The following article published in one of the world's most erudite academic
journals provides some interesting information on the supremely healthy state
of the drug industry. Read the following extracts.
New England Journal editor blasts Drug Industry
<At a time when high drug prices force some Americans to choose between
medicines and basic necessities, the outgoing editor of the New England
Journal of Medicine attacked the pharmaceutical industry, calling for a study
of price controls and urging new laws to curb certain business practices.
"The pharmaceutical industry is extraordinarily privileged," Marcia Angell
wrote in Thursday's issue. She said drug companies benefit enormously from
publicly funded research, tax breaks and other business advantages while
reaping big profits. "An industry so important to the public health and so
heavily subsidized and protected by the government has social
responsibilities that should not be totally overshadowed by its drive for
profits," Angell wrote in an editorial. "There needs to be a better balance
between the interests of the shareholders and those of the public."
..... The criticism came as the cost of medicine in the United States was
rising about 15 percent per year. In Maine in May legislators passed a law
that would use the state's purchasing power to cut drug prices for residents.
Similar measures were being considered, but not acted upon in California and
Vermont. Congress is working on a plan to help senior citizens and the
disabled on Medicare, the nation's health insurance program for its elderly,
pay for prescription drugs.
The rate of pharmaceutical price hikes is increasing so rapidly, Angell said,
that drug expenses "will soon surpass the spending for physicians' services"
and could outstrip the annual pricetag for hospitalizations in many health
maintenance organizations (HMOs).
Older Americans without supplemental Medicare insurance pay twice as much for
the 10 most commonly prescribed drugs as do large HMOs. U.S. consumers
"regularly pay up to twice as much as Europeans and Canadians for the same
drug," she said. Pharmaceutical companies say prices are high because drug
quality is high, drug research is expensive, and price controls in other
countries are forcing them to make up the difference here. But Angell said
many of the industry's arguments are "exaggerated or misleading," and some
are simply false.
"Over the past few years the pharmaceutical industry as a whole has been by
far the most profitable industry in the United States" with profit margins
for the top 10 drugs averaging a "stunning" 30 percent, and overall profits
at about 18.6 percent, she said. Banking ranked second at 15.8 percent.
Not only is much of the basic drug research funded by the U.S. government,
said Angell, "the industry also enjoys great tax advantages. Not only are its
research and development costs deductible, but so are its massive marketing
Pfizer spent 39.2 percent of its revenues on marketing and administration in
1999. Pharmacia & Upjohn reportedly spend about the same, she said. The drug
companies say they need to spend money to educate doctors and the public
about their medicines.
"But to rely on the drug companies for unbiased evaluations of their products
makes about as much sense as relying on beer companies to teach us about
alcoholism," she said. "The fact is that marketing is meant to sell drugs and
the less important the drug, the more marketing it takes to sell it." >
Dr Mel C Siff