Dimebon, whose generic name is latrepirdine, is an old Russian over-the-counter antihistamine, now off the market but once used for hay fever. A Russian researcher named Sergey Bachurin, one of two directors of the Institute of Physiologically Active Compounds in Russia, tried several compounds for potential use on Alzheimer's patients. He found latripirdine.

Beginnings

A former researcher with Bachurin's group moved to San Francisco and searched for American investors. He found Dr. David Hung, who had previously been involved with medical development companies. Hung had been president, CEO, and a director of ProDuct Health, Inc, which was purchased by Cytyc Corporation for $167 million after spending only $22 million in development. He knows the ropes and has the connections.

Hung and Bachurin formed a new organization, Medivation. Hung is now the president, CEO, and a board member. Bachurin is a scientific and clinical advisor; he gained an unstated amount of equity in the new corporation. In 2008, Hung's salary from Medivation was $464,200, his bonus was $100,100. His total compensation, including options, was $1,932,093. At that point, Medivation had no products for sale. They still don't.

Early Drug Trials

Dimebon trials were done in Russia. Human trials, which were supposed to have been double-blinded, produced exceptional results: a 4 point improvement in cognition, better than the 2.7 points seen with existing Alzheimer's drugs. The FDA liked the results. So did Pfizer, which gave Medivation $225 million for rights to the drug and may pay more if it's successful in trials.

There was just one little problem. The pre-FDA approval phase III trial, a six month study, failed to demonstrate any benefit from Dimebon.

This, however, does not represent a permanent failure to the principal players of Medivation. Just take a look at the income Hung takes out now. While he stands to win even bigger with a blockbuster drug, he isn't hurting now. There's more, though. Medivation isn't done with Dimebon. They're also trialing it as a Huntington's disease drug. There's also another drug in its pipeline, MDV3100, for advanced prostate cancer.

Insulation From Risk

To insulate each of the drugs from the other, two separate subsidiary companies were created: Medivation Neurology for Dimebon and Medivation Prostate Therapeutics for MDV3100. So, if one fails, the principals can jump ship to the other. This is similar to what Monsanto did to evade its responsibility for the massive harm it did as a chemicals corporation. A new division was created and spun off, the principals went to the new company, the old one was left with minimal resources, but all the responsibility for damages. The new Monsanto was loaded with money and left free and clear to pursue its new earth-scorching practices in genetic modification.

Taking Advantage of Patients

Part of the marketing process is to get patients and caretakers excited about the product. If a drug makes it past FDA approval, the makes want patients to be ready to rush into their doctors' offices demanding prescriptions. If a drug is borderline, then having patients pressure the FDA or other nations' dispensing body, such as the UK's National Institute for Clinical and Health Excellence (Nice). It was through patients' groups that heparin found approval in the UK, in spite of its very poor cost-effectiveness profile.

Of course, this often results in very disappointed patients, both in situations where drugs never obtain approval and when they get approved, but prove to be relatively ineffective or dangerous. This, though, is no concern to the pharmaceutical makers. Their interest is focused on one thing: profits. By any means: By a product making it to market, whether it really works or is dangerous. By public perception to drive up stock prices. By perception of other corporations to throw money their way. It doesn't really matter. The important thing is the bottom line.

The Real Beneficiaries

It isn't the corporations themselves that are the issue. It's those at the top, the CEOs, presidents, initial equity holders—anyone in a position to profit from sales or stock prices or investment money.

For the principals of Medivation, Dimebon has been nothing but profitable since the corporation was created. Money has been poured into it. The principals have been skimming off the top since the beginning. What else are such obscene salaries and bonuses and options received by Medivation's CEO, Hung?

Medivation has been able to gain a payment of $110 million, which could increase to $655 million if development milestones are met, from a Japanese company that needed an American partner for its prostate drug, MDV3100. They've floated stock that has reached a value of $1.3 billion.

Given a worst-case scenario, the principals of Medivation have made themselves rich, even if they never produce a single product. If they do, then they'll become fabulously rich—even if their products produce only marginal benefits or do significant harm. Their positions within the corporation insulate them from most risk—a significantly different position from those who take their products in the hope of gaining some marginal benefit.

Think about it: The excitement over Dimebon relates to an improvement of 1.3 points over other drugs on a scale of 0-70 in the Alzheimer's Disease Assessment Scale, cognitive section—and there's no indication of arresting the disease.

For, at best, minimal benefit to patients, a small number of people who know how to play the system are, at a minimum, raking in millions on the hope of achieving that small gain. If they hit the jackpot, they stand to see profits in the tens or hundreds of millions of dollars.

Quite a scam, isn't it?