Big Pharma, the other elephant in the room


By Jack E. Lohman

Make no mistake about it, American healthcare already employs the “free market system” conservatives have been calling for, and it’s eating us alive.

It is fraught with profit-taking, with the two most egregious rip-offs being the middleman insurance bureaucracy and the highly profitable pharmaceutical industry.

The insurance industry is totally dispensable and must be eliminated from the system, as it drains 31% of health care resources without ever providing direct patient care.

The second, pharmaceuticals, enjoys more legitimacy because some drugs are indeed effective and have themselves cut healthcare costs by treating diseases without the need for expensive surgeries and hospitalization. Advanced and effective drugs are estimated to save the healthcare system upwards of 17% of its costs.

But that’s no reason to give away the store, or give it all back to them. Some drugs do more damage than good.

Pharmaceuticals are one of the most profitable industries in the world, even after deducting its R&D costs, lavish CEO perks and enormous shareholder profits. The taxpayers — through public grants from the National Institutes of Health — fund about a third of all drug R&D costs, with the industry’s resulting share equaling only 7% of their total revenues.

Where does the other 93% go? Advertising, both TV and in print, sometimes educates patients but also undermines physician advice. And on costly sales reps who should restrict their time to educating physicians instead of treating them to staff lunches, physician and spouse dinners, and “educational seminars” in plush faraway places. Hawaii is nice, but patients should pay for the trip.

Drug and device manufacturers also pay physicians handsome consulting fees – sometimes in the area of $200,000 per year or more – all to add credibility and convince their colleagues what a wonderful product they represent. And to prescribe the product. even if it isn’t good as others.

But these bonuses should be viewed for what they are: payoffs for ordering the drugs or implanting expensive devices. A kickback.

Many of these “consulting” physicians also sit on the FDA panels that approve drugs for the companies they represent…. a conflict of interest we should not accept in our nation’s food and drug oversight.

Of course these companies must allocate a portion of revenues to cover costly tort expenses, especially when these conflicted physicians sitting on the FDA review board vote to approve drugs they shouldn’t have. They did that in the case of Vioxx where over half of the FDA board had received payments from the parent drug company.

If all of these pharmaceutical expenses went to new, innovative drugs it would’t be so bad. But from 1995 to 2000 only 13% of America’s drugs were “innovative” and unique to the marketplace.

Even today over 80% of all “new” drugs are remakes of the older version whose patents are about to expire. Not generics manufactured by competitors, but “me-too” drugs where the original manufacturer changes the formula just slightly and reintroduces it under a new “improved” name. It may not even be better, because the testing is against old placeboes rather than the original drug itself, and may even be worse. Not a pretty picture.

Thus over 80% of our drugs and the associated expenses are unnecessary.

Why would companies do this? Because they can. Congress has done nothing to intervene with this so-called “free market” approach to medicine. In fact, they passed the Medicare Part D drug program which will transfer over $780 billion to the drug industry over the next decade, all while prohibiting Medicare from negotiating for lowest prices. And even when the average beneficiary savings is $9 per month.

And you again ask Why?

Follow the money to our corrupt political system. Over $100 million dollars per year are spent by the pharmaceutical industry for lobbying and campaign contributions. And yes, they add these costs to the product and they are picked up by the patients in need.

As well, many congressmen — like my Rep. Jim Sensenbrenner — own millions of dollars of stock in Pfizer and Merck and others, and want to protect their investments even when not in the best interest of the country. That’s a double conflict of interest that must be eliminated.

But it’s a free market, don’cha know.


“Bush / Big Pharma conspiracy? White House to oppose open disclosure of clinical drug trials” HERE

“The FDA still allows serious conflicts of interest in decision panel experts” HERE

“The Truth About the Drug Companies: How They Deceive Us and What to Do About It” by Marcia Angell 

Comments are closed.

%d bloggers like this: