Saturday, October 10, 2009

Really Expensive Medicine

Melody Petersen nailed it in her op-ed piece in the Los Angeles Times. If there isn't a provision in the health care reform bill which allows the government to negotiate drug prices, the pharmaceuticals will be the primary beneficiary of the new system, not Americans.

If healthcare legislation is signed into law with no controls on drug prices, the pharmaceutical industry will have won a financial bonanza. Drug companies will get millions of new customers while continuing a system that leaves the United States as the only country in the developed world that lets the industry charge more or less what it wishes. All other countries either limit medicine prices or the industry's profits.

The United States spends $300 billion a year on prescription drugs -- twice as much as we spend on higher education. We spend more on medicines than do all the people of Japan, Germany, France, Italy, Spain, Britain, Canada, Australia and New Zealand combined.

Ms. Petersen, who covered the pharmaceutical industry for the NY Times, includes a plethora of such facts, which makes her column such an excellent analysis of one major defect with the reform proposals currently under discussion. There are some facts, unfortunately, that she cannot cite because they are unavailable, even to the government, facts which would counter the industry's usual response to threats of price controls.

It's true that discovering a new lifesaving drug is expensive. Whether the cost is as high as the industry claims continues to be a matter of fierce debate. The drug companies have refused to allow outside scrutiny of what they spend in their labs. In fact, the companies' actual research costs are one of the industry's most closely guarded secrets. In the 1970s and 1980s, pharmaceutical companies waged a decade-long legal battle to keep even government auditors from reviewing those costs, leaving it unclear whether they include non- scientific costs such as promotion.

Of course those costs are hidden. If they weren't, we'd have a wider picture of just how much is being spent on direct-to-consumer advertising on television and radio, newspapers and magazines. We'd also know how much they were paying doctors to shill for them, either as "speakers" at educational forums or as attendees at posh resorts hosting seminars. A few individual states (Massachusetts, for example) are trying to force some of that information out by requiring the drug makers to report just how much they are paying doctors and for what, but such measures are providing only limited transparency at best.

We'd also know just how much each company was contributing to the congressional campaigns of the very people who are debating the terms of the reform bill, either directly or via the powerful lobby known as PHARMA, which thwarted the last attempt at allowing the government to negotiate prices under Part D, the prescription drug "benefit" tacked onto Medicare. We do know that Billy Tauzin, the congressman who shepherded that bill through Congress, was immediately rewarded with a multi-million dollar a year job within the industry.

I suggest you email a copy of this column to both your senators and to your congress critter. Let them know you're watching this all very carefully and intend to do something about their actions come the next election cycle.

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