In the movie "Wall Street" corporate raider Gordon Gekko proclaims "Greed is good!" much to the chagrin of his young protégé. Gekko's rapacious avarice however, pales in comparison with the real-life greed of Big Pharma's multinational drug behemoths. In a time of stagnant growth for most industries, pharmaceutical firms are posting record profits. Indeed, their return on investment - around 18.5 percent - is from three to five times the average of other industrial sectors. Taken together, the over $20 billion drug companies earned last year is more that the total of the airline, entertainment, construction and railroad industries combined.

Of course, whenever their profits are questioned, the drug companies are quick to say they are necessary to fund research. Otherwise, Big Pharma asserts, we would never have the miracle cures for life-threatening disease created in their laboratories. On the surface if makes sense, except for one thing: it's all a lie.

TAXPAYER SUBSIDIES OF DRUG RESEARCH

Lobbyists for "Big Pharma" claim that it now costs $802 million dollars to win approval of a new drug. These enormous costs, they argue, are why drug company profits have to be so high. Without them there might never be new treatments for cancer, AIDS and a host of other terrible diseases. What they don't say, however, is that the $802 million figure is derived in a way that defies any reasonable accounting standard. More important, what they don't say is that in a vast majority of the cases what was spent on research came largely from the government!

To illustrate, of the 77 anticancer drugs approved between 1949 and 1996, 50 - that's right 50 - were the product of research sponsored by the National Cancer Institute (NCI). Included among them were such widely used drugs as Taxol, Zoladex and Interleukin-2.

But it's not just cancer drugs that benefit from government largesse. A study funded by the National Institutes of Health found that the agency had "played a critical role" in the development of the top five selling drugs of 1995. These included such familiar products as the antidepressant Prozac, the antiulcerant Zantac, the herpes drug Zovarix and the antihypertensives Capoten and Vasotec.

In another case, NIH provided Colombia University with a $4 million grant that led to the development of Xalatan, a medicine to treat glaucoma. The University sold the patent rights to the drug to the multinational drug giant Pharmacia for $150,000. In 1999, the most recent year for which figures are available, Xalatan generated $507 million in sales revenues for Pharmacia. Yet the taxpayers whose money funded the NIH grant did not get a single penny in royalties!

Moreover, the raid on U.S. taxpayers isn't limited to domestic firms. A drug used to treat Multiple Sclerosis called Copaxone was developed with the assistance of some $5 million in NIH and FDA money and then licensed to Teva Pharmaceutical Industries, an Israeli manufacturer. In the first three quarters of 2000, the company had sales totaling some $175 million for the drug. To its credit, Teva has said it would be willing to reimburse the taxpayer investment in Copaxone's development, something U.S. firms have failed to do.

The proposal also stipulated a number of specific restrictions on vitamin and mineral sales and promotion including:

Strict controls on potency, limiting the amount of a vitamin or mineral in any formulation to pre-determined “safe” maximum levels. For example, Vitamin C could not be sold in potencies greater than 200 mg. Vitamin E would be limited to 45 international units (IU) and Vitamin B1 would be limited to 2.4 mg. All of these are far below potencies commonly sold in the United States today.

There would be an outright ban on any health claims related to vitamins or minerals even if they are true. For example advertising could not claim that taking calcium helps prevent osteoporosis, or that Folic Acid helps prevent certain birth defects.

Even though a doctor’s prescription would be required for all vitamins and minerals, they could not be used for the prevention or treatment of disease other than vitamin deficiency.

If you think that this is such an extreme proposal it would never be adopted, think again. In 1997 it was only a last-minute blitz by consumer advocates that prevented passage of those very dietary supplement restrictions by the Codex and the matter remains under consideration even now.

But it may not be necessary for the Codex rules to be adopted in order to shut down the supplement industry. A recent action in Europe – spearheaded, of course by Germany – holds out the prospect of such restrictions reaching U.S. shores through another avenue: the World Trade Organization, or (WTO). To understand how this could happen, you need to know what has already taken place in Europe.

On November 1st 1993, the European Union was established to create a single market among the various nations of continental Europe and Great Britain. Over the past decade, what was intended as a means of facilitating trade has evolved into a massive bureaucracy that issues an average of 3,500 “directives,” each year. These “directives” are, for all practical purposes, laws, that are binding on all EU members. Many of them are aimed at regulating foodstuffs. In fact, EU bureaucrats have issued directives covering everything from the number of holes in Swiss Cheese to the maximum frying temperature for oils. While many might be shrugged off as silly, the directive concerning dietary supplements is no laughing matter.

In March of 2002, the European Union (EU) passed the “European Union Directive on Dietary Supplements.” It was pushed by – you guessed it – Germany! Under this new law, vitamins and other dietary supplements are treated as though they are drugs! That, however, is just the start.

On February 23, 2003, the EU published draft regulations to implement the law. The draft regulations go into full effect in 2005. These new rules will be a deathblow to the dietary supplement industry in Europe. A brief review of just a few of them illustrates this point.

For example, just as had been proposed in the 1997 proposed amendment to the Codex Alimentarius, one of the rules puts absolute limits on the potency of vitamins at levels far below those in common use. In the case of Vitamin C, for example, the limit is 300 milligrams (mg). Since many people take 2 to 3 GRAMS per day (eight to ten times as much), this would require that they ingest from eight to ten pills to take their normal dose. In the case of Vitamin E, the potency is limited to about one-eighth of what many people routinely take. Even then, they won’t be able to just walk into a store and purchase their vitamins.

The reason is that as was the case with the 1997 Codex proposal, since the rules essentially classify vitamins as drugs, vitamins will only be sold through pharmacies, with a doctor's prescription! This is already a requirement in several countries including Norway, Germany and Greece, and by 2005 will be required everywhere in Europe.

Still, it’s not just the limit on potency that is a problem. The rules would also emulate Germany’s proposed Codex amendment and ban a number of herbal supplements entirely. In fact, Ireland has already made St. John’s Wort illegal, and the European Union’s Scientific Committee on Food has declared that supplements such as Coenzyme Q-10, Bioflavanoids, and a wide range of amino acids are dangerous. This sets the stage for these supplements being banned as well.

Under the rules, again as was proposed for the Codex in 1997, health claims for vitamins are specifically banned, whether or not there is a scientific basis for the claim. Therefore, dietary supplements may not be marketed as a preventative measure to protect against disease – no matter what the research says!

In other words, the multinational opponents of dietary supplements who were thwarted in 1997 merely shifted the focus of their assault to the EU!

But, what, you may ask, does an EU regulation have to do with vitamin sales in the United States?

The short answer is more than you’d think. The reason is because the United States is a member of another international body called the World Trade Organization or WTO!

In 1995, the United States and 134 other nations entered into the World Trade Organization Agreement. Ostensibly, the purpose of the WTO was to help manage international trade in an orderly fashion and eliminate trade barriers between nations – in essence to promote free trade. The fact that the WTO Agreement and its accompanying regulations comprised a document more than 22,000 – that’s right 22,000 pages – in length might have given a hint that it was really something quite different, especially if you read the fine print.

One of the most important elements of the WTO Agreement was the so-called “harmonization” rule. This rule required that all of the signatory nations revise their regulations so that they were in agreement or “harmonized.” If a country fails to comply with the “harmonization” rule it can be taken before the WTO Dispute Resolution Panel and forced to do so!

If this all seems a little hard to believe, consider the following:

The United States passed a law banning the importation of tuna that was caught in nets that also trapped dolphins. Mexican fishing companies that didn’t want to spend the money on new nets complained to the WTO and the matter went to a Dispute Resolution Panel – which ruled against the United States. The law was overturned.

When the U.S. passed another rule aimed at protecting endangered sea turtles, Asian fishing firms complained to the WTO. Like their Mexican counterparts, they didn’t want to spend the money to upgrade their nets so sea turtles wouldn’t be accidentally snagged. Again, a Dispute Resolution Panel overturned the U.S. rule.

In a third instance, foreign oil refiners complained to the WTO that they couldn’t comply with U.S. rules concerning air pollution rules that applied to gasoline. As with the other two cases, the Dispute Resolution Panel overturned the regulation, allowing foreign refiners to sell gasoline in the U.S. that polluted the air!

And these are just a few examples!

But that’s not all.

The WTO Dispute Resolution Panels operate in complete secrecy – they are not open to the public or to attendance by interested third parties – and there is no appeal from their rulings! Also WTO rules require that neither the complaining nation nor the nation against which the complaint has been lodged have a representative on the tribunal deciding the case. In fact, the complaining nations have no role in the panel’s selection. Rather, the judges are selected by the WTO’s unelected bureaucrats in Geneva!

With the potential for an outright ban facing the industry, you might think that even the huge multinational pharmaceutical firms might be concerned. After all, they manufacture around 60% of all vitamins sold. But as usual, surface appearances can be misleading.

Although it is true that these giant companies manufacture the majority of all vitamins in terms of absolute volume, the overwhelming majority of their production goes to bulk sales to food processors and for animal feeds. The reason this distinction is important is that the proposed regulations include an exemption for vitamins used to fortify foods to meet government requirements. For example, virtually all flour has vitamins added to “enrich” it, and most salt has iodine added. So Big Pharma gets to have its cake and eat it. It will still be legally able to sell its bulk vitamins even as it is putting the “little guy” out of business!