Home
Current Issue
Past Issues
Support
About IJME
Oct-Dec2001-9(4)
FROM OTHER JOURNALS
Why drugs cost so
much...
Controversy surrounds the price of prescription
drugs in the US. In 1999, when drug industry profit margins were higher than
most other sectors of the US economy, drugs accounted for 44% of the total
increase in health care costs.
As the post-development costs of drug manufacture
are only 20-30% of the sale price, the industry justifies the rest on the basis
of two factors. The first is that modern pharmaceuticals, apart from providing
therapies for conditions which were previously untreatable, have reduced
spending for hospital stays, surgery and other costly treatments. The second
factor is that the industry needs to recoup the enormous overall cost of drug
development where for one successful drug, the industry screens 5,000 compounds
in the lab and 10 are subjected to expensive clinical trials.
While there is some truth in the first argument, in
that drugs have reduced cardiovascular mortality and lowered elective surgeries
for diseases like peptic ulcer disease and prostate hyperplasia, the cost of
long-term drug therapy spread out over many years is very high and
therefore may not save much. Cost-effectiveness analyses are being used in
Australia, over the strenuous objection of the industry, as a constraint on drug
costs.
Are the large costs associated with drug
development justified? Computer-assisted drug development is expensive and has
produced only a tiny number of drugs. Use of genomics in drug development may be
even more costly because the genetic component of most diseases involves
multiple rather than single genes which interact with environmental factors to
cause disease. Therefore genomics will need to tailor drugs to the hundreds and
thousands of multi-gene variants in individual patients resulting in enormously
expensive drugs applicable to a very small market.
Instead of government price controls on drugs, or
regulation by a non-profit institute set up by private insurers and government,
the industry could voluntarily lower prices. The prime beneficiaries would be
patients. Health care systems would be able to spend the saved dollars on other
badly needed basic medical services. Primary payers such as government and
employers would benefit from these reduced costs. The pharmaceutical industry
also would benefit. Its less-than-public spirited image would improve and in
addition it would reduce the threat of government regulation which is a major
concern to the industry.
Davidoff Frank. The heartbreak of drug
pricing Ann Int Medicine 2001; 134 (11): 1071.
And the other point of
view...
This article was commissioned by the Pharmaceutical
Research and Manufacturers of America as a counterpoint to the above
article.
Pharmaceutical price controls are being proposed to
curtail increases in health care costs. However the increase is caused more by
an increased use of drugs and switching to newer, more effective drugs than by
an increase in price of existing drugs. The industry's position is summarised
below.
1. Pharmaceutical research is motivated primarily
by the possibility of large profits from the rare success in research. Financial
calculations suggest that after accounting for risks and the role of research
and development as an investment, pharmaceutical industry profits have not
persistently exceeded competitive levels.
2. Drug price controls cannot rest on objective,
predictable standards including the benefits or costs of individual drugs, as
medical and economic benefits cannot be determined until well after marketing
(depending on the size of treatable population, changes in medical practice
etc.). Research costs are shared among numerous drugs and, sometimes, firms.
Advertising costs, though considered wasteful by some, make markets more
competitive and are socially beneficial as advertising overcomes information
deficits of patients and doctors.
3. In the absence of objective standards for price
control, price regulators would reduce drug prices below levels sufficient to
reward innovative research. Decisions would be dominated by political forces and
advocacy groups who would each try to pass on the cost to other groups. Drugs
already on the market would continue to be available as long as prices remain
above cost but a drug in development would suffer as there would be no group
advocating to price it above its cost which would be unknown at that time.
4. Research firms would anticipate the effects of
price controls and curtail research because potential payoffs would be reduced.
Firms undertaking the small probability, high payoff research that is essential
to pharmaceutical advances would have reasons to doubt that they could obtain
the financial returns necessary to recoup their costs and sources of funding
would dry up. The deleterious effect of price control is evident in the slow
progress on drugs for such massive problems as malaria as the nations where
malaria is a major problem are likely to exert price control through
disregarding patent rights to a breakthrough drug.
5. Finally, once established, price controls
would tend towards complexity and entrenchment of vested interests and could
become permanent regardless of the harms that they cause. In summary,
pharmaceutical price controls offer short-term gains for a small proportion of
patients at the cost of curtailing research that promises to bring far better
therapies in the future.
Calfee John E. Pharmaceutical Price Controls
and Patient Welfare Ann Int Med 2001; 134(11): 1060-1064
Participating in direct to consumer
advertising
Direct-to-consumer advertising (DCA) may be
conducted through print media, television, audiotapes and videotapes. DCA serves
two purposes: it informs patients about a product and it attempts to persuade
them that one company's product is superior to that of its competitors. Although
DCA may be regarded as educational, it is also a marketing tool. Pharmaceutical
or medical device companies may solicit neurologists to participate in DCA. This
Practice Advisory is based on the following tenets: 1) Patient education
material produced by pharmaceutical or medical device companies will provide
education as well as advertising and should therefore be regarded as DCA; 2)
Mass marketing through DCA may promote a drug or device that is unsuitable to an
individual; 3) Participation in DCA may harm a neurologist's professional
reputation and trusted relationship with patients; 4) The relationship between
neurologists and industry merits further analysis and improvement; 5) Public
information about advances in therapy should be conveyed from impartial sources.
Neurologists may participate in DCA by writing or editing material that is used
as an insert in an article from the sponsoring company, by authorising excerpts
of their oral or written presentations for video/audio tapes or pamphlets.
Neurologists who participate may be motivated by the belief that they are
providing useful information to a wide group of patients. However, the
neurologist's contribution may be distorted or her/his participation may be
wrongly interpreted.
Distortion could occur if the neurologist's
qualifying or cautionary statements are omitted from the final product. Opinion
could get presented as fact. A neurologist's preference may make it harder for
another neurologist to recommend an alternative medication. Conflict of interest
may occur if a neurologist has accepted compensation for DCA. She/he may not be
completely objective when assessing the relative merits of competing products.
Full disclosure to the public is the most common means of mitigating a conflict
of interest. Recommendations - A neurologist who participates in DCA should
insist on the following conditions:
1. She/he should have the opportunity to review the
finished product for accuracy and fairness and to withdraw it if it cannot be
modified to her/his satisfaction.
2. The neurologist's participation should be
contingent upon the inclusion of a disclosure statement similar to those used
for scientific meetings and publications. It should indicate the payment or
other compensation received and should clearly state conflict of interest, if
any.
The Ethics, Law and Humanities Committee of the
American Academy of Neurology. Practice Advisory: Participation of neurologists
in direct-to-consumer advertising. Neurology 2001; 56:
995-996.
Reflections of a medical professional and
editor
George D. Lundberg, a distinguished pathologist and
editor-in-chief of the Journal of the American Medical Association for 17 years,
knew that his sacking in 1999, as editor, was inevitable. He had upset too many
people for too long a time. His editorial strategy, he has said, was 'to
deliberately give (readers) something to complain about'. This had eroded the
patience of his corporate supervisors at the AMA. In the end his editorship
collapsed not on a point of principle or integrity but over his decision to
publish a study of students' attitudes about oral sex during the public travails
of President Bill Clinton. Lundberg is rueful about the outcome: "The Monica
Lewinsky affair resulted in the loss of my job," he writes, "but not Bill
Clinton's."
Lundberg begins with a series of stinging
indictments of the AMA. The present organization has 'lost its credibility' and
'lacks leadership'. It has 'bloated senior staff', along with 'a group of
pampered voluntary officers' and executives enjoy 'inflated per diems and
multiple junkets'. According to Lundberg, the fact that over two-thirds of
physicians in the United States refuse to join its ranks proves that the AMA is
reviled by its constituency. He watched as the AMA adopted staunchly
pro-Republican policies, campaigned for the interest of the doctors rather than
patients, failed to protect the fragile mantle of professionalism surrounding
physicians and preferred to fight within its own committees rather than openly
on behalf of the public.
He is equally scathing about his clinical
colleagues. There has been a 'disastrous severance of trust', the origins of
which lie in the ways in which doctors, their egos inflated by the prospect of
unbridled affluence, have sought new ways to make money from the sick. As a
result, professional standards have plummeted. Medicine has been seduced by
business. Lundberg wants doctors to take back their profession and he believes
they can do so only if they provide a package of basic health care to all
citizens. To achieve such an ambitious goal, rationing must be embraced, not
resisted. As unpleasant an idea as this might seem, the benefits in tackling
health inequalities and quality assurance, would be overwhelming. On the whole,
his account of a life and its times has the ring of honesty. He also recognises
that his expulsion from the AMA was to the journal's eventual advantage.
Stronger systems to safeguard editorial independence are now in place for which
his successor owes him a huge debt.
Horton, Richard. Book review NEJM 2001; 344
(26): 2032 Severed Trust: Why American Medicine Hasn't Been Fixed George D.
Lundberg, with James Stacey 371 pp, New York, Basic Books, 2001.
Excerpted by Meenal B. Mamdani, MD, Assistant Chief
(retired), Neurology, VA Hospital, Hines IL USA. Emailmmamdani@home.com.