Is Big Pharma Simply Enjoying Profits or Fostering Profiteering?
*The following is an excerpt from an article “The Medicating of America,” published in Living Safer Magazine and The Legal Examiner.
Is Big Pharma Simply Enjoying Profits or Fostering Profiteering?
Five of the largest pharmaceutical companies in the world each made a profit margin of more than 20% last year—and have done so for more than the past decade. These include Pfizer, Hoffman-La Roche, AbbVie, GlaxoSmithKline and Eli Lilly. And it’s not just patients that notice the widening gap between what a company puts into drug development versus what they then reap in profits for years to come. Dr. Brian Druker, director of the Knight Cancer Institute in Portland, Oregon, puts it bluntly in a New York Times article from April 2013 that questioned the cost of cancer drugs; “If you are making $3 billion a year on Gleevec, could you get by with $2 billion? When do you cross the line from essential profits to profiteering?” And Druker should know about the revolutionary cancer treating drug, Gleevec, because it was his research in targeting cancer’s molecular defect in the human body while leaving healthy cells unharmed that led to the development of the product.
Almost immediately, Gleevec—generically referred to as Imatinib—was geared up for greatness as the FDA approved it for use in treating chronic myelogenous leukemia (CML), acute lymphocytic leukemia (ALL) and certain types of gastrointestinal stromal tumors (GIST)—it’s even featured on the World Health Organization’s List of Essential Medicines.
Manufactured by Novartis International, the appeal of this drug as part of a treatment regimen is global. In many parts of the world, a typical treatment of Gleevec can be obtained for a little over $19,100.00 USD a year (2016 pricing) In the United Kingdom, where a generic version became available in 2017, a typical treatment costs the National Health Service (NHS) about $28,327 USD a year. Yet in the United States, a typical yearly dose has a cost of about $84,400 USD.
Monopolization of the market is not just a concern in the United States, either. The Supreme Court in India actually ruled that Gleevec could not be patented by Novartis, opening the door to less expensive generics as they are developed.
In fact, India’s pharmaceutical companies are known to be the world’s largest supplier of generic drugs. At one time, there competitive pricing lead to a deflation in drug prices across the U.S., but recent trends show that their business model has become a double-edged sword—lower drug prices in the U.S. and quicker approval of generics by the FDA have now led to other producers of generics to enter the market, including South Korea, China and New Zealand. Right now, about 25 percent of drugs consumed by U.S. residents are actually manufactured outside the country. Part of President Trump’s plan to get drug pricing under control is to offer pharmaceutical companies numerous incentives and tax breaks if they bring production (and jobs) back to the United States, but some consumer advocates believe this could result in higher drug prices as there are more complexities involved as to why a pharmaceutical company does or does not locate its production facilities within the U.S.
More so than in the arena of generic drugs, consumers have yet to witness a lowering in the price of specialty and maintenance drugs. Many manufacturers are beginning to express the idea that certain drugs shouldn’t be priced in accordance with how much it costs to develop or produce the medication, but in relation to how it can improve the health or affect the quality of life for a given patient. In other words, the closer it is to a “miracle drug” then expect the price to be miraculously higher than what is justified by the cost of production.
According to a study published in JAMA by the American Medical Association (AMA), drug spending in the U.S. increased by 20 percent between 2013 and 2015. Yet another study by the American Hospital Association and the National Opinion Research Center (NORC) at the University of Chicago showed a similar increase of 23.4 percent spent during the same time frame—but they linked the jump specifically to an increase in drug unit pricing, not to an increase in the volume of drugs used. Thus, the Research Center found it difficult to explain the increase in dollars spent to anything other than price hikes by pharmaceutical manufacturers.
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