NOVEMBER 1991 - VOLUME 12 - NUMBER 11
E C O N O M I C S
The Birth Control Business
Corporations and Contraceptivesby Jennifer Kassan and Holley Knaus
The range of contraceptive choices being developed in the United States is lagging far behind what is available in other industrialized countries. From the early 1960s until the mid-1980s, at least nine major U.S. pharmaceutical firms were developing new contraceptives; now, only one large company, Ortho Pharmaceutical Corp., is involved in any significant contraceptive research. A few small firms and non-profit organizations continue to develop and market products, but they lack the resources to operate major research programs.
There is no question that there is a need for new contraceptive methods. A 1990 report published by the National Research Council and the Institute of Medicine, "Developing New Contraceptives: Obstacles and Opportunities," notes that "significant gaps ... currently exist in the range of available methods [which] could be filled, in part, by developing new, safe, effective, and acceptable contraceptive methods for men, for breast feeding women, for teenagers, for older women, and for those with a particular health condition or illness." Many women's health organizations stress the need for the development of methods that work to prevent the spread of sexually transmitted diseases, particularly AIDS, as well as pregnancy. And the decline in research being done in the United States has ramifications for the fertility and health of women and children in nations that lack the resources to develop contraceptives.
European pharmaceutical companies are investigating a number of new contraceptive methods, including contraceptive vaccines, reversible sterilization for men and women, a once-a-month pill that induces menstruation and drugs that interfere with sperm production. Yet no major U.S. firm is exploring any of these methods, according to the National Research Council.
Contraception and victims' rights v. corporate rights
Pharmaceutical corporations and family planning and women's health organizations suggest that several factors--including cumbersome FDA regulations, fears of liability litigation and the spill-over from abortion politics--have contributed to the decline in contraceptive research.
The argument that the cost of unwarranted liability litigation in the 1970s and 1980s led to a climate in which marketing contraceptives was not economically feasible has received a great deal of attention, with both the pharmaceutical industry and women's organizations citing it as an important factor.
G.D. Searle & Co., once the largest U.S. manufacturer of intrauterine devices (IUDs), blamed liability litigation for its 1986 decision to discontinue marketing the Copper-7 and Tatum-T IUDs. In announcing the decision, Searle's vice president of communications said, "The escalating cost of defending unwarranted product litigation makes continuing in the IUD business in the U.S. no longer economically sensible for the Company. Searle made this decision because of mounting unjustified litigation in the U.S. that has made future product liability insurance virtually unobtainable."
The pharmaceutical companies' trade group, the Pharmaceutical Manufacturers Association (PMA), also argues that the costs associated with liability litigation contributed to the decline in research. This claim conveniently supports the pharmaceutical industry's broader agenda of "tort reform," measures which would restrict the rights of victims to sue manufacturers and to be compensated for their injuries. Consumer groups contend that these reforms represent an attempt to limit victims' rights and protect corporations from facing meaningful penalties for marketing dangerous products. The PMA supports several reforms that would minimize the unpredictability of damages awarded to plaintiffs by juries in products liability cases. Chief among the measures supported by the industry is a proposal that would limit the rights of victims to sue manufacturers of products that have received FDA approval.
Unfortunately, the industry's linkage of lack of research with liability suits has generally been accepted as "a truism" by family planning and women's organizations, says Cynthia Pearson of the National Women's Health Network, thus lending support to industry calls for tort reform.
Lisa Kaeser of the Alan Guttmacher Institute (AGI), a non-profit family planning organization, calls product liability "one of the major reasons" companies abandoned research in the first place and why they are now reluctant to get back in. She places much of the blame on "the Dalkon Shield disaster." AGI supports the industry proposal to limit victims' rights to sue over products which receive FDA approval, but says the issue has been complicated by other measures, such as arbitrary caps on rewards or elimination of joint and several liability, that are included along with the provision in tort reform bills pushed by industry. Kaeser says, "the liability problem pushed many companies out of the field. Whether reform would cause them to come back is less clear, but I think it would help."
Dr. Rosemarie Thau, director for contraceptive development at the Population Council, a non-profit research organization, also sees the liability litigation issue as playing a significant role in the research decline. She states that juries which "are not medically educated" often do not have the knowledge to make informed decisions about whether or not a company can reasonably be held responsible for injuries that a plaintiff claims were caused by use of a contraceptive device or drug. Thau does not support the FDA approval defense in all cases, but does favor the implementation of a cap on the amount of compensation a jury can hand over in a liability suit which would "limit the award to a reasonable sum."
The perception that pharmaceutical companies are frequently required to pay exorbitant punitive damages when they may not even be at fault is flawed, however. Pearson says significant damages have been awarded in cases in which the company has withheld information about a product from the FDA and from its packaging inserts, not those in which the company was seemingly innocent of conscious wrongdoing.
In preparing its "Developing New Contraceptives" report, the National Research Council reviewed the product liability lawsuits faced by the drug industry. The Council concluded that "[w]ith the exception of one recent case, there has been very limited recovery by plaintiffs from manufacturers of IUDs other than the Dalkon Shield." The oral contraceptives cases in which the plaintiffs were successful have held that companies must provide consumers as well as doctors with a warning on potential health risks and that the manufacturer must keep abreast of new studies which could require additional warnings. For example, in McEwen v. Ortho Pharmaceutical Corp., the plaintiff, who had taken Noring and Ortho-Novum pills in 1966 and 1967, was awarded damages after she suffered hemorrhages in both eyes and became blind in her right eye in 1968. An Oregon appellate court held that the manufacturer knew or should have known of studies indicating that injuries such as those suffered by the plaintiff were occurring.
The fundamental reason for the lack of contraceptive research, however, may be much simpler; pharmaceutical companies do not perceive a sufficiently large market for new contraceptive products. Pearson asserts that industry decisions concerning contraceptives are market-driven and based upon the changing demographics of the U.S. population. The pharmaceutical market, she claims, is largely dictated by the "baby boomer" generation, which is now in the 36- to 45-year age range. The boom years of contraceptives research in the United States coincided with the years in which the baby boomers needed contraceptives most. Now, as the baby boomers age, the contraceptives market is declining, and the markets for other products, such as cardiovascular, anti-arthritic and cholesterol lowering drugs, are growing.
Sandra Waldman, manager of public information at the Population Council, agrees with Pearson, stating that large pharmaceutical corporations market so many products that they easily abandoned contraceptive research when they began to notice that the potential for profitability was declining.
As Thau puts it, "private companies will only go where the profit is." A forthcoming Planned Parenthood report on contraception, "New Birth Control," states, "Developing a new product requires a sizable investment in fixed costs, so an appropriate market size for a new contraceptive is generally pegged at $50 million in annual sales. Pills and condoms command markets of well over $50 million in annual sales, but other contraceptives do not....The market for pills and condoms also appears to be saturated with existing products, and thus there is little incentive for firms to develop new contraceptives."
Most of the innovative contraceptives that could be developed, according to Kaeser of AGI, are "just not that profitable." Long- lasting or inexpensive barrier methods promise little profit compared to birth control pills, which require frequent purchase.
The search for alternatives...
Some nonprofit organizations are attempting to fill the role which corporations have abandoned and develop safe and effective alternative forms of birth control themselves. The Population Council's development of the controversial Norplant, a method which involves inserting capsules under the skin that release progestin and prevent pregnancy for up to five years, is an example of this.
The Population Council itself, however, says nonprofits cannot replace the research and development function of big corporations. Waldman says that nonprofits and small companies do not have the resources to develop and market a revolutionary new contraceptive device in the near future. She notes that it took her organization 24 years to develop Norplant, with much of that time spent fund raising.
Many have looked to the federal government as an alternative source of innovation in the contraceptives field. But federal funding for this research has not been forthcoming. The National Institute of Health budget for contraceptive research has remained steady since 1982 at $8 million, without even an increase to keep pace with inflation. In response to right-wing pressures, the U.S government has even withdrawn funding from the contraceptive distribution programs of the International Planned Parenthood Federation and the United Nations Fund for Population Activities.
In June 1991, Representative Patricia Schroeder, D-Colorado, and Olympia Snowe, R-Maine, introduced the Contraceptive and Infertility Research Centers Act of 1991, with Tom Harkin D-Iowa, introducing the Senate version. The bill would fund three contraceptive and infertility research centers. The centers are expected to receive funding of $4.4 million for the next fiscal year.
Yet federally funded contraceptive research is not free of problems. It may be constrained by political considerations. For example, right-wing fundamentalist attempts to label many forms of birth control abortifacients may limit what research is undertaken. The authorization bill for the contraceptive research centers would not support research on RU 486 and similar drugs. Furthermore, according to the National Women's Health Network's Pearson, most government research is "high tech", utilizing steroids and intrauterine devices (IUDs), rather than focusing on barrier methods, which women's health advocates support because they are free of harmful side effects and prevent disease as well as conception.
The ultimate problem with the research centers proposal, as Dr. Gabriel Bialy, director of the contraceptive development division at the National Institutes of Health, notes, is that "no public sector agency can market a new contraceptive product." Women in the United States will have to rely upon private industry to market any new products developed by the federal government, but pharmaceutical companies will only market those products they believe will be profitable.
...And the current predicament
The market has failed to satisfy the contraceptive needs of women in the United States. When they demanded wider birth control choices, they received strong drugs and dangerous devices which caused injuries and many unwanted side effects. When they demanded safe birth control methods, corporations blamed them for the lack of research into new methods available, disguising the real, market-driven reason. Even those who work in the public sector, like Dr. Bialy, place some blame on women for the current predicament. Bialy asserts, "The feminists say, 'We want new products, but you can't set limits on liability'--well, you can't have it both ways."
When the chief of the federal government's contraceptive research program is willing to dismiss women's demands for safe and effective birth control so glibly, it is no wonder that the contraceptive options available in the United States are so inadequate.