Why do pills cost so much? Blame Canada

The Repository (Canton, OH) ^ | January 22, 2005 | JIM HILLIBISH

[ResistorSister]

It’s called hyperparathyroidism, and many of us dialysis patients eventually must cope with it. It’s important to control it, or painful bone problems will develop.

My doc, after taking all the usual remedial steps, says I need a new drug, the first that alleviates the problem. Fine, write me a script.

“James, you’re not going to want to hear this,” my druggist said.

“It costs $13.35.”

“That’s cheap,” I said.

“Per pill.”

What? That’s $400, per month, for the rest of my life. I could mortgage a house for that, or lease a Cadillac.

I left without them. In the car, it hit me: corporate greed, golden faucets in the drug-company restrooms, executives taking home more in a week than I make in a year.

I had to do something, so I hit the Internet. The greed thing simply did not wash. The company is not exactly rolling in dough. Its stock hasn’t budged for three years. It doesn’t pay a dividend. You could make more money on a bank savings account.

So how did we get to $13.35? More Internet research. I deep scanned the company’s SEC statements and financials.

It’s a new drug with limited potential users. Company officials had to pay for many years of research, liability insurance and field trials and then FDA approval, with zero cash coming in. They have only a few years to sell it at full price before it goes generic.

Now they must sell the pills to countries with socialized medicine where costs are controlled by laws instead of the free market. That’s where the big rub takes place for us.

Americans are picking up the worldwide costs of medications, their development, testing, manufacture and some profit to keep the company in business and employees working. Other countries are not paying their fair share, nowhere close.

It’s insane, but it’s happening with all drugs. Americans are subsidizing the world’s medicine cabinets, rich countries including Canada. Then Canada resells them to us. Neat trick.

What to do? Write your congressman? Let’s pass a law like the others have, cutting prescription prices to affordable prices? Twenty-five cents a pill sounds good.

So Congress does that, and there goes this company and the industry.

(I did check on getting the pills in Canada. That country’s government is close to shutting off the pipeline to the States. They don’t want to knock out the American drug industry. They want to keep their own good deal, and keep us paying for it here).

If the world were a logical place, perhaps these countries would be picking up their fair share of drug prices. Like fun. Governments control prices, not the market. No politician over there ever would increase drug prices just to help us. They prefer to squeeze the fat cats — us. What a surprise.

My case has a silver lining. I have prescription insurance. We called them, and after the sticker shock subsided, they agreed to cover all but $30 a month to keep me walking, mowing the grass and hopefully free from a future of terrible bone pain.

What about the folks not on Medicaid and without insurance? What a scary thought. The $400 would be more than crippling. That’s crippling on their family budgets and crippling on their bodies, too. It’s enough to make even healthy people very sick. My druggist says it’s happening all the time. So far, nobody has a solution, just rhetoric, and we all know what that’s worth.

You can reach Repository New Media Editor Jim Hillibish at (330) 580-8324 or e-mail:

jim.hillibish@cantonrep.com

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[PGalt]

Interesting post and FReeper discussion. Thanks.

[johnmilken]

Yeah. In the UK it's illegal to advertise drugs directly to consumers. I do see what regular folk are supposed to do with that information anyway. If you have a problem see a doctor and let them decide, don't hassle them because of a neat marketing campaign.

[Non-Sequitur]

Now they must sell the pills to countries with socialized medicine where costs are controlled by laws instead of the free market.

The fallacy of that argument is that no, they don't have to sell the pills to Canada or any other country. Nobody is forcing them to. The long and short of it is if they were losing money selling pharmaceuticals to countries with socialized medicine then they wouldn't do it. The profit they make selling there just isn't as large as the profit they make selling here.

[arasina]

I can understand a drug company advertising to doctors and medical personnel, but how many $millions go into those TV ads to the general public. Why? Prescription drugs require doctor's prescriptions, so why are so many millions of dollars spent advertising to patients at home??

I have questioned that for years now --- ever since we began seeing the ubiquitous ads for pills, with their laundry list of precautions and the 'ask your doctor' disclaimer. Unfortunately, it is not likely that the advertising will end without yet another darned law on the books.

Advertising generates revenue for the entire pyramid of leeches: the ad production companies, the model agencies and actors, the ad agencies which represent the drug companies, the television and radio stations that air the spots and the doctors who get patients requesting the newest fad pill. (Rarely do you see a genuinely life-saving pharmaceutical product; most are only life-enhancing and sometimes created to counteract a bad choice of lifestyle---it's easier to take a pill than to change your diet or get more sleep, etc.)

I find it ironic that many of the drugs pushed to the public are apparently not fully researched and then have to be pulled from the 'market' -- Vioxx, for example. Could it be that some drugs are being released before they are adequately tested so their marketing can start sooner?

Related issue: There used to be TV ads for Enron. Why? Other than to make their stock look good, I could see no reason. The company did not have a product that was sold to the public, so why on earth would they need to spend big bucks on advertising? (But then I've never understood why the United States Postal Service has to advertise either.)

[wita]

Oh yea, the infamous drug cartel and the Rockefellers, et al. I think I disagree completely, and do not agree that the three drugs mentioned needed to be removed from sale. There is much more to be said on the subject, but I defer.

[TomGuy]

I always laugh at ads by the electric company or natural gas company, too. Like I have a choice????

And I still haven't figured out why my cable tv company advertises on a cable channel. If I don't have cable, I won't see the ad; if I already have cable, I don't need the cable ad.

Such is business. One hand greases the other. [Whatever that means.]

[texas booster]

I have a friend who cruises the Gulf, with a stop in Mexico, at least twice a year.

They figure that the cost of the cruise is offset by the cheap pharmaceuticals they can purchase in Mexico.

[Balding_Eagle]

2. Require all drug stores to publish their prices.

Car dealers should be forced to publish their prices too. Sometimes, if you drive to the next block, that second car dealer will sell for a lower price and that's unfair too.

[SeerSucker]

Quote: My case has a silver lining. I have prescription insurance.

---

Don't be fooled. The raising costs of medications also contribute to the raising insurance costs. We recently had to find a new insurance carrier because the UCLA system here in So Cal stopped accepting payments from the one we were using. Our rates went from about $800/mo to about $1,300/mo for a lot less coverage and included higher co-payments. The high costs of services and medications were not being covered under our old policy. So we pay either way!!

[Polybius]

To: beaver fever

Just out of curiosity, does Canada invent any drugs on its own?

No. Canada prefers to live as a parasite in regards to not only national defense but also their drug research and development. They then enjoy bragging about how, unlike their host, they are peaceful and have cheaper drugs.

As beaver fever points out in his Post 4, Canada demands that they get the drugs cheap, minus the research and development cost, or else they will simply steal the patent.

The answer is simple.

Have the U.S. Government legislate that no drug company that sells drugs in the U.S. may offer drugs cheaper to the U.S. market than it does to Canada.

The Canadians can then either pay their fair share of the reasearch and development costs or develop their own drugs.

[Polybius]

All this rant about the US patients subsidizing Canada and other countries is just more corporate BS. The problem with selling to Canada and other countries is that the companies don't make quite as much of a profit as they do in the US--but they do make a profit or they wouldn't sell to those countries.

Once the American market has assumed the full cost of the research and development, every pill that a drug company sells abroad at any cost that covers the cost of chemicals and shipping represents pure profit.

[Rate_Determining_Step]

> 1. Cease all prescription advertising to the general public. People should not be requesting drugs based on TV ads; doctors should be the ones determining drug needs.

The would be un-Constitutional. First Amendment.

Branding isn't free. When the power to brand is taken away, then all drugs will "appear" to be the same. There are many products I buy based on the good, hard-earned name of the company brand. My brands rarely fail me.

[Polybius]

Have the U.S. Government legislate that no drug company that sells drugs in the U.S. may offer drugs cheaper to the U.S. market than it does to Canada.

Typo Alert.

Should read:

"Have the U.S. Government legislate that no drug company that sells drugs in the U.S. may offer drugs cheaper to Canada than it does to the U.S. market."

The original sentence is what the Canadians Government currently demands.

[Nataku X]

It won't stop the Canadian government from putting the medication in public domain, will it?

[ArmedNReady]

Not only are the drug companies selling these drugs to other nations at a lower wholesale price than they are selling in the US, but they are also "giving" drugs to underdeveloped countries and calling it a charitable donation. The reality is that the drug companies sell the drugs cheaply to other countries, give some drugs away as "charity" to underdeveloped countries and then they set the price for the drugs sold in the US such that they make a profit. American are paying to make up for what the companies lose doing business elsewhere.

I have no problem with any business making a fair profit but to do so in this manner forces the people of the US to pay for the rest of the worlds prescription drugs. And the rest of the world treats the US like $hit.

[Hot Tabasco]

How are we getting ripped off? We ask for these drugs.

You're absolutely right! We are fastly approaching a moral dilemma here in this country which is a combination of increasing healthcare/drug costs and the desire to sustain our lives indefinately. Sooner or later we as a population are going to have to make a decision between the two.

Do we choose to prolong the life of an elderly person who has already lived a full and satisfied life by spending literally hundreds of thousands of dollars in the last remaining year or two of their life or merely try to make them as comfortable and pain free as possible........

I'm only asking the question, I don't have the answer.

[TomGuy]

The would be un-Constitutional. First Amendment.

No it wouldn't. Alcoholic beveraged were banned for decades. Prescription advertising was banned for decades. Lawyers advertising was banned for decades. It has to do with FCC policy, not First Amendment rights. They are still free to open their windows and yell whatever they want to.

[Polybius]

It won't stop the Canadian government from putting the medication in public domain, will it?

Nope.

No more that it would then stop the U.S. Government from banning imports of all Canadian products.

[Observer of Life]

Well, there was that insulin thing.