From CNN MONEY 2005.
Rumsfeld’s growing stake in Tamiflu
Defense Secretary, ex-chairman of flu treatment rights holder, sees portfolio value growing.
NEW YORK (Fortune) – The prospect of a bird flu outbreak may be panicking people around the globe, but it’s proving to be very good news for Defense Secretary Donald Rumsfeld and other politically connected investors in Gilead Sciences, the California biotech company that owns the rights to Tamiflu, the influenza remedy that’s now the most-sought after drug in the world.
Rumsfeld served as Gilead (Research)’s chairman from 1997 until he joined the Bush administration in 2001, and he still holds a Gilead stake valued at between $5 million and $25 million, according to federal financial disclosures filed by Rumsfeld.
The forms don’t reveal the exact number of shares Rumsfeld owns, but in the past six months fears of a pandemic and the ensuing scramble for Tamiflu have sent Gilead’s stock from $35 to $47. That’s made the Pentagon chief, already one of the wealthiest members of the Bush cabinet, at least $1 million richer.
Rumsfeld isn’t the only political heavyweight benefiting from demand for Tamiflu, which is manufactured and marketed by Swiss pharma giant Roche. (Gilead receives a royalty from Roche equaling about 10% of sales.) Former Secretary of State George Shultz, who is on Gilead’s board, has sold more than $7 million worth of Gilead since the beginning of 2005.
Another board member is the wife of former California Gov. Pete Wilson.
“I don’t know of any biotech company that’s so politically well-connected,” says analyst Andrew McDonald of Think Equity Partners in San Francisco.
What’s more, the federal government is emerging as one of the world’s biggest customers for Tamiflu. In July, the Pentagon ordered $58 million worth of the treatment for U.S. troops around the world, and Congress is considering a multi-billion dollar purchase. Roche expects 2005 sales for Tamiflu to be about $1 billion, compared with $258 million in 2004.
Rumsfeld recused himself from any decisions involving Gilead when he left Gilead and became Secretary of Defense in early 2001. And late last month, notes a senior Pentagon official, Rumsfeld went even further and had the Pentagon’s general counsel issue additional instructions outlining what he could and could not be involved in if there were an avian flu pandemic and the Pentagon had to respond.
As the flu issue heated up early this year, according to the Pentagon official, Rumsfeld considered unloading his entire Gilead stake and sought the advice of the Department of Justice, the SEC and the federal Office of Government Ethics.
Those agencies didn’t offer an opinion so Rumsfeld consulted a private securities lawyer, who advised him that it was safer to hold on to the stock and be quite public about his recusal rather than sell and run the risk of being accused of trading on insider information, something Rumsfeld doesn’t believe he possesses. So he’s keeping his shares for the time being.
Tamiflu is the new snake oil
In days of old when the snake oil salesman came to town folks would gather round to hear of miracle cures. Those who were sufficiently impressed would buy some of the salesman’s wares to cure colds, sore toes or a myriad of other ailments. The snake oil salesman would then get back onto his cart and go to the next town.
Times change. Today we have scientific channels, advisory panels and rigorous process to make sure that whatever claims are made are verifiable.
So surely governments around the world could not spend billions of dollars stockpiling a drug which does not actually do anything?
Could doctors, advisory panels, and health departments have been sold modern day snake oil?
Unfortunately, the answer is yes!
The anti viral drugs Tamiflu (oseltamvir) and Relenza (zanamivir) have been promoted as a treatment for influenza. But most specifically, they have been claimed to reduce transmission of influenza and reduce complications such as pneumonia. Governments have bought them so that they can be released in the event of an epidemic.
But recent research has found that these drugs are little more than today’s snake oil potions. A review of 46 studies on more than 24,000 people has shown that they do not prevent people catching the flu. They do not reduce the rate of complications or hospitalisations. At best, they might reduce the length of the illness by about half a day.
Let me repeat that- it shortens the course of influenza by half a day, at best!
How could so much money get spent on something of so little value? That is because the drug manufacturers refused to release most of the data that is now available. Only information from drug trials, which showed a positive effect from the drug, was previously published.
The British Medical Journal and independent Cochrane Collaboration had been fighting for four years to get hold of all the data so that it could be independently examined and to answer the very basic question – does it work?
Obviously the manufacturers are keen to put the best spin on their products. But they are not the only ones culpable here. There are numerous problems to fix.
Between 48% and 89% of researchers involved in clinical trials of new treatments have been found to have undeclared conflicts of interest. This occurs where the company that has a new drug being studied may pay them directly or indirectly.
Medical research needs to be cleaned up.
Governments look to advisory panels for independent advice. Some 75% of doctors on panels, which make recommendations about disease definitions and management, have ties to the pharmaceutical industry.
Any advisory board must have totally independent members.
The facts show that every influenza “epidemic” since 1918 has had fewer deaths than the one before. Predictions about millions of deaths from, Avian flu, SARS and Swine flu all turned out to be completely wrong.
Each year in Australia there are around 2500 deaths associated with influenza. Some 98% of these are due to secondary pneumonia in people of an average age of 87(which is older that the average life expectancy).
The annual “killer flu” hype needs to be toned down.
Is the flu really so fearsome? For the vast majority of people it will be up to a week of feeling unwell followed by a full recovery. There are exceptions and whilst tragic, they are very rare and are not always understood or preventable.
Governments like to be seen to be doing something. Wendy Barclay from Imperial College London best summed this up telling Reuters: “If another pandemic came tomorrow, and the government had no drug to treat thousands of influenza infected patients, I imagine there would be public outcry”.
She sums the situation up very well – the public expects the government to provide a medication, which does not work for an illness, which will go away by itself.
Maybe deep down we still want to buy the snake oil and the salesman is still ready to assist us.