Price-Gouging By the Pharmaceutical Industry

Americans pay more for prescription drugs than residents of any other country, yet the treatment they receive is not necessarily of higher quality. The increased costs are not allotted for developing better drugs; they provide larger profits for pharmaceutical companies.

Prescription Drugs are More Expensive in the U.S. than in Any Other Country

• The U.S. outspends all other countries on pharmaceuticals. In 2000, the U.S. spent $556 per person on prescription drugs.¹
  
  
• This amount eclipses the costs of comparable treatment in neighboring countries, with Canada spending $385 per person and Mexico spending $93 per person the same year.²
  
  
• Americans would have saved $60 billion in 2004 had they been charged Canadian prices for brand-name prescription drugs.³

Higher Prices Equate with Higher Profits, Not Higher Quality Drugs

• In 2001, the profits for pharmaceutical companies reached 18.5 percent of sales.⁴
  
  
• In comparison, other Fortune 500 companies' net profits accounted for only 3.3 percent sales that year.⁵
  

• Only 12 percent of pharmaceutical sales were devoted to Research and Development (R&D) while marketing of drugs to patients and physicians accounted for between 30 and 36 percent of sales.⁶
  
  
• As Marcia Angell of Harvard Medical School stated, "the prices drug companies charge have little relationship to the costs of making drugs and could be cut dramatically without coming anywhere close to threatening R&D."⁷

The Pharmaceutical Industry Controls Research and Regulation

With its staggering profits, the pharmaceutical industry has deep pockets to spend on lobbying for legislation that protects its price-gouging practices. In 2004, big pharma budgeted $150 million to protect its interests.⁸

Pharmaceutical companies are also guilty of influencing medical journal research, which should be independent and unbiased.⁹ Pharmaceutical companies actually fund 80 percent of drug research that appears in American medical journals.¹⁰ Additionally, many of the peer reviewers, who analyze studies for accuracy before journal publication, have financial ties to the pharmaceutical industry.¹¹

Sources

1. Anderson, Gerard F., Reinhardt, Uwe E., Hussey, Peter S. and Petrosyan, Varduhi, "It's the Prices, Stupid: Why the United States is so Different from Other Countries," Health Affairs, May/June 2003, 93.
2. Id. at 93-94
3. Sager, Alan and Socolar, Deborah, Health Costs Absorb One-Quarter of Economic Growth, 2000-2005, Health Reform Program, Boston University School of Public Health, February 9, 2005, 17.
4. Goldstein Botello, Judy, "The Medicine Show," The San Diego Union-Tribune, October 10, 2004, Books
5. Angell, Marcia, The Truth About Drug Companies: How They Deceive Us and What to Do About It, Random House, 2004, 11.
6. Goldstein Botello, Judy, supra note 4, at Books
7. Angell, supra note 5, at xv.
8. Id.
9. Pierce, Neal, "Fixing the Bush and Kerry Empty Calory Health Plans," National Academy of Public Administration, October 17, 2004.
10. Goldstein Botello, Judy, supra note 4 at Books.
    
11. Id.
    

August 2005