Healthy Skepticism Library item: 19993
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: Journal Article
Gebbie KM
Profitable Pills
AIDS Reader 2004; 14:(106):109
http://www.medscape.com/viewarticle/472296
Full text:
The question of pharmaceutical company profits has been a part of most health policy debates for the past quarter century. The recently enacted Medicare reform includes a drug benefit package that many believe was carefully structured to assure drug manufacturers that their profit margin would not be reduced. The international debate about medications for those infected with HIV in developing countries has focused on both price and patent protection issues. And those who have followed HIV/AIDS policy are certainly aware of the public outcry when zidovudine was first introduced to the market. Rage was fueled by the high price of this drug, which was developed in part with the assistance of tax funds and was seen as the first hope for controlling the virus. The price was quickly reduced.
Maintaining a regimen of antiviral drugs and symptom management medications is expensive, and many patients are dependent on state-managed drug benefits for help. Yet these aid programs are far too small to fully meet the need, and many of them have had to specify a very limited formulary in order to stretch the funds. More stretching is going to be needed if the latest price increase announced by Abbott Laboratories remains in place.
Abbott manufactures ritonavir (Norvir) and had priced 100-mg capsules at $205.74 per 120 capsules for volume purchasers. At one time, this medication was used as primary therapy, with a recommended dosage of 1200 mg/d. Because of changing treatment patterns and available options, it is now used primarily as a booster for other protease inhibitors, at 100 to 200 mg/d. Early in 2004, the price for the same 120-capsule supply was raised to $1028. For one high-volume purchaser, this means an annual increase in cost from $203,368 to $1,017,720, an almost unbelievable jump. The best available information suggests that Abbott is seeking to maintain the same level of profit on a much lower sales base.
The wide range of prices for any one product makes discussion of a particular product difficult. A recent Gay Men’s Health Crisis analysis revealed that the prices for a 30-day supply of tenofovir (Viread) range from an online pharmacy cost of $435, to a state AIDS drug program price of $380, to a published “list price” (wholesale acquisition cost) of $360, to a developing-country price of $39.1 The last figure is probably close to the actual cost of manufacturing the drug. All of the other prices include advertising, new drug development, set-asides for future capital investment, and shareholder profit. Reports from Wall Street show pharmaceutical companies routinely being among the more profitable investments one can make.
With the exception of some early vaccines manufactured by public health departments, this country has always relied on the private marketplace to supply medications. Because of growing attention to problems of quality control and false advertising, the FDA has been charged with ensuring that drugs coming to market actually do what they say they can do and that indications, contraindications, and side effects are clearly labeled. While there are many critics of this process, and suggestions for improvements abound, the country has generally been well served by this level of oversight.
