I promise you, in the cost of drugs, advertisement is not where it breaks down.
Drug Companies spent 4 billion dollars
on advertising in 2004, that's not chump change. They've also spent 800 million on lobbying
in the past 7 years.
In addition, of the 1,274 people registered to lobby in Washington, D.C. in 2004 on behalf of the pharmaceutical industry, according to the non-partisan Center for Public Integrity, 476 are former federal officials who worked for regulatory agencies as well as in Congress. They include over 15 former members of the U.S. Senate and over 60 members of the U.S. House of Representatives. The most powerful pharmaceutical industry lobbying group in Washington is the pharmaceutical trade group Pharmaceutical Research Manufacturers of America (PhRMA). It is now headed by former Rep. Billy Tauzin (R-LA) and was central to getting the 2003 Medicare Modernization Act passed while Tauzin was Chairman of the House Energy & Commerce Committee
Drug manufacturers successfully joined with the Bush administration in preventing cost restrictions on drugs with the passage of the new Medicare law which features prescription benefits, shortly going into effect in 2006. In addition, drug companies are awarded with corporate tax breaks by the federal government.
Senator Bill Frist, a heart surgeon prior to serving in the Senate and now Senate majority leader, has just recently called upon the Government Accountability Office (GAO), a non-partisan investigative branch of the Congress, to examine drug advertising practices. He said, “This advertising can lead to inappropriate prescribing and fuel prescription drug spending.” On the other hand Sen. Frist has personally enjoyed favors from pharmaceutical giant, Schering-Plough, supplying him with a private Gulfstream corporate jet several times at the cost of a first-class commercial fare. Pharmaceuticals regularly supply members of Congress access to private jets at a minimal cost, which often includes a lobbyist along for the ride to capture a lawmaker’s ear on key legislation they either want passed or want to prevent.
Along with the lobbying efforts of pharmaceutical companies themselves are non-profit organizations which directly profit from a money stream from the drug makers. To wit, during the Senate hearings in March 2005 on the FDA’s drug approval process in light of the belated discoveries of the health risks from taking Vioxx, witness Nancy Davenport-Ennis testified on behalf of the National Patient Advocate Foundation which receives funding from pharmaceutical firms, Pfizer, Merck - manufacturer of Vioxx-, and Glaxo-SmithKline. She admitted that “I don’t think there is a patient advocacy group in America that does not receive some level of funding from a pharmaceutical company.” This includes the AARP, instrumental in passage of Medicare’s new prescription drug plan, which remains flawed and confusing to date, even to the Social Security Administration, as they scramble to outline its rules and benefits for 2006.
Physicians have long been concerned about the direct-to-consumer advertising and want the discretion to prescribe medication put back into the examining room. At a recent American Medical Association meeting several resolutions were proposed to restrict such advertising. Interestingly Washington lobbyists on behalf of several pharmaceuticals attended the meeting in an effort to block such reforms and such issues were then tabled by the AMA for another year.
Senator Herb Kohl (D-WI), ranking member of the Senate Special Committee on Aging, recently said, “Spending for prescription drugs is one of the fastest growing components of national health care spending in the U.S., increasing fourfold between 1990 and 2002. At the same time, pharmaceutical manufacturers are spending billions of dollars to advertise prescription drugs directly to consumers.” Kohl has joined Sen. Frist in requesting the GAO research on the impact of direct-to-consumer advertising to consumers and how much television and print ads have led to escalation of drug costs.
And more importantly, the less costly prescriptions are dispensed, the less the costs will continue to rise. Yet the retail costs of medications which many elderly and disabled must pay for out-of-pocket due to no prescription coverage, can easily add up to thousands of dollars each year, and they usually do not have the luxury of doing without their medications. Until medications are affordable for all, especially for those most in need of them, it will be up to the federal government to take on the pharmaceutical industry in containing costs. Sadly, at this juncture it does not appear that will happen anytime soon.
We are particular people. We want our government to take care of us. We want to know that the drugs we take are safe, completely totally safe. If they aren't safe, we shall sue the butt off the drug makers. therefore our government regulates the drug companies, and the medical profession.
Apparently they're not doing a good job given all the recent problems we've seen with numerous drugs. Who generates the data used to decide if a drug will recieve approval? The drug companies do.
Drug manufacturers put out *so* much money in creating new treatments and getting them approved. I'm not saying that I think the approval process is too strict, I'm just explaining the cost. While it might only cost a buck to physically create the pill, they need to charge $30 (and those are random numbers, I have no idea what the actual ratio is) to pay for all the research that led to that pill eventually getting on the shelves, and the hundreds of other ideas that *didn't* make it to the shelves.
As I understand it the American taxpayer is pretty much footing the R&D bills for new drugs (given the price controls everyone BUT America has on how much drug companies can charge.
US residents pay more as taxpayers and consumers for pharmaceutical R&D than do persons in other OECD countries.
The most important US contributions to global R&D are from the public sector. The $28+ billion per year the US government spends on the National Institutes of Health and the significant amounts spent on health care R&D in other federal agencies (CDC, DOE, DOD, NSF, FDA, etc) are highly valued resources for the entire global scientific community. These public sector expenditures on R&D are more than 25 basis points of US GDP. No other country comes close.
Based upon data from the US IRS regarding the federal R&D Tax Credit and other sources, CPTech estimates that 13 percent of US pharmaceutical sales are reinvested in R&D. Given current outlays on medicines, this is more than 25 billion dollars in private sector R&D that is financed from purchases of drugs by US residents -- or about 25 basis points of GDP from consumers.
Taken together, US residents, taxpayers and consumers pay for R&D in amounts greater than 50 basis points of GDP. We estimate that other OECD countries pay considerably less, probably in the range of 5 to 20 basis points of GDP.
Private Sector R&D is Not Very Productive or Innovative
CPTech estimates that the patent system increased the cost of pharmaceutical products by $400 billion globally in 2003. This higher cost is justified on the grounds that it finances R&D.
Despite staggering increases in consumer outlays for new medicines, the rate of innovation in new drugs is modest. Over the past eleven years, about 70 percent of New Chemical Entities (NCEs) registered with the US FDA were judged not significantly better than existing treatments. Clinical trials for the “me too” products were almost twice as large as the trials on the innovative products, suggesting an even greater bias in investment toward “me too” drugs.
the same is true of medical practices. We want to be safe, so we want our doctors to be regulated, so we are paying for all of the research to make sure that what they are doing is safe. I'm not saying that our safety measures are any stricter than the countries with less healthcare costs per person, but I would be interested in knowing those numbers.
Last in my personal laundry list of problems with the system is too much overhead and pencil pushers to pay for. Why? Because we have 1,000s of providers with 1,000s of different forms, coverages, exclusions, exemptions etc...THAT IMO is the real source of tons of waste.