Healthy Skepticism Library item: 90

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

Why Are Drugs So Expensive?
The American Progress Report 2004 Jan 26

Full text:

Time Magazine’s cover story this week explores – and debunks – the pharmaceutical industry’s efforts to keep drug prices in the United States artificially high. The situation has become so dire that seniors all over the country are defying the FDA and importing drugs from Canada, a place where “name-brand prescription drugs cost an estimated 40% less than they do in the U.S.” The prices “help explain why the pharmaceutical industry is-and has been for years-the most profitable of all businesses in the U.S.” – while also helping to explain why so many Americans cannot get the medicines they need. And some of the industry’s most ardent critics are conservatives. Rep. Dan Burton (R-IN) has accused the industry of “raping the American people,” while Rep. Gil Gutknecht (R-MN) said, “The only people really being protected [by the system] are the big executives of the large pharmaceutical companies.

There is nothing wrong with the word profit, but there is something wrong with the word profiteer.”

NEED FOR HIGH PRICES CHALLENGED: The drug industry “insists it needs high prices to pay its hefty research and development tab.” But the industry refuses to say how much it actually devotes to R&D, as opposed to advertising, and it has “waged a nine-year legal battle with the General Accounting Office to keep the information secret.” The industry is also “slow to acknowledge the contributions of American taxpayers.” A report by the Joint Economic Committee of Congress in 2000, then headed by Republican Senator Connie Mack of Florida, summed it up: “The Federal Government, mainly through the NIH, funds about 36% of all U.S. medical research … Of the 21 most important drugs introduced between 1965 and 1992, 15 were developed using knowledge and techniques from federally funded research.”

THE ‘SAFETY’ RED HERRING: The drug industry has worked hand-in-hand with the FDA to clamp down on those trying to get cheaper medicines from Canada. The FDA parrots the drug industry’s claim that importing such medicines would be unsafe – even though they have never produced any evidence to substantiate that claim. And it appears the drug industry has resorted to straight-up deception about the safety argument. When Time Magazine asked a spokesman for the drug industry if there were any cases of Canadian drug imports harming Americans, he said, “Yes, I believe there have been some. I believe FDA has some on its website.” In fact, “the FDA has no such record” and its own officials admit as much.

At a June 2003 hearing, FDA Commissioner William Hubbard said “we have very little evidence” of harm coming to those who have imported drugs from Canada. When pressed, “I have no evidence. That’s correct.” In fact, “while the FDA and the drug industry have talked at length about the threat posed by drugs brought in from Canada, what they neglect to mention is this: prescription drugs bought by Americans increasingly are produced in foreign countries with minimal FDA oversight and then shipped to the U.S.”

STRIPPING DOWN THE MEDICARE BILL: In both the House and Senate, versions of legislation allowing prescription drug reimportation passed, as did provisions allowing the government to negotiate lower drug prices for seniors. But the drug industry “maintains more than 600 lobbyists and has spent $435 million to influence Washington from 1996 to 2003.” The provisions were consequently stripped out, and the payback now appears to be in: the two principal architects of the legislation are both in cahoots with the industry. Tom Scully, Medicare administrator at the time of the bill’s passage, now works for a health care industry lobbying firm. And Rep. Billy Tauzin (R-LA), chairman of the committee that wrote the bill, is “expected to leave Congress to head the pharmaceutical industry’s trade association.” Check out more on the impact of the Medicare bill.