Why drug costs continue to increase


Category : Medical Rants, Pharma

Off to rounds, I will rant later this morning about this article – HIGH PRICES. This article, written by one of my favorite writers – Malcolm Gladwell – gives an interesting overview of why we are spending so much on medications.


Back from rounds! Everyone is doing well.


The core problem in bringing drug spending under control, in other words, is persuading the users and buyers and prescribers of drugs to behave rationally, and the reason we’re in the mess we’re in is that, so far, we simply haven’t done a very good job of that. “The sensitivity on the part of employers is turned up pretty high on this,” Robert Nease, who heads applied decision analysis for one of the nation’s largest P.B.M.s, the St. Louis-based Express Scripts, says. “This is not an issue about how to cut costs without affecting quality. We know how to do that. We know that generics work as well as brands. We know that there are proven step therapies. The problem is that we haven’t communicated to members that we aren’t cheating them.”

This article does a very nice job of providing texture to the problem of drug expenditures. While “big pharma” is greedy (after all they are for-profit companies), they cannot make physicians prescribe drugs. We must become more intelligent about prescribing. We must resist requests for Nexium and Celebrex – unless they are clearly indicated.

I object to direct to consumer advertising because it makes our job more difficult, but we must still do a good job. We do need more easily researched sources for drug information (efficacy and price). The data are available but often difficult to decipher.

We in academe should do a better job at packaging and presenting the information to practicing physicians.

But this rant pales in comparison to the article. Gladwell rights brilliantly. He will make you think and reconsider all of your assumptions about drug costs. So if you have not read the article please scroll up and go clickety click!

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Comments (22)

I just finished reading Dr. Marcia Angell’s book, The Truth About the Drug Companies, and reading this article by Malcolm Gladwell in an obvious attempt to undermine Dr. Angell’s main points has not changed my mind that the former NEJM editor has the more compelling arguments.

Mr. Gladwell, to begin with, does not mention anything about the bloated budget for Big Pharma’s marketing and administration, which Dr. Angell estimates far outpaces money spent for R and D (research and development.)Those expenses are hidden in what Dr. Angell calls a black box, which Big Pharma refuses to open. Duplicitous? You bet it is.

Secondly, Mr. Gladwell ignores completely the ways Big Pharma engages in what I feel are corrupt practices in extending its patents on drugs, including bribing generic manufacturers to extend those patents for as long as possible. As further examples, how can we justify the practice of Big Pharma getting an automatic extra 30 months for suing a generic manufacturer, or an extra six months for testing drugs on children, when there are no valid reasons for these suits or for pediatric testing? These effectively destroy Gladwell’s arguments that the higher prices we pay for patented drugs lead to lower prices when they become generics. Three more years of monopoly because of a lawsuit can mean billions of dollars.

Thirdly, the example he gives of AstraZeneca’s sordid ploy to bammboozle the public that
Nexium is better than Prilosec
illustrates pointedly that Big Pharma has come up with few innovative drugs, but a surfeit of copycat drugs with no better benefits and sill sold at prohibitive prices, despite minimal research, and with renewed patents that will keep that monopoly and multi-billior dollar business flowing for years. Dr. Angell gave examples of the really few innovative drugs that came out the last five years, with the vast majority being “me-too” drugs that are promoted as better when they are not. That $802 million average it allegedly costs Big Pharma to develop and market a new drug looms more and more like a fantasy.

Fourthly, Mr. Gladwell mentions the benefits of drug-benefit programs without stating that a number of these are owned by companies doing advertising for Big Pharma. See the conflicts of interest?

Fifth, Mr. Gladwell does not address the incestuous relationships Big Pharma has with the FDA, the NIH, and academic centers, with conflicts of interests that should not be there. Just as important, the vast majority of basic research is done through public funding by the NIH, which then franchises it to medical schools and biotechology centers, which in turn enter into agreements with Big Pharma, but with the public still victimized by high prices. The stories of Taxol and Gleevec are classical examples which physicians should read.

There are many other points that Mr. Gladwell omits, including the ubiquitous and well-known practice of Big Pharma spending vast amounts of money for marketing disguised as education and research. The ever-growing direct-to-consumer (DCA) is adding to the marketing budget, aimed not at educating the public but at promoting sales of its products. You bet that marketing money will translate into those high prices.

Mr. Gladwell may be right in saying we need to communicate better with physicians and consumers, but how can you fight a godzilla with that gargantuan money and a marketing machine that keeps promoting the sales of its products instead of educating us?

I would urge physicians to read Dr. Angell’s book. The book is a litany of truths, while Mr. Gladwell’s article is a smokescreen for Big Pharma.

Now that they have gone generic, the price of Metformin, Fluoxetine, Claritin, Lisinopril all pllummeted. They went generic. The supply catalogues show generic Prozac is about $30 for one hundred pills. It used to be about $250 for a hundred. I saw similar numbers for generic Claritin if bought in bottles of 100.

Zithromax and a whole bunch of big sellers are going generic real soon.

Problem, of course, is there are always new drugs, and everybody has to have the latest and greatest.

We are starting to get a track record on Medical Savings Accounts (MSA), now Health Savings Accounts (HSA).

Data is starting to show a substantial increase in the use of generic drugs among holders of HSA’s, compared to more traditional alternatives.

It really does make a difference when it’s your money.

The Wall Street Journal looked at a number of drug companies financial statements and, if memory serves, R&D was 17% of gross income. Big Pharma is here to sell, and sell they do, for a very good profit.

RGL, some of the issues you raise are on target. Patent extensions, for one.

But the complaint about pharma’s enormous marketing budget is misguided. Why should anyone dictate how much pharma spends on marketing? I agree with controls on what they say – e.g. no lying or unfairly misleading statements, at minimum, which is what we demand of any commercial marketing. We can reasonably argue for tighter restrictions on marketing content for drugs than for “normal” consumer protucts. Should direct-to-consumer drug ads be allowed? Maybe, maybe not.

But as long as the content of pharma marketing is fair (whatever we decide “fair” is), the amount should be entirely within their discretion.

“[H]ow can you fight a godzilla with that gargantuan money and a marketing machine that keeps promoting the sales of its products instead of educating us?”

You make it seem like we’re all powerless to resist the evil pharma marketing machine. As if they have some enormous mind control device hidden in NJ, beaming uncontrollable lust for Nexium into all our brains.

It’s not their job to educate us! Their job is to sell drugs and make a profit. And we are not mindless sheep, unable to choose for ourselves.

The problem, as Gladwell correctly points out, is that there’s little if any incentive in the system to prefer lower cost drugs (where possible). Insurees generally have a low, fixed copay for scrips, so actual cost doesn’t matter to them. Naturally, there’s going to want whatever they perceive to be top of the line. And since high Rx costs don’t affect the docs, they have little incentive to argue with those patients.

It’s like if you were going to buy an SUV, but you only had to pay a $10,000 copay, and your car-buying insurance paid the difference. Are you going to pick the Ford or the Lexus?

It’s very important that we all understand Gladwell’s point on this. Just because he didn’t address all the other issues you raise, doesn’t make him wrong on this one.

In response to qetzal:

First, I did not advocate restricing the marketing budget of Big Pharma. I was reinforcing the point made by Dr. Angell that the drug companies have been lying about costs for research and development, which, as it turns out, are far, far less than those for marketing. Just recall they cite their R & D costs as a justification for the high prices of drugs, which is duplicitous.

Compounding the problem is that Big Pharma refuses to open what Dr. Angell calls a “black box,” which surely would give us transparency over what they have been peddling to the public.

Secondly, Dr. Angell made the point that Big Pharma has been able to bamboozle physicians with its vast marketing schemes disguised as “education” and “research.” Despite restrictions imposed by AMA and PhARMA, the incessant promotion of products to physicians has not slowed down. So-called CME meetings are held with the ubiquitous shadow of Big Pharma looming overhead with either sponsorship fees or speakers with ties to the industry. I agree we are not powerless sheep, but I’m not happy over the vast influence the drug industry continues to hold among us.

I’m all for incentives to have physicians prescribe cheap but equally effective drugs, but other things need to be done as Dr. Angel proposes. These include curbing monopolies, opening that “black box,” restructuring the FDA, creating a special institute for clinical testing of drugs to replace those sponsored by the drug companies, get Big Pharma out of medical education, and establish reasonable and uniform pricing.

I did not miss the point of Mr. Gladwell’s article, but he appears to be a shill for the drug industry; in presenting his counterpoint to the book by Dr. Angell, he missed painting the whole picture.

RGL, why should pharma be obliged to open this “black box?” If there’s some general accounting principle that says public companies should disclose this info, then fine. Otherwise, so what?

Again, it doesn’t matter how much they spend on marketing. In absolute terms, or relative to R&D. It matters what they spend that money on.

This whole argument that pharma spends too much on marketing, and lies about how much R&D really costs, is a red herring!

I don’t know why you think Gladwell is a shill. Re-read his article. He’s making a very valid and (IMO) accurate point. One that I think is quite important. Seems pretty unfair (not to mention counterproductive) to accuse him of being a shill, just because he dares to disagree with Dr. Angell on one point. Especially since you seem to agree with him (but perhaps only partly?).

FWIW, I agree with about a third to a half of what you say needs to be done. Another third may or may not make sense, depending on the details. The rest I disagree with. Does that make me a shill as well?

RGL says “Just recall they cite their R & D costs as a justification for the high prices of drugs, which is duplicitous.”

Nope. There are only two possibilities. Pharmas are either (1) throwing money away to annoy TV viewers, or (2) advertising has a positive return on investment (ROI). We know it must be #2, because pharma boards of directors are greedy puppets being controlled by even greedier investors.

What’s more, we know that advertising ROI is greater than 11%, because that’s how profitable the stock market is. (If it was less than 11%, they’d just buy securities.) In fact, we know it’s a lot more than 11%, advertising a single product is vastly riskier than a diversified stock portfolio.

Re. Nexium versus Prilosec: They aren’t identical “me too” drugs. The little granules in Nexium verus the Prilosec tablet make a noticable difference for some people, me included, presumably because of differences in stomach motility. Mind you, not enough to justify the factor of 10 price difference.

“As further examples, how can we justify the practice of Big Pharma getting an automatic extra 30 months for suing a generic manufacturer, or an extra six months for testing drugs on children, when there are no valid reasons for these suits or for pediatric testing? These effectively destroy Gladwell’s arguments that the higher prices we pay for patented drugs lead to lower prices when they become generics.”

Patents bring in vast revenues, which pay to develop drugs, which become cheap generics. End of discussion. (Whether extensions just enrich the lawyers is another question.)

“Just as important, the vast majority of basic research is done through public funding by the NIH,…”

Nope. The NIH does a lot of biology research. The NIH does not synthesize millions of compounds, put them in screening libraries, and routinely test them against potential therapeutic targets.

I guess there is no tipping point, as Mr. Gladwell would put it, where most of us can resolve this controversy about the drug industry.

I have always thought of drug companies as ethical concerns, interested not only in making profits but in doing business in accordance with what is right. Qetzal may not be concerned by how much Big Pharma spends on its marketing, but that spending lies at the heart of the dispute about why the prices of drugs are outrageously high. And to think, as Dr. Angell cogently argues, Big Pharma has come out with only a few innovative drugs in the past several years, with 77% of its output being me-too drugs. These copycat drugs in fact constitute the primary business of the pharmaceutical industry today.

The lures, the bribes, and the kickbacks employed by Big Pharma in its dealings with physicians are another concern we ought to think about. Maybe we need another Elliot Spitzer to blow the whistle on these shenanigans.

I try to be as open-minded as I can in looking at this sordid situation, but it’s hard to overlook that there are indeed serious problems, and justifying Big Pharma’s practices with perfunctory excuses just would not be enough.

I think we need to clean those Augean stables, no matter what measures we take to make things right again.

In a free, market-oriented society, there is no such thing as charging too much. The only entity with the power to forcibly extract funds from you as a condition of existing is the government; it will put you in jail or confiscate your property if you don’t pay up. No one can force you to buy Nexium, Prilosec, generic cimetidine or Maalox. It’s up to you whether you want to pay to be relieved of heartburn, pay a quarter for a dose of Maalox, or $3 for a day of relief from Nexium, or put up with the effects of excess stomach acid. Same is true for antibiotics, blood pressure meds, and every other category of medications. The newer brand name expensive drugs are easier and more effective than the older ones, and in almost every case, the older ones were once the new and expensive ones. Just as no one can force you to take Nexium, no one can force Merck or Pfizer or Jane the biochemist to try to develop the next new drug. This gets back to classical economics and Adam Smith’s “Invisible Hand.” Whether Big Pharma spends 10 or 30 or 50% of revenue on R&D is it’s own business, just as it is Microsoft’s and General Motors’ and the Gap’s business how to spend their revenue. When a patient comes in and I need to prescribe an antibiotic, my first choice is generally a cheap generic cephalosporin, but sometimes a more expensive drug is needed, and only once have I had to explain to a patient who had to buy Levaquin out of pocket at a hardship to him (multiple allergies to the cheap drugs). Maybe that’s why I rarely get visited by detail reps.
As the owner of a 50+ year old prostate, colon, pancreas, and circulatory system, I’m very glad that the Pharma companies have the resources to devote to developing new drugs, even if their motivation is to eventually make a buck, or lots of bucks, off of me. I understand that Pfizer and Merck and Jane the biochemist have never heard of JB, and they secretly hope that I get all kinds of chronic diseases so that I will want to buy their products. What I’m afraid of is that the trial lawyers will put Merck out of business over Vioxx, and scare Pfizer and Bayer and the rest out of taking chances on new drugs that may save my life at great expense to me and great profit to them.
I grow weary of people saying that because these drugs are lifesaving, spending public money on them or imposing extra regulations and fee controls on the drug companies is justified. Lots of things in our society are potentially lifesaving, yet people elect to do without them when they are spending their own dimes. How many people go out and buy the top rated safety car every year? I’ve never met one yet. Sure, people consider safety rating when they buy a new car, but most can’t afford a new car every year, and wait until a new car is needed for other reasons before upgrading their safety. It’s only when they can find someone else to pay for it that they demand the absolute best safest way to take care of their problem.


Do you agree that there are at least some marketing activities that are acceptable for pharma to engage in?

Then, as long as pharma always confined their marketing to those acceptable activities, would you still argue that they shouldn’t be allowed to do as much of those activities as they chose?

If so, then I agree we will never see eye-to-eye on this.

Trying to restrict pharma’s marketing budget is totally misguided. Restricting their marketing activities to eliminate “unfair” practices makes perfect sense. Now, we might still disagree on what’s fair or unfair, but at least we’d be arguing in the right direction.

Oops! Missed an end-italics code after “budget” above. Sorry.

Just a few comments about JB’s rants:

(l) I don’t think most people agree with your assertion there is no such thing as charging too much just because we live in a market-oriented society. Companies, in this instance the drug industry, should have a corporate conscience. If JB believes in what he says, is he really charging his patients as much as the traffic can bear? Beyond profits, I think we all have a responsbility, as physicians, to do what is right for our patients and to the larger society we serve. Bilking customers should never be part of our culture.

(2) Saying that new drugs, particularly copycats, are better than the old ones is treading on very flimsy evidence. Big Pharma does not favor testing those drugs within a class against one another purely because they are afraid to face the truth: none is better than the others. The ALLHAT study showing diuretics better than new ones sent chills to the drug industry.

(3) If Big Pharma does not begin to discipline its wild ways, you can be certain the uproar from Americans will be so loud that radical action would be taken to cut off the industry’s excesses. I see no reason for Americans to be extorted with these outrageous prices when Canadians can get them at half of what it costs us here. So much for a market-oriented society.

(4)JB is implying Americans would rather rely on give-aways than spend their own money. I think he misses the point. Most Americans would buy those drugs if they are priced reasonably, but they are not, and that is what lies at the heart of what we are debating about.

Having said all these, I, too, believe in a capitalist society, but we need to balance our desire for profits with fairness and responsibility. That’s the American way I know.

To Qetzal:

I have no problem with Big Pharma conducting marketing activities as long as they are not disguised as “education” and “research.”
We also need to make sure we get rid of what Dr. Angell calls lures, bribes, and kickbacks in the conduct of these activities. Qetsal surely must be aware of these
shenanigans if he has been in practice long enough.

Marketing is what sells products, and Big Pharma knows about that. But it ought not to put a smokescreen by exaggerating their costs for R & D, while minimizing their marketing expenses, to dupe the public into believing that’s what is driving drug prices beyond what is reasonable.


I don’t practice in a free market. I practice in the USA where Medicare, Blue Cross, Cigna, and United control my fees. I would be delighted to practice in a free market where my fees would be determined by what I felt I was worth and what the patient could afford to pay. That ended years ago. I get paid the same whether I spend 25 minutes or 2 hours taking out a gall bladder. If the 2 hour gallbladder is your standard, then getting the same fee for ¼ of the work may seem like “bilking.” I don’t think so.

The new expensive drugs are either worth what is being charged, or they are not. As a surgeon, I know that some of the new antibiotics are expensive, but if they get someone out of the hospital a couple of days early, everyone wins. I don’t pretend to know much about statins, but I do know that when properly prescribed they can extend lifespans. I don’t know why a doc would prescribe Lipitor instead of generic lovastatin at 25% of its cost, but I do not believe it’s because the prescribing physicians are fools, uninformed, or tools of Pfizer. Presumably, they are all better than niacin. Whether the extra benefit is worth the extra cost is between the doc and his patient, with a possible contribution from the trial bar and the insurance company.

This goes for the copycat drugs also. They are similar but not identical, and there is the occasional patient who can benefit from, say, Nexium, and not Prevacid. Even after they go off patent, the multiple copycats continue to be manufactured and sold; see the multiple NSAIDs, some of which are OTC, and the H2 blockers, which were the blockbuster high dollar drugs of the late 70s and early 80s and now all OTC and cheap and all still sold.

Big Pharma will not give away its products; it’s too high risk to develop new types of medication without a high potential profit down the road (there has to be a cat before there is a copycat). Bringing up Canada is specious. If Americans start to drive down profit margins by taking the Canadians’ limited drug supply, the Canadians will quit selling to Americans, and the Pharmas will quit selling to Canadians. The American drug market is what drives the Pharma industry. The Canadian market, even at market prices, could never support the current R&D efforts of the drug companies.

Americans buy the drugs because they believe they are worth the money. Of course they would be happier to buy them for less. The problem is that no one is going to develop and sell them for less. No one is forcing anyone to buy them today.

It’s great to want to “balance our desire for profits with fairness and responsibility,” but that is pretty difficult to do when you have the FDA on one side, the shareholders on another side, and the trial lawyers surrounding you. I don’t blame them for behaving the way every other corporation does. They make a product and sell it for whatever price they can. That’s the American way.

In response to JB:

I don’t know how long JB has been in surgical practice, but I presume he must be familiar when physicians were billing patients on the basis of UCR – usual, customary, and REASONABLE. That was before Medicare and private insurance companies started controlling fees. Why? A number of those charges were deemed to be UNREASONABLE, indefensible under the pretext of a market-centered society. A number of us may not feel we are not being paid enough, but at least the current fee schedule system is much saner. And by the way, it’s not based on the unsavory philosophy that you can charge as much as you can.

It’s also naive to believe that that Big Pharma “will not give away its products” if there is no prospect of profits waiting for them. This is not a question of giving their drugs away as much as it is of asking them to price those drugs REASONABLY. When, for the past 20 years, you have the Big Ten of Big Pharma amassing profits larger than those of 490 other businesses combined on Fortune’s 500, you are talking about real money. Can we just agree it is nothing more than naked GREED?

Of course nobody is forcing Americans to buy these expensive drugs; even if they are forced, many cannot afford to do so. But isn’t that why there is a problem and we need to do something about it? I get the feeling JB could care less, but my training as a physician has endowed me, and thousands of colleagues I know, with certain ethical standards. We all need to advocate for the interests of our patients, unless JB feels we all ought to behave like businessmen.

For JB to believe it’s the American way to extract as much profits as possible, cognizant there are problems in the drug industry, is to embrace a philosophy that recognizes no ethical compass. As I said before, corporations, like physicians, ought to have a conscience.

This will be my last post on this issue, since it’s clear to me that you have a socialist outlook on the way American medicine ought to be, and therefore it gets to be like where we are arguing religion. I will only point out where I believe that your last post was misguided. You may have the last word if you wish.
I doubt that many will agree with RGL’s take on medical economic history with respect to UCR charges. In the old days, doctors charged what they thought was fair. Fees were relatively high, but discounts to poor people were common. Nobody died in the streets. In the 1960s when Medicare started the trend towards people getting medical care at someone else’s expense, it had no trouble paying UCR fees. Within a few years, as demand exploded, the Medicare budget was out of control, and that was the stimulus for the Medicare price control system (aka Relative Value system, where the amount of labor involved determines the compensation, not the value placed on it by the recipient. Students of Karl Marx will recognize the principle). Following the lead of the government, and taking advantage of their monopsony purchasing power, the big insurance companies followed suit a few years later. It has nothing to do with being “deemed reasonable” (who was doing the deeming?), it’s pure economic power.
RGL has a problem with Pharma earning more than almost all of the Fortune 500. Pharma is in a high risk, highly competitive marketplace, doing very important work. The big profits aren’t guaranteed, and even if they were, what kind of corporation would you prefer making a lot of money? The prospect of a big potential payoff attracts investors who provide the needed capital to develop new drugs, and the high salaries in the industry attract the scientific and managerial talent needed to do the work. Would you prefer that money be tighter in the industry so that the most talented people will go into another line of work? Or do you think that everyone should receive only what he needs to live on, whether he or she develops new pharmaceuticals, or is a Spice Girl, or flips burgers, or plays second base, or repairs cars for a living. Again, RGL may respond that all he wants is “reasonableness,” but then it gets down to who determines what is reasonable, and before you know it you’re in Marxland again.

BTW, RGL, if you are a typical physician, you earn a very comfortable six figure salary. I don’t think it’s reasonable for you to earn that much when some people can’t afford to buy their medicine.

RGL, I went through the same type of medical training that you did, but I don’t wear my “ethical compass” on my sleeve. I agree that there is a problem, but where I disagree with RGL is that I don’t think it’s my place to compel another person or company to use their talent and resources to solve those problems. RGL is free to start a Pharma company that will behave as he deems reasonable, or to invest his money in such a company if he wants to. I’m here to serve my patients. Most of them pay me, but some don’t. If I didn’t behave like a businessman, the bank would foreclose on my office, the IRS would confiscate my assets, my employees would not come to work, and the power company would turn out the lights. If those things happened, I would not be here to serve my patients. So, yes, RGL, I believe that we all ought to behave like businessmen. That’s the only way that we can assure that we will be here for our patients. RGL may be in a practice where someone else “behaves like a businessman” for him, but there is no doubt that that is the only way that we will be able to be here, to take care of our patients, and to work to solve our society’s problems.

T%o JB:

This will be my last riposte on this subject, since it appears we can beat this to death without agreeing, mainly because of our differing philosophies. It’s not because I’m a Marxist, as you imply, and which is not true, but we are looking at this subject from two entirely different perspectives.

My original comments on this issue began after reading Malclom Gladwell’s piece in the New Yorker, and I felt he did not lay out a comprehensive picture of the problem of high drug prices, in contrast to the litany of what Dr. Marcia Angell, in her book, described as corrupt practices by Big Pharma to tweak these prices.

Chief among these is that the drug industry bamboozles the public by overstating its R & D expenses (11% of sales revenues) when these are dwarfed by its vast marketing scheme that eats up 35% of the revenues, in contrast. Couple this with other unsavory practices, all documented in Dr. Angell’s book, and you begin to see why prices are set so high, victimizing a lot of people except the investors.

JB contends that is perfectly alright, withou acknowledging that there are problems. And that’s where JB and I differ. It’s not a simple question of letting the market run on its own course; we need to make sure the rules are fair. Come to think about it: 10 drug companies outstripping the combined profits of 490 other businesses on that FORTUNE 500 list. And that has been consistent for the last 20 years. You call that a high-risk business?

On the subject of fee schedules, yes I’m quite familiar with the old UCR and the current RV-based system.The old system did not last because medical providers, sad to say, abused it – an example of a free market gone wild. The RV system at least is fair, and while not perfect, it is equitable and reasonable. Most of us still make confortable sums of money, but without the freedom to dictate how much we can charge without constraints.

Which brings me to my last point: ethics in medicine. I don’t have to wear my ethical compass on my sleeve; that ought to be ingrained in the practice of our profession. While I can understand JB’s need to behave like a businessman, that’s not the image that I would like to project to the public as a physician. Mixing medicine with business is not a good mixture, which can only sully our already tarnished image.

Maybe I’m too much of an idealistic physician, but what is wrong with that? I practiced Internal Medicine for 33 years, retired three years ago, and never had any regret about not commercializing my practice. It’s the last thing we need at a time when the public is getting increasingly skeptical about our profession.


As previously noted, I agree that there are problems that should be fixed, and that fixing them has a good chance to lower prices in a “productive” way. (Admission: I’m not really sure what “productive” means, except that it does not include arbitrary price caps.)

But I confess I’m still mystified by your emphasis. Per your last post, you argue as follows:

“Chief among these [problems] is that the drug industry bamboozles the public by overstating its R & D expenses….”

For the sake of argument, let’s grant that industry really does massively overstate R&D costs. (My personal guess is that the actual degree of financial obfuscation is more than what pharma claims, but less than what its major critics claim. No matter.)

Do you really think this is the “chief” problem? Do you think forcing pharma to disclose the “real” numbers would have more impact on drug prices than any other single change? Or is there some reason you think other changes would be ineffective without that change as well?

I hope I don’t sound like I’m bashing; my questions are quite sincere.

In my opinion, forcing “reasonable” financial disclosure would not, by itself, do anything useful. It might make people more angry at big pharma (again, assuming they really are bamboozling), but it would still require other changes to actually lower prices. That’s why I argue we should focus on those other changes, and ignore the marketing budget question entirely.

To JB:

Here we go again!

In trying to justify the high prices of drugs, Big Pharma always invokes its supposedly massive costs for R&D when in reality it’s the vast marketing budget that eats up over 1/3 of of its annual sales revenues ($200 billion.)
Where is the honesty there and how can we believe them
in trying to justify their outrageous prices?

A lot of that marketing money is spent on massive advertising to doctors, in DCA, and in other activities masquerading as “education” and “research.” A lot of those things are questionable, even corrupt.

But in addition, I made it clear we have to do other things, including curbing monopoly rights to facilitate getting generic drugs faster,
strengthening the FDA to distance itself from industry influence, creating an independent institute to carry out clinical trials and replace those sponsored by Big Pharma, getting the drug industry out of medical education, and establishing reasonable and uniform pricing.

I feel these things would work. Nobody had confronted Big Pharma before about its practices, and it’s a good thing we are finding out more about them. Besides Dr. Angell’s book, two others by Dr. Jerome Kassirer(On the Take) and an investigative
team from TIME (In Critical Condition ) just came out, with chapters quite critical of the drug industry.

Also consider there are dark clouds ahead for Big Pharma if it decides to do things as usual. People are mad, states are complaining about drug bills busting their Medicaid budgets, and the drug pipeline, particularly for innovative drugs, is slowing down to a trickle. On top of that, patents are due to expire on a number of blockbuster drugs.

So, yes it’s in the interest of the drug industry to impose better discipline on itself, or BIG TROUBLE will be looming just ahead.

I love it! Roaring Remy exposed as the socialist he is!! (shurely some mistake, Ed?)

Good to hear from you,Matthew.

I want to assure you I’m not a bloody socialist like a few friends I have in England.

Matt, I would urge you to read a piece in the current New England Journal of Medicine — Doctors and Drug Companies, by Dr. David Blumenthal.

The author, among other things, writes about the drug industry’s…. “methods that are deeply troubling and even criminal” and its …. “egregious excesses.”

This may be an eye-opener to rabid free-market advocates.

The “Shurely some mishtake, Ed” line is from the UK magazine “Private Eye” which would appear when one of their contributors said something so ridiculous even is jest that no on would believe it!

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