Do you believe the commissioned salesgirl when she tells you that you look fabulous in the aqua poncho?
Do you believe researchers who get grants, speaker's fees and honoraria from drug companies whose fortunes rise and fall on diabetes drugs, when they tell you that carbohydrate restriction doesn't help diabetes--when diabetes is a disease of carbohydrate intolerance?
A recent study, for instance, concluded that a "high protein/low carbohydrate" diet wasn't more effective than a high carb diet. (Dr. Richard Feinman's criticisms of the study are here; Tom Naughton's are here.) Tom Naughton also mentioned in the comments section of his blog post that Dr. J.E. Shaw, one of the researchers, "received grants, honoraria and speakers’ fees from: GlaxoSmithKline, Lilly Pharmaceuticals, Bristol Myers Squibb, Astra Zeneca, Pfizer, Merck Sharp and Dolme, and Novo Nordisk." Likewise, the American Diabetes Associates is sponsored by drug companies Eli Lilly, Merck, Novo Nordisk, Sanofi Aventis, Abbott, and Amylin Pharmaceuticals, among others.
What does this have to do with bad fashion and mortgage payments beyond your means? It's all about considering the source of your information. But where can you get to the accurate information in a world of payoffs and shady salespeople and possibly biased research? There's a place where you have to give a full, public accounting of what you've done, and you can be fined and imprisoned if you're caught lying: the Securities and Exchange Commission. Let's look at some information from these companies' annual reports filed with the SEC, and some of the companies' own information from their web sites.
Recall that Novo Nordisk sponsors the ADA and research pooh-poohing low carb diets:
Novo Nordisk has pioneered many therapeutic breakthroughs in diabetes care and today diabetes remains our primary focus. The company is the diabetes care market leader with 51% of the total insulin market and 46% of the modern insulin (insulin analogue) market, based on volume, at year-end.(1)
Lyrica, for diabetic peripheral neuropathy (among other illnesses), is Pfizer's third biggest revenue source. (2)
For Eli Lilly, sales of diabetes treatment drugs accounted for at least 28% of their revenue in 2010.(3)
For Bristol Myers Squibb, Avapro/Avalide is their second biggest source of revenue.(4)
Amylin Pharmaceuticals, like Novo Nordisk, absolutely depends on sales of diabetic drugs:
We began selling, marketing and distributing our first products, BYETTA and SYMLIN, in 2005 and we will depend heavily on the success of those products and, if approved, BYDUREON, in the marketplace. (Emphasis in original.)(5)
The financial statements also mention that Amylin is a young company bleeding money.(6) An investor should wonder whether Amylin would give money to an organization dedicated to *preventing* diabetes.
Several ADA and research sponsors have diabetes drugs in the pipeline as well. There are at least 50 diabetes drugs on the market or in the pipeline. What are the stakes? Pat Dorsey, former Director of Stock Analysis at Morningstar, writes about getting a drug to market.
But innovation isn't cheap. It takes money to make money, and the average cost of taking a drug from discovery to the pharmacy shelf is $800 million. Only a third of those drugs ever return their costs of development. Plus, drugs take years to develop. The clinical testing phase (trials in humans) alone can take decade. All the while, the company is pumping money into the research process with no guarantee of a return.(7)
Novo Nordisk's annual report illustrates the 20-year process of bringing a drug to market (scroll down to page 20).
Now, I'm not accusing anyone mentioned here of lying, and I'm not anti-business or anti-pharmaceutical company. I'm certainly not against diabetes drugs that are safe and effective. But you have to consider that there's an incentive for companies to get up to mischief, and ask yourself whether companies that have billions of dollars riding on selling diabetes drugs would spend precious money on research and organizations dedicated to *preventing* diabetes or managing it without drugs, as many diabetics do on a low-carb diet. If you think so, I have some clothes with shoulder pads I'm looking to get rid of. Don't worry--they'll look fabulous on you.
Further reading:
Sources:
1. Novo Nordisk R&D Pipline. Http://www.novonordisk.com/investors/rd_pipeline/rd_pipeline.asp?sort=6&phase=000.All&indication=Diabetes
2. Pfizer's 2010 financial statements, p. 25.
3. Eli Lilly's 2010 financial statements, p. 21.
4. Bristol Myers Squibb's 2010 financial statements, p. 3.
5. Amylin's 2010 financial statements, p. 23.
6. Ibid.
7. The Five Rules for Successful Stock Investing by Pat Dorsey, p. 189. John Wiley & Sons, Inc., Hoboken, NJ, 2004.
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