Standard pricing

by rcentor on August 27, 2005

I have previously written that I would like standard national pricing of drugs. Publish the wholesale prices for each drug – and then free markets could work. Free markets do not work, because the companies charge everyone something different. This example appears most egregious – California Accuses Drug Companies of Fraud

The suit originally arose from a whistle-blower lawsuit filed in 1998 by a Florida pharmacist, who noticed wide discrepancies in prices charged by drug manufacturers. California joined that suit in 2003 and expanded it on Thursday after more investigation. The pharmacist, John Lockwood of Ven-A-Care, a home health care company in Key West, Fla., appeared at the news conference with Mr. Lockyer. “These drugs are far too important to everyone in this country to allow this kind of fraud scheme to continue,” Mr. Lockwood said.

California officials cited as an example a pint bag of saline solution used as an intravenous drip manufactured by Abbott Laboratories. The lowest price available to health care providers was 95 cents, the officials said. Medi-Cal was charged $9.78 for the same item.

“We have an ocean of it,” Mr. Lockyer said. “It’s called saltwater.”

Mr. Lockyer held up a bottle of 50-milligram tablets of Atenolol, a generic high blood pressure treatment manufactured by Mylan Laboratories, for which the state paid $804.70. A pharmacy chain pays $33.85 for the same bottle, he said.

Mr. Lockyer acknowledged that the Medi-Cal system might not always be the most prudent buyer of pharmaceuticals and other medical services. But he said that did not let the drug companies off the hook for what he called an elaborate scheme of fixing prices.

“I wish there had been more aggressive negotiations along the way,” Mr. Lockyer said. “Now we have to clean up after the elephant.”

If California is correct they really deserve a major refund. We could solve many drug company cost problems if we could figure out the pricing. Standard pricing does not seem that complex. Let the companies truly compete.

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{ 5 comments… read them below or add one }

Colin August 27, 2005 at 5:10 pm

Say I own a cafe. A guy walks in and I offer him a cup of coffee for $10, he bargains me down to $1.50. A second guy walks in, and I like the way he looks better, so I offer him a cup of coffee for $5 instead of $10 and he buys it without even trying to bargain. A third guy walks in and I offer him a cup of coffee for $7 and he rolls his eyes and drives down the street to another restaurant where they offer it to him for $1.50.

Isn’t that my prerogrative?

I’m not sure how this story constitutes fraud or denies a free marketplace unless there was some conspiracy and collusion for price fixing. The individual drug companies charged what they thought different consumers would pay. It’s the responsibility of the consumer to make sure they’re getting the best of it – they define the demand side. Unless the drug companies are somehow prohibiting Med-Cal from finding out what others paid for the same (at least generic) pharmacuticals they purchased then…

jb August 28, 2005 at 3:11 pm

It’s fraud and illegal and evil because drugs companies are inherently that way. They are free to spend hundreds of millions of their own dollars trying to develop new ways to improve or save lives, but they are not free to make a profit from their activities. Any profit they make is not theirs, but the property of the trial bar or any poor sap out there who took one of their pills and then did not do well. In the future, we will have plenty of progress in new ways to brew coffee, but only naive fools will invest in pharmaceutical research.

Seriously, lots of companies who could sell to government agencies do not deal with them due to the bureaucracy involved, delays in getting paid, inherent extra cost, and the possibility that an innocent mistake will turn into a criminal prosecution. Those that do have to charge more than they would a private individual. DB’s examples do seem outrageous, but we are hearing only one side of the story, and that from a lawyer-politician. Maybe they should reflect on the fact that salt water costs ten bucks a bottle only after the lawyers and legislators have their way with it. Mr Lockyer could tell his state’s buyers to shop more carefully, but that would never get him newspaper coverage.

Daniel Newby August 28, 2005 at 8:07 pm

California? Remember, this is the same state that outlawed long-term electricity buying, in preference for paying whatever was asked on the spot market. Then acted surprised when the supply became both expensive and erratic.

“Mr. Lockyer acknowledged that the Medi-Cal system might not always be the most prudent buyer of pharmaceuticals and other medical services.”

In Sacramento, ‘not always most prudent’ is code for ‘like a drunken sailor in a whorehouse’.

WL August 31, 2005 at 9:02 am

To follow up on what D. Newby stated, I will second the “California?” bit. That’s the state where some federal “judge” just okayed a lawsuit against the U.S. for global warming. I didn’t even have to read the rest of the article to KNOW that it came from San Francisco.

And people make fun of Alabama? Whatever.

Dan February 5, 2009 at 11:47 am

The Conversion of Our Protector

Not long ago, what we as American citizens ingested in ourselves may have been at times dangerous due to flaws in the process of producing food and drugs in particular. With the absence of regulation of the manufacturers, American citizens could not be assured in what they may take to eat or restore their health was safe for them, and this was understandably concerning for many people.
Nearly 100 years ago, one man changed the fears and concerns of American Citizens regarding what they may eat, or what medicine they may be given to restore their health. And this man simply improved the way things were by writing a book.
The Food and Drug Administration originated in its primitive form several decades ago to ensure the health and safety of the citizens of the United States in regards to what they consume. The administration was created to regulate the manufacturers who make items people do consume to ensure the safety of the American citizens.
The man responsible for the development of the Food and Drug Administration was a socialist named Upton Sinclair, who was a writer. One particular book he wrote several decades ago, while fictional, addressed the working conditions in a meat packaging company that were quite shockingly described by Upton in this book. Called, “The Jungle” The one particular issue in his book regarding the lack of food safety is what caught the attention of the public who read his book, and this included the U.S. president. The impact caused by this book on others is what led to the development of the FDA.
However, and with great disappointment, the purpose and function of the FDA seems to have changed in the past few decades. The FDA appears to have decided to ensure the health of the pharmaceutical industry, an industry the FDA was designed to regulate. This is one of many disturbing flaws and concerns expressed by others regarding the FDA.
One example is the large amounts of money the pharmaceutical industry gives the FDA for various reasons created recently. These amounts of money are so large that this money given to the FDA accounts for nearly half of the FDA’s entire budget. An example of stated reason by the FDA for receiving such funds is due to what is known as the PDUFA ( the prescription drug user fee act), which began in 1992. Basically, the drug industry has been authorized and is now required to pay the FDA for faster approval of their medications awaiting approval by the FDA. The FDA also accepts from this industry over a million dollars from certain drug companies in order to give their pending new drugs a priority review of 6 months instead of a year, along with a creating an etiology for this urgency as it happens, others have said.
Results of this relationship, which some have called collusive and pathologically intimate between the FDA and the drug industry, may have something to do with the actual removal of newly approved drugs due to safety reasons. The lack of regulation and monitoring required by the FDA of the pharmaceutical industry has resulted in such dangerous safety concerns, one could safely say.
The FDA and the drug industry continues to attempt to validate and explain often what many others have questioned about the FDA and its lack of focus on the safety of the public- the public the FDA is suppose to protect to assure their safety. Yet the focus of the FDA and the purpose of their creation appears to be absent.
The presumed intimacy between these two organizations, the pharmaceutical industry and the FDA, does in fact seem to continue to worsen. For example, and recently, the FDA announced they were allowing the pharmaceutical industry to allow their promoters of their branded drugs they market to discuss these products for disease states not studied or evaluated by the FDA. This process use to be mandatory before a drug company could claim that their drugs were beneficial for a particular disease state. Many remained shocked on this decision made by the FDA.
Yet the FDA claims that this proposal would enhance the education and knowledge of the prescriber by the pharmaceutical representative of the marketer of a particular medication, which remarkably mirrors the premise and objective of this industry already. So this strategy, void of any protection of the public health, allows for potential dangers associated with this practice. This autonomy of the FDA illustrates once again the present state of the FDA and its need for reform.
A prescriber, upon their own discretion, can in fact prescribe a drug off-label, and they do so based upon their own discretion. Historically, a pharmaceutical drug promoter was legally forbidden to suggest to a health care provider to use their promoted drugs for disease states not approved by the FDA already.
In fact, it was a federal offense for such drug representatives to speak off-label about the drugs they promoted for their employers. In the past, drug companies have had to pay settlements to the DOJ when they fractured these laws regarding off label promotion of medications.
This off-label FDA protocol for drug representatives that has been allowed by our FDA with presumed encouragement by the pharmaceutical industry is called, “Good Reprint Practices.” This overt and absurd benefit for the pharmaceutical industry is that now they can have their pharmaceutical sales representatives, unregulated themselves, speak about their promoted medications to health care providers essentially in any way they choose.
Furthermore, this proposal is flawed in that most pharmaceutical representatives lack necessary medical and clinical training to discuss the complex considerations a health care provider is able to do because of their training.
Most drug representatives have little medical or clinical training in any objective way, and they are not hired with having such a background, usually. So this seems to further complicate the idea of this off-label authorization by the FDA due to the ignorance of the representatives to discuss such clinical matters. In addition, the relaxation of previous restrictions regarding off-label promotion could prove to be a catalyst for representatives of the pharmaceutical industry to further embellish statements to prescribers for their own benefit in regards to their promoted medications they present to them. In fact recently, a study by Sermo concluded that 90 percent of doctors want clinical evidence based medicine from educated and trained professionals instead of the typical pharmaceutical sales representatives that now exist. This study also concluded that around 80 percent of health care providers prefer not to interact with pharmaceutical representatives, yet still accept drug samples from them for their patients. The results are rather understandable considering what we now know.
So, our previous safety association, the FDA, appears to be evolving into a possibly harmful association with the pharmaceutical industry by suggesting such practices that aggravate the existing situation with the lack of protection that was once offered and required from the FDA.
It is unbelievable this good reprint practices ever came into existence- with the delusional fallacy that it would be of any benefit to patient health. Furthermore, this may complicate if not increase existing patient medication errors, such as in the elderly or dosing for children.
So there are enough problems with prescribing, and adding this FDA seems to be making the issues with medications in the U.S. worse instead of better. We as citizens are no longer the concern of the FDA, one could safely conclude, and this is clearly dangerous to the health of the public.
Perhaps another alternative would be to have clinically trained people discuss such issues regarding the benefits of medications with prescribers, instead of existing drug reps who have the sole objective of increasing the market share of their promoted meds with no regard to the science behind these meds, in large part, or the consequences of their actions as they promote their drugs in this way. Because historically, medications have in fact proven to be beneficial for other disease states other than what a certain drug was initially indicated for upon approval. Yet this should not be determined by those who promote such drugs. Now, unfortunately, pharmaceutical representatives are allowed to determine how they can promote their drugs for their employer’s benefit.
Regardless, awareness needs to happen by the citizens involving these tactics progressively allowed by the FDA that are dangerous and deceptive to the health of the public. As citizens, we have the right to insist that the FDA- our FDA- maintains focus on the safety of the public and their health. Reform of the FDA appears to be necessary for this to occur to re-establish the FDA as the administration that was created for our protection, and not to protect others financially.
About half of all drugs approved presently by the FDA have had serious post-approval side effects that should have already been known or suspected of these drugs. Well over 100 thousand people die every year from drug reactions or mistakes. This seems to be a rather significant concern for those who are need to restore their health.
Dan Abshear

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