Drug companies bilk U.S. consumers, author says

By Don McIntosh, Associate Editor

For all the resources drug companies deploy to maintain their profit margins, they can’t buy public good will when exploding drug prices maim the pocketbooks of growing numbers of Americans. That’s the conclusion of free-lance health care reporter Katharine Greider, who spent a year investigating the pharmaceutical industry at the request of the national AFL-CIO. The fruits of her research are contained in a book released in May by the Public Affairs publishing house: “The Big Fix: How the Pharmaceutical Industry Rips Off American Consumers.”

In the book, Greider brings together pharmacological science, the details of patent law and the complex workings of the federal government to paint a picture of an industry whose appetite for profit is increasingly an obstacle to its supposed goal of furthering human health.

Greider was in Portland July 26 to give a talk to a group of seniors from the Oregon chapter of the union-affiliated Alliance for Retired Americans.

In an interview with the NW Labor Press as well as in her book, Greider aimed to debunk arguments drug companies use to defend their practices. The pharmacy manufacturers’ trade association refused to talk with her, she said, but their arguments are everywhere repeated in the press and in lawmaking bodies: Seniors driven to shop in Canada for cheaper medications are told they should worry about safety of the drugs. Attempts to rein in prices are said to threaten drug companies’ ability to fund new research. The flood of direct-to-consumer advertising is defended as an effort to “educate” consumers.

“I think they’re doing a very poor job of public relations,” Greider said. “They’re saying the same old stuff and it’s not going to cut it any more.”

That’s because drug prices are more and more eating into workers’ wages, and seniors on fixed incomes are finding they can’t keep up. Even people with good insurance, who felt insulated in the past from drug costs, are being asked to pay up. In a recent Kaiser Family Foundation study, one-third of U.S. employers said they were likely to raise the amount employees pay for prescription drugs this year.

Why are prices rising so quickly? Part of it is that the population is aging, and older people take more prescription drugs. But more than that, it’s because drug companies, consolidated as never before, are focusing their marketing and legal efforts on a handful of highly profitable “blockbuster” drugs. The formula for eye-popping profit is this: Develop a drug that treats a chronic long-term condition, one that affects large numbers of patients, and then use the patent monopoly to set high prices, while spending billions on advertising to create demand, billions more to indoctrinate doctors, and millions to influence politicians against any reform that would cut into profits.

In addition to the $2.6 billion drug companies spent in 2001 on advertising, they maintain an army of over 88,000 drug sales reps — one for every eight physicians — to influence physicians. And they employ more lobbyists than there are members of Congress.

In fact, drug companies take more in profits than they spend on research and development, and marketing — not R&D — is their biggest expense.

Greider told Portland seniors that the drug price issue hit home for her when her little boy got sick and was prescribed a new-generation antibiotic - at a cost of $80. Greider consulted an expert, and was told there was no reason not to have prescribed much cheaper and just as effective penicillin.

“Prescription drugs aren’t the same as every other product,” Greider said. “It’s very difficult for consumers to exercise their traditional powers when it comes to pharmaceuticals the way they do when it comes to Coke or Nike.”

“The bottom line solution is a universal health care system,” Greider added, “because if we were all in the same boat, we wouldn’t be pitted against each other, and we’d have a reasonable platform from which to negotiate with the industry.”

Short of that, Greider says, any attempt to pool buying power will have an effect, and so will attempts to reimpose restraints on marketing.

Most other countries have some form of controls on drug prices, and nearly all ban direct advertising of prescription drugs.

© Oregon Labor Press Publishing Co. Inc.