As we further explore the healthcare consumer in a healthcare prison, Big Pharma is an area we need to review and explore because companies are profiting hugely by raising prices to dizzying heights. Drugs that cost less than $400 a year in some countries cost $300,000 a year in the United States.
Eighty percent of the growth of profits in the 20 largest drug companies has resulted from price increases — not new drugs. Just raising prices. The brunt of that pain is felt by the healthcare consumer because the drugs that we buy here are much more expensive than the prices elsewhere.
A few points need to be clarified regarding Your Doctor, Big Pharma and the Consumer before we can answer the question.
Your doctor contributes to the problem. The following study is mind boggling:
In 2013, 1,122 (39.1%) of 2,873 Medicare Part D prescribers received gifts from pharmaceutical companies totaling $3.9 million in 2013. Compared to non-gift recipients, gift recipients prescribed 2.3 more claims per patient, prescribed medications costing $50 more per claim, and prescribed 7.8% more branded drugs.
Physicians who received small gifts (less than $500 annually) had more expensive claims ($114 vs. $85) and more branded claims (30.3% vs. 25.7%) than physicians who received no gifts. Those receiving large gifts (greater than $500 annually) had the highest average costs per claim ($189) and branded claims (39.9%) than other groups.
Big Pharma by the Numbers:
First, most large drug companies spend more on sales and marketing than on research and development. Anyone who watches television can attest to the growth and dominance of marketing to the consumer.
Second, since 1980 and the Bayh-Dole Act, drug companies can feed off research funded by the National Institutes of Health, which they acquire at late stages of development. The big companies can either license the drugs or buy out small biotech companies carrying out NIH-funded research. In short, much of the research going into these products is funded by taxpayers, not pharmaceutical revenues. Many companies have operating profits ranging from 15% to 30%. The average S & P company had an operating profit of 10.4%
Third, the pharmaceutical industry has a massive lobbying presence, consistently spending over $200 million a year, according to the Center for Responsive Politics. It has more than two lobbyists for every member of Congress and spends tens of thousands of dollars per election cycle. That type of investment is only undertaken when there is a significant return expected. For example, Congress placed a provision in the 2003 Medicare Prescription Drug Benefit that prohibits Medicare from negotiating with drug companies on pricing. Now that’s a return on lobbying costs!
Fourth, Nielson estimated that $5.2 billion was spent on prescription drug advertising in 2015. The largest chunk of that amount was for television advertising.
And lastly, in 2013, biopharmaceutical companies led all other industries in corporate giving by donating 19.4% of pre-tax profits to charitable organizations. You probably won’t be surprised, though, that 90% of the contributions came in the form of in-kind product donations. High list prices for certain drugs can add up to some major bucks quickly. Still, it’s nice to know that the frequently vilified Big Pharma companies aren’t as heartless as they’re sometimes portrayed.
Now from a healthcare consumer prospective:
- It is estimated that there are 110 million regular prescription drug users across the US.
- 49% of us take at least one drug
- 19% of us have skipped taking a drug or cut it in half
- 14% of us chose not to fill prescriptions at all
Additionally, Big Pharma and insurance companies have developed relationships that have forced healthcare consumers to buy brand name versus generic drugs. Insurance companies tell consumers the generics are not covered only brand names. Unbelievable!!!!!
The above ‘costs of doing business’ result in the cost of healthcare for every healthcare consumer increasing at all levels. Furthermore, the practice of “gifting” medical professionals should be considered a crime—similar to rebating in the insurance industry.
Big Pharma gifts influence MDs script writing, which affects Medicare, Medicaid, and all healthcare insurance policies, coverages and, ultimately, premiums insureds pay.
If the above hasn’t convinced you are a healthcare prisoner in a healthcare prison I’m not sure what will. Big Pharma locks us up and throws away the key. We clearly are prisoners. I rest my case!!!!!!
We have spoken with many healthcare consumers and they’ve shared scores of unbelievable stories. Talk to any of your friends, relatives or colleagues and I am sure they will have a Big Pharma story to tell.
Tells us what you think.