New Drugs for Old: How drug companies make their profits

No E-news bulletin would be complete without some news about those bad, bad boys, the drug companies. This week we hear that GlaxoSmithKline has been paying doctors to switch patients to a newer, and more profitable, drug.
This is common practice, of course, and it’s the reason why drug companies are so profitable. In fact we’ve estimated that over 30 per cent of profits are derived from new products. But how do you get patients to try the next best thing when they’ve been on an older drug, possibly for years, and without suffering any nasty side effects?

Well, you need to get the doctor on your side so that he can convince the patient of the benefits of the switch (the real benefit is a higher profit margin, but we assume he doesn’t mention that bit). So instead he talks about the drug’s greater efficacy, and so on.

Most ‘new’ drugs aren’t that different from the older ones they’re replacing. They are usually more powerful, and possibly have an extra chemical ingredient, which means they are ‘new’ and thus enjoy new patent protection.

Unfortunately the new version hasn’t been properly tested. Nobody at the early stage of a new drug’s life really knows what effects it may cause.
But that’s not the issue, at least not for the drug company. They need to start getting a return on the £150m spent on developing and testing the new drug, and quickly.

So, as we were saying, GlaxoSmithKline has been found guilty of paying doctors to switch asthma patients to Seretide, a dual action inhaler.