US has shorter life expectancy

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American Drug Prices: Big Pharma's Dirty Little Secret

Published on Sunday, December 26, 2004 by the Los Angeles Times

Big Pharma's Dirty Little Secret

by Rost

The American healthcare system is the best in the world. Or so we are often

told. But is it really true?

It is certainly the best system for drug companies, which can charge the

highest prices in the world to some U.S. consumers. The Congressional Budget

Office has estimated that average prices for patented drugs in 25 other top

industrialized nations were 35% to 55% lower than in the United States.

And it is a pretty good system for hospitals, insurance companies and

others that deliver healthcare services. Americans spend about twice as much

per person for healthcare as do Canadians, Japanese or Europeans, according

to the World Health Organization.

But it's not a good system for American citizens. The U.S. has shorter life

expectancies and higher infant and child mortality rates than Canada, Japan

and all of Western Europe except Portugal, according to the WHO.

I'm a drug company executive who has spent 20 years marketing

pharmaceuticals. And I'm troubled. I'm most troubled by the fact that we

stick it to the people who can afford it the least.

For instance, elderly people who use a Medicare discount card and have to

pay $1,299 annually for a drug that the Department of Veterans Affairs

purchases for $322, according to a comparison by Families USA. Or

middle-class families that lose health insurance and have to pay $29,500 for

an overnight hospital stay, when Medicaid would have paid only $6,000,

according to the Wall Street Journal.

It just doesn't make any sense. And, not surprisingly, the companies with

the biggest profits ‹ those in the drug industry ‹ have been fighting

hardest to maintain the status quo.

Our dirty little secret is that the drug industry already sells its

products, right here in the U.S., at the same low prices charged in Canada

and Europe. It's done through rebates. These are given to those with enough

power to negotiate drug prices, such as the VA.

A 2001 study by the consumer advocacy group Public Citizen found that drug

companies' favorite customers paid just a little over half the retail price.

This leaves the 67 million Americans without insurance to pay cash, with no

rebates, at double the prices paid by the most-favored customers.

The fight against re-importation of drugs is a fight to continue to charge

our uninsureds full price while giving everyone else a rebate.

But what about all those programs drug companies provide to help the

indigent pay for drugs? If they really worked, the Kaiser Family Foundation

wouldn't have reported that 15% of uninsured children and 28% of uninsured

adults had gone without prescription medication in 2000 because of cost, and

87% of uninsured individuals with serious health problems reported trouble

obtaining medication.

People today have to choose between drugs and food. The journal Diabetes

Care recently reported on a study of older adults with diabetes. One in

three said they went without food to pay for drugs.

As a drug company executive, I care about profits. When I was responsible

for a region in Northern Europe, I doubled sales in two years by lowering

drug prices, and in the process increased my company's sales ranking in

Sweden from No. 19 to No. 7 in less than two years. I proved that it is

possible to do good business with lower prices.

It's encouraging to see that the American Medical Assn. recently came out

in favor of a system that would allow U.S. pharmacies and wholesalers to

re-import drugs safely from other countries. This is exactly what Europe has

had for more than 20 years. It is outrageous to claim, as politicians and

drug companies have done, that the U.S. wouldn't be able to safely and

cost-effectively handle re-importation. A key trade association for European

pharmaceutical companies claims there has never been a confirmed case in

Europe of a counterfeit medication reaching a patient as a result of

re-importation. In Germany, this was verified last year by the Federal

Ministry of Health.

In the next five years, branded drugs with annual sales of $72.9 billion

are expected to lose patent protection. So we in the drug industry are

fighting re-importation because we're worried about the bottom line. But

when we have to choose between that and the lives of those who can't afford

drugs, we have to choose life.

I joined this industry to save lives, not to take them. And that's the

reason I've chosen to speak out.

Rost is a vice president of marketing at Pfizer. The views expressed

here are his own and do not reflect those of his employer.

© 2004 LA Times