Last year, the American Journal of Medicine, aka "The Green Journal," ran a series of articles about the problems inherent in the American healthcare system. They were written by Dr. Edward Hoffer from Mass General Hospital in Boston. I would like to share with you some information from his article about the U.S. Pharmaceutical Industry. While spending on medication makes up only about 14% of total U.S. health care spending, it is rising rapidly and represents one of the most egregious failures of the “free market system” to be reasonable and fair. There is no doubt that the pharmaceutical and medical device industries have vastly improved health care over the last 50 years. For example, consider the fact that FDR died in 1945 of a cerebral hemorrhage because there was no effective treatment for high blood pressure.
We have come a long way since then, but at what cost and what value?
In 2017, U.S. pharmaceutical expenditures were $1443 per capita. Compare that to $667 per capita in Germany and $566 in Sweden. Implanted devices like prosthetic joints and pacemakers cost more than six times as much here as they do in other countries. The cost of insulin doubled between 2012 and 2016. While this reflects, in part anyway, a shift from older human insulins to newer analog insulins, the cost of the older insulins has increased dramatically.
It is estimated that 25% of diabetics underuse insulin because of its high cost. Ironically, insulin was discovered in 1921 by Canadian doctors, Frederick Banting and Charles Best, who sold the patent to the University of Toronto for $1 because they believed that this life-saving drug should be available and affordable for all diabetics who needed it. They would be spinning in their graves if they knew how their idealism has been corrupted by the pharmaceutical industry.
While price gouging is common in the pharmaceutical industry, one of the worst cases was the behavior of Turing Pharmaceuticals under the leadership of Martin Shkreli. In 2015, Turing bought the patent for Daraprim, knowing it was not widely used but was essential in the treatment of toxoplasmosis, a parasitic infection. They boosted the price from $13.50 a pill to $750 a pill, a 5500% increase. Despite being called to testify before Congress, Shkreli did not reduce the price. In 2017, Nostrum Laboratories raised the price of nitrofurantoin, used to treat urinary infections, from $475 to $2392. Nostrum’s CEO defended the increase, and defended the actions of Turing, by stating that, in a capitalist system, there was a “moral requirement to sell products at the highest possible price.”
Drug companies try to justify their high prices by claiming that they need to cover the high costs of research and development (R & D), but the reality is that they spend far more on advertising and marketing. When a truly innovative medication is released, many companies develop “me too” medications that tweak the original product. Then they market their product as even better than the original. This requires minimal spending on R & D, but huge spending on marketing. One can see this “me too” phenomenon in drugs like ACE inhibitors (lisinopril), ARBs (losartan), and the newer diabetic medications like Ozempic. New cancer drugs come to the market with price tags over $100,000. As newer gene therapy drugs become available, their price tags are likely to be in the millions. Rather than endlessly dwelling on ways to get rid of a duly elected president they don’t like, Congress needs to shift its focus to fix our broken healthcare system.
By Peter Galvin, MD
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