I used to defend pharmaceutical companies. ”What companies out there have contributed more good? Should care manufacturers make more when all they do is make transportation that breaks after a few years?” It made sense to me that you should put a pot of gold at the end of the rainbow so that companies are motivated to invent more drugs and innovate. We throw a lot of money to athletes and movie stars who simply entertain us, shouldn’t we do better to those who heal us?
I used to say that. I don’t any more.
No, I don’t think the drug companies are “evil.” People who say that are thinking way to simplistic. These companies are doing exactly what their shareholders want them to do: make as much money as possible for as long as possible. That’s what all companies do, right? They are simply working within the system as it is and trying to accomplish the goal of making money. To say that they should “sacrifice” is foolish. They are simply playing by the rules that have been set out there. Those rules are the thing that has to change.
The system that allows them to charge $200 per month for a drug that does the same thing as 5 other drugs on the market is the real villain here. The system that does not obey the rules of free-market is what is at fault. Those drug prices are absolutely killing us – literally at times. The entire healthcare system operates under a stealth billing system that allows for exorbitant charges. Why can hospitals charge $10 for a dose of Tylenol? Because nobody sees it unless they read the fine print, and because it gets paid for. Why can a company charge $100 for a hemorrhoid cream that has the same things in it that over-the-counter drugs have? Because insurance pays for it and nobody complains.
It’s crazy. It’s how our system works.
Here are my top gripes about drugs and what they cost:
1. All the drugs in a class always cost about the same. Why do all of the blood pressure, reflux, or antidepressant medications in a class always go for about the same price? I have never in my 16 years of practice seen two drug companies go head-to-head in a price war. Isn’t that what the free-market system encourages? Shouldn’t competition drive the price down? It doesn’t in our healthcare system.
2. Drug rebates. Most folks don’t realize it, but drug companies pay insurance companies “rebates” if their drugs are chosen for their formulary. This means that it is often not the real price for the drug or its superiority to the competition that determines formulary status, it is the “rebate” that the drug companies agree to pay. In other circles this is called “extortion.” ”I promise that my friend Vinny won’t beat you up if you pay me $10 per week.” And do you think the “rebate” is sent back to the policy-holders of the insurance company in the form of lower rates? Do I have to ask that question?
3. Drug Marketing. Yes, the direct-to-consumer marketing nauseates me. The plethora of drug reps pounding us to use their drug instead of their competitors makes me tired. I am all for education and for companies being allowed to market. How could a product be sold if it isn’t marketed? But when the marketing budget exceeds the R and D budget for a drug, something is way off. The goal is to make a “blockbuster” drug that they can milk for a long time, and so they get docs to prescribe and patients to demand the drugs with the best profit-margins. This happens because there is no competition between manufacturers on price, it is instead a marketing war.
4. Patent Extensions. The patent process is supposed to protect the inventor of a product from having the idea stolen and used by someone else. What the process has become, however, is a game to give companies exclusivity on a drug and hence higher-margins for as long as possible. The system doesn’t protect, it endows. It turns drug development into a Vegas game with a chance to hit the jackpot if all of the columns line up.
5. Generics. It used to be simple with generics: since there was no R and D involved, the drugs would be lots cheaper and so would reduce cost. This isn’t the case now. When Effexor XR and Adderal XR went generic, the companies who made the drugs were granted the exclusive right to make the generic for 6 months. Yes, the drugs were still made by one manufacturer, and that manufacturer had no motivation to lower the price at all. There are also a bunch of generics that are priced suspiciously close to the price of the brand-name drug. Why is that? How can they be allowed to charge so much when they have no marketing or R and D? The profit margins must be staggering. Yes, that is the case. Check out the generic drug companies’ stock prices. They are very successful.
6. The FDA. The FDA has been the subject of much ire – some deserved, and some not. But the presence of people from the drug industry in the FDA, as well as some of their decisions, has made their trustworthiness hard to hold on to. Why is the generic drug Colchicine (a drug for gout that cost under $10 per month) being taken off the market leaving only Colcrys, a drug that costs $4.50 PER TABLET?? The reason is that colchicine is a very old drug, and so didn’t have to go through the rigors of approval for use in gout. But it works great, and was a very cheap way to relieve gout sufferers’ pain quickly. Now the company who makes Colcrys got its version of colchicine approved for use in gout, making the rest of the drugs “illegal.” They are being forced off of the market by the FDA, leaving a drug that costs 50 times more. Surely it doesn’t cost the manufacturer 50-times more than it did for the generics. This isn’t the first time this has happened, and with the jackpot won by the manufacturer of Colcrys, it will probably not be the last. What’s the FDA’s role in this? They hand out the golden tickets and take away a great medication for people who need it.
If we are going to fix our system, we need to become more transparent in our charges. We need to make it so we know when we are being gouged, and when something actually costs a lot. We still need to reward those who do great things. We still need to motivate companies to innovate and to improve products. But the nature of the current system turns our healthcare system into a source of quick money for many companies.
We can’t expect things to improve until we change this.This material, written by me, is free to re-post and share under the Creative Commons agreement. In other words, use it all you want; just give me credit.