In the past few decades there has been a growing concern over the price of prescription drugs in America. Although this concern is there, little has been done to curb this problem. In more recent years this concern has grown into skepticism into the practices of pharmaceutical companies in and outside of the United States. The growing concern is a result of excessive profits to speculation over the lobbying practices of pharmaceutical companies to influence Congress (Public Citizen). While the likelihood of these practices is high, little is being done to stop these practices. What can be done to stop these practices?

One of the main reasons given by the pharmaceutical industry for the high cost of the development of new drugs. The industry claims that, on average, it cost $800 million dollars to research and develop a new drug. While this is the accepted cost, Christopher Adams and Van Brantner of the Federal trade Commission dispute this in their report entitled The Real Cost of Drug Development. They cite that the cost of the development of new drugs can vary anywhere between $500 million to $2 billion. The gap present in the costs of development can be explained by variables in publicly attainable records and by the fact that not all drugs cost the same to research and develop.

The only reason that the previously mentioned figures may be wrong is that the information used in the research of these figures cannot be independently verified since it was gathered by the drug companies (Adams, Brantner, 2006). This means that although we have the figures of the costs of drug development, we cannot know what the pharmaceutical companies consider to be costs in drug development and therefore cannot know the true accuracy of the estimated costs. I’m not trying to say that the previously mentioned costs are completely wrong, but what I am trying to say is that figures like these, that are often cited while policies are being made, should be independently verified in order to prevent possible corruption and unethical behavior in the gathering of this information and to prevent any biases from influencing the information.

Considering that the costs of development of new drugs can accurately be said to be $800 million, it can partially explain the high cost of medicine. But does it explain the consistently rising profits made by pharmaceutical companies? In the first half of 2005, the top ten pharmaceutical companies claimed profits of over $31 billion dollars (Waxman, 2006). That averages out to $3 billion dollars a year for each of the top ten companies. A simple definition of profit is the amount of money made after expenses, so in the case of pharmaceutical companies this would be even after the cost of developing and making the drugs. Even if you leave out the cost of the development of a new drug, the profits are large enough to cover the that and leave over a $2 billion profit. Off course the profits mentioned above are only for the top ten companies and the costs may put more stress on smaller companies, but you have to consider that the $800 million spent to produce a drug is spent over several years and would easily be absorbed by a company that’s profit is only a fraction of those mentioned above.

In the April 1, 2007 edition of 60 Minutes, CBS reported that pharmaceutical companies spend $100 million dollars a year on campaign contributions and lobbying congress. Compared to the amount of money the pharmaceutical companies spend to develop new drugs or to their profits, this doesn’t seem like a lot of money, but what kind of affect does this have on the decisions members of Congress make? Representative Henry A. Waxman wrote an analysis of the situation which showed a $8 billion increase in profits from the first half of 2005 ($31 billion) compared to the first half of 2006 ($39 billion). The apparent reason for the jump in profits is the 2003 Medicare Prescription Drug Bill. In Representative Waxman’s conclusion in his analysis, he cited three reasons why this was the case. The first reason is that the Medicare bill increased the demand of the prescription drugs. The second reason is that the bill doesn’t allow for the program to obtain discount prices for the prescription drugs purchased. The third and final reason is that the bill gives drug manufactures the ability to significantly raise drug prices.

Now how does a bill that seems to favor the pharmaceutical industry so drastically get passed in the first place, even with the amount of money the industry spends of lobbying and campaign contributions? In the edition of 60 Minutes previously mentioned, CBS went on to report that the problematic Medicare bill was passed under very questionable, yet surprisingly legal, circumstances. The only people present to see the bill into being were the Congressmen and their staffers, and, unsurprisingly, hundreds of pharmaceutical company lobbyist. Normally I would be surprised to here that there was no media personal there, no reporters, cameramen, etc., but it was three o’clock in the morning. The voting machines were also left on for three hours, a far stretch from the normal fifteen minutes. Last of all, the main person pushing the bill through, former Congressman Billy Tauzin, went on to making $2 million annually working for Pharmaceutical Research and Manufacturers of America, as president of the company. That looks more than suspicious to me.

Through the process of gathering information, I found it rather difficult to find information on this subject that wasn’t biased either for or against pharmaceutical companies. After observing this, I realized one thing that would help policymakers greatly would be independent organizations to gather information about the pharmaceutical industry to ensure information is available that is unbiased and accurate. This may not solve any problems, but it may be a way to help ensure fairness of future policies and ethical practices of pharmaceutical companies.

The controversies over campaign contributions and lobbying in Congress that have been seen in recent years could easily be solved though limits on the amount of money contributed and the amount of lobbying that takes place. After all, it isn’t only the pharmaceutical industry that is creating this problem. For example, limit campaign contributions to individual citizens and possibly put a limit of contribution that meets a percentage of what the average American makes a year. In order to decrease the amount of lobbying that takes place, Congress should make a policy that limit’s the number of lobbyist in a certain industry or limit lobbying to groups of citizens representing their own needs. We have to remember that Congress is there for the United States and its citizens, not for large corporations.

To reduce the cost of prescription medication, Congress could put price caps on drugs. At most, they could include any drug produced, but that seems unrealistic. At the very least I believe they should put caps on the prices of drugs which could be considered vital to patients of potentially life threatening diseases or illnesses that would only get worse or cause severe complications, like diabetes and heart disease. This would end up saving everyone money on drugs they need and even save the government money otherwise spent on Medicare or Medicaid.

I strongly believe that the 2003 Medicare Prescription Drug Bill should be repealed. Not only is it creating more stress on the already overstressed Medicare system, but it is taking more money out of the pockets of the elderly, many of which are living on fixed incomes. Although parts of the bill are still needed, such as extending what Medicare covers, most of it isn’t. The government should be able to negotiate for cheaper prices with pharmaceutical companies, especially with a program such as this.

The most severe measure the government could take is pushing for the development of pharmaceutical companies that function as non-profit organization. While this is the most unlikely solution to take place, it is probably the one that would be the most successful in solving the current problems. The main thing the government would have to do is spend money on grants for groups of people potentially interested in starting one of these non-profit organization. Once the organization got on its feet it should be able to sustain enough of a profit to continue production of medications and continue research on other potential drugs. One way the government could help these groups funded, other then outright paying for them, is to include a small donation section on tax forms. I remember seeing a part like this on my state tax form’s last year that provided an easy place to donate to the Wildlife Fund or something along those lines.

Although some of the solutions are fairly simple, the others would be difficult to put in place. I believe Americans as a whole could make this happen by making our voices heard and silencing those of large corporations. We have to remember, along with those that represent us in the government, that the government was created out of the citizens’ needs and should be governing according to those needs. Nothing will change for the better if we sit back idly. That is the only way reforms, especially like those needed in the pharmaceutical industry, will ever happen.

References

Brand Name Drug Companies Versus Generics, (n.d.) Retrieved September 1st, 2007 from Public Citizen, from http://www.citizen.org/congress/reform/drug_industry/contirbution/articles.cfm?I D=8045

Adams, C., Brantner, V. (2006). The Real Cost of Drug Development. Retrieved

August 31st, 2007 from http://www.touchbriefings.com/pdf/1842/Chris_Adams.pdf

Krofts, S. (Reporter). (2007, April 1). 60 Minutes [television broadcast]. New York:

CBS Inc.

Waxman, H. (2006). Pharmaceutical Industry Profits Increase by over $8 Billion After Medicare Drug Plan Goes Into Effect. Retrieved August 21st, 2007 from http://oversight.house.gov/documents/20060919115623-70677.pdf