My well-meaning, but misdirected mother spends her days sending me
junk e-mail.  I usually just delete them, but recently got one that
really stuck in my crawl (whatever that is).  It went on and on about
how evil the drug companies are for charging outlandish prices for
their drugs, and how the generic drugs cost so much less.  I am
looking for a concise article on the reasons drug companies charge the
prices they do, to send her in response.  I am looking more for the
costs that go into developing a new drug and the costs of doing
business rather than a lesson in economics.

This is a very complicated topic, and I will tell you point blank,
both sides have some very valid points.  You would be well served by
choosing to look at both sides of the issue. Its not only drug
companies, it's legislation, lawyers and medical professionals who
have made this into a big mess.  I can however, be reasonably certain
that, whatever you were sent was full of holes as is most information
regarding drug pricing.  I doubt that for $5.00, you'll get anything
more than a biased cursory examination of the issue--but I guess
that's what you're after anyway.

GOOD QUESTION!! Seeing as I have worked in an organic chem lab trying
to design new anticancer drugs, I may be a little biased on this
subject, but I must say that I support the prices of drug companies.
It takes several years after college of intense education to be able
to have the skills to design new drugs. I won't graduate and start my
career in academic medicine until I'm 35! (An MD/PhD takes 11-12
years.)

Most people just have no clue how hard it is to design new drugs. As
reported in Science magazine, 19 March 2004 issue, pg. 1797,
"According to Tuft's CSDD, it now costs companies an average of $897
million, taking account of candidate compounds that fail along the
way-- to develop, test, and obtain approval for a new medicine. And
there are plenty of failures. A staggering 99.9% of compounds wash out
of the development pipeline." Imagine that! You spend $897 million on
each trial drug, and only .1% of them will ever bring you a profit.
You'd have to charge the prices they do just to be able to design ANY
drugs.

Some people think that the government should control prices, but that
would control the success or failure of pharmaceutical companies.
Neither could government shorten the patent times of drugs, since that
would destroy motivation for making new drugs (right now a patent will
only last 17 years from the time the drug enters clinical trials,
leaving about 12 years for it to actually make any money), and
pharmaceutical companies are having a hard enough time as it is (there
are only four companies for manufacturing vaccines, because they must
have at least $5 billion stored away for potential lawsuits).

Furthermore, the pharmaceutical patents do not apply in other
countries, and so pharmaceutical companies already subsidize the
world?s access to drugs. Therefore, if the United States decides to
import cheaper drugs from Canada, this is like circumventing the
patent laws and the FDA, and pharmaceutical companies will refuse to
sell cheaper drugs to Canada anymore (at least two have already
officially made that claim). This will make Canadians pay much higher
prices for their prescriptions, and it will make prescriptions in the
U.S. much more at risk for low quality medicines and even for
potential errors in what the drug is or the proper dosages (this is
because generics are formulated differently than the brand name
drugs).

If one thinks that designers of drugs and doctors make too much, he or
she ought to consider that many movie stars, athletes, business men,
and musicians can make many times more than that. Are good looks,
physical ability, and managerial prowess to be prized above the
knowledge of saving lives? What if we were to demand lower prices for
these other types of services? Movies would become lower-budget,
businesses would not survive, musicians would be forced to perform
only as a side job, and athletes would not have as nice equipment or
as much incentive to play hard. Likewise, lowering doctors? pay would
drive away the most talented doctors who could succeed in a variety of
other fields, resulting in lower-quality care for us.

What other profession is expected to produce miraculous results while
receiving little to no compensation? What other profession has to work
so hard for so little respect? But when you are lying on the hospital
bed, I do not think that you wish you had a doctor who worked for
free, or some generic medicine made in a bathtub in India. You would
want the best services available, but, of course, you don?t want to
pay for it. You don?t want to pay for his hundreds of thousands of
hours of studying. You do not want to pay for extra-ordinary talents
in science, health, and technology, and for his extraordinary efforts
to benefit society, yet you want to pay millions more to some guy who
can throw a ball through a hoop, or to some guy who is stealthy at
buying and selling goods. And do you think health care is free to the
doctor?? He or she has to pay hundreds of thousands of dollars in
educational costs, and hundreds of thousands more for facilities,
tools, instruments, and hundreds of thousands more for liability
insurance. Look at sports-- they do not have to pay for their
stadiums. That is just ridiculous. Don?t get me wrong, I love sports.
I have played intercollegiate rugby, which was
an under-funded sport, and it would have been nice to have more
support rather than paying for stuff out of my own pocket. But the
expectations on doctors and scientists are just ridiculous.

purk,

Would you say it's fair that drug companies can use public, academic
funding to the tune of 250 million to discover, identify, and test an
new natural product and then reap more than a billion a year in
profits from said drug?

Would you say it's fair that drug companies can and often do promote
off-label use of medications to doctors who then use them at great
risk to their patients? Is it even remotely fair, that as patients we
have to pay for pharmaceutical company liability, when it is they who
push the use of off-label drugs?

Why does it cost less for me to buy a drug in Canada than it does in
the US when the drug was manufactured in Germany?

Is it right that doctors, prescribe the newest standard of care, when
there are plenty of older drugs that would likely do the trick?

You're still a little enamored with your chosen profession. It's easy
to be a cheerleader. Yeah, the drug companies butter our bread,
99.999% of all new compounds don't become drugs, blah blah blah, but
as I said before, disagree or not, this is a complicated issue.

Here's an interesting article:

http://money.cnn.com/2003/10/09/pf/health_drug_cost_quest/

If average drug prices fell, would the quality and number of new drugs
fall slightly or considerably? I'm confident that there is some fat in
the system that could be trimed by wise management, I can't say how
much fat can be trimed before future generations are deprived
significantly of improved drugs. In some sence the ready availability
of genaric drugs, is driving prices higher on new non-genaric drugs.  
Neil

I never said there weren?t two sides to the issue. And yes, I am
enamored with my profession?you have to be to endure this long in
school. As you say, there will always be bias in this issue, including
with yourself?if you are going to take the facts and say, ?blah, blah,
blah,? then you obviously are pretty biased yourself. At least I can
recognize that there are other facts that are not fair. I was just
answering the guy?s question for defense of pharma, not writing a
formal paper on the entire topic. I agree with you?there are two
sides. It?s true that there?s much public funding at the university
level that gets us as far as we?ve gone, but those publicly funded
people also make their own patents, even at the university level, and
so they are making money too in the same way. Plus you cannot say,
?Hey, those advancements in science were just for our common
knowledge, you can?t actually do something useful with what we?ve
discovered and go make money off them!? But at the same time, the
public, who is paying tax dollars for such advancements, should reap
some benefit. But maybe the benefit is that an advancement is made at
all. I dunno.

I do not support how drug companies go around telling docs that ?our
drug is the best,? yada, yada. Doctors need to be educated and look at
the research themselves.

It?s true that foreign drug companies (the example you gave, Germany)
know they can charge more in the US than other countries.

Again, if the newer standard of care is better, it should be
recommended. But yes, if there is an older drug that does the trick,
then the doc should explain that to the patient. It?s all about
honesty and informed decisions.

So Pink,

According to that article, it's perfectly reasonable to accept less
money for your product, as long as you get all you can from a
capitalist society like america?  It's also perfectly legal to do
that, when we all keep paying more and more into the insurance system
too?  Price controls just ain't doin it for me.

The rest of the article is interesting, but justifying why we're
paying more doesn't explain why.  For instance, if we're selling more,
why are we paying more?  Aren't drugs like DVD players?  Why do I have
to pay more because the drug company has decided to piss away it's
revenue on full page ads for viagra? What happened to cialis and
levitra?  Isn't there real competition???Why does nobody use mevocor?

<wink wink--this is the most telling paragraph> In 1988, consumers
footed nearly 60 percent of the nation's drug bill, according to the
Centers for Medicare and Medicaid Services. In 2001 only 31 percent
came out of our pockets, mainly because the rise of managed care meant
our insurance company was more likely to pick up the
tab.<bigger-wink-wink--this is what you've got to think about>

Managed care means what?  Where do they think this money is comming from?????

Like I said, this is a complicated issue.

Purk,

Yeah, I meant to ruffle your feathers a bit.  Sorry, I just wanted to
provoke a little debate.  <wink>

No problem, it's cool (c:

dr_bob,

I said that the article was interesting. I did not say that I agree
with everything in it.

My theory is that the main reason why name-brand drugs are expensive
is because so many of them are purple. Everyone knows that purple is
the color of royalty. Darn those highfalutin' drugs. ;-)

~pinkfreud