Big Pharma = Big Bucks
Corporations Run Capital Hill
In 1816, in a letter to George Logan, Thomas Jefferson wrote, “I hope we shall…crush in its birth the aristocracy of our moneyed corporations which are already to challenge our government to a trial of strength and to bid defiance to the laws of their country.”
Nearly two centuries later we find that it is Thomas Jefferson’s hopes crushed, not the intention of corporations to effectively own Capital Hill. The scandalous 700 billion dollar bail out financed by hard working American taxpayers is a dazzling example of corporate mafia at work. The subject of this article though is not the bail out but the patently immoral tactics of the pharmaceutical industry also known as Big Pharma.
Marcia Angell MD, in her book, The Truth about the Drug Companies, writes, “The combined profits for the top ten drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion). Over the past two decades the pharmaceutical industry has moved very far from its original high purpose of discovering and producing useful new drugs. Now primarily a marketing machine to sell drugs of dubious benefit, the industry uses its wealth and power to co-opt every institution that might stand in its way, including the US Congress, the FDA, academic medical centers, and the medical profession itself.”
Facts About Drug Companies
Facts About Drug Companies
On a daily basis Americans are hit with a barrage of ads from the drug companies promoting a message that ‘yes these drugs are expensive, but they are essential to your well-being and our research and development costs are huge – you get what you pay for’. We are being fed a big serve of BS!
Now I am not refuting that the pharmaceutical industry hasn’t helped to produce and provide effective drugs that have saved, improved and extended millions of lives, but their criminal and deceitful practices have caused a lot of grief, pain, unnecessary financial strain and deaths as well.
Some facts about the industry and the people they ‘serve’:
- Americans spend over $200 billion on prescriptions drugs with a growth of 12% annually.
- The rising cost of drugs means that many Americans simply can’t afford them or take less than the prescribed dose and are too embarrassed to tell their treating doctor, therebye making an accurate assessment impossible.
- The elderly are the most vulnerable – without supplementary insurance, and an average cost of $1500 a year for each drug they take, the costs are an impossible burden for many seniors.
- Despite the drug industry’s claims, research and development accounts for a relatively small part of their costs, especially when compared with marketing and administration, which soaks up about 36% of sales revenue – 250% more than R&D.
- In 2001, the former chairman and CEO of Bristol-Myers Squibb, Charles A. Heimbold Jr. made just under $75 million on top of $76 million in unexercised stock options (Families USA).
- Many of the new innovative drugs are developed not by the drug companies, but by universities, biotech firms or the NIH – this is largely tax-payer funded research.
- The vast majority of drugs marketed as ‘new drugs’ are ‘me too’ drugs – essentially a new name, packaging and marketing pitch is the only real difference – for example, the many cholesterol lowering drugs on the market.
- IMS Health estimated in 2006 that the worldwide sales of prescription drugs was around $643 billion with U.S sales accounting for half of that figure.
- Pfizer makes $50 billion a year.
- Americans pay much more for prescriptions drugs than virtually any other country in the world – sometimes hundreds of percent more.
- Amongst the crimes committed by big pharma are illegally overcharging Medicaid and Medicare, paying kickbacks to doctors, anti-competitive pricing practices, clandestine deals with generic companies to keep cheap generic drugs off the shelves, promoting the use of drugs not approved for certain ailments, misleading advertising and hiding evidence of wrong doing.
- Civil and criminal fines barely make a dent in the company’s earnings.
- Merck’s drug Vioxx killed about 60,000 patients – about the number of Americans killed in the Vietnam War. This claim was made by David Graham of the FDA, much to the disgruntlement of his FDA bosses
The 800 Pound Gorilla
The drug industry today is such a colossus that it has gotten used to throwing its weight around and getting away with pretty much what it wants. Between 1960 and 1980, prescriptions drug sales were holding steady but from 1980 to 2000 they increased 300%. Profits skyrocketed and Big Pharma was born under the Reagan administration and a cultural shift toward the view that greed is good.
To quote Angell,
“Starting in the Reagan years and continuing through the 1990s, Americans
changed their tune. It became not only reputable to be wealthy but something
close to virtuous. There were winners and there were losers, and the winners
were rich and deserved to be. The gap between the rich and poor, which had been
narrowing since World War II, suddenly began to widen again”. Under two terms
of Bush, the gap became a chasm and today the standard of living for the
average American has seen a dramatic fall, while the fat cats of Wall Street are licking their blood stained lips.
The Bayh-Dole Act sponsored by Sen. Bob Dole and Sen.Birch Bayh allowed universities and small biotech firms to patent their discoveries and strike deals with the big drug companies who then market the new drugs. Big Pharma was able to cash in on what is tax-payer funded research. Drugs licensed from academic institutions and biotech firms provide the research for roughly a third of the drugs marketed by big drug companies. Chasing the almighty dollar, the academic studies being carried out by the brightest minds in the industry are now focusing on research that may lead to a drug that is highly desirable and marketable to the drug industry - a bias that is not necessarily in the best interests of the tax paying public.
Another shift in legislation that proved a huge windfall for big pharma was the Hatch-Waxman Act which extended the monopoly rights for brand name pharmaceuticals – an exclusivity that translates to big bucks since no other company could sell the same drug for a particular time period. This allows the company to charge for the drug at a premium – as soon as drugs become generically available they drop in price by as much as 80%.
The drug companies employ armies of lawyers to have these exclusive rights extended for as long as possible, keeping the price of drugs to the public high - a public whose tax dollars paid for a good part of the research. With the explosion of drug company profits came political clout. If the FDA, the federal agency responsible for regulating the pharmaceutical industry gets in the way, the big drug companies exert a little ‘pressure’ and call on their friends at Capital Hill.
Legislative reform of drug companies is well overdue – Americans can no longer afford to fund the insanely lucrative empire that is Big Pharma. As Angell points out, the industry should be regarded as a public utility and they should have to open their books and reveal the truth of how they conduct their business. The FDA should impose a new provision that ‘new’ drugs will only be approved if they are in some way an improvement on the pre-existing drug marketed under a different name.The placebo test is an inadequate way of monitoring the usefulness of the release of a 'new product'.
In more recent developments, the White House confirmed that it has promised Big Pharma that any health care legislation will prevent the government from negotiating lower drug prices, and that they will not allow the importation of cheaper drugs manufactured abroad, a change that Obama promised during his political campaign. This a huge win for Big Pharma. Last week, Nevada Senator and U.S. Senate Majority Leader, Harry Reid was exposed for accepting large sums of money from Big Pharma in order to shape and direct the recently passed health care bill in their favor.
Drug companies are the strongest lobby group in Washington and give massive sums of money to political campaigns. I wonder how many of us know that we are being taken for a ride by Big Pharma? Votes are the most powerful currency in a democracy and if more of us voice our demand for reforms within the industry, we may well see things change for the better– at least for the 98% of us that are not amongst the elite who insist on milking the cow dry.
The Truth About Drug Companies by Marcia Angell
The Whistelblower: Confessions of a Healthcare Hitman
The Body Hunters: Sonia Shah
Enlightening Books on Drug Companies
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
Polly on August 01, 2016:
I am a victim of Johnson&Johnson, the most crooked company on the face of the planet in my opinion. I have poisonous transvaginal mesh. Untested and unapproved thrown into the market place. Many have died already and many are forever chained to their beds and homes. I've lost everything and my kids lost their mother. It's a worldwide destructive attack on women,,,GENOCIDE ON WOMEN to be exact. Some of us have had up to 30 surgeries. We are left to travel the country looking for help. There are only 3 doctors who know how to successfully remove it. I went thru 2 worthless doctors who left me so scarred before finding a surgeon in Arizona. We are forever sick and lame. Autoimmune diseases, Lupus, Lymphedema, Tumors, Cancer, Perforated Organs, Damaged Bladders and Colons, Dermatology Issues, Digestive Issues, Severe Neuropathy and the list goes on and on and on. If you hear the word MESH,,,,RUN FOR YOUR LIFE!!!!
Scott M (author) on January 22, 2016:
I am very sorry to hear about your situation. Consumer lobby need to be more vocal about this sort of thing and take out class action again Big Pharma.
drummer on January 11, 2014:
Drug companies get away with murder. My boy's have been affected by a drug called sodium valporate. All 3 have different disabilities. Nobody seem's to do anything but us the mothers. As it wasn't only mine. There is thousands of children affected.
Sembj on February 24, 2011:
Great Hub with important material - thanks. I have just linked to this story from something I wrote regarding medication shortages and how drug companies seem to be profiting at the expense of guess who . . .
Your new follower,
Scott M (author) on October 10, 2010:
I am sure you do - you work in the industry promoting sales. My article makes dozens points regarding the immoral and deceptive activities of drug companies. You make the sweeping statement -'comlpetely disagree' - I assume that you are refuting the claim that R&D is exaggerated as a cost and that marketing and other costs are actually higher - that information came from Peter Rost, former VP of Pzifer Marketing and Marcia Angell MD, author of The Truth About Drug Companies. Perhaps you could be more specific regarding the points made in the article with which you disagree. I am not saying that drug companies don't make useful drugs, but the truth of how they operate should be known and addressed. All the best, Shimla
JRDurruthy on October 08, 2010:
Completely disagree. Highest cost is actually from items such as doctor visits, procedures, etc.
Scott M (author) on September 14, 2010:
Thanks Mr Happy - we seem to share the same concerns about the toll that the corporatization of the world is taking. We all need to realize that we have the power to withdraw support for a system that is doomed. Thanks.
Mr. Happy from Toronto, Canada on September 07, 2010:
Here's a great blog! Very nice indeed! Thank you.
Kim Harris on August 29, 2010:
Interesting. I just finished a hub on Prescription Drug Benefits and Consumer Behaviors that might interest you. I'm thinking PBMs have taken a chunk of the pie away from PHARMA and consumers. I'm counting on this particular PBM to do the right thing though, if for no other reason than to avoid a public shame fest in congress and on the national news networks. It would be refreshing to hear about wouldn't it? Life a modern day fairy tale. We could use one. Thanks for the hub, Shimia. rate up and useful, and will follow.
eshaw from Huntsville on August 14, 2010:
that's why i think the health care bill was a good thing, and bad thing, it allows people to become dependant on others to take care of them, but the people that are taking care of them the government is also the one making them sick by allowing companies to produce any and everything that they think might make a dollar
John Harper from Malaga, Spain on August 14, 2010:
Excellent expose, hope it reaches every person on the hub, it needs to be exposed.
fucsia on August 14, 2010:
I do not trust in drug companies: people who would do good public health, invent research, disease, narrow-minded media, only to be successful. I am speechless in the face of this crap. Thanks for publishing this news.