March 11, 2001
The Claritin Effect; Prescription for Profit
By STEPHEN S. HALL
It had been yet another miserable, nose-dripping, red-eyed spring a couple of years ago, when I finally went to see an allergy specialist. I've been battered by seasonal allergies all my life but relied on family doctors and, more recently, ''primary-care physicians'' for relief. In a kind of a pharmaceutical version of playing catch with Dad, my father and I shared his hay-fever pills when I was growing up. They were smooth, round yellow tablets, etched with a tiny red corporate symbol that was as delicate as a Chinese ideograph. At a time before people routinely gobbled down a half dozen medicines a day, those pills held a kind of mythic power for me, not only because they could make the misery of allergies disappear but also because they were prescription drugs -- inherently more powerful, more inaccessible, more special.
Those yellow pills were called Chlor-Trimeton, manufactured by the Schering-Plough Corporation, first as a prescription drug and then, after 1976, as an over-the-counter medication. It definitely worked, but it knocked me out. I remember days when I felt glazed by sleepiness. Even as the high tide in my nose and throat subsided, I felt mentally waterlogged.
For the most part, I managed to get by with over-the-counter medications until that spring in 1999, when I decided I needed something stronger. After rummaging through a cabinet in the examining room, my new allergist handed me a week's supply of Claritin, also made by Schering-Plough. Claritin was, and still is, the most frequently dispensed drug sample in the United States, part of the nearly $8 billion worth of free drug samples that pharmaceutical companies distribute to doctors annually. I had seen the ads on TV -- who hadn't? I figured I'd give it a try.
Claritin had several other distinctions: it was by then the best-selling antihistamine in the United States, indeed the most profitable antihistamine of all time, with annual sales of more than $2billion. And it was the most aggressively marketed drug to American consumers. Claritin is a drug for our time: designed to relieve symptoms and improve ''quality of life,'' hardly lifesaving or even curative, expensive as hell. A month's supply of Claritin currently costs about $80 or $85 in the United States, even though it is an over-the-counter drug in dozens of other countries, where it usually costs $10 or $15. The high domestic price is paired with an enormous potential market: an estimated 35 million Americans suffer seasonal allergies, and many of us will be feeling that first tickle of dread later this month, when spring tree pollen begins to barge into our air passages like molecular roustabouts.
So I went home and tried it. The little white pill was easy to swallow and had to be taken only once a day. There was just one problem: it didn't work. It didn't relieve my runny nose and red-rimmed, gunked-up eyes. When I told my allergist, he didn't seem particularly surprised. Only about 30 to 40 percent of his patients, he said, found the drug helpful. And, he added, that estimate was ''generous.'' I was surprised, perhaps naïvely, by this remark. I figured a ''blockbuster'' drug would be efficacious in more than 50 percent of the people who took it. The percentage he mentioned, incidentally, is certainly debatable; in fact a debate broke out later between my allergist and his partner, who thought 50 or 55 percent was more like it. Even so, it made me wonder: $80 for a drug that works only half the time?
Claritin has been singled out as a prime example of greed by the American pharmaceutical industry, notably last summer by Al Gore during his presidential campaign, and there has been a constant stream of negative press about Schering-Plough's efforts to get the basic patent on Claritin extended beyond its 2002 expiration. Schering-Plough has argued that the patent should be extended because the Food and Drug Administration review of Claritin was unusually ''protracted'' (which, in fact, it was). To press its case in Washington, the company has paid millions of dollars in political contributions and assembled a high-powered, strange-bedfellows team of lobbyists (including the former senators Howard Baker and Dennis DeConcini, the Gore confidant Peter Knight and Linda Daschle, wife of the Senate minority leader, Tom Daschle); it has also encouraged repeated attempts by Congressional supporters to insert language favorable to Schering into legislation at the last instant.
Claritin's 77-month odyssey through the F.D.A. approval process was indeed lengthy, as a General Accounting Office report, issued last August, documents. That report prompted me to read through the transcripts of old F.D.A. meetings, obtain other documents through Freedom of Information requests and speak to doctors about allergy medications in general. As I learned more about the approval of Claritin, I realized that the biography of this one drug reveals a great deal about why prescription drugs cost so much to bring to market, and also why health-care economists like Uwe E. Reinhardt of Princeton University argue that we are paying premium prices for new drugs like these without actually knowing if they are better than the drugs they've replaced. The Claritin story is an unauthorized biography, in the sense that Schering-Plough declined to grant any interviews and responded only to written questions.
It is above all a case study of how a drug company creates a blockbuster. There are no villains, no broken laws -- just an enormous expenditure of money, a highly sophisticated understanding of food and drug laws, daring marketing, a great deal of luck. Making it all possible is a financial system that ultimately passes along the high price of a modest drug to third-party payers -- and you.
Claritin's journey from lab bench to marketplace was nearly epic in the time it took, the vicissitudes encountered and the plot twists along the way. In June 1980, when Schering filed a patent for the group of chemical compounds that included the drug that would eventually be known as Claritin, the world of drug development was quite different. It typically cost a pharmaceutical company roughly $200 million to $250 million to develop a new drug; that cost is estimated to be closer to $500 million today, a figure that also accounts for failures along the way. A patent lasted 17 years from the date it was issued; it now lasts 20 years from the date the application is filed. And the effective patent life of a new drug -- the amount of time a company can expect to enjoy an exclusive run in the marketplace -- was about eight years; the average effective patent life of a drug has nearly doubled since then. The Schering patent, issued Aug. 4, 1981, stated that the compounds, including the future Claritin, were ''useful as antihistamines with little or no sedative effects.'' Pharmaceutical companies rarely disclose the cost of bringing a specific drug to market, but it's a safe bet that it took at least several hundred million dollars to deliver on the promise of those nine words.
Loratadine (pronounced ''low-RAT-a-deen'') -- the generic name for Claritin -- was one of several second-generation antihistamines that emerged from drug-company laboratories in the 1980's. They worked by essentially the same simple mechanism as the first-generation antihistamines developed immediately after World War II, like Chlor-Trimeton. When pollen bumps into certain immune-system cells just beneath the lining of the nose, eyes or respiratory passages, it provokes an immunological overreaction in susceptible people. Thus perturbed, these ''mast cells'' shudder with the molecular equivalent of uncontrollable weeping; they churn out at least 15 different inflammatory molecules, many of which contribute to the allergic reaction. One of those molecules, unleashed instantaneously, is called histamine.
When these roving histamine molecules attach to receptors on nearby nerve cells, you feel an itch or a sneeze or a scratchy, ticklish palate. When they dock onto receptors in nearby blood vessels, the vessels become porous and leaky, and fluids begin to ooze into the tissues of your nose and eyes. Antihistamine drugs work because the active ingredient is a molecule that fits like a cap onto the histamine receptor, blocking the signal that causes itchy, watery symptoms.
Everyone agrees these drugs are effective, but just how effective is very difficult to say. All the antihistamine drugs, new and old, are plagued by high placebo effects. ''It's a question of how bad a placebo effect you have,'' says Dr. Peter S. Creticos, head of the allergy and clinical immunology division at the Johns Hopkins University School of Medicine. ''The placebo effect can be anywhere from 20 to 40 percent.''
Complicating the process of determining efficacy is how the data are gathered: patients in these trials typically assess their own degree of symptom relief, which many allergists concede makes the data somewhat subjective.
Then there's the sponsorship of the science. Because the placebo effect is so high, large numbers of patients must be enlisted in clinical trials to achieve a robust, or statistically ''significant,'' result, which means that only drug companies can afford the expense. Studies sponsored by drug companies tend to show an advantage for the company's own products. Zyrtec, an antihistamine produced by Pfizer, for example, has been shown to be more potent than other drugs in its antihistamine effect -- in a study sponsored by Pfizer. Desloratadine, currently awaiting F.D.A. approval as the next generation ''super-Claritin,'' is said to relieve nasal stuffiness, unlike other antihistamines -- in a study done by Schering. And Allegra, produced by Aventis, was recently shown to be equal to Zyrtec -- in a study sponsored by Aventis. ''They're going to take that study all the way to the bank,'' one academic allergist chuckled. Which is precisely the point. Scientific studies of these drugs serve as marketing tools, providing drug-company salesmen with their best lines.
The first-generation antihistamines, now sold over the counter as Chlor-Trimeton, Benadryl, Tavist and others, are still considered pretty effective medicines. In fact, many allergists told me that they are at least equivalent in medical potency to newer drugs like Claritin and Allegra. But the first-generation molecules cross the blood-brain barrier and get into the central nervous system, causing drowsiness. The second-generation drugs have been medicinally engineered to stay out of the brain. As a result, they cause little or no sedation.
A nonsedating antihistamine was clearly a desirable drug, and Schering-Plough had been looking for one since the 1960's. In fact, the company thought it had one in a compound called azatadine. The drug is still sold as Optimine, and if you've never heard of it, that's because the compound looked deceptively nonsedating when it was tested in cats and showed its true, somnolent colors only during human testing. Next came loratadine. Following years of testing, Schering formally submitted what is known as a New Drug Application, or N.D.A., to the Food and Drug Administration on Oct. 31, 1986, seeking approval of loratadine.
Schering was not the first company to knock on the F.D.A.'s door with a nonsedating antihistamine. Seldane (terfenadine), manufactured by Marion Merrell Dow, had been approved the year before, and Hismanal (astemizole) was already under F.D.A. review. Because a similar nonsedating antihistamine was already on the market, the F.D.A. assigned Claritin its lowest priority for review -- it was considered, according to an F.D.A. classification system no longer in use, a drug that ''essentially duplicates in medical importance and therapeutic usage one or more already marketed drugs, offering little or no therapeutic gain over existing therapies.'' Technically, Claritin started out as a ''me too'' drug.
Schering-Plough doggedly pursued the approval of Claritin, spurred, no doubt, by the phenomenal success of Seldane. But it wasn't easy. Over six and a half years, Schering filed 37 major amendments to its application. The company decided to switch the formulation from capsules to tablets, and it took more than two years to show that the capsules used in clinical trials were pharmacologically identical to the tablets it intended to sell. Among the many obstacles Schering had to overcome, the first was to convince F.D.A. reviewers of the drug's main selling point: that it could be effective without causing drowsiness.
To approve a new drug, the F.D.A. must be convinced that it is both safe and effective. As a practical matter, that often means arriving at a balance between potency and side effects. Drug companies routinely submit notebooks of dictionary girth full of experimental results establishing a drug's safety profile, first in animals and then in human subjects. In establishing the effectiveness of a new drug, however, a company has only to show in well-designed trials that a drug is more effective than a sugar pill, and if there is already an equivalent drug on the market for the same use, that it is at least equally effective.
The effectiveness of loratadine had been an area of F.D.A. concern as early as January 1987, just months after Schering filed its application. Dr. Sherwin D. Straus, the F.D.A. medical officer assigned to review the drug, told the company that a 10-milligram dose of Claritin -- the amount marketed today -- did not appear to be very effective. He reiterated that point in public on Oct. 23, 1987, when the F.D.A.'s Pulmonary-Allergy Drugs Advisory Committee met at the agency headquarters in Rockville, Md., to consider Schering's application for loratadine. (This panel of outside experts doesn't formally approve new drugs, but makes influential recommendations to the agency.)
Establishing a drug's safety and efficacy is not a pretty business. A parade of Schering representatives described a staggering amount of data from animal tests in mice, rats, guinea pigs, cats and monkeys, including the ''mouse-paw edema test'' (in which mice have their paws cut off and weighed to see how successfully an antihistamine inhibits swelling). In several studies, extremely high doses of the drug, consumed daily for up to two years, produced borderline evidence of liver-tumor formation in rats and male mice, but otherwise loratadine appeared very clean. Indeed, the company maintains that the drug's ''excellent safety profile is well established'' by 10 billion ''patient days'' of experience in the marketplace.
After preclinical animal tests, Schering began to test loratadine in thousands of human patients, first to establish its safety and then to prove its effectiveness. The company ultimately submitted three so-called ''pivotal'' clinical trials to support the drug's safety and efficacy. Schering conducted what is considered the gold standard in drug testing -- randomized, double-blind trials pitting Claritin against both placebo and one of several already approved antihistamines -- and the results reveal just how vexing the placebo effect can be. In one study, for example, people taking Claritin experienced a 46 percent improvement in symptoms at the end of the trial; patients taking a placebo reported 35percent improvement. In another trial, Claritin produced 43 percent improvement versus 32 percent on placebo. As part of these same studies, physicians examined the patients and, unaware of which treatment each had received, assessed their condition; these doctors concluded that anywhere from 37 to 47 percent of patients taking the sugar pill showed a ''good or excellent response to treatment.''
When it was his turn to speak, Straus engaged in a little bureaucratic soft-shoe, complimenting the Schering team's presentations as ''a tough act to follow.'' Then he tried to demolish the heart of Schering's application. Straus didn't doubt that loratadine worked as an antihistamine, he said; he just doubted that it worked at the 10-milligram dose. In fact, at one point he claimed that ''10 milligrams is not very different than placebo clinically.'' The reason the dose was so low, he argued, is that evidence of sedation began to crop up at higher, more effective doses.
What he didn't say -- but what everyone understood -- is that using a higher, more effective dose of Claritin would affect how the drug was described on the label. The term ''nonsedating'' was considered a critical marketing point. A single adjective or phrase contained in the F.D.A.-approved label -- no more sedating than a sugar pill,'' for example -- can form the basis of claims made by company salesmen to doctors, the basis of words that throb in the bold type of advertisements, even the basis of lawsuits filed against competitors. Those seemingly eye-glazing, hairsplitting distinctions provide the foundation for multimillion-dollar marketing campaigns.
The clash over effectiveness was crystallized in one edgy exchange between Straus and Dr. Anthony Nicholson, a British neuroscientist, one of the Schering-sponsored clinical researchers, over the interpretation of a study that compared loratadine to a sedating antihistamine called tripolidine. ''We are not actually in the business of saying one drug is better than the other,'' Nicholson told Straus. ''We are in the business of saying whether a drug is acceptable in terms of its performance profile.''
''But how can you say it is acceptable in terms of its performance profile,'' Straus replied, ''without comparing it to what else is out there?''
''We compare it with placebo,'' Nicholson said.
''So you compare it to nothing.''
''And it is better than nothing.''
''All right,'' Straus said. ''I can't argue with that.''
The Schering representatives gave as good as they got. One suggested that Straus was guilty of statistical mischief; he had selectively looked at variables, subsets and time points, ''and this is, as I am sure everybody in this audience knows, the perfect method of proving any claim one wants.'' Dr. William Darrow, a senior vice president at Schering, acknowledged that Straus's concerns were legitimate, ''but for us the question is whether we have demonstrated consistently superiority and adequate efficacy over placebo by the 10-milligram dose. And we stand on our data there.''
In a sense, they were both right. Schering had shown, according to the requirements of the law, that a 10-milligram dose of loratadine was more effective, and no more sedating, than placebo. And Straus had argued, to the satisfaction of at least some people on the committee, that while the drug might be more effective than placebo, it was not a whole lot more effective.
Perhaps the most startling assertion made at that 1987 meeting came not from Straus, however, but from Leslie Hendeles, a pharmacology professor at the University of Florida, and it is as relevant to allergy sufferers today as it was back then. He suggested that most of the patients in Schering's Claritin studies would have been better off being treated with a different class of allergy medication altogether -- steroid nasal sprays. ''Certainly, in this kind of patient that was selected for this study,'' he said to the gathering, ''most clinicians would probably use intranasal steroids to provide very prompt and sustained relief, rather than antihistamines.'' To treat full-blown allergy symptoms with an antihistamine, he continued, was ''pharmacologically irrational.''
Hendeles and other experts made a similar point to me recently: steroid nasal sprays, like Flonase and Schering's own Nasonex, shut off an allergic reaction that's already under way. In 1998, the Annals of Allergy, Asthma and Immunology published treatment guidelines stating that these nasal sprays ''are the most effective medication class for controlling symptoms'' of allergies. The popular antihistamines are valuable at preventing an allergy attack from getting under way if taken ahead of time and seem to be effective against eye symptoms, but they rarely bring quick and substantial relief of nasal symptoms once histamine has already begun to wreak havoc. ''We don't use these medicines correctly,'' said Peter Creticos of Johns Hopkins. ''As I tell patients, by the time the process starts, the horse is already out of the barn in terms of the antihistamines. You turn the process off by using a nasal steroid.''
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.