Tuesday, December 28, 2004

The Insider

Kevin Drum recently linked to an editorial appearing in the Los Angeles Times entitled, Big Pharma's Dirty Little Secret. This piece builds nicely on two recent TIA posts concerning certain less than desirable aspects of the pharmaceutical industry, which can be found here and here. The author of this editorial, Peter Rost, makes the following bold statement concerning the vaunted US health care system:

The American healthcare system is the best in the world. Or so we are often told. But is it really true?

It is certainly the best system for drug companies, which can charge the highest prices in the world to some U.S. consumers. The Congressional Budget Office has estimated that average prices for patented drugs in 25 other top industrialized nations were 35% to 55% lower than in the United States.

But it's not a good system for American citizens. The U.S. has shorter life expectancies and higher infant and child mortality rates than Canada, Japan and all of Western Europe except Portugal, according to the WHO.
That is strong language, but reminiscent of the type of charged rhetoric that has infused much of the debate around the many controversial topics plaguing the increasingly besieged pharmaceutical industry. What is noteworthy about Rost's indictment, however, is his professional status: Peter Rost is a vice president of marketing at Pfizer - one of the world's biggest purveyors of drugs. In his own words:

I'm a drug company executive who has spent 20 years marketing pharmaceuticals. And I'm troubled. I'm most troubled by the fact that we stick it to the people who can afford it the least.
Part of what Rost is objecting to is the disparate treatment that American citizens receive based on their ability to pay, and, relatedly, their ability to secure health insurance of some form or another. There is also an inherent criticism of the portion of the Medicare prescription drug benefit legislation that forbids Medicare from using its bargaining power to demand lower prices from pharmaceutical companies.

For instance, elderly people who use a Medicare discount card and have to pay $1,299 annually for a drug that the Department of Veterans Affairs purchases for $322, according to a comparison by Families USA. Or middle-class families that lose health insurance and have to pay $29,500 for an overnight hospital stay, when Medicaid would have paid only $6,000, according to the Wall Street Journal.

It just doesn't make any sense. And, not surprisingly, the companies with the biggest profits - those in the drug industry - have been fighting hardest to maintain the status quo.

Our dirty little secret is that the drug industry already sells its products, right here in the U.S., at the same low prices charged in Canada and Europe. It's done through rebates. These are given to those with enough power to negotiate drug prices, such as the VA.
The results of the imbalance in the availability of treatment have been dismal for those Americans who find themselves on the outside looking in.

A 2001 study by the consumer advocacy group Public Citizen found that drug companies' favorite customers paid just a little over half the retail price. This leaves the 67 million Americans without insurance to pay cash, with no rebates, at double the prices paid by the most-favored customers....

People today have to choose between drugs and food. The journal Diabetes Care recently reported on a study of older adults with diabetes. One in three said they went without food to pay for drugs.
It is simply unacceptable for a nation with the wealth, power, and prestige of the United States to allow its senior citizens to choose between food and life saving medicine. In this vein, Rost also takes on the bugaboo of drug re-importation - more specifically, the spurious claim by some politicians that the re-importation of drugs creates myriad safety hazards and other dangerous scenarios.

It's encouraging to see that the American Medical Assn. recently came out in favor of a system that would allow U.S. pharmacies and wholesalers to re-import drugs safely from other countries. This is exactly what Europe has had for more than 20 years. It is outrageous to claim, as politicians and drug companies have done, that the U.S. wouldn't be able to safely and cost-effectively handle re-importation. A key trade association for European pharmaceutical companies claims there has never been a confirmed case in Europe of a counterfeit medication reaching a patient as a result of re-importation. In Germany, this was verified last year by the Federal Ministry of Health.

In the next five years, branded drugs with annual sales of $72.9 billion are expected to lose patent protection. So we in the drug industry are fighting re-importation because we're worried about the bottom line. But when we have to choose between that and the lives of those who can't afford drugs, we have to choose life. [emphasis added]
Rost's concern for the well being of the public is a welcomed departure from some of the cynicism and greed that has pervaded the leadership of this most crucial of industries. He even offers a glimmer of hope that there can be fruitful resolutions to problems, resulting in win-win scenarios for the warring camps.

As a drug company executive, I care about profits. When I was responsible for a region in Northern Europe, I doubled sales in two years by lowering drug prices, and in the process increased my company's sales ranking in Sweden from No. 19 to No. 7 in less than two years. I proved that it is possible to do good business with lower prices.
Peter Rost has displayed a certain form of heroism by mustering the courage to play against type, and speak out about the abuses occurring from the vantage point of an insider. It is more than likely that such honest appraisals do not ingratiate Rost to many of his superiors, peers, and colleagues. This risky stance certainly lends credence to his statements, because any bias in his outlook would most likely lean in the other direction. Rost closes this editorial with the following words:

I joined this industry to save lives, not to take them. And that's the reason I've chosen to speak out.
Based on what he wrote, I believe him.

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