Drug Industry on a $125 Billion roll

FROM INTERNATIONAL COUNCIL FOR HEALTH FREEDOM

USA - The American drug industry is on a roll and despite all the hoopla about managed care, cost containment etc. in organized medicine - saw a doubling of gross income between 1995 and 1999 from $65 billion to $125 billion as the nation's ever-growing army of "senior" citizens agonized over who will pay the bills.

At least one governmental survey predicts that prescription drug spending in the USA will reach a staggering $243 billion by 2008.

A thorough review of the industry in recent Newsweek and Fortune magazines - and the bringing of the high cost of prescription drugs for "seniors" into the November US presidential contest - has brought

the high-riding pharmaceutical empire back to public attention.

In Newsweek's survey (Sept. 25), pharmaceuticals topped the list of "most profitable industries" in terms of "profits as percentage of revenue" (18.6 percent), followed in order by commercial banks, "computer peripherals," telecommunications and beverages.

An earlier Fortune assessment revealed that the US division of the equally profitable international "legitimate" drug trade surpasses virtually every other major economic sector in terms of profit margins, leading in all three categories thereof - return on revenues, return on assets, and return on shareholders' equity.

In 1999, the industry spent almost $14 billion on advertising and promotion, with its $2 billion on consumer advertising said to be a 63 percent increase over 1997. The drugmakers spent $83.6 million in governmental lobbying in 1999, or 13 percent more than in 1998, reported Newsweek.

The magazine added that the most promoted drug in the 12 months up to June 2000 was Searle's pain- killer Celebrex, which the company paid $170 million to push and for which it took in $1.4 billion in sales.

The price of Wyeth-Ayerst's Premarin, an estrogen- replacement drug (massively prescribed to women under the allopathic theory that post menopause is a disease which needs to be treated), jumped 12.1 percent between January 1999 and January 2000, reported the healthcare research group Families USA (FUSA).

The drug (whose name is based on its source (pregnant mare's urine) has been dispensed through 47 million prescriptions.

In defending the industry, spokesmen note that US drug companies are expected to spend $22 billion in research and development in the year 2000 and that the full costs of taking a compound from invention to market is now about $500 million and takes anywhere from 13 to 14 years.

The drug industry refers constantly to the costs of research and development and the high cost of complying with FDA regulations, together with the presence of government-mandated lower drug prices in other countries (notably Canada and Mexico), as the reason for price increases but often skips over these realities:

• Since scores of useful drugs have in part been developed through federal agencies, particularly the National Institutes of Health (NIH) (point in passing: Bristol-Myers-Squibb's Taxol), US consumers are in effect paying for the same twice - through increased retail costs as well as increased taxes.

• FDA regulations, however costly and onerous, actually protect the market place for giant global pharmaceutical companies by making it impossible for smaller companies to compete. Too, those who get through the process are assured of virtual monopolies for 17 years.

Newsweek noted that the popular ulcer drug Prilosec costs 68 percent less in Mexico because that country "negotiates bulk acquisitions," and that the depression drug Zoloft costs $125 per average prescription in Canada vs. $223 in the USA.

"As a result the pharmaceutical industry has to earn most of its profits in the United States, the only major country where drug prices remain unrestricted," noted Newsweek.

Yet since the drug lobby is so powerful at federal and state levels major political-party candidates cannot normally be heard arguing for just such price restrictions.

The top drug company earners between July 1999- June 2000, according to a major survey, were: Merck ($9.9 billion), Bristol-Myers-Squibb ($8.4 billion), AstraZeneca Corp. ($8 billion), Pfizer ($7.9 billion), and Johnson & Johnson ($7.3 billion).

During the same period, the most popular drugs by sales (though not by total prescriptions) were Zocor (Merck), $2.5 billion; Prozac (Lilly), $2.6 billion; Prevacid (TAP), $2.8 billion; Lipitor (Parke Davis), $3.6 billion; and Prilosec (AstraZeneca), $4.4 billion.

In the meantime, the number of new drugs approved by the FDA each year doubled between 1980 and 1998, or from 19 to 38. Much of the increase was driven by such multifactorial disorders as AIDS, for which there are now 339 approved medications.

HEALTH FREEDOM NEWS, Vol. 19 NO.1, Jan.2001

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