Recently, through the launch of a new online database last week the U.S. government revealed that in 2013, doctors were paid roughly $380 million by medical device and pharmaceutical corporations for speeches and consultations, all within a five-month time frame. Big Pharma spends almost $20 billion annually marketing their products to doctors, which yields profits upwards of $300 billion per year in drug sales. A handful of these doctors were paid more than $500,000 apiece. Others were paid millions for the drugs and devices they helped to create. Doctors insist that this money doesn’t influence what they recommend to their patients. However, it’s extremely difficult to imagine what purpose the payments would serve if not to increase product sales through prescriptions. eDrugSearch.com has been warning the American people about these unethical issues and conflict of interests for years.
Drugs Come at a Price
In the United States, we spend vast amounts of money on medications. In fact, on a per-person basis, we spend the most out of every industrialized country the world despite the fact that we’re no better off as far as our health. It’s estimated that Americans spend about $2.7 trillion every year on medical care, and medications take up about ten percent of that cost. A portion of this cost is paid by the Government via the ACA, Medicaid and Medicare. Unfortunately, that part is funded by the taxpayers. The remainder of the cost is funded by skyrocketing deductibles, expensive co-payments and high premiums.
According to the World Health Organization (WHO), Big Pharma globally rakes in $300 billion a year, and its expected to increase to $400 billion within a few years. As a result of this pressure to keep up with sales, WHO has officially stated, “an inherent conflict of interest between the legitimate business goals of manufacturers and the social, medical and economic needs of providers and the public to select and use drugs in the most rational way“.
The Bigger Picture
The payments doctors are receiving are just a small piece of a much larger, and more profitable, puzzle for drug companies. Big Pharma also uses a marketing strategy called “product hopping”. This involves taking an existing product with a patent up for expiration and making small changes to it. According to the law, this makes it an entirely new product. Namenda, for instance, is commonly prescribed for Alzheimer’s, but its maker, Forest Labs, recently said it would stop offering the drug. Instead, it would release Namenda XR, the same drug slightly modified to make it extended-release. In the process, the company ensured that there could be no generic substitutes. This means Forest Labs sees more profits while patients are stuck paying the inflated costs. Drug companies have another trick up their sleeves. Even though a drug’s twenty-year patent is long expired, Big Pharma will still advertise their brand aggressively, leading patients to request prescriptions from their doctors.
The United States is one of only two countries in the world that lets pharmaceutical companies do direct-to-consumer advertising. According to John Mack at Pharma Marketing News in 2013 Big Pharma spent $3.8 Billion in dtc advertising and “The rich pharma companies got richer and spent more“. Another scheme called “Pay-for-Delay” costs us an estimated 3.5 Billion a year involves Big Pharma paying the makers of generic versions to hold off on their development, raking in huge amounts of money for both parties. Yet again, patients are stuck with obscene prices. In Europe, this is illegal. In the U.S., however, Big Pharma has successfully lobbied against legislation that would ban the practice.
Lack of Government Controls
Other countries have wholesale pricing for medications, but in America, the government isn’t allowed to negotiate for lower prices under Medicaid and Medicare. Indeed, this was one of Big Pharma’s support criteria for the Affordable Care Act. Their excuse? They needed the money for research and development. However, most of this research is done by the government through the National Institutes of Health (NIH).
Meanwhile, pharmaceutical companies actually spend millions more on advertising than on research and development. For every $1 spent on basic research, Big Pharma spends $19 on promotions and advertising. That’s to say nothing of the millions these companies spend on government lobbying. Just last year, that figure stood at $226 million, considerably more than military contractors spent on lobbying. In addition, drug firms use politics to gain an advantage. The industry gave more than $50 million on political candidates in 2012, earning it the title of the largest contributor to political campaigns.
The Crux of the Problem
At this point, you’re probably wondering why the American public tolerates this stunningly predatory business model. It would be a gross oversimplification to claim that nobody has a say in these matters due to Big Pharma’s impressive spending power and influence over government policy. If Americans were to become fed up enough with the status quo, the government couldn’t allow the companies to continue their price-gouging. Unfortunately, we haven’t gotten fed up yet. Most people don’t even realize some of Big Pharma’s marketing schemes are going on because they’re done behind the scenes, and it doesn’t make the news. That said, it may also be a misconception that drug prices are simply the “free market” in action. It’s commonly believed that the market is separated from the government. Furthermore, people believe that the core principles of the free market mean that drug firms are able to sell their property for any price they see fit.
Few people understand that government and the free market can’t be separate. The government creates the rules, including deciding what products receive patents, how long they last, which payoffs aren’t allowed, the research that gets paid for and under which circumstances the government can ask for reduced prices. It’s not important to ask if the government should be making these decisions. If not for them, there wouldn’t be a market or any medications. The big problem is the way the market is set up. As long as Big Pharma is allowed to have a say in these decisions, the American public will continue getting ripped off.33