Ill-gotten gains – Economic Disincentives for Trusting Science 

August 10, 2022
Editor(s): Morgan McDonagh

The pharmaceutical industry has undoubtedly facilitated improvements in life expectancy, healthcare outcomes and quality of life for all of humanity. As well as these social benefits, the economic contributions of the pharmaceutical industry are immense with revenues of US1.27 Trillion worldwide. Pharmaceutical innovation, which provides a fundamental basis for the magnitude of the industry, was largely responsible for the fast-tracked development of the ground-breaking COVID-19 vaccines that relieved us from the burden of lockdowns. However, despite the inarguable rewards that we’ve all collectively reaped, there are still valid criticisms of the current pharmaceutical climate ranging from animal testing to exploitative pricing and a full-blown opioid crisis. However, a recent umbrella study on the effect of SSRIs (antidepressants) and an alleged academic fraud which could invalidate years of Alzheimer’s research and drug development highlight a disturbing fragility in the pharmaceutical system. A fragility that’s borne from a disincentive to challenge the scientific basis of pervasive and economically significant pharmaceutical products. 

According to a recent report, one of the most cited Alzheimer’s studies, which provided a hypothesis concerning an amyloid protein as the cause of cognitive decline, may have been purposefully manipulated. Although research integrity and academic fraud have been prescient issues in recent years, there is a more tangible impact when this science directly inspires pharmaceutical development. Simufilam, an experimental treatment based on these studies might be subjecting volunteer patients to health risks with little to clinical benefit. As a result, a criminal investigation into the biotech company behind Simufilam has been officially opened and speculation concerning the extent of the impact of this potential fraud is rife in the neuroscience community. There are an estimated 6 million Americans suffering from Alzheimer’s disease to whom this fraud and the subsequent misdirected funding represents a devastating and disheartening blow to hopes for effective treatment. A similar situation arose in 2021 when several FDA officials resigned following the approval of an Alzheimer’s medication produced by Biogen. One of the FDA officials who resigned, Dr.Aaron Kesselheim, called it ‘the worst approval decision that the F.D.A. has made that I can remember’. The question which these scandals highlight is whether the scientific peer review process, a tenet of societal progress, can be corrupted by the economic incentives of large pharmaceutical companies that would benefit from specific desirable outcomes in scientific research papers. 

Although not fraudulent or dishonest, current pharmaceutical approaches to neurological disorders were further challenged as a comprehensive umbrella review recently found ‘no consistent evidence of there being an association between serotonin and depression’. This study which covered decades of research has eroded the long held and ‘widely promoted’ belief that depression is caused by a chemical imbalance in the brain.  The uncomfortable reality of this scientific revelation lies in the popularity of SSRIs (a category of antidepressants which rely upon the serotonin theory of depression) with Sertraline, a type of SSRI, becoming one of Australia’s most prescribed medications in 2021. The global market for antidepressants reached a peak in 2020 of US$26.25 Billion  which highlights the economic value of these medications for the pharmaceutical industry. 

Similar to the Alzheimer’s case, there is a clear economic incentive which seems to be at odds with scientific reality.  This misalignment may not be an existential threat. However, there is a latent possibility that without confronting regulatory issues, anti-competitive behaviour or the way scientific research with pharmaceutical applications are funded, health-care outcomes may suffer, and real innovation could be stifled. 

Solutions to these negative externalities in the pharmaceutical industry are gradually emerging as there are increasingly innovative treatment approaches and pharmaceutical business models entering the market. An example of this is Mark Cuban’s ‘Cost Plus Drug Company’ which champions an open and transparent approach to prescription medication retailing based on a standard 15% mark-up. This addresses the allegations of price gouging and profiteering which have negatively impacted the perception of the traditional US pharmaceutical model. In Australia, there is a growing push towards research into alternative treatments for anxiety, depression and other mental health disorders. A Sydney-based clinical trial testing nasally administered ketamine as an alternative treatment for adult depression has begun, seeking to address the ’15-30% of people with depression that are not helped with the first two attempts at treatment using standard SSRI antidepressants’.  This kind of medical research provides a promising opportunity for the pharmaceutical industry to adapt to the scientific evidence that challenges existing medication in favour of more effective approaches. 

Ultimately, pharmaceutical treatments represent far more than an economic good, as a deeply personal product with direct health ramifications, consumers place a level of trust in both regulatory bodies and pharmaceutical companies when they purchase medication.  The alleged Alzheimer’s research fraud and SSRI effectiveness study offer an opportunity for an open dialogue about the extent to which this trust is weakened when compelling science isn’t immediately embraced. Scientific innovation and progress are responsible for the incredible economic value of the pharmaceutical industry and this is where the value remains, in the pursuit of better health outcomes for society, rather than maintaining a profitable status quo.  

The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.

Meet our authors:

Morgan McDonagh

I'm a second year Bachelor of Commerce student majoring in Finance and Economics with a passion for writing and research. My key interests are primarily public policy and macroeconomics. Outside of university commitments, I enjoy playing guitar, chess and watching Formula One.