The Irish Independent reports that Irish exports to the U.K., Ireland’s biggest trading partner, dropped 18 percent in August as the British economy slid into a recession and the euro’s advance against sterling eroded competitiveness.
Sales to the U.K. fell to €958 million in August from €1.17 billion in the same month a year earlier, the Cork-based Central Statistics Office said in a monthly report today. Figures for the three months through September show sales abroad dropped 3.7 percent from a year earlier in the third quarter to €20.8 billion.
The euro has increased 14 percent against the British pound this year, eroding Irish companies profit margins. A housing slump and the financial crisis have pushed the U.K. to the brink of a recession, cooling demand for imports.
“The impact of the weak sterling on the competitiveness of Irish exports is now coming through more strongly in the official numbers,” said Ronnie O’Toole, chief economist at National Irish Bank in Dublin. The indications for 2009 are “that along with the U.K., export markets in eastern Europe and the U.S. are likely to be particularly affected.”
The Irish Times reports that the Department of Finance is "very sympathetic" towards people who are retiring shortly on defined contribution pension schemes and is considering allowing people to defer the purchase of an annuity, Minister for Social and Family Affairs Mary Hanafin said yesterday.
Referring to the poor performance of Irish pension funds this year, Ms Hanafin said there should be ample time for many people in defined contribution schemes to recover their losses, but it was a major issue for people who are retiring now or who are close to retirement.
Earlier this year, the Irish Association of Pension Funds called on the department to allow members of defined contribution schemes to defer the purchase of their annuity until markets recover.
At present, members of such schemes are forced to buy an annuity when they retire, exposing them to the current market turbulence.
Ms Hanafin also called on pension fund managers and financial advisers to reconsider their investment strategies.
"If there was one lesson in relation to defined contribution schemes we should take from the current difficulties, it is that we must take a more conservative approach to pension investment, particularly for older workers in the last 10 years before they retire,"she said.
Ms Hanafin was speaking at the publication of the Office of the Pensions Ombudsman's Annual Report and Digest of Cases for 2007, at which Pensions Ombudsman Paul Kenny revealed that the number of new cases opened in the year to the end of October 2008 was up by 49 per cent on the corresponding period last year. This was partially due to an upsurge in cases relating to the construction sector, as well as an increase in complaints about general investment matters.
Mr Kenny, whose job is to investigate complaints of financial loss due to maladministration and disputes in relation to pension schemes, said that with redundancies on the rise in construction, more people were examining their pension benefits and discovering that they may not have received all the contributions they were entitled to.
He also said that, with equity markets in turmoil, pension fund holders were complaining that instructions which they may have given their administrators with regard to selling out of equities were not adhered to.
Looking ahead, Mr Kenny said: "There is every indication that our workload in 2009 will be heavier again."
The Irish Times also reports that Brian Lenihan's meeting today with the chiefs of the six State-guaranteed banks and building societies comes against the backdrop of a push by the fund management units of AIB, Irish Life Permanent and Bank of Ireland to recapitalise the banking system in concert with the Government and other long-term investors.
Although all investment allocations by AIB Investment Managers, Irish Life Investment Managers and Bank of Ireland Asset Managers are necessarily made independently of their parent institutions, their move in co-ordination with the Irish Association of Investment Managers (IAIM) stands as an implicit acknowledgement from within the banking system that the sector is now firmly in recapitalisation mode.
This was long resisted by the banks themselves. But the combined forces of domestic and international recession, the credit crunch, the precipitous collapse of Irish banking shares and the recapitalisation of international banks mean that the same fate now awaits the Irish banks.
The key issue now is to agree on the modalities and financial scale of the process, and to decide on who the participants are.
While Mr Lenihan maintains State investment is but a "last resort", Government sources acknowledge that some form of support from the public coffers seems increasingly likely.
Thus the IAIM's intervention two days ago served to widen the Minister's options considerably. In addition, it expands the range of choices available to the banks themselves.
If the arrival of the Mallabraca consortium and groups such as Texas Pacific and Kohlberg Kravis Roberts raised the spectre of a short-termist private-equity play on institutions integral to the performance of the Irish economy at large, the IAIM move demonstrates that major long-term investors are still in the game.
There is no small amount of self-interest involved here on the part of the fund managers in question.
Their existing investments in the banks - down drastically since the Irish market reached its height in February last year - would be significantly diluted by any recapitalisation from other quarters.
Whether the embryonic IAIM proposal proceeds to a full-scale plan will be seen in the coming weeks.
As efforts intensified yesterday to drum up support for the initiative from the international investment community, there were indications that the response was positive in the main.
But be it from this source or from the private equity world, the raising of new capital resolves only one part of the equation. Leaving aside the matter of how much money will actually be required to restore the institutions to long-term stability, questions loom over the banks' willingness to go along with a process of consolidation.
While it is difficult to foresee an independent future for the Educational Building Society and the Irish Nationwide Building Society, there are bigger questions around a possible fusion of Bank of Ireland and Irish Life Permanent.
Anglo Irish Bank, though often mooted as a consolidation target, remains determined to go it alone.
These are some of several issues for discussion today with the Minister, who has asked the banks to reflect on how they can execute the business plans they developed in light of the State guarantee.
Crucially, he also wants an update from the banks on their willingness to continue lending to the consumer and business markets. That becomes riskier as the recession bites, increasing the likelihood of loan impairments and writedowns.
The task of weathering such pressures in the face of the shutdown in international money markets makes recapitalisation all but inevitable at this point. Yet still more questions hang over the banks' ability to raise funding for their day-to-day operations. While it is a given that they must rebuild their balance sheets, the increasing deterioration in loan quality will only erode the new capital they raise.
In the short-term, this will serve to increase the cost of money-market funding.
In the medium term, the unwinding of the State guarantee in 22 months means the deadline for the resolution of all these issues is not very far away at all.
Whether the guarantee will have to be extended hangs in the balance. This will be a crucial issue for resolution as the recapitalisation endgame approaches.
The Irish Examiner reports that as he faces union calls to nationalise the banks, Finance Minister Brian Lenihan’s hand has been strengthened by the offer of a €4 billion capital investment in advance of a meeting with bank bosses today.
Mr Lenihan will meet with executives from the six financial institutions covered by the €460bn state guarantee scheme, to discuss the future of the sector.
Mr Lenihan welcomed an approach from the Irish Association of Investment Managers, who oversee €260bn in investments worldwide, to co-sponsor a €4bn investment in the leading four banks with the Government.
Irish financial stocks rose 13% yesterday on the news.
The proposal is believed to involve investment subsidiaries of AIB, Bank of Ireland and Irish Life and Permanent as well as several foreign-owned institutions, which manage money belonging to private investors.
In return for the investment, which would allow banks to start lending again and inject cash into the economy, the private investors and the Government would take a long-term stake in the banks.
Mr Lenihan said in the Dáil he welcomes private investment in Irish banking institutions: “I have not ruled out the co-investment by the state in support of any such private investment and the state is not committed to any particular private investor.”
The Irish Congress of Trade Unions has called for the Government to nationalise six banks to resolve the financial crisis. ICTU said the state can borrow the necessary funds at a reasonably cheap rate and does not need to take money from the National Pension Reserve Fund.
The Financial Times reports that Eurozone official interest rates are almost certain to be slashed again next week by at least half a percentage point after a survey on Thursday showed the region facing its worst downturn since the recession of the early 1990s.
Economic confidence in the 15-country region crashed this month to its lowest point since August 1993, the European Commission reported. With inflation also falling rapidly, the European Central Bank has not sought to stop financial markets assuming its main interest rate will be cut next Thursday from 3.25 per cent to 2.75 per cent or below.
Public ECB comments show the bank remains cautious about the pace of cuts, pointing to a half-point reduction next week – the same as in October and this month. But economic news has been consistently gloomier than expected, strengthening the case for a larger cut.
The ECB is unlikely to go as far as the Swiss central bank, which slashed its target interest rate by a full percentage point last week, let alone the 1.5 percentage point cut by the Bank of England. But 75 basis points seems a distinct possibility.
The size of next week’s ECB rate cut will depend on how it expects the eurozone to perform in the next few months. The ECB will be hesitant in predicting any turnround, while its “risk management” assessment could conclude faster rate cuts are needed.
Governing council members have expressed concern that rate cuts will be less effective in kick-starting growth than in the past.
Lorenzo Bini Smaghi, an ECB executive board member, argued this week that in “spaghetti westerns”, the “goodies” won if they shot first – but they had to hit the target: “There is no scene more depressing than one in which the cavalry is surrounded, without any ammunition left.”
The FT also reports that the downturn in the Chinese economy accelerated over the past month and could lead to high unemployment and social unrest, the country’s top economic planner warned on Thursday.
Zhang Ping, chairman of the National Development and Reform Commission, said the government needed to take “forceful” measures to limit the slowdown in the economy, which included Wednesday’s large cut in interest rates and a sharp increase in fiscal spending. The rate cut was the fourth since September.
“The global financial crisis has not bottomed out yet. The impact is spreading globally and deepening in China. Some domestic economic indicators point to an accelerated slowdown in November,”Mr Zhang said on Thursday at a rare news conference.
Mr Zhang’s warning about the potential for social unrest as a result of factory closures underlined the mounting concern in Beijing about the fallout from the global financial crisis.
“Excessive production cuts and closures of businesses will cause massive unemployment, which will lead to instability,”Mr Zhang said.
His comments came a day after the mayor of Shenzhen, China’s largest export centre, said factory closures had claimed 50,000 jobs in the city so far this year after 682 factories closed or stopped production.
The city was facing “grimmer challenges than in the Asian financial turmoil,” Xu Zongheng said.
Mr Zhang gave no fresh details about economic activity over the past month. Industrial production grew by 8.2 per cent in October, the lowest level in seven years, and sharp drops in construction investment, tax revenues and electricity demand have fuelled speculation that the economy might be cooling even more quickly.
Mr Zhang provided the first breakdown of how the money would be spent, indicating that nearly three-quarters of the Rmb4,000bn (£382bn, $586bn, €452bn) investment over two years would go on infrastructure projects.
He said that Rmb1,800bn would be spent on railways, roads and airports, with a further Rmb1,000bn on disaster reconstruction, especially in the region of Sichuan province, hit by an earthquake in May.
About Rmb370bn would be spent on rural development and Rmb40bn on health and education.
Mr Zhang said that the extra spending would add about 1 percentage point to economic growth next year, less than most private sector economists had forecast.
He added that there were no plans to allow local governments to issue bonds to pay for new investments.
Andy Rothman, an economist at CLSA in Shanghai, said that although there were still many details to be clarified about how the government would spend the extra funds, the main purpose of the fiscal announcements was to guide sentiment.
“There will be a lot more rhetoric about how confident the authorities are, which will be particularly aimed at getting the housing market going again,”he said.
The economy would continue to slow over the next few months, he said, but would start to stabilise in the second quarter of next year.
The New York Times reports that Black Friday, long the Super Bowlof shopping, is at hand, but it may have become nearly irrelevant. Check out the deals that were already on offer earlier this week:
Diamond earrings at Macy’s were chopped to $249 from $700. A Marc Jacobs bag at Saks, originally $995, fell to $248.45. And for men, a Ted Baker suit at Lord & Taylor was selling not for the usual $895, but for $399.99.
Such crazy prices are a sign of the times, and analysts expect many more such deals during one of the toughest holiday seasons in decades.
Laden with excess inventory, hungry for sales and worried because of five fewer shopping days between Thanksgiving and Christmas this year, the nation’s retailers went into a price-cutting frenzy long before the day after Thanksgiving, the traditional start of the holiday shopping season. For weeks, they have been trying to outdo one another to capture the attention of consumers who have become numb to run-of-the-mill discounts. As the latest T. J. Maxx slogan goes: “Every day is Black Friday.”
In fact, retailers have had so many early “doorbusters” — jaw-dropping deals usually reserved for Black Friday — that “it’s almost not necessary to get up at 5 in the morning,” said Bill Dreher, a senior retailing analyst with Deutsche Bank Securities.
But the retailers are just getting warmed up.
The Toys “R” Us chain is planning the deepest discounts in its history on Friday, with 50 percent more doorbusters than last year. Other retailers are promising that their deals will be even more striking than the sales they have already unveiled — with Wal-Mart, for instance, promising large flat-panel televisions for less than $400.
Such bargains are likely to set the tone for the shopping season to come.
“There’s no reason to suspect this will end,” said Dan de Grandpre, editor in chief of Dealnews.com, which has been tracking Black Friday deals for about a decade. “This kind of heavy discounting will continue until we see some retailers start to fail, until they start to go out of business.”
Indeed, the intense competition could erode profits at many chains. Some retailing analysts even fear it could condition consumers to shop only when merchandise is deeply discounted.
Still, stores plan to pull out all the stops on Friday and through the weekend. After all, November and December sales make up 25 to 40 percent of many retailers’ annual sales, according to the National Retail Federation, an industry group. (The day after Thanksgiving is called Black Friday because it was, historically, the day that many retailers moved into the black, or became profitable for the year.)
The deals were laid out in circulars tucked into newspapers on Thanksgiving Day, on retailers’ Web sites and on sites dedicated to sales and shopping strategies, like bfads.net and gottadeal.com. Many stores planned to open just after midnight Friday morning, and others — including Wal-Mart, Sears, Macy’s, Best Buy, Circuit City, Toys “R” Us and Old Navy — set their openings for 5 a.m. Target will open at 6 a.m. and BJ’s Wholesale Club at 7 a.m.
Consumers have been resisting the stores’ entreaties. In the first two weeks of November, retail categories like apparel, luxury goods and electronics and appliances all had double-digit sales declines, according to SpendingPulse sales reports from MasterCard. Grocers are just about the only stores doing well in this economy, as people hole up and eat at home instead of going to restaurants.
“If you’re in a sector that doesn’t sell food, you’re under a lot of pressure,” said Michael McNamara, vice president of SpendingPulse.
Projections vary about the likely success of this year’s Black Friday and the days following. A National Retail Federation survey said fewer people planned to shop this weekend — as many as 128 million, down from about 135 million who said they planned to shop Thanksgiving weekend sales last year. But a survey from the International Council of Shopping Centers found the opposite, that more people plan to shop this year.
Retailers are hoping for the best.
“This year I expect it to be bigger than ever,”said Gerald L. Storch, chairman and chief executive of Toys “R” Us. Citing the down economy, he explained:“I believe it will be huge because Black Friday is all about bargains.”
Ken Hicks, president and chief merchandising officer for J. C. Penney, said the day “probably will not be as big as it has been recently, but it’s still going to be a huge day.”
While bargains are already on offer at J. C. Penney, Mr. Hicks said the company’s doorbusters would make it worth lining up before sunrise. Over all, J. C. Penney, which plans to open at 4 a.m., will have 20 percent more specials this year than last year, like a five-piece luggage set for $38.88. “We’re selling some items purely intended to drive that traffic in,” Mr. Hicks said.
So are other retailers. Disney Stores, which had a few midnight openings last year, planned to open more than half of its 200 stores at the Cinderella hour this year. Almost everything in those stores, including one-day-only specials, will be an additional 20 percent off until 10 a.m.
At Toys “R” Us, anyone who buys a black 16-gigabyte iPod Nano will get a $50 gift card. Wal-Mart, the nation’s largest retailer, will offer jeans and sherpa lined hooded sweatshirts for $4 and $8. Even Dollar General will have Black Friday deals, like a Black & Decker coffee maker for $15.
For the holiday season as a whole, retailing analysts expect weak sales. Standard & Poor’s Equity Research is predicting a 5 percent decline, calling the holiday shopping season “the gloomiest in recent decades.” The National Retail Federation, which made one of the more optimistic predictions, said sales would increase 2.2 percent, well below the average 4.4 percent yearly increase retailers have enjoyed for the last decade.
The only real winners this season are bargain-hunters with money to spend. With more deals on the way after Friday, shoppers can get impressive savings without necessarily having to brave the crowds or the cold on the day after Thanksgiving.
“There’s a small cadre of people who love Black Friday shopping,”Mr. de Grandpre said. “Everybody else hates it.”
The NYT also reports that the surprising news made headlines in December 2002. Generic pills for high blood pressure, which had been in use since the 1950s and cost only pennies a day, worked better than newer drugs that were up to 20 times as expensive.
The findings, from one of the biggest clinical trials ever organized by the federal government, promised to save the nation billions of dollars in treating the tens of millions of Americans with hypertension — even if the conclusions did seem to threaten pharmaceutical giants like Pfizer that were making big money on blockbuster hypertension drugs.
Six years later, though, the use of the inexpensive pills, called diuretics, is far smaller than some of the trial’s organizers had hoped.
“It should have more than doubled,”said Dr. Curt D. Furberg, a public health sciences professor at Wake Forest University who was the first chairman of the steering committee for the study, which was known by the acronym Allhat. “The impact was disappointing.”
The percentage of hypertension patients receiving a diuretic rose to around 40 percent in the year after the Allhat results were announced, up from 30 to 35 percent beforehand, according to some studies. But use of diuretics has since stayed at that plateau. And over all, use of newer hypertension drugs has grown faster than the use of diuretics since 2002, according to Medco Health Solutions, a pharmacy benefits manager.
The Allhat experience is worth remembering now, as some policy experts and government officials call for more such studies to directly compare drugs or other treatments, as a way to stem runaway medical costs and improve care.
The aftereffects of the study show how hard it is to change medical practice, even after a government-sanctioned trial costing $130 million produced what appeared to be solid evidence.
A confluence of factors blunted Allhat’s impact. One was the simple difficulty of persuading doctors to change their habits. Another was scientific disagreement, as many academic medical experts criticized the trial’s design and the government’s interpretation of the results.
Moreover, pharmaceutical companies responded by heavily marketing their own expensive hypertension drugs and, in some cases, paying speakers to publicly interpret the Allhat results in ways that made their products look better.
“The pharmaceutical industry ganged up and attacked, discredited the findings,”Dr. Furberg said. He eventually resigned in frustration as chairman of the study’s steering committee, the expert group that continues to oversee analysis of data from the trial. One member of that committee received more than $200,000 from Pfizer, largely in speaking fees, the year after the Allhat results were released.
There was another factor: medicine moves on. Even before Allhat was finished, and certainly since then, new drugs appeared. Others, meanwhile, became available as generics, reducing the cost advantage of the diuretics. And many doctors have shifted to using two or more drugs together, helped by pharmaceutical companies that offer combination pills containing two medicines.
So Allhat’s main query — which drug to use first — became “an outdated question that doesn’t have huge relevance to the majority of people’s clinical practices,” said Dr. John M. Flack, the chairman of medicine at Wayne State University, who was not involved in the study and has consulted for some drug makers.
Dr. Sean Tunis, a former chief medical officer for Medicare, remains an advocate for comparative-effectiveness studies. But, as Allhat showed, “they are hard to do, expensive to do and provoke a lot of political pushback,” said Dr. Tunis, who now runs the nonprofit Center for Medical Technology Policy, which tries to arrange such trials.
“There’s a lot of magical thinking,” he said, “that it will all be science and won’t be politics.”
Expensive Pills
Promising better ways to treat high blood pressure, drug companies in the 1980s introduced a variety of medications, including ones known as calcium channel blockers and ACE inhibitors.
Although there was no real evidence the newer pills were better, diuretics fell to 27 percent of hypertension prescriptions in 1992, from 56 percent in 1982. Use of the more expensive pills added an estimated $3.1 billion to the nation’s medical bill over that period.
So the National Heart, Lung and Blood Institute, part of the federal National Institutes of Health, decided to compare the various drugs’ ability to prevent heart attacks, strokes and other cardiovascular problems. “This was a big-bucks issue,” said Dr. Jeffrey Cutler, the Heart, Lung and Blood Institute’s project director for the study.
Allhat — short for the Antihypertensive and Lipid-Lowering Treatment to Prevent Heart Attack Trial — began enrolling patients with high blood pressure, age 55 and older, in 1994, with more than 42,000 people eventually participating. Patients were randomly assigned one of four drugs: a diuretic called chlorthalidone; an ACE inhibitor called lisinopril, which AstraZeneca sold as Zestril; a calcium channel blocker, amlodipine, sold by Pfizer as Norvasc; and an alpha blocker, doxazosin, which Pfizer sold as Cardura.
Cardura was added only after Pfizer, which had already agreed to contribute $20 million to the trial’s costs, increased that to $40 million, Dr. Cutler said.
Early Trouble Signs
Pfizer’s bet on Cardura proved a big mistake. As the Allhat data came in, patients taking Cardura were nearly twice as likely as those receiving the diuretic to require hospitalization for heart failure, a condition in which the heart cannot pump blood adequately. Concerned, the Heart, Lung and Blood Institute announced in March 2000 that it had stopped the Cardura part of the trial.
What happened next provided the first signs that the Allhat evidence might not be universally embraced.
Rather than warn doctors that Cardura might not be suited for hypertension, Pfizer circulated a memo to its sales representatives suggesting scripted responses they could use to reassure doctors that Cardura was safe, according to documents released from a patients’ lawsuit against the company.
And in an e-mail message unearthed in those same court documents, a Pfizer sales executive boasted to colleagues that company employees had diverted some European doctors attending an American cardiology conference from hearing a presentation on the Allhat results and Cardura. “The good news,” the message said, “is that they were quite brilliant in sending their key physicians to sightsee rather than hear Curt Furberg slam Pfizer once again!”
Pfizer declined to comment on the messages.
The Food and Drug Administration waited a year before convening a meeting of outside experts to discuss Cardura’s safety. At that session, some of the experts sharply challenged the conclusions of the Allhat organizers. They argued that the heart failure cases might have been false readings and that an inadequate dose of Cardura had been used in the trial.
By the end of the daylong meeting, Dr. Robert J. Temple, a senior F.D.A. official, was clearly exasperated by the experts’ varying interpretations of a supposedly definitive trial.
“This is the largest and best attempt to compare outcomes we are ever going to see,”he said. “And people are extremely doubtful about whether it has shown anything at all.”
The committee decided that there was no need to issue an urgent warning to doctors and patients about Cardura.
Cardura sales held up in 2000. But the next year, worldwide sales fell to $552 million, from $795 million. Prescriptions for all alpha blockers fell 22 percent from 1999 to 2002 after having risen before then, according to one study.
Pfizer’s decision to stop promoting Cardura in late 2000, after the drug lost patent protection, was a factor in the decline. But Allhat clearly was, too.
Cost-Benefit Analysis
The main Allhat results were announced in December 2002 at a news conference in Washington and published in The Journal of the American Medical Association.
In the primary target outcome of the trial — the prevention of heart attacks — the three remaining drugs were proved equal. But patients receiving the Norvasc calcium channel blocker from Pfizer had a 38 percent greater incidence of heart failure than those on the diuretic. And those receiving the ACE inhibitor from AstraZeneca had a 15 percent higher risk of strokes and a 19 percent higher risk of heart failure.
Moreover, the diuretic cost only about $25 a year, compared with $250 for an ACE inhibitor and $500 for a calcium channel blocker. So the diuretic was declared the winner.
But some hypertension experts accused the government of overstating the case for the diuretics, as a way to cut medical spending.
“There was a feeling there was a political and economic agenda as much as a scientific agenda,” said Dr. Michael Weber, a professor of medicine at the Health Science Center at Brooklyn, part of the State University of New York, who had been an investigator in the study but afterward became one of its leading critics. “They pushed beyond what the data allowed them to say.”
Critics said the rules of the trial had favored the diuretics. If the first drug did not adequately lower blood pressure — as happened in more than 60 percent of cases — a second drug could be added. But that second drug was usually a type that worked better with diuretics than with ACE inhibitors.
There were also more new cases of diabetes among the patients who took diuretics, although experts argued over how meaningful that finding was.
Adding fuel to the debate, an Australian study released two months after Allhat found an ACE inhibitor superior to a diuretic. The proper lesson to draw from Allhat, some critics contended, was that what matters most is how much blood pressure is lowered, not which drug is used to do it. For these and other reasons, European hypertension experts discounted Allhat.
Allhat’s proponents discounted the Australian study as less authoritative, and they dismissed the other criticisms.
Still, the arguments “muddied the waters,” said Dr. Randall S. Stafford of Stanford, who studied the effect of Allhat on prescriptions. “The message,” he said,“was no longer as clear to physicians.”
Science Moves On
By the time the Allhat results were released, lisinopril, the ACE inhibitor, had become generic. That meant AstraZeneca and Merck, which sold a version of the compound as Prinivil, had less interest in defending their drugs.
Not so Pfizer. Norvasc was the best-selling hypertension treatment in the world, with sales of $3.8 billion in 2002, and Pfizer’s second-biggest drug behind the cholesterol medication Lipitor.
The company set out to accentuate the positive. In a news release after the Allhat results were announced, it said that Norvasc was found to be “comparable to the diuretic in fatal coronary heart disease, heart attacks and stroke.” And in a medical journal advertisement, it proclaimed “ALL HATs off” to its drug.
Neither the news release nor the ad, however, included the 38 percent greater risk of heart failure with Norvasc in the Allhat study.
Nor did Hank McKinnell, then Pfizer’s chief executive, mention heart failure in lauding the results during his quarterly earnings conference call with analysts a few weeks after the Allhat report was released. “Contrary to what you might have read in the press,” Mr. McKinnell said, “Allhat is extremely positive for Norvasc. It will be our job to explain that to the medical community.”
Dr. Paul K. Whelton, president of Loyola University Health System and the current chairman of the Allhat steering committee, said that Pfizer and other drug companies “took what was in their best interest and ran with those, and conveniently didn’t mention other things.”
Pfizer defends its actions. Dr. Michael Berelowitz, the head of Pfizer’s global medical organization, said that in the trial’s design, heart failure was merely one component of a broader measure of various cardiovascular problems. And in that broader measure, Dr. Berelowitz said, there was no difference between Norvasc and the diuretic. Also, he said, the label for Norvasc already contained a precaution about heart failure.
“Further action regarding the heart failure finding was therefore not considered necessary,”he said in a statement in response to questions.
Pfizer was not the only company promoting its drugs. The drug giant Novartis, for example, was spending heavily to market Diovan, a leader among a class of hypertension drugs called angiotensin receptor blockers, which were too new to have been included in Allhat. Diovan, which had more than $5 billion in sales last year, sells for $1.88 to $3.20 a pill on drugstore.com, compared with 8 to 31 cents for a diuretic.
No company, though, was spending money to promote generic diuretics. So the federal Heart, Lung and Blood Institute recruited Allhat investigators, provided them with training and sent them to proselytize fellow physicians. In all, 147 investigators gave nearly 1,700 talks and reached more than 18,000 doctors and other health care providers.
But it was a coffee-and-doughnuts operation compared with the sumptuous dinners that pharmaceutical companies used to market to doctors. Moreover, the steering committee’s outreach program did not get under way until about three years after the results were published.
Dr. Stafford of Stanford said the outreach seemed to have had a slight effect on increasing the use of diuretics.
The results of Pfizer’s efforts are easier to quantify. Norvasc sales continued to grow to $4.9 billion in 2006, falling only after the drug lost patent protection in the United States in 2007.
Tangles and Strife
Tensions about industry influence reached even the study’s own steering committee. Dr. Furberg, the chairman, bluntly accused some members of the committee of being agents of the industry.
One member, Dr. Richard H. Grimm Jr. of the University of Minnesota, had been receiving tens of thousands of dollars a year from Pfizer since at least 1997, according to reports that pharmaceutical companies file in that state.
In 2003, the year after the Allhat results were published, Dr. Grimm’s payments from Pfizer soared to more than $200,000 — an increase that The New York Times reported in 2007.
Dr. Grimm said in a recent interview that about half those fees in 2003 came from giving about 100 Pfizer-sponsored talks to doctors about Allhat. Dr. Grimm said he gave mainly the standard Allhat-sanctioned talk. But instead of saying diuretics were outright better than the other drugs, he said they were as good or better.
Meanwhile, Dr. Grimm had led an effort to remove Dr. Furberg from his position on the grounds that he had not been impartial.
“He had a vendetta against the calcium channel blockers,” Dr. Grimm said. Dr. Furberg had been publicly questioning the safety of those drugs based on some studies he did in the 1990s. The effort to oust Dr. Furberg failed in 2001. But in August 2004, Dr. Furberg resigned as chairman, contending that there had not been enough effort to disseminate the Allhat message.
Dr. Whelton, who took over as chairman, said that the study’s message was never compromised by industry ties on the steering committee.
“Curt is a wonderful guy who is a crusader,”said Dr. Whelton, who did not have industry ties and was not involved in the effort to unseat Dr. Furberg. “He has certainly rubbed a lot of people, even good friends, the wrong way.”
Changing Practice
Experts see several lessons to be learned from Allhat.
One is that “all trials have flaws” that leave the results open to interpretation, said Dr. Robert M. Califf, a cardiologist at Duke who served on the safety monitoring committee of Allhat.
Another is that providing doctors information is “necessary, but not sufficient” to urge them to change their practices, said Dr. Carolyn M. Clancy, director of the federal Agency for Healthcare Research and Quality, which itself conducts studies comparing different medical treatments.
And while insurers can influence practice through reimbursement policies, they did not seem to have pushed strongly for diuretics after Allhat, in part because some of the other drugs had become generic.
Even the cost-conscious medical system at the Department of Veterans Affairs did not require diuretics, because too many doctors would probably have requested exceptions, said Dr. William C. Cushman, chief of preventive medicine at the department’s medical center in Memphis.
Dr. Cushman, a member of the Allhat steering committee, said diuretic use in the system was still “much lower” than he thought it should be.
Dr. Clancy said that her agency was now mainly using insurance records to judge how treatments perform. While clinical trials are the gold standard, she said, they are costly and time-consuming.
And, she added, “You might be answering a question that by the time you are done, no longer feels quite as relevant.”
