Healthy Skepticism Library item: 6508

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: news

Burke K, Metherell M.
Marketing to doctors sends drug bill sky high
Sydney Morning Herald 2006 Nov 13
http://www.smh.com.au/news/national/marketing-to-doctors-sends-drug-bill-sky-high/2006/11/12/1163266413086.html

Full text:

Marketing to doctors sends drug bill sky high

Kelly Burke and Mark Metherell
November 13, 2006

THE most prescribed drug in the country is costing patients and taxpayers almost $200 million a year more than it should, purely because of the cost of marketing.

Australians spend $94 million a year at the pharmacist’s counter on the cholesterol-lowering drug Lipitor, analysis of Pharmaceutical Benefits Scheme data shows.

But more than double that figure is spent on marketing the drug, taking the total cost to the taxpayer after the PBS subsidy is added to $581.5 million each year.

Choice, the consumer rights watchdog which analysed the data, said the price patients pay for drugs could be slashed by at least a third if drug companies stopped their aggressive marketing campaigns, which are largely targeted at doctors.

The Choice report comes as the Federal Government considers sweeping changes to the PBS to exploit cheaper prices available from the growth in generic medicines.

Cabinet is expected to consider today a plan to reduce by 25 per cent the price the Government pays pharmacies for dozens of prescription medicines which have come off patent and are now subject to price competition from multiple brands of the same drug.

There will also be other mandatory price cuts, in a scheme proposed to take effect from August 2008 aimed at making the payments system more transparent and competitive and saving hundreds of millions of dollars a year.

The changes would do away with discounts which can frequently mean pharmacies pay drug companies significantly less for the drug than the Government pays the pharmacies for the drug under PBS subsidies. In return, the Government is proposing compensatory payments to pharmacists, at a cost of hundreds of millions to the taxpayer.

The Pharmacy Guild has denied the discounts pharmacists receive are “secret” and has shown federal MPs a copy of a 1999 letter from the Health Department which is said to have acknowledged discounts of 30 per cent or more were acceptable to foster the sale of generic drugs.

Choice’s claims are backed up by US health economist James Love, who will deliver the annual Ruby Hutchison Memorial Address in Sydney tomorrow.

“The Government might as well just open its wallet to the big drug companies, because they can name their price,” he said, of the Australian PBS model.

Mr Love, the director of the Washington-based Consumer Project on Technology, said not only were drug companies’ exorbitant marketing budgets pushing up the cost of medicines, they were also seriously inhibiting new medical breakthroughs, with less than 10 per cent of profits going back into research and development.

While in Sydney Mr Love will outline an alternative model for funding drug development, which would force pharmaceutical companies to share formulas with competitors, thereby radically expanding the generic medicines market and pushing down the cost of prescription drugs