HEALTH Is Big Pharm just naturally stupid or Machiavellian?

http://www.usatoday.com/printedition/news/20080808/1a_bottomstrip08_dom.art.htm

Drug prices up 100% — or higher
Spikes bring legal, political scrutiny
By Julie Appleby
USA TODAY

Drug companies are quietly pushing through price hikes of 100% — or even more than 1,000% — for a very small but growing number of prescription drugs, helping to drive up costs for insurers, patients and government programs.

The number of brand-name drugs with increases of 100% or more could double this year from four years ago, researchers from the University of Minnesota say. Many of the drugs are older products that treat fairly rare, but often serious or even life-threatening, conditions.

Among the examples: Questcor Pharmaceuticals last August raised the wholesale price on Acthar, which treats spasms in babies, from about $1,650 a vial to more than $23,000. Ovation raised the cost of Cosmegen, which treats a type of tumor, from $16.79 to $593.75 in January 2006.

The average wholesale price of 26 brand-name drugs jumped 100% or more in a single cost adjustment last year, up from 15 in 2004, the university study found. In the first half of this year, 17 drugs made the list.

"This does drive up the price of health care," says Alan Goldbloom, president of Children's Hospitals and Clinics of Minnesota. "Hospitals are either eating the cost or passing it along to insurers, so you and I are paying it in increased premiums."

Some of the drugs are administered in hospitals, which bill insurers, patients or government programs for them. Insured patients pay either a flat dollar amount, such as $20, or a percentage of the drug's cost.

Last year, prices rose about 7.4% on average for 1,344 brand-name drugs, according to Express Scripts, which manages drug benefits for large employers and insurers.

Reasons for the larger increases are varied, researchers say.

"There's no simple explanation," says Stephen Schondelmeyer, director of the PRIME Institute at the University of Minnesota, which studies drug industry economics. "Some companies seem to figure no one is watching so they can get away with it."

The price increases are drawing legal and political scrutiny:

•In a decision awaiting approval by the 9th U.S. Circuit Court of Appeals, drugmaker Abbott agreed last week to pay up to $27.5 million to settle a lawsuit over a 400% price increase on its HIV/AIDS drug Norvir. Settlement did not lower the price.

•Sen. Amy Klobuchar, D-Minn., and Sen. Charles Schumer, D-N.Y., asked the Government Accountability Office last week to investigate large price hikes. Klobuchar asked the Federal Trade Commission in April to investigate Ovation Pharmaceuticals, which raised prices on four drugs in 2006 by up to 3,436%.

Drug companies say the price hikes cover the costs of keeping the drugs on the market. They say the drugs are often less costly than alternative treatments, such as surgery or newer, high-tech medicines.

Questcor says on its website that it had to raise Acthar's price after struggling for years to "keep (it) financially viable."

Ovation says it needed to cover its 2005 purchase of the drugs and facility upgrades. "We feel we made an important investment in keeping these older products alive," says spokeswoman Sally Benjamin Young.

If I was a drug company expecting price controls ala Obama, I'd get them prices way up there so when the controls come......That's why that little sign on the back of hotel doors in many places shows a room rate a lot higher than what you paid. The Nixon price controls taught them a lesson.

The other alternative is that they a just plan stupid. Galbraith in one of his books notes that when he was working with the CEO's of great corps during WWII, the one thing he noted was how stupid they were. Based on their track record in recent years, he may have been right.

My guess is they THINK they are being very crafty but in reality are making a very stupid move. Unless they actually want to bring in price controls and government regulations.

When you think about it, in many cases drug companies are not a total market driven enterprise. that's because if you are sick and only one drug is approved to help keep you functional (or even alive) you have a choice of getting that drug or getting worse (I will leave aside the entire topic of alternative therapy that's a different issue). These huge price rises may make them some money in the short term, but they are going to produce a back lash from everyone from Joe Q. Public to the so-called Health insurance companies. Since the government also pays for a huge amount of these drugs, that's going to be a factor too.

Add this to the fact, that unlike say a DVD player that you can choose to live without, many people have little choice but to buy the drugs. When they simply can't be afforded, many people will become sicker and often unable to work or support themselves. Either through breadlines, charity or welfare they have to then be taken care of, that or dig mass graves. I think people are going to fill very differently when even the upper middle class is facing choices like, buy the husband's medications or buy food for the children. When the middle and upper middle class get mad, change tends to happen.

I was hoping the US health care system could be overhauled in a sane and thoughtful manner. One that would try to avoid the worst problems of all the existing systems (no system works perfectly). Instead, the backlash is likely to produce some sort of hybred monster and it won't matter whose name (McCain or Obama) signs the bill. The only difference might be that a Republican congress would try again to appease Big Pharma/Health with a half-way plan (like the drug bill) that makes things even more complicated and a Democratic one might try to enforce a single payer system on a country unlikely to be happy with it. The real options, something like Germany's public/private systems (or the expanding the Federal Employee's Health care plan) may be ignored in the shuffle.

I do hope something is done, the current system is really breaking down now and actions like this just help speed it up.

Yep, think they are wise, but really very foolish..that's my vote.

Is Big Pharm just naturally stupid or Machiavellian?

To answer your question in a word: yes.

Jonas Parker said:

Is Big Pharm just naturally stupid or Machiavellian?

To answer your question in a word: yes.

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Having recently retired after working for big pharma for several years, I think the answer is greedy. Big Pharma is just plain greedy. It is all about the bottom line. And it is only getting worse. Pricing is just part of it.

Not only are pharma manufacturing operations being moved offshore, so are most other areas: research, clinical trials, and IT (lots of data to manage) to name a few. Everything else remaining in the states, like sales, legal, some research and manufacturing, and local IT support, is being outsourced to contract firms or "partners." Full-time American workers are too expensive, they expect competitve salaries and benefits. Chinese, Eastern Europeans, and Indians, not so much.

Get this: one of the research chemists that sat near me before I left, told me that all of his group's work (he was kept, others in group let go) was being done in China now. But...the company doesn't trust the Chinese not to steal the information gained. So they send 7 or 8 experiments over to be run in China but are really only interested in the results of one. They just don't tell the Chinese which experiment is the important one. The chemist went on to tell me that the quality of the work coming back from China is so poor, that he has to put in overtime to bring it up to FDA standards. He said, "If I turned in this kind of work, I'd be fired." Even with all that, it is cheaper for the company to do it that way, so they don't really care how much extra work has to be done. They want the workforce to be as cheap and expendable as possible in order to keep profit margins high.

Think about that the next time you fill a prescription.

meanwhile the left continues to rant about "record big oil profits" while these guys are making billions.

The number of prescriptions has exploded since the late 80's. As a result, everyone is so much healthier, with a great quality of life. Just look around and you'll see!

tothetune, i hope you are being sarcastic--

big pharma charges big bucks for synthetic copies of natural ingredients so they can patent it and own it, and end up mixing some of this with some of that and creating something whos side effects are worse than the disease its being used for. they dont care how many people they kill or injure.

and i dont care if i ended up with cancer, or any other disease they use to scare us to death just to buy their crap. id treat myself and i know have a better life. ive seem family members and friends hooked on those damn drug/poisons that only extended their life by years but not in quality in any fashion.

Ok - so when did you all become Socialists?

If they want to raise prices 10,000% it's their right to do so. In fact, if they want to stop selling a particular drug completely, they can do that too. Those drugs are their PROPERTY, not yours, not mine.

Several years ago I worked for a Pharma company, and just like any other company they are driven by profits. The investors (including many retirement 401k and pension funds) DEMAND a return on their investment.

A company losing patent protection on a cash cow might just want to recoup that money somewhere else in order to avoid massive layoffs. The company I worked for lost patent protection for one of their drugs and lost a full 33% of their ENTIRE revenue overnight. They went from a $9 billion company to a $6 billion company in the blink of an eye. How many companies do you know can lose 33% of their revenue and continue to INVEST in the RISKY and EXPENSIVE task of trying to discover new drugs?

You want new, life saving drugs? You want the best medicine that money can buy? Well, it costs upwards of HALF A BILLION DOLLARS to bring a new drug to market. That money has to come from somehere...

Sadly, germs and disease are no respecter of money, greed or corporate profits. The main reason that public health and health care came about in the United States was after the 1918 flue, when it suddenly dawned on the well to do that if the masses came down with something, they too could die. Until world war II, there was actually a lot of public health in the United States (often provided by States and Cities) who cared for folks who were required to be in quarentine. Private doctors and hospitals existed, of course, but there were also charitable ones in almost every area (some good, some not so great) and a lot of organizations that helped educated people towards basic sanitation and disease prevention. Medicine was seen both as a high art (for those who could afford such a standard) and a public good from which everyone benefited. You can call that socialist if you like, but you could also call it prudent and realistic.

After the development of antibiotics (and the polio vaccine) the days of the great waves of disease that carried loved ones away in the night, seem to go away. In reality, good sanitation and sewers probably helped as much as anything, but for whatever reason, medicine became more about treating broken legs and cancer than preventing and treating epidemic disease. This let to a more "modern" view of medicine as a personal problem for an individual rather than a threat to the public good. For awhile, while medicine and doctors fees were affordable for most, and charity existed in many places, things bumped along without too many problems. Large, and even many small employers could afford at last major medical insurance and self-employed folks could buy it through various organizations they belonged to.

Somewhere around the late 1980's all this began to change and without going into all the boring details, you now have the mess there is today. Now, huge numbers of people are exposed to medicines they can never pay for and hospital bills only Bill Gates could pay when they become sick or injured. Again, this isn't like taking a vacation or buying a car, people who really need medical treatment and simply can't get it mostly don't lay down and die. Much of the time, they become disabled instead and become a burden on the tax payer. When their conditions become life threatening, the ER will treat them, ofen costing thousands upon thousands of dollars more than if they just had access to the medication in the first place. I personally know of one case where because the person could not afford antibiotics, they collapsed and the bill for the brain infection was over 100,000 dollars. That is penny wise and pounds foolish, it is also why drugs and medicine ARE different from developing and selling new comptuer software for whatever the market will take.

I do agree that drug development has to be funded somehow, but the current system also endangers public health. But rewarding companies for making fifteen different copies of the same "lifestyle drug" (or heavily used drug like Satins) and failing to reward them for coming up with new antibiotics and other vital but not always high payout drugs; the entire country is left open once again to the vary types of diseases that afflicted them in the past. The US has been lucky so far, but MRSA and other emerging diseases show that real research can not be totally dependent on what makes money in the short term, not if everyone wants to stay breathing.

Of course, there is the Russian option, just let everyone who can't afford medicine die, and have the average life span reduced to less than 50 in some areas. Not a great choice if you ask me, but it does seem to be where the current system is heading.

In the days when medicine was seen as patriotic (rather than a way to make money for shareholders) a huge amount of medical research was done by university labs and the military. Tax payers DID pay for it, without them we might not have antibiotics even today. Now, almost all university studies are funded by Big Pharma who routinely refuse to publish anything they don't like. This is also a very dangerous practice, and again everyone rich and poor may suffer as a result.

So, perhaps medicine (and drugs) are something, like electricity that does do better with some public monitering and regulations? I do know that if something doesn't happen, the US WILL experience the ERON of health care sooner or later. I just hope that millions don't die of a preventable disease because of it.

Somewhere around the late 1980's all this began to change and without going into all the boring details, you now have the mess there is today. Now, huge numbers of people are exposed to medicines they can never pay for and hospital bills only Bill Gates could pay when they become sick or injured.

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IMO, this has little to do with the drug companies, and everything to do with the Govt. getting involved in providing expensive healthcare. Remember, when you subsidize something, you get MORE of it, not less.

TECH32:

Well, *I* haven't a spare billion or so lying around,
to enable Big Pharma to make life-threatening proprietary versions of NATURAL SUBSTANCES.

SO... I would not shed a tear, if they would all...
Well, be 'permitted' to "SINK or SWIM" [ NO BAILOUTS!!! ] on their OWN (dubious) Merits.

Just get those 500-lb monkeys off the average citizen's back!

Aka: Our Goobermint ought apply
the same standards (in re: inefficacity<sp> and persons-harmed) to Big Pharma,
as it presently does to the 'Natural Health' and Supplements "industry".

Edited to Add: I despise "insurance", and have always paid cash for my "health care".

Socialist? socialism is what the complaint is about big pharma is socialism - just not the type you are used to. Without the FDA et all big pharma would rot and rot fast.

Look up merchantilism or better yet corporitism.

TECH32 said:

Ok - so when did you all become Socialists?

If they want to raise prices 10,000% it's their right to do so. In fact, if they want to stop selling a particular drug completely, they can do that too. Those drugs are their PROPERTY, not yours, not mine.

Several years ago I worked for a Pharma company, and just like any other company they are driven by profits. The investors (including many retirement 401k and pension funds) DEMAND a return on their investment.

A company losing patent protection on a cash cow might just want to recoup that money somewhere else in order to avoid massive layoffs. The company I worked for lost patent protection for one of their drugs and lost a full 33% of their ENTIRE revenue overnight. They went from a $9 billion company to a $6 billion company in the blink of an eye. How many companies do you know can lose 33% of their revenue and continue to INVEST in the RISKY and EXPENSIVE task of trying to discover new drugs?

You want new, life saving drugs? You want the best medicine that money can buy? Well, it costs upwards of HALF A BILLION DOLLARS to bring a new drug to market. That money has to come from somehere...

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Kronos: You don't have to purchase their products - no one does. You are entirely free to eat tree bark or drink squid tea or whatever floats your boat as cancer ravages your body. No one is pointing a gun at anyone's head and making them purchase the products Pharma companies sell.

Sebastian: Govt. control of prices "for the greater good" is identical to controlling production - the very definition of socialism. As a libertarian, I am no fan of the FDA. I think the FDA should be like the Good Housekeeping Seal of Approval - an advisory organization that lets consumers know if a company's claims are true. No way, no how should the Govt. be telling people what they can and cannot put into their bodies.

TECH32 said:

Kronos: You don't have to purchase their products - no one does.

You are entirely free to eat tree bark or drink squid tea or whatever floats your boat as cancer ravages your body.

No one is pointing a gun at anyone's head and making them purchase the products Pharma companies sell.

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Well, how facetiously magnaminous of you, to both grant me the 'right' to 'eat tree bark',
whilest at the same time, wishing me cancer.

Nopes, no gun to my head... but in the background,
Big Pharma would 'outlaw' both 'natural' alternatives, as well as any INFORMATION regarding same.

One is NOT BY LAW permitted, to make any 'claims' regarding ages old remedies,
whilest witness the Deluge of "ask Your Doctor about xyz happy-happy pharmaceutical" Ads on TV.

I would enquire... are you in any paid position, to be so supportive of Big Pharma?

Kronos said:

Well, how facetiously magnaminous of you, to both grant me the 'right' to 'eat tree bark',
whilest at the same time, wishing me cancer.

Nopes, no gun to my head... but in the background,
Big Pharma would 'outlaw' both 'natural' alternatives, as well as any INFORMATION regarding same.

One is NOT BY LAW permitted, to make any 'claims' regarding ages old remedies,
whilest witness the Deluge of "ask Your Doctor about xyz happy-happy pharmaceutical" Ads on TV.

I would enquire... are you in any paid position, to be so supportive of Big Pharma?

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Nope - haven't worked for that company for several years. As to making claims, Pharma companies spend HUGE amounts of money making sure their ads are in compliance with FDA/FTC guidelines.

I was a computer guy, and even I had to take their training about what employees, any employee, were allowed to say and not say concerning the company's products. On top of that, if I was out to dinner with a friend who told me that he *thought* my company's product did anything negative then I was required to report it as an "Adverse Event". That's right, if my buddy said "I took your company's pill to do X and then farted six times" I had to fill out forms with the compliance dept.

All of that costs money. Big money. Huge money like you wouldn't believe. It cost MILLIONS OF DOLLARS every time they wanted to change anything at all on the product packaging - and this was for products that the consumer never sees, only the pharmacist. For changes to boxes that the pharmacist throws out.

The amount of money Pharma companies spend on "compliance" with various Govt. rules and regulations is STAGGERING. As mentioned, it costs upwards of HALF A BILLION DOLLARS to bring a new product to market. And that doesn't even include the money sunk into new drugs that fail in trials right before release.

When they research new drugs it is a total crap shoot. They don't know if the drug will work. They don't know if doctors will prescribe it. They don't know if, even after spending hundreds of millions of dollars getting FDA approval, some lawyer won't sue them for billions of dollars decades in the future because of some percieved flaw in the drug.

I know, from personal experience, that these companies take HUGE risks on behalf of their shareholders, and those shareholders expect a return on their investment. So yeah, I think they should be able to charge whatever the market will bear, just like ANY OTHER COMPANY IN A FREE MARKET SOCIETY.

You want to give the Govt. the power to say "you make too much money"? Well comrade, if you do that, you give them the power to say that to ANY company in ANY industry. You bemoan the fact that companies are fleeing our shores? Give the Govt. the power to dictate how much a company can make and NO company will remain in the US. Period. Why would ANY company take ANY risks here if they can't profit from it?

Quoting Comrade Tech32: "Nope - haven't worked for that company for several years."

Which company might that have been, pray tell?

Yes, corporations, irrespective of their stated purpose, are all about PROFIT.

However, it is hardly an 'even playing field',
when those whose raison de'etre [pardon my French] is:
squeeze max profit from All and Sundry, whilest, at every opportunity, sucking on the Goobermint tit.

For why? Hey!, just coz they CAN!

...unlike we lowly plebes *spits*

Kronos said:

Quoting Comrade Tech32: "Nope - haven't worked for that company for several years."

Which company might that have been, pray tell?

Yes, corporations, irrespective of their stated purpose, are all about PROFIT.

However, it is hardly an 'even playing field',
when those whose raison de'etre [pardon my French] is:
squeeze max profit from All and Sundry, whilest, at every opportunity, sucking on the Goobermint tit.

For why? Hey!, just coz they CAN!

...unlike we lowly plebes *spits*

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Won't tell you the company name (there are people I know who work there that would be able to put 2 and 2 togther) but it's been over 2 1/2 years since I worked for them, and haven't recieved a penny in compensation from them since.

As to the rest of your post - you are also free to start your own pharma company. Believe it or not there are thousands of small research companies that are doing genomics research right this very minute. When they find something promising, they often partner with larger companies who can afford the HUNDREDS OF MILLIONS OF DOLLARS it takes to bring a new drug to market. But they, like everyone else, are taking risks, putting money on the line in hopes that they too will produce a "hit" drug.

Again, you are free not to purchase their products. But for a hundred or so million Americans, the benefits are substantial.

The rate of congestive heart failure has tripled since statins (cholesterol lowering agents) were put on the market. Merck holds a patent to supplement mevacor (statin) with coenzyme-Q, which the heart requires to pump properly, but no such product was ever brought to market. Congestive heart failure is currently the #1 cause of hospitalization in patients over 65.

"...The rate of congestive heart failure has tripled since statins (cholesterol lowering agents) were put on the market. Merck holds a patent to supplement mevacor (statin) with coenzyme-Q, which the heart requires to pump properly, but no such product was ever brought to market. Congestive heart failure is currently the #1 cause of hospitalization in patients over 65..."

Sounds bad. Of course you can explain why our longevity persists in increasing even though we are all being poisoned by flourides, statins and mercury tooth fillings.

And to argue that number is faked, well, all you got to do is go down to the local senior citizens home to see the folks that in an early age would have died long before their ages.

As I have stated in other places, a 50th wedding ann caused interviews in the local press when I was a kid. Now you got to go to 60 or more to make the newspapers, 50th not being much of anything. And when you figure that cohort is made up of Depression Babies when the birthrate was much lower, well....people are not dying like flies as intimated.

After a night to think about this, while I agree that insurance itself may be part of the problem, the other thing that happened in the mid to late 1980s was the collaspse of the charity hospital system. For generations, they provided the "safety net" for the working poor and even many who simply faced serious and long term illness. Teaching hospitals were the other place the poor (working or not) and folks needing "last hope" care. In exchange for letting interns surround your bed, you could be cared for. Interesting cases were considered a good source of learning.

Again, rather than thinking of these places as dump for deadbeats, like some tax payer funding for drug development, it was considered both prudent and patriotic. A sign that America cared about her people.

When the charity and teaching hospitals closed (or went private) then all the people they treated were dumped into a so called "private" system. If they couldn't pay for care before (or at least extensive care say after an auto accident or a premature birth, cancer etc) they still could not pay now. Long term conditions tended to fester under this system, while emergencies (like that car wreck) simply produced unpaid bills. Working poor families have members die from lack for care because they are terrified to go to the doctor when the first symptoms of something serious shows up. The bread winner is terrified they will loose their tiny house or auto repair shop. I know of cases where they just keept working, didn't tell anyone and hoped it would go away. Even middle class people do this when they are layed off, one women died of stomach cancer because she waited until her new employers insurance kicked in. She would not have been covered if she had gone in before as she would then have had a pre-exisiting condition. So instead of treating a small cancer, the new insurance company got to pay thousands to save a dying patient. While not drug related exactly, it shows the problems with the current system of no preventative health care (or drugs) for a large portion of the population (many of them working and in no way lazy people).

I couldn't afford 1,000 dollars a month for medications, I don't know many people who could. The other thing that happenes is faced with bills like this, many people just drop out of the system. They can't buy medicine, they get sicker, they apply for disablity, this takes forever. They end up either on disabiltiy or in a homeless shelter, at somepoint the tax payer has to step in (or they are dead). This does not strike me as the best pharma and health care system I can think of.

Good book on these scam drug companies: http://www.amazon.com/Truth-About-D...bs_sr_1?ie=UTF8&s=books&qid=1218289572&sr=8-1

A little piece of trivia to consider:

Of all of the people since 2000 that had to file bankruptcy because of financial collapse brought on by a health crisis (whether by injury or by illness), roughly 80% did have health insurance when their crisis began.

Having a major health problem in the U.S. is pretty much a death sentence, whether literally or figuratively.

Kronos said:

Well, how facetiously magnaminous of you, to both grant me the 'right' to 'eat tree bark',
whilest at the same time, wishing me cancer.

Nopes, no gun to my head... but in the background,
Big Pharma would 'outlaw' both 'natural' alternatives, as well as any INFORMATION regarding same.

One is NOT BY LAW permitted, to make any 'claims' regarding ages old remedies,
whilest witness the Deluge of "ask Your Doctor about xyz happy-happy pharmaceutical" Ads on TV.

I would enquire... are you in any paid position, to be so supportive of Big Pharma?

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But there are guns to our heads should an individual or a doctor wander to far off the reservation

The guns will come out should all else fail.

I just dont know which side is which anymore. Ill hear from the same person how all modern science is the devil, antibiotics are the mark of the beast, doctors are all out to kill you.... then once they get sick, or injure themselves, i dont see them walkin round in field dressings made at home, and i dont see them with stacks of library books on meds and chemistry and roots and herbs.

Instead, i start hearing them whine about their medical bill from the people theyd "never go to", how this or that life saving med should be cheap or free, why there are side effects like nausea to this or that drug that stopped them from dying etc.

Despite all the 'conspiracies' headed by suits in the pharm agency, and how often some guy in texas builds a flying car that runs on wheatgrass and ginseng tea, but the big oil company and mcdonalds kills the guy and makes the patent dissappear.....

...you cant keep information banned or hidden. even microsoft cant keep their products from being stolen, and the chinese cant completely block the web. Old dial up BBSes are still around etc. if you want to use the treatments our ancestors did 100 years ago, live their lifespan and health, the infos out there.