Working Every Angle

Working Every Angle

Sooner or later, most of us feel the pinch (or worse) of the skyrocketing costs of health care.

There are dozens of reasons why these costs are always on the rise, and one of them might make you angry enough to spit prescription capsules.

The markup

A couple of years ago, the Life Extension Foundation listed the cost of the key ingredients of several best selling prescription drugs. Here’s a quick breakdown of just a few:

• Prilosec consumer price: $360.97 for 100 20mg tabs. The active ingredient costs a little more than 50 cents per tab. The markup: more than 69,000 percent.
  
• Norvasc consumer price: $188.29 for 100 10mg tabs. The active ingredient costs 14 cents per tab. The markup: more than 134,000 percent.
  
• Prozac consumer price: $247.47 for 100 20mg tabs. The active ingredient costs 11 cents per tab. The markup: nearly 225,000 percent

Of course, there’s quite a bit more to drug production than just active ingredients. But even after you consider the cost of research and development, manufacturing, marketing, packaging, legal fees, etc., you’re left with an easy-to-understand equation: Consumers pay through the nose while major drug companies make billions in profits each year.

Fishy smell

To what lengths will drug companies go to protect their profits? One of their tactics might make Tony Soprano proud.

Earlier this year, the New Jersey Star-Ledger reported that (according to the FTC) the drug company Schering-Plough paid a total of $90 million to two drug manufacturers to persuade them to delay production of a generic version of a Schering-Plough blood pressure medication.

And you can be sure that if they’re willing to pay that kind of money to keep generics off the market, it represents a profit for the company that well exceeds $90 million. Needless to say, that profit comes from consumers who will not have access to the lower priced generics for another year or more. That includes Medicaid and the Medicare prescription plan.

This scheme is known as “pay to delay,” and while it has a fishy smell, it’s completely legal. The Star-Ledger notes that this practice takes advantage of a loophole in a law supposedly designed to encourage generic manufacturers to move quickly in bringing their products to market.

That’s right – I said, “supposedly.” Call me a crazy, tinfoil hat conspiracy theorist, but I can’t help but wonder if this law might have been specifically written to give the appearance of encouraging generics, while knowingly providing a mile-wide loophole for drug companies.

Availablemaana

Two years ago, Lester M. Crawford, the Acting Commissioner of the FDA, stated that if Americans bought generics instead of their brand-name counterparts, the combined savings would be about $17 billion per year. He didn’t happen to mention that quite a few generics wouldn’t actually be available for a while.

You can read about another creative technique that drug companies use to extend patent protection in the e-Alert “The Color Purple” (9/23/03). You’ll never believe what high-profile drug was given a flashy makeover and marketed to women as a treatment for premenstrual irritability. You can find that e-Alert at this link: http://www.hsionline.com/ealerts/ea200309/ea20030923.html

Sources:
“End Big Pharma Payoffs” The Star-Ledger, 1/27/07, nj.com
“The FDA Versus the American Consumer” Life Extension Magazine, October 2002, lef.org