25 Shocking Facts About the Pharmaceutical Industry
Researching and snagging an adequate, wallet-friendly health care plan is tough these days, despite its high-profile presence in political debates. A large part of the controversy over expensive health costs stems from criticism of high-priced medications marketed by powerful pharmaceutical companies. From Medicare fraud to CEOs worth billions of dollars, big drug companies are accused of putting profits above patients, spinning false PR campaigns and more. We’ve uncovered 25 of the most shocking facts about the pharmaceutical industry in this list.
The price of drugs is increasing faster than anything else a patient pays for: Marcia Angell writes in her book The Truth About Drug Companies that “drugs are the fastest-growing part of the health care bill which itself is rising at an alarming rate.” Dr. Angell argues that patients are spending more on drugs simply because they are being prescribed more drugs than ever before and that “those drugs are more likely to be expensive new ones instead of older, cheaper ones, and that the prices of the most heavily prescribed drugs are routinely jacked up, sometimes several times a year.”
Your doctor may have an ulterior motive behind your prescription: In 2007, the St. Petersburg Times reported that drug reps often give gifts to convince doctors to prescribe the medications that they represent. Dr. James P. Orlowski tries to teach his students that interaction with drug reps is not in the best interests of patients. Even though many doctors may believe solicitation from drug reps is unethical or at the very least impractical, gifts like free meals, pens, posters, books, and free samples are offered to physicians in an effort to influence their prescription practices.
Pharmaceutical companies spend more on marketing than research: According to ScienceDaily, a “new study by two York University researchers estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as it does on research and development.” Despite pharmaceutical companies’ claims that Americans pay such high prices for prescription medications because they’re really paying for research and development costs, the industry spent $33.5 billion on promotion costs in 2004. The study also “supports the position that the U.S. pharmaceutical industry is marketing-driven and challenges the perception of a research-driven, life-saving, pharmaceutical industry” that values the lives of its patients, rather than their spending habits.
Brand name meds often have a 1,000% mark-up price: Many Americans are aware that brand name prescriptions cost more than generic meds, and that part of the reason for the higher prices is because they’ve been hiked up by the pharmaceutical companies themselves and aren’t necessarily a direct result of expensive new ingredients. This study, however, reveals that some meds can have a mark-up of 1,000%. For example, according to the study, consumers pay approximately $215 for 100 tablets of the allergy medicine Claritin, while the cost of the generic active ingredient in Claritin only costs 71 cents.
Popular meds are referred to as “blockbuster” drugs: The new presence of blockbuster drugs is a testament to how the pharmaceutical company’s marketing tactics and price hikes are getting out of control. According to TheAtlantic.com, “the industry usually considers a drug to be a blockbuster if it reaches a billion dollars a year in sales.” The drug Prilosec, for example, was marketed as a miracle pill that allowed people to “eat the burritos and curries that their gastrointestinal systems had placed off-limits.” Prilosec is the first drug to make the industry $5 billion in one year, and the next year, in 2000, Prilosec reached $6 billion. Consumers called it “purple Jesus,” making it easy for the drug company to capitalize on patients addict-like behavior.
Vioxx advertising reaches new heights: To give consumers more perspective on how prescription drug advertising has reached new heights, the AARP Bulletin reports that pharmaceutical giant “Merck spent more advertising Vioxx, according to NIHCM, than the $125 million spent promoting Pepsi or the $146 million spent on Budweiser beer ads. It even came close to the $169 million spent promoting GM’s Saturn, the nation’s most advertised car.” While “drug prices are rising at more than twice the rate of inflation,” industry analysts and insiders debate over whether or not rising prices is the fault of the pharmaceutical company or the consumers.
Drug reps often have no medical or science education: Is it safe for doctors to assume that the professionals they meet with to discuss new medications and prescription recommendations for their patients actually have backgrounds in medicine or science? According to ABC News, it’s not. A former drug rep for the pharmaceutical company Eli Lily, Shahram Ahari testified before Congress, saying that “pharmaceutical companies hire former cheerleaders and ex-models to wine and dine doctors, exaggerate the drug’s benefits and underplay their side-effects.” He also explained that he was taught “how to exceed spending limits for important clients…[by] using friendships and personal gifts” and to “exploit sexual tension.”
Pharmaceutical companies are helping, hurting the AIDS epidemics: Pharmaceutical companies have been feeling the pressure from the UN as well as governments and activists from underdeveloped countries to supply tests and medicine for AIDS patients at reduced prices. According to the Center for International Development at Harvard University, the pharmaceutical company Merck & Co. agreed to slash prices on its two AIDS drugs in Brazil” in 2001, but supposedly “in part to stop that country from importing a generic version.” Unpatented AIDS drugs are circulating in countries like South Africa, which makes pharmaceutical companies nervous because “patents are the basis for high drug prices,” and the presence of generic drugs “weakens the drug companies’ efforts to maintain a worldwide environment that respects intellectual property.” The debate surrounding intellectual property and the private sector vs. patient rights and affordable health care is magnified on a much larger, more global scale in this situation.
Doctors can choose to reveal or keep private their prescription records: Drug reps often research doctors’ prescription records before meeting with them and attempting to convince them to recommend certain drugs. By understanding a physician’s history with a given drug, the drug rep is more likely to influence doctors and sell more medicines. The New York Times reports, however, that not all doctors are falling prey to these background checks. In 2006, the American Medical Association decided to give doctors a choice to keep their “records off limits to drug sales representatives” and make prescription recommendations based on unbiased judgment.
Good PR trumps patient care: When Merck & Co. found out that one of their products, Vioxx, can increase the risk of heart attacks in its patients, it allegedly “played down” the evidence. Cleveland Clinic cardiologist Dr. Eric Topol accused Merck of “scientific misconduct,” and two days later, Dr. Topol was kicked off the board of governors at the Cleveland Clinic.
Toxins found in drugs exported from China: A top story in the spring of 2007 centered around Zheng Xiaoyu, a Chinese drug czar who was sentenced to death “after admitting that he took bribes while running the country’s Food & Drug Administration between 1998 and 2005,” when he served as commissioner. According to The New York Times, “every year, thousands of people [in China] are sickened or killed because of rampant counterfeiting and tainted food and drugs.”
Abbott Laboratories charged Medi-Cal nearly $10 for saline solution: This list has already mentioned some of the extreme mark-ups for prescription medications, but Abbott Laboratories’ fraudulent behavior towards California’s state Medicaid program actually ended up in court. The state attorney general “sued 39 drug companies…accusing them of bilking the state of hundreds of millions of dollars by overcharging for medicines,” reports The New York Times. An example of the outrageous mark-ups include the $9.73 price tag for saline solution, which cost other health care providers 95 cents.
Guilty of Medicare fraud: Pharmaceutical companies are also being tried in federal courts as an answer to their exploitation of Medicare. AstraZeneca Inc. had to pay $280 million in civil penalties and $63 million in criminal penalties to the federal government after the company “paid kickbacks to doctors and coached them to cheat Medicare to promote a prostate cancer drug.”
Some generic brands are becoming more popular: Those wanting to really “stick it” to the big man and who hope to see pharmaceutical companies stumble as the result of more competition and fewer consumers will enjoy this 2007 report from The New York Times, which finds that “annual inflation in drug costs is at the lowest rate in the three decades since the Labor Department began using its current method of tracking prescription prices.” Patients are starting to use generic medications and buy prescriptions from discount stores like Wal-Mart to alleviate the financial burden of brand name drugs.
Combined wealth of top 5 pharmaceutical companies outweighs GNP of sub-Saharan Africa: Corporate Watch shows the public just how much wealth big pharmaceutical companies have, even on a global scale. Their report references The Guardian, which found that “the combined worth of the world’s top five drug companies is twice the combined GNP of all sub-Saharan Africa and their influence on the rules of world trade is many times stronger because they can bring their wealth to bear directly on the levers of western power.”
Dr. Robert Jarvik isn’t a licensed doctor: Many Americans watched as Dr. Robert Jarvik, inventor of the artificial heart, gently coaxed them to take the Pfizer-marketed drug Lipitor in order to lower their cholesterol. The ads were eventually pulled, however, when “it turn[ed] out Jarvik isn’t a licensed heart doctor.” U.S. Representative John Dingell remarked, “It seems that Pfizer’s No. 1 priority is to sell lots of Lipitor, by whatever means necessary, including misleading the American people.”
Ernesto Bertarelli makes Forbes’ billionaires list: Just as Americans are questioning the record profits and salaries of booming oil companies when they’re forced to accept rising prices at the pump, people may wonder about Ernesto Bertarelli’s billionaire status. Bertarelli is the CEO of the pharmaceutical company Serono, and Forbes reports that his net worth in 2002 reached $8.4 billion. That was enough to place him as the 31st richest person in the world.
Pfizer is fifth-best wealth creator: Corporate Watch reports that Fortune named pharmaceutical giant Pfizer as the “fifth-best wealth-creator” in America, and Corporate Watch considers it the “largest and richest pharmaceutical enterprise in the world.”
Americans pay more for prescription meds than anyone else in the world: The Media Matters website analyzes a 60 Minutes interview between correspondent Bob Simon and then Surgeon General Richard H. Carmona. During the segment, Carmona maintains that Americans pay more for brand name prescriptions than anyone else in the world because of the hefty price associated with “the research and development of drugs.” See point number 3 on this list, which points out that drug companies pay more on advertising and marketing than they do on research and development.
Pharmaceutical advertisements actually work: The public wag their fingers at pharmaceutical companies’ advertising budgets only if they admit that sometimes, those commercials actually work. The Miami Herald points out that while “more than four in ten [Americans] have an unfavorable view” of pharmaceutical companies, “prescription-drug advertising has driven a third of Americans to talk to their doctors about specific drugs, and many of these people got a prescription from their doctor as a result.”
Americans spent $200 billion on prescription drugs in 2002: Marcia Angell reveals in her book The Truth About the Drug Companies that Americans spent $200 billion on prescription drugs in 2002. That’s the amount experts estimated it will cost to rebuild New Orleans after Hurricane Katrina, and the amount China is pouring into an energy renewal program.
Academics help pharmaceutical companies conduct research: A new trend in the R&D sector of the pharmaceutical industry features research-based partnerships between academic centers and drug companies. Marcia Angell explains the collaboration by writing that these companies “now ring the major academic research institutions and often carry out the initial phases of drug development, hoping for lucrative deals with big drug companies that can market the new drugs. Usually both academic researchers and their institutions own equity in the biotechnology companies they are involved with,” and everyone can “cash in on the public investment in research.” As academic centers play a more significant role in the success of the drug companies, they are more likely to take on the “entrepreneur” spirit and make profits from patents, royalties and stocks, which can mark up the prices for everyday consumers.
“New” Drugs aren’t really new: When a new drug hits the market, is it really new? Euractiv.com reports on a recent study which found “that two-thirds of the prescription drugs approved by the Food and Drug Administration between 1989 and 2000 were identical to existing drugs or modified versions of them. Only about one-third of the drugs approved by the FDA during the time period were based on new “molecular entities” that treat diseases in novel ways.” Many of these newer drugs cost more because the drug companies have to extend their patents, which can “enable a brand company to delay generic competitors and maintain a high price for an aging product.”
Some drug companies are taking advantage of underdeveloped countries to perform clinical trials: Wired.com reports that India is becoming a more attractive place for drug companies to run clinical trials and test out new drugs. The article explains, “more and more drug companies are conducting clinical trials in developing countries where government oversight is more lax and research can be done for a fraction of the cost.” Controversy is starting to build over the trend, however, as one expert explains. Sean Philpott, managing editor of The American Journal of Bioethics, reveals to Wired.com that such practices may be unfair, as “individuals who participate in Indian clinical trials usually won’t be educated. Offering $100 [as payment for their participation] may be undue enticement; they may not even realize that they are being coerced.”
Pharmaceutical Companies donated millions to Hurricane Katrina relief programs: Americans are used to bashing pharmaceutical companies, just as they criticize health insurance companies, rising gas prices and monopolies. It may come as a shock, then, to discover the philanthropic efforts undertaken by big drug companies. Medical News Today writes that companies like Abbott, Eli Lilly, Merck, Pfizer and others have donated millions of dollars in cash and supplies to the Hurricane Katrina relief efforts.
By Laura Milligan
First Published in Nursing Online Education Database (NOEDb)