdoses. The intensity of dosages — using the industry measure, the morphine milligram equivalent (MME) — indicated that OxyContin’s MME ranged from 10mg to 80mg. The differences were both clinical and financial. For every 10mg dosage, Purdue would make $38 from those taking two pills a day for a week. Once a patient was on the pricier 80mg dosage, the weekly profit jumped by 450% to $210.

To maximise profits, Purdue had to extend usage durations and dosage intensity. Its business model focused on encouraging doctors to prescribe higher dosages, leading to longer treatment cycles and to addiction.

Once this happened, the Sackler family became richer and their desire for profits larger. On the back of the universal acknowledgement that addiction to painkillers had fuelled a national crisis, Purdue then decided to sell drugs to cure addiction to painkillers such as OxyContin

When Elling sent the email, the crux of it centred on how McKinsey could shield itself from accountability in relation to the Purdue scandal. Its most important contribution was the recommendation that McKinsey should delete all documents and emails relating to its work with Purdue. In September 2018, in steps reminiscent of Purdue’s own intention of participating in the full spectrum of the opioid crisis, McKinsey — which has a notorious habit of claiming that it acts in the best interests of its clients — released a report titled Why we need bolder action to combat the opioid epidemic

Such a report suggested that while McKinsey was happy to advise the Sackler family and Purdue on how to fuel the epidemic on one end, they were equally happy to issue reports aimed at those trying to solve the opioid crisis they were profiting from.

The revelations relating to the Purdue business model and its role in the opioid crisis form part of the disclosures emanating from the most prominent of the opioid-related lawsuits against various drug companies including Insys Therapeutics and Johnson & Johnson. 

The litigation risk associated with adverse events is a permanent source of anxiety for drug manufacturers. Such anxieties are a contributor to the long time lags between drug research, clinical trials and roll-out, which are usually measured in years rather than months. Over the past year, the rapid research, approval and roll-out of Covid vaccines has escalated the question of reliability, efficacy and liability. The nature of the pandemic, when measured by lives lost, has required fast responses.

The remaining concern is whether, in the pursuit of the fast solutions and massification, the pharmaceutical industry has exposed itself to blind spots, particularly adverse responses. 

The potential litigation costs is an unquantifiable endeavour. In seeking to cover themselves, the vaccine manufacturers have lobbied for no-fault contracts, which indemnify them from all possible litigation relating to the vaccines. In its vaccine solidarity facility, Covax, the World Health Organisation (WHO) has created a no-fault compensation fund that will be the singular source of settlement for any claims relating to the vaccines it has distributed.

For acquisitions made by countries outside the Covax facility, individual nations are responsible for their own compensation funds. 

The minister for cooperative governance and traditional affairs, Nkosazana Dlamini-Zuma, recently gazetted the creation of such a fund for South Africa’s direct vaccine acquisitions. The fund will be responsible for claims relating to vaccines. The problem is that the funding of the scheme is envisioned to come from the general fiscus and “funds accruing from any other source”. 

But, as anyone who has observed the implosion of the Road Accident Fund would know, the problem with compensation funds that have no ceiling on claims and limited funding sources is that they eventually leave both the claimants and the nation dry.

The model mooted in the gazette pales in merit when compared with the WHO model. Under the WHO model, a levy is added to every vaccine to be distributed. This ensures the funding sources are widely distributed. Quite why the South African government has decided to house the risk in a bankrupt fiscus is a mystery.

This blanket indemnity may provide adverse incentives for vaccine manufacturers. 

As the history of the opioid crisis indicates, such companies are not immune from prioritising profits over people. The opioid crisis lawsuits represented a rate instance of corporate accountability. Last year, Purdue agreed to an $8.3-billion settlement and promptly filed for bankruptcy protection. McKinsey agreed to pay almost $600-million in compensation and cease advising clients on opioid businesses. 

The worrying factor for the WHO, South Africa and other countries is that in the opioid crisis, one of the manufacturers that was heavily implicated and was ordered to pay $572-million to the state of Oklahoma is Johnson & Johnson.

The recent interruptions of its vaccine roll-out suggest that its product is the type of vaccine that would benefit from a longer assessment and trial evaluation period associated with years rather than months. But as the world seeks to balance the urgency of the crisis with the possibility of adverse events while dealing with a company not immune to bending the axis towards profit rather than people, anxieties of old are revived.

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Khaya Sithole
Khaya Sithole is a chartered accountant, academic and activist who writes regularly for the Mail & Guardian and discusses the issues raised in his columns on his Kaya FM show, On The Agenda, every Monday from 8pm to 9pm

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