More on 'Big Pharma Maintains Illusion of Innovation' (Response to Ken Johnson)

This is my response to a SA comment posted by Ken Johnson, Senior Vice President, Communications of PhRMA, the Pharmaceutical Research and Manufacturers of America, in response to my SA article, “Big Pharma Maintains Illusion of Innovation.”

While I am proactive about maintaining good health, I also consider myself to be very fortunate that I do not take any medications, and have only had to in the past on rare occasion. Regardless of whether or not an American consumer takes any medication, everyone is overpaying for big pharma’s illusions and budgets that rival Hollywood’s through higher health insurance premiums, and tax revenue subsidizing Medicare and Medicaid. Secondly, medications are not discretionary for real illnesses.

Therefore, pharmaceutical companies are entrusted with a certain level of social responsibility for the privilege of applying the basic research funded by the NIH and the military. Just like the TARP, if big pharma eats at the trough of government-funded research, they have an obligation not to overcharge the American people.

Contrary to the illusion projected by Montel Williams’ magical mystery bus tour throughout the U.S. as part of your group’s Partnership for Prescription Assistance (PPA) program, helping a small and select group of consumers is no substitute for price gouging the general population. And Pfizer’s (PFE) program to offer limited free drugs to the newly unemployed is especially egregious in taking advantage of the difficult economic times in order to improve big pharma’s image. It speaks to the fact that the U.S. must not only stop subsidizing the rest of the world at the expense of American consumers, but also full retail price paying consumers subsidizing PhRMA’s “generosity” in sponsoring the PPA.

As for your comment that the pharmaceutical industry as a whole is spending a larger percentage of its revenue on R&D than technology or other industries, you need to be more specific as to which companies you’re including. If you’re including biotechnology startups with no revenue or development phase companies with limited revenues, you’re skewing the true R&D expenditure ratios for big pharma alone.

Additionally, the actual composition of industry R&D needs greater clarification before consumers can make a judgment. Many consulting fees paid to doctors could easily cross the line between true science and clinical development vs. marketing.

SA readers might be interested in a research article (“The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States”) published last year in PLoS, the journal of the Public Library of Science, a nonprofit organization of physicians and scientists. The authors gives a detailed explanation to arrive at their conclusion that the ratio of marketing vs. R&D spending is nearly 2:1. You have quoted IMS data in your comment, and the PLoS article explains why IMS reporting data is underestimated in order to enhance the industry’s public image.

If the pharmaceutical industry is as caring as they profess to be, why do they institute price increases every year for drugs whose development and manufacturing infrastructure costs have been fully amortized years ago?

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Comments

[policy_redux:]

the simple answer to your last question is....... cost shifting. Every health care entity does it. Why pick on Pharma, it only makes up roughly 13% of total health care expenditures. If you want to talk about the non-transparency and waste of cost shifting in health care wouldn't it make prudent sense to look at the 80% that isn't drugs?

May 19 09:23 AM

[Furd Turgeson:]

"If the pharmaceutical industry is as caring as they profess to be, why do they institute price increases every year for drugs whose development and manufacturing infrastructure costs have been fully amortized years ago?"

To hire, make payroll, and offer benefits to employees, market the products they took through development which costs into the hundreds of millions (why is this such an issue for some of you? companies can't promote products they develop? Is this russia, chump?), combat inflation and the loss of value of money over time (duh), research and develop new products, and run clinical trials of available drugs on the market and those in the clinic trying to make it to the market. Do you think there is a lipitor tree out there that produces pills from hydrogen and oxygen?

May 19 06:31 PM

[Rage1979:]

The razor thin line between "marketing" and "educating" doctors about different treatment options (products) is the problem. Yes, the patient benefits when the physcian is up to date on new treatment options; however, not when the doctor gets a full week "conference" in Monte Carlo, with just one 3 hour seminar where all you can drink booze is served.

Promoting/Marketing/Pu... drugs, aka, being awarded recognition trips to speak at seminars in 5 star resorts, is not the solution. Drugs and healthcare should NEVER be compared with retail or technology products (these are discretionary sectors). In one way the FDA regulates drugs for safety and effectiveness; then it turns its head when it is being over-prescribed so Dr. Doe can get him and his wife a cruise.

You heavily regulate a product on one hand and then allow general consumer promotion on the other...just another sad example of talking out of both sides of your mouth.

Oh yeah, get over this anti-captialism tirade...liptor make 8 BILLION USD A YEAR....even when it is not necessarily the best treatment option...now thats capitalism if I have ever seen it.

May 20 03:35 AM

[turd furgeson:]

You obviously have very little knowledge of the current promotional and educational restrictions that the overwhelming majority of pharma and biotech manufacturers follow. Half of your argument is simply not valid anymore, and it hasn't been valid for years.

May 20 01:20 PM

[turd furgeson:]

....in the United States I mean to add. I do not know about the EU or other countries. In the US - The things you mention do not happen anymore and haven't happened for a long, long time. Dr's can't even go to dinner with their wife at Burger King sponsored by pharma. In fact, the regulations have gotten so stiff, they are almost ridiculous.

May 20 01:29 PM

[Rage1979:]

I am a pharmacuetical lawyer, so I do know the regulations quite well. What the law says and what happens in practice are two different things. The law says alot of things, like you must state clearly and unambigously the known side effects of drugs; do pharma companies abide by that one too?

Being an in house, I understand what is going on and see it everyday....the laws are FILLED with loopholes, so don't be so naive

May 21 07:26 AM