14 07 2006

The drug companies really care about our health, right? They just want to see a world of healthy, shiny, happy people who don’t need any of their products, right? Wrong—they want a world full of shiny, happy people who pay them money for the drugs that keep them that way. That’s why, when 3rd-world countries who can’t afford even the firms’ most deeply discounted prices for AIDS drugs set out to manufacture them for themselves because it’s cheaper that way, that’s why the drug companies then sue third world countries for intellectual property rights violations. It’s the international equivalent of harassing medical marihuana patients, especially since drug companies have far more resources at their command than AIDS-beleaguered third-world countries.

They get those resources through a truly-breath-taking pricing scheme. Let’s look at a couple of examples:

There’s a drug called Matulane that is used to treat Hodgkin’s lymphoma, originally introduced by Roche pharmaceuticals at sixty cents a pill. Considering typical manufacturing markups, let’s assume that this pill cost them thirty cents a pill to produce. The pill now sells in the U.S. for $55 a pill, according to the website of the Parker and Waichman law firm. Let’s translate that into something else. Apples cost abut $5 a bushel to produce, roughly twelve cents a pound. If apples were given that kind of markup, they would cost twenty-two dollars a pound in your local supermarket or health food store.

Here’s another way to think about the markups involved in drug prices: Cipro, the anti-anthrax drug that the government is so eager to stockpile, has what Bayer Pharmaceuticals terms an”average wholesale price” of $4.67 per pill, but the company has generously dropped the price to an average of eighty-five cents a pill in view of the government’s interest in buying so many. Doesn’t that seem wonderfully public-spirited?

Umm…Bayer’s cost of manufacture for Cipro is twenty cents a pill. Third world drug makers, with different salary scales and accounting methods, say they can produce it for a nickel, but let’s just focus on Bayer for now.

Suppose the price of oil were marked up like that, what would that look like?

Well, that depends on if you’re in the Mideast or not. If you’re not Saudi Arabia, Iran, or Iraq, your oil production costs are around six dollars a barrel, which means that a Cipro-proportioned markup gets you hundred-and-forty dollar a barrel oil. Based on current ratios, that’s six dollar a gallon gas.

If you’re one of those three countries with easy oil, your costs are only about a buck and a half a barrel, and that—oops, that gets oil at only about thirty-five dollars a barrel, buck-fifty a gallon, less than half the current price. Hmm….. No wonder those guys have so much money to throw around! When Bush posed in front of the “Mission Accomplished” banner, is this the mission he was proud to have accomplished? He’s an oilman, after all, and it’s Saudi Arabia’s reinvested petrodollars that, along with the Chinese, are supporting America’s colossal debt and keeping Bush’s ass out of a sling, to use a bit of technical jargon. But, I digress.

With profit margins so outlandish, the drug companies surely must be spending lots of money on research to find new, groundbreaking drugs and guarantee that the ones they are already selling are effective, right? After all, the argument they use when they sic their lawyers on third world countries is that the companies have spent money on research that is not reflected in the manufacturing cost of the drugs, and so impoverished third world countries are keeping important research from being financed by making their own drugs.

It sounds like a reasonable thesis, doesn’t it? It’s not. Let’s parse the drug companies’ argument and see what it’s really made of.

First part of the parse—drug companies are spending lots of money on research. Well, on the face of it they are—about forty billion dollars a year. But Dean Baker of the Center of Economic and Policy Research points out that this is only about a quarter of big pharma’s excess profits, estimated at a hundred and fifty billion out of the country’s total drug bill of two-hundred and twenty billion dollars. Furthermore, much of this research goes into “copycat drugs,” drugs that have the same effect as big-selling medications but are different enough to be patentable.

For instance, Nexium is a knockoff of Prilosec, developed and marketed because Prilosec’s patent was running out, and it had been a twenty-seven billion dollar cash cow for its owners, the AstraZeneca Company. AstraZeneca spent a half billion dollars promoting Nexium, which even its own studies show is only marginally better at combating heartburn than Prilosec. At a hundred and twenty dollars a month per prescription, they have been well paid for their investment, as millions of television addicts have demanded Nexium. Meanwhile, Prilosec, which will work as well as Nexium about 95% of the time, is now available over the counter for about twenty dollars a month—or people could change their diets and eating habits and avoid heartburn at no cost whatsoever. That’s what I did. But Nooo….that doesn’t contribute to the gross national product! We gotta increase the GNP! Oh dear, I’m digressing again.

These copycat drugs soak up enough research money so that instead of one out of four dollars going for breakthrough research, it’s more like one out of ten dollars going for real research. And furthermore, according to the industry’s own data, it costs drug companies about seven times as much to perform a clinical trial as it costs those nasty socialists at the National Institute of Health. All those kickbacks to doctors, I guess. Anyway, to follow the math on down, that means that only one out of seventy dollars spent on prescription drugs really goes into basic research. So, out of a hundred and fifty billion, that’s about two billion. NIH spends about six billion and gives the results away, which the drug companies take full advantage of. Hmm….

Okay, parse of the second part: they stand behind their products—they have done research that demonstrates that the drugs they sell are effective. I’m sure I could do a whole show on how big a joke that is, but here are a couple of examples.

Celebrex is advertised as a miracle-working anti-inflammatory drug. It costs about a hundred and fifty dollars a month. Ibuprofen works about as well for most people, and costs about five dollars a month. Millions of people are being persuaded to take Celebrex by advertising and their doctors (who are persuaded by kickbacks and promotions from the drug kingpins) when they would be just as well off on the moral equivalent of aspirin.

For another example: studies appeared to show that a drug called Pravachol “lowered the risk of stroke in patients with coronary heart disease by 19%.” Again, looking at what the statistics mean, writer Malcolm Gladwell points out in the New Yorker that this amounts to preventing one stroke per thousand people, which, given the drug’s expense, means that it costs about 1.2 million dollars for each stroke prevented. There are cheaper ways to prevent strokes—smoking marihuana appears to be one of them–and furthermore, the average patient in the study was a 62 year old male, while the average stroke victim is a woman over 70—and when the statistics for women over seventy in the study were analyzed, Pravachol users actually had more strokes than those on placebos.

So maybe this shows you that, when I rant about drug companies’ ill-gotten gains, I’m not just blowing hot air. The drug companies are vampires, sucking blood and growing fat at the expense of the rest of us. It’s time for a fundamental change in health care policy in America, a change that puts personal health ahead of corporate profits.

music—Richard Thompson&Fred Frith–”March of the Cosmetic Surgeons



2 responses

13 06 2009

[…] you’re sick and spending money on it that your contribution to the GNP skyrockets. )  As I detailed three years ago on this show, drug company profit margins are simply insane.  They take pills that […]

12 03 2010

[…] Romney/Obama plan does nothing to lower the exploitive rates charged by insurance companies, pharmaceutical companies, hospitals, or doctors who think their M.D. is a license to become a millionaire.  It […]

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