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This is the third in a series on the state of healthcare in the United States. This article explores a few ways to lower the cost of prescription drugs. Remember, these are presented as common sense solutions from a dumb engineer.
First and foremost, we should eliminate direct marketing to patients. It is a waste of money and many doctors tell us it is dangerous. It is especially true when more is spent marketing Vioxx than Pepsi. Some of the claims were actually false and dangerous. With this direct marketing system doctor’s find themselves defending drug choices which are actually cheaper and may be safer to patients who have neither the training nor education for the debate.
Secondly, we need to re-introduce supply and demand into our prescription drug market. Several years ago, my company’s drug coverage was converted to a “point of sale” policy. I had to pay for my drugs and then be reimbursed by the insurance company. I was made painfully aware of the costs of my drugs. This system may not work well for lower income families and some allowances may have to be made in their case. But, having to float the insurance company a loan for prescription drugs made me ask my doctor about cheaper alternatives from time to time. Some drug stores would have to begin charging actual market price for some generics. Insurance companies and drug companies would also have to eliminate formularies for a system like this to work. The beauty of real supply and demand without direct patient marketing is how a doctor, patient and the pharmacy have to work together in a constructive way to eliminate waste and improve safety.
Some say the most constructive way to eliminate waste in the prescription drug market would be to critically examine doctor’s relationship with drug companies. Today, doctors depend on drug companies for drug samples and continuing education. Although samples, if used correctly, are an excellent resource for doctors, they may come at too high a price. The price becomes daily propaganda from a drug rep. Doctors have become too dependent on drug companies for annual continuing education requirements for medical licenses. Since continuing education classes sponsored by pharmaceutical companies are free to the doctors, a requirement to maintain a medical license and held in Cancun, pharmaceutical continuing education has become the only source of that education for some physicians.
The pharmaceutical industry frequently tells us importing drugs from Canada will destroy their ability to conduct real research and development. If that is the case, we must be subsidizing the rest of the world’s research. Shouldn’t we allow the wholesale importation of drugs so that market forces will even the playing field?
Finally, as the recent news from Wall Street will attest, corporate America will often trade immediate profits for long-term stability. If the pharmaceutical industry insists on making the kind of profits outlined in the previous article, government might need to review the patient system for drugs. They obviously need no protection.
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This is the second in a series of articles on the state of healthcare in the United States. This article explores the state of prescription drugs. I feel pharmaceuticals should be a part of any comprehensive healthcare reform.
Wonder drugs are everywhere. There is a new drug called Avastin. It is chemotherapy for several kinds of cancer. Avastin is unlike most any anti-cancer drug used today. Most chemotherapy is merely a form of targeted poison. Being a poison, most other chemotherapy agents have very severe side effects. Avastin belongs to a class of drugs which block a tumor’s ability to trick the body into providing blood flow. Without the formation of blood vessels, tumors can’t thrive and most shrink. Although it is a new drug and long term clinical trials are unavailable, Avastin’s side effects seem to be very mild compared to other chemotherapies. Wikipedia says a round of treatment with Avastin can approach $50,000.00.
Avastin was developed by a company called Genentech. Genentech is the company all other biotechnology companies aspire to be. Their research and development has become legendary and so have their profits. The company made a 25 percent profit last year. Genentech is so successful that pharmaceutical giant Roche is in the process of buying the company. Roche made a 32 percent profit last year. According to Fortune, Roche is not alone in the Pharmaceutical industry. The pharmaceutical industry makes a median profit on revenue of over 18 percent. The average for the rest of the Fortune 500 companies is a little over two percent. While they spend only 12 percent of their revenue for research and development, they tell us they won’t be able to deliver new drugs without the high profits.
But, a system already exists to reimburse the pharmaceutical industry for the cost of research and development for prescription drugs. It’s called a patent. The theory behind patents is reward research by giving the inventor the exclusive right to sell or license a product for a set period of time. But, the pharmaceutical industry has figured out a way to pervert this process too. They “make a new drug” by changing it to a long acting version or combining it with another drug and extend the patent. This requires little research and development and allows drug makers to continue their monopoly. This process is laid out nicely by an article titled “High Prices” in The New Yorker . Additionally, The Washington Post says the drug makers are able to manipulate congress into making Medicare rules which prohibit states from steering patients toward cheaper generics once they are past patent protection. Drug makers game the laws and the lawmakers as our costs go up over 15 percent a year.
So what are they spending our money on? Fortune tells us the industry spends over 30 percent of their revenue on marketing and administration. What do we, the customer, get for that huge marketing expenditure? Well, my high school friend gets free lunches for one. See, my friend is the receptionist for my internist. One day while we were negotiating my next appointment, she got a call. I overheard her talking about lunch. It was about nine in the morning so I kidded her about being hungry. She told me her entire office got several offers from different drug reps every day for lunch. The office staff had to decide early so the successful rep could get the food delivered by lunch time. Beyond free lunches for my friend, we get to watch a Viagra, Cialis or Levitra commercial almost every single commercial break on TV. If that’s not enough, we get to wait in the waiting room while our doctor yuks it up with some supermodel drug rep that wouldn’t know the difference between a cell and cellular phone.
That’s the same drug rep who gives bad information to the ole doc about her drug company’s drugs. The Journal of the American Medical Association says at least eleven percent of the information a drug company rep tells a doctor is inaccurate. In the case of the anti-arthritis drug, Vioxx, according to WebMD, drug reps were instructed by the manufacturer, Merck, to tell doctors the drug was actually good for the heart. They told doctors this when the company knew there were cardiovascular risks associated with the drug. The sad truth is many drug reps don’t have the education or training to know anything about clinical implications of drugs.
For that matter, most of us lack the education or training to understand critical details of prescription drugs. Drug commercials for laypeople are inherently dangerous. That’s why a drug commercial always includes the phrase, “ask your doctor if ____ is right for you.” In other words, you probably have no business making prescription decisions based on a 30 second commercial. You probably need about 12 years of medical school to suggest a powerful prescription drug.
My suggestions for a fix next time