The hidden cost of prescription drugs

Last month I gave you an update on how that new marketing code of the Pharmaceutical Research and Manufacturers of America (PhRMA) was going (“The Drug Salesman & the PhRMA’s Daughter” 9/23/02). Designed to “govern” the pharmaceutical industry’s relationships with physicians, early reports showed that many of the voluntary guidelines were being blatantly ignored.

In other words, to nobody’s surprise, nothing has changed. And nobody really thought it would. PhRMA is an advocacy group that represents pharmaceutical manufacturers. Their one and only job is to make the industry look good. They have no powers and certainly no real intention to regulate anyone.

So now the Office of the Inspector General (OIG) of the Department of Health and Human Services is going to take its turn. On October 3, 2002, OIG posted a draft of a document titled “Compliance Program Guidance for Pharmaceutical Manufacturers” in the Federal Register. Any interested parties are invited to respond with comments on the draft by December 2, 2002.

The Compliance Program appears to be designed to prevent drug company “incentives” from stepping over the line into coercion – especially anywhere federal government health programs and pharmaceutical salespeople cross paths. The OIG is basically saying: “Do what you want out in the public sector, but when you’re on federal turf, you better be good.”

Among other things, the OIG recommends that drug companies develop a “corporate statement of ethical and compliance principles that will guide the company’s operations.”

I’ve accused drug companies of double speak before. This one should be a classic.

Meanwhile, back in the real world, I recently received this e-mail from a reader named Julie who has this to say about how one pharmaceutical company is responding to the PhRMA guidelines: “I work for a sizeable clinic, and we are not only still getting wonderful, expensive lunches, we are getting more and more of them, at least 4 weekly for 60 employees. It makes me really sick to think that that is the main reason my medicine costs so much!”

We know for sure that the high cost of medicine is NOT due to the cost of the ingredients. As HSI Panelist, Allan Spreen, M.D., pointed out in a recent e-Alert (“Compounding the Issue” 10/15/02), when you compare the cost of drug ingredients to the prices charged, some well-known brands are marked up more than 200,000%. And at least one (Xanax) is marked up more than 500,000%!

So often we hear the pharmaceutical industry defending the prices they charge for prescription drugs, crying about development, production and advertising costs. But you’ll notice that we never hear them complaining about the millions they spend hosting expensive golf junkets for hospital administrators, paying out “consulting” fees to doctors, and treating entire clinics to lunch several times each week.

To Your Good Health,

Jenny Thompson
Health Sciences Institute