Rising Prescription Drug Prices: Warranted or Unjustified?

Rising Prescription Drug Prices: Warranted or Unjustified?

U. S. citizens pay the highest prescription drug prices in the world. This is an injustice that must be corrected. The "U.S. forbids the import of prescription drugs by anyone other than the original U.S. manufacturer, and even then only when the drugs meet all the approval requirements of the U.S. Food and Drug Administration (FDA)" (Barlett & Steele, 2004). Prescription drug prices are outrageously high in the United States because of the influence of advertising on consumer purchasing, the misleading statements by pharmaceutical companies about the cost of research and development of new drugs, the manipulation of patent laws, the antiquated laws regarding importation of drugs, and the influence of the greedy pharmaceutical companies' lobby on the Federal government. Prescription drug costs in the United States are unreasonably high, and consumers should have the option to save money by purchasing prescription drugs from reputable companies in Canada and the developed world.

Howard J. DeMonaco (2003), Chairman of the Human Research Committee of Massachusetts General Hospital and editor at Harvard Health Publications, predicts that prescription-drug costs will increase at a rate of around 11 percent each year. He attributes the increase to manufacturers raising prices, doctors prescribing new and more expensive drugs, and people taking more drugs than in previous generations. Pharmaceutical companies defend the increase in prescription drug costs. The increase in volume spending by seniors can be explained because they require multiple prescriptions to maintain an active lifestyle (Clemente, 2004). Pfizer states "the price increases of our medicines have averaged at or below the rate of inflation for the past five years" (Clemente, 2004). However, a The New York Times article refutes this information. "Last year, the drug industry raised prices by an average of 4 percent, twice the rate of inflation" (Connelly, 2003).

In a survey by Weiss Ratings, Inc., 23.3 percent of respondents cited expensive marketing as a reason for soaring prescription drug costs ("Drug," 2004).

Consumer advertising for prescription drugs has exploded since 1997, when the FDA relaxed its rules on pharmaceutical advertising. In 2000, drug companies spent about $10.4 billion on marketing, an increase of about 16 percent over the previous year, according to a recent study by consulting firm Scott-Levin (Banstetter, 2001).

"The top-selling drug companies have enormous advertising budgets. Merck, for example, spent $160 million during 2000 promoting its anti-arthritis drug, Vioxx. That's more than PepsiCo spent advertising Pepsi, and more than Anheuser-Busch spent promoting Budweiser beer last year" (Banstetter, 2001).

Advertising has been effective. "Prescription drug spending rose by 19 percent, or $20.8 billion, during 2000. About 48 percent of that increase came from the 50 most heavily advertised drugs" (Banstetter, 2001). The number of prescriptions written for the most advertised drugs jumped almost 25 percent during 2000, compared to a rise of just four percent for all other drugs (Banstetter, 2001). A study by the National Institute for Health Care Management, a Washington, D.C. based health care research group, reported 78 percent of doctors received requests from patients for Celebrex, a heavily advertised arthritis medication (Banstetter, 2001). "Retail sales of the 50 most advertised drugs rose 32 percent last year, compared to 14 percent for all other prescription drugs" (Banstetter, 2001). "The increase is fairly dramatic," said Steven Findlay, the National Institute for Health Care Management's director of research. "Of the 10,000 or so drugs on the market, it's this very small level of 50 or so drugs driving the spending upwards" (Banstetter, 2001).

Pharmaceutical companies defend the high cost of prescription drugs because of the cost of research and development. It takes 14 years and $500 million to bring one medicine to market (Clemente, 2004). Pfizer spends more than $3 billion on research and development (Clemente, 2004). Drug companies claim most of their profits are reinvested to develop new drugs, yet the industry has refused to show government auditors its books (Clemente, 2004). In addition, pharmaceutical companies do not acknowledge the financial contribution of the government which funds research with the National Institutes of Health (NIH), the National Cancer Institute, and other public agencies. "The Federal Government, mainly through the NIH, funds about 36% of all U.S. medical research. . . Of the 21 most important drugs introduced between 1965 and 1992, 15 were developed using knowledge and techniques from federally funded research" (Barlett & Steele, 2004). Pfizer's profits of $9.1 billion for 2002 were 28 percent, twice which of General Electric, nine times more than Wal-Mart and 31 times more than General Motors (Barlett & Steele, 2004). "Drugmakers' net profit margins averaged 19 percent last year vs. 7.5 percent for all the companies in the S&P 500. The seven largest U.S. drugmakers made $31.2 billion last year" (Gibbs, 2003). This supports the findings of a recent online survey conducted by Weiss Ratings, Inc.: "forty-two percent of consumers polled blame pharmaceutical companies' excessive profits for high prescription drug costs" ("Drug," 2004).

Pharmaceutical companies also defend the costs because of the patent laws. When a patent expires, a generic drug can be made and sold for lower cost. "Although patents last 20 years, the clock starts running when the drug is first developed, not when it's approved, so the average sales period is just 11 years" (Gibbs, 2003). However, the industry is constantly working on new variations of drugs. This results in multiple patents and patent extensions (Noonan, 2000).

Ð''If I'm a manufacturer and I can change one molecule and get another 20 years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac, instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less-certain endeavor, which is looking for brand-new drugs,' said Dr. Sharon Levine, the associate executive director and a pediatrician for the Kaiser Permanente Medical Group ("Bitter," 2002).

The facts support this theory. When a drug is submitted for approval to the Food and Drug Administration, it is categorized as a priority drug (significant improvement) or standard drug (similar to others). Eighty percent of approvals in the last six years were deemed similar