Is Healthcare Hype Driven by Aging Baby Boomers and Big Pharma's Tactics?

[loseyourname]

Just FYI, some of my statistics came from http://www.karlloren.com/Diabetes/p17.htm, a copy of a New England Journal of Medicine article on this issue.

Thanks. I'll take a look at that and try my best to figure out what the breakdown is and where they're getting the numbers from.

Something that I noticed that I think is worth mentioning right off the bat is the comment the author makes about the riskiness of being in the pharmaceutical industry. The very large companies themselves don't risk much collectively, since they have such a huge number of products on the market and in development all the time. As such, these companies make a safe investment for shareholders and the CEO is probably fairly secure. The careers of lower-level executives, the R&D division chairs and such, is not nearly as secure, however. If one man oversees two or three failed projects consecutively, even though the company overall might be doing quite well, his department just lost hundreds of millions (perhaps even billions) of dollars and is going to be cut. Many doctors also stake their reputation on one or two drugs that they develop, and if these fail, their careers can be ruined. Even if the industry is doing quite well, it isn't all hunky dory for everyone.

Note: While all of the above is probably pretty obvious and mostly not relevant, I just wanted to ensure that nobody gets the idea that there is any such thing as a sure bet in business, even in industries as wildly profitable as pharmaceuticals. The researchers themselves are quite well paid and secure, but the men who attempt to get fabulously rich in the higher positions quite often do fail. I get the impression that discussions of business tend to focus on nameless, faceless corporations and forget that these are populated by individuals.

The generic market is much less profitable than the new drug market. The generic market is almost perfectly competitive: there's not much money to be made there, and lulls in demand can force companies out of business. On the other hand, if you develop a new, innovative drug, then you can have a temporary monopoly.

That's the thing, though. If you take away the monopolies by allowing imports that circumvent the patents, there is no more incentive to innovate. No matter how high their profits may be right now, the patents (along with doctor recommendations) are the sole source of those profits. Take those away and you take away the profitability.

Don't get me wrong here. I'm not making a direct comment on whether or not we should allow any importation. To be honest, I'm not that knowledgeable about foreign pharmaceutical companies and what kinds of laws and approval processes they go through. I'm just trying to say that the current embargo on imports isn't just about maintaining profits for powerful lobbyists. There are two other issues that are very important: 1) Maintaining the patent monopolies that make innovation worthwhile in the first place. If the imports are being manufactured by the same company or manufactured after the patent has run out for the domestic drug, go ahead and allow it. 2) If we allowed US citizens to buy drugs that were not FDA-approved, why have an FDA approval process for drugs in the first place? Of course, people do have this option already with herbal medicines, which are not regulated. I'm sure many work quite well, but naturally there are many that make sham claims and intentionally rip off desperate people.

According to Frontline, clinical trials make up 75% of development costs, so one would assume that that is counted as part of R & D costs. Unfortunately, there's no possible way to get an exact breakdown, because the drug companies have a disincentive to publish that information.

Well, I could ask my old contact (who is semi-retired on permanent disability and has no incentive to lie), but I haven't talked to him in years.

Edit: By the way, I felt I should add that even though I may know people involved in the industry, obviously they can't actually reveal trade secrets or financial records to me. Just in case anybody is getting the mistaken impression that I'm somehow in the know - I'm not.

I'm not suggesting that price controls be implemented. I'm not even suggesting that patents be removed, only that they be enforced correctly.

I can't disagree with you there. I only present the case for the pharmaceutical industry because it seems like everyone else around here is so hellbent on presenting the case against it. The forum requires balance. You've been very fair in your assessment, though. I'm quite impressed. You rarely see fairness in a political discussion.

As it stands, the industry is always trying to weasel its way around patent law. For example, when one drug's patent is about to expire, they'll often package it together with another one, and get the combo patented. Then, unsuprisingly, they take the original off the market and rebrand it. Also, the USPTO needs to be far less lenient when it comes to the "me-too" drugs. (This doesn't just apply to the drug market: the patent office is far too lax in general, mostly because they've been overwhelmed in recent years by software patents. For example a few years ago, Smuckers received a patent for a crustless PB & J sandwich, and a few weeks ago, Amazon.com received a patent for being able to remember purchasers' histories.)

Yes, every industry has its loopholes that it exploits. These financial officers really do earn their salaries. The man I was talking about earlier as my contact actually created a new tax loophole by directly petitioning the IRS (successfully) on behalf of a deaf client to deduct the cost of his pet. As Oscar Schindler's father told him, there are three things every man needs: a good doctor, a good priest, and a good accountant.

Also, I think that if our tax dollars are going to subsidize these companies, then at the very least, importation needs to be allowed.

I may yet come to agree with you, but as of now, the statement "importation needs to be allowed" is vacuous without qualification. It all depends on what exactly is being imported and what rules this importation follows. Has there been any specific legislation proposed to break the import embargo that I could analyze that has a more detailed plan?

 

[loseyourname]

Phew, loseyourname - this is plain speaking indeed. Totally naked ruthless capitalism, huh? I was especially struck by the phrase "...use the patient as a test subject in clinical trials normally preformed on apes...' I do not (and would never) agree with such ruthlessness - but bravo for putting the case so very plainly.

So what would you do if you had a terrible disease that could not be cured by any drugs you could currently obtain? Personally, I would love to have the option of taking experimental drugs at no cost.

Remember, every drug is first tested on animals and then tested on terminal patients. I don't see what is so ruthless about taking a drug in this early developmental stage without having to pay the extraordinary cost of drugs that have already been approved. What I see as ruthless is not giving this option and watching people suffer and die with no hope of cure.

 

[loseyourname]

Not to mention the immense amount of money they spend on advertisement. Why do they need to advertise? Prescribing medication is a doctor's role.

I never understood that either. I can see why they would advertise for things like fertility drugs, impotency drugs, and even new allergy medications. If people don't know these exist, they might never visit the doctor in the first place. What I don't get is all the ads for disease treatments, like the fuss over valtrex a few years back. Like you, I ask: Shouldn't these people's doctors be telling them about this?

 

[Kerrie]

I never understood that either. I can see why they would advertise for things like fertility drugs, impotency drugs, and even new allergy medications. If people don't know these exist, they might never visit the doctor in the first place. What I don't get is all the ads for disease treatments, like the fuss over valtrex a few years back. Like you, I ask: Shouldn't these people's doctors be telling them about this?

I have noticed this too, alongside with a lot more advertisements for private health insurance...I don't seem to remember so much of it 10 years ago.

 

[The Smoking Man]

So what would you do if you had a terrible disease that could not be cured by any drugs you could currently obtain? Personally, I would love to have the option of taking experimental drugs at no cost.

Remember, every drug is first tested on animals and then tested on terminal patients. I don't see what is so ruthless about taking a drug in this early developmental stage without having to pay the extraordinary cost of drugs that have already been approved. What I see as ruthless is not giving this option and watching people suffer and die with no hope of cure.

Unless you get another thalidamide.

The disadvantage of an unapproved drug is that this can always happen.

Heck ... Tholidamide was even APPROVED but with lesser rigid standards.

 

[loseyourname]

Unless you get another thalidamide.

The disadvantage of an unapproved drug is that this can always happen.

Heck ... Tholidamide was even APPROVED but with lesser rigid standards.

That's exactly why you wouldn't have to pay anything. The point I'm making is that you either pay and know that your drug is approved and (probably) safe, or you can take a risk on an experimental drug and not pay. I'd rather have that option than only having the option to take approved drugs that I can't afford and insurance doesn't cover. An experimental drug is better than no drug.

 

[devil-fire]

I also feel that health insurance companies shouldn't just base your premiums on your age either...when you sign up for car insurance, your background is run to see what sort of risk you are. I wouldn't be personally oppossed to having my medical history reviewed if it helped my premiums go down. Preventative checkups would not count against me, but treatments that could have been prevented earlier by me taking better care of myself might count towards a higher premium. I know this sounds harsh, but it is fair for those of us who take care of our health.

this sounds good if your thinking in the lines of "peole who don't smoke, eat well, and exersize regularly should get discounts compared to people who do the opposite" but you have to include cases where people have a vary unhealthy and potentialy long future ahead of them and not having to do with how well they take care of themselves. kids who have degenerative diseases would have vary high insurence rates if subject to backround checks

 

[alexandra]

So what would you do if you had a terrible disease that could not be cured by any drugs you could currently obtain? Personally, I would love to have the option of taking experimental drugs at no cost.

Remember, every drug is first tested on animals and then tested on terminal patients. I don't see what is so ruthless about taking a drug in this early developmental stage without having to pay the extraordinary cost of drugs that have already been approved. What I see as ruthless is not giving this option and watching people suffer and die with no hope of cure.

My solution, that essential medication be subsidised by our taxes, is currently in place in Australia under the Pharmaceutical Benefits Scheme. After all, that is the ‘contract’ citizens have with their governments: citizens pay taxes so that a central regulator – their elected ‘representatives’ in government, who are responsible to them (the voters) - can spend the money on essential services like education and health. When did we lose sight of this contract, everyone? Why do those who argue against this think the government should NOT use tax-payer’s money for the purposes taxes are supposedly collected in the first place? If all essential services are to be privatised, why should we pay taxes at all? I really don’t understand the reasoning behind such arguments.

In any case, getting back to the Pharmaceutical Benefits Scheme. This scheme, that many low-income Australians rely on, is threatened by the Australia-USA Free Trade Agreement, which came into effect on 1 January 2005:

Australia’s 55 year old Pharmaceutical Benefits Scheme is world renowned for subsidising around 600 drugs for Australian consumers.

Under the scheme, low drug prices are negotiated by the combination of stringent cost-benefit (or ‘pharmacoeconomic’) analyses and the market power of a centralised buying system (see Harvey 2001; Wright 2003). The Australian system works. Drug prices in the United States are around 160 per cent higher than in Australia; drugs in Canada and Sweden cost about 50 per cent more (Productivity Commission 2001).

However, the success of the PBS does not please everyone, particularly the American pharmaceutical companies. The Pharmaceutical Research and Manufacturers of America (PhRMA) makes no secret of its dislike of Australia’s scheme, which it argues erodes intellectual property, devalues innovation, and discourages investments in new medical discoveries (PhRMA 2003). But PhRMA’s claims are not easily supported. For example, the Australian Productivity Commission (2001) has found that, comparatively, the largest price differences in Australia applied to new drugs offering few benefits over existing ones (so-called ‘me-too’ drugs). This means that genuinely innovative pharmaceuticals are priced like they are in other countries—and hardly pose a disincentive. When it comes to investment, the Department of Industry, Tourism & Resources (2004) administers a Pharmaceutical Industry Investment Program (PIIP) that rewards pharmaceutical manufacturers for undertaking research and development in Australia.

Even so, PhRMA often vigorously opposes government policies they think hurt the balance sheets of their members. In the current fiscal year July 2003–June 2004, PhRMA will apparently spend more than US $150 million to influence government—a 23 percent increase over the previous year (see Table 1).

Given this political activity, it isn’t surprising to discover that, in January 2003, PhRMA lobbied US trade negotiators to seek an Australian government commitment to ‘refrain from trade distorting, abusive, or discriminatory price controls’ which would include PBS pharmacoeconomic analysis, reference pricing, and restricted listings. Nor is it surprising that President Bush, who benefited to the tune of $14 million from the US pharmaceutical industry during his 2000 campaign, singled out changes to the PBS that would help US companies when he visited Australia last October (Colebatch 2003).

Reference: http://www.econ.usyd.edu.au/drawingboard/digest/0403/harvey.html

 

[Kerrie]

this sounds good if your thinking in the lines of "peole who don't smoke, eat well, and exersize regularly should get discounts compared to people who do the opposite" but you have to include cases where people have a vary unhealthy and potentialy long future ahead of them and not having to do with how well they take care of themselves. kids who have degenerative diseases would have vary high insurence rates if subject to backround checks

this is a very good point, thank you for bringing it to light. with auto insurance you get the best rate when your behavior isn't risky, so if you aren't risky when it comes to your health-such as smoking and eating right, etc-you would benefit from a discount in your premiums.

 

[SOS2008]

I have noticed this too, alongside with a lot more advertisements for private health insurance...I don't seem to remember so much of it 10 years ago.

And now of course there are advertisements about all the R&D they do and the cost, etc., in other words, political lobbying advertisement. Personally I feel advertisement is only applicable to over-the-counter medications, but not anything that is prescribed. They are trying to get the public to place pressure on doctors in favor of their drug, but it is at the patient's expense of course because the cost for advertising will be passed along to the public.

this is a very good point, thank you for bringing it to light. with auto insurance you get the best rate when your behavior isn't risky, so if you aren't risky when it comes to your health-such as smoking and eating right, etc-you would benefit from a discount in your premiums.

Things like smoking is taken into consideration for insurance, certainly life insurance. Even risky behavior such as skydiving. It presents a slippery slope when it comes to where to draw the line. Currently there is discrimination against issues people don't control, such as age, preexisting conditions (e.g., asthma, cancer), etc.

 

[loseyourname]

Currently there is discrimination against issues people don't control, such as age, preexisting conditions (e.g., asthma, cancer), etc.

All insurance works that way. You pay more if you're more likely to be making a lot of claims. You pay more for car insurance if you're male, if you're a teenager, if you live in Los Angeles, if you drive a sports car, regardless of your driving record and accident history. You pay more for fire insurance if you live in Malibu. You pay more for flood insurance if you live in Florida. Eddy Curry of the Chicago Bulls isn't getting any big contract offers as he expected, because the league won't insure the contract due to a heart condition he has. Same thing with health insurance - you pay more if you're more likely to be unhealthy.

Even the good driver discounts don't necessarily benefit only those who are diligent and drive safely. If someone else hits you and you are not found to be at fault, your premiums still go up.

 

[The Smoking Man]

All insurance works that way. You pay more if you're more likely to be making a lot of claims. You pay more for car insurance if you're male, if you're a teenager, if you live in Los Angeles, if you drive a sports car, regardless of your driving record and accident history. You pay more for fire insurance if you live in Malibu. You pay more for flood insurance if you live in Florida. Eddy Curry of the Chicago Bulls isn't getting any big contract offers as he expected, because the league won't insure the contract due to a heart condition he has. Same thing with health insurance - you pay more if you're more likely to be unhealthy.

Even the good driver discounts don't necessarily benefit only those who are diligent and drive safely. If someone else hits you and you are not found to be at fault, your premiums still go up.

So, I smoke and my colesterol is sky high ... do you think I get a break on my retirement contributions!?

 

[Kerrie]

All insurance works that way. You pay more if you're more likely to be making a lot of claims.

Premiums specifically don't work that way for health insurance. They stay fixed within age categories, but on the backend you will pay more for your health issues because you see a doctor more. My objection with this is, if someone who smokes is ill a lot more and needs more medical care, why do I have to pay $200 a month for my premium? My car insurance premium is based soley on my driving habits, thus another incentive to simply drive carefully.

 

[SOS2008]

I don't feel health benefits and auto insurance are good comparisons. I don't feel health care should become more expensive because of things a person can't help, like getting old. With the cost of health care so high that an unfortunate ailment can cause a family financial ruin (this is one reason for the increase in bankruptcies) we need to find a way to provide this most basic need to Americans in a more affordable way.

...If someone else hits you and you are not found to be at fault, your premiums still go up.

I agree this is wrong, especially since it is illegal to be without auto insurance (unlike health insurance). But this is another topic...

 

[loseyourname]

Premiums specifically don't work that way for health insurance. They stay fixed within age categories, but on the backend you will pay more for your health issues because you see a doctor more. My objection with this is, if someone who smokes is ill a lot more and needs more medical care, why do I have to pay $200 a month for my premium?

Well, I actually didn't know that. I've never paid for a health insurance premium and I just assumed it worked like other kinds of insurance. Do they just refuse to insure you then if you have a really bad condition beforehand?

My car insurance premium is based soley on my driving habits, thus another incentive to simply drive carefully.

It isn't, though. It varies according to age, gender, location, and the make of your car. Driving history alone doesn't determine the premium. If you were a 21 year-old male driving a Ferrari, you'd pay more than you're paying now, even if you had a perfect driving record. My cousin pays more for insurance each month than he does for his car payment, on a small pickup truck. The reason? He's a teenage male driving in Los Angeles that has had a car totaled before? Even though somebody else hit him, he still pays.

 

[Kerrie]

It isn't, though. It varies according to age, gender, location, and the make of your car. Driving history alone doesn't determine the premium. If you were a 21 year-old male driving a Ferrari, you'd pay more than you're paying now, even if you had a perfect driving record. My cousin pays more for insurance each month than he does for his car payment, on a small pickup truck. The reason? He's a teenage male driving in Los Angeles that has had a car totaled before? Even though somebody else hit him, he still pays.

*smacks self in the head* duh, that's right, they do take age, gender and location as a main factor, then your habits...i can understand the statistics playing a role in your insurance coverage, but i think you should also get the best rate if your habits are optimum too, especially with health care.

I don't feel health care should become more expensive because of things a person can't help, like getting old.

i agree, but since health insurance and the whole health care industry is capitalized, this isn't always the case. there are many factors causing such high costs in the health care industry in america, lawsuits that are outrageous (does Canada allow this?), malpractice insurance (very expensive from what i hear, so i am sure those costs are passed down), drug markup, hospital costs especially, and the fact that so many are uninsured and can't be turned away for help then end up not being able to pay, thus those who can pay pick up those costs.

it all boils down to our country's priorities, and foreign affairs are much more of a priority then the health care of our citizens. also, how many lobbyists are out there for these health care companies and drug companies? in a perfect run country, health care would be provided...not necessarily obtaining a prescription for viagra, but getting basic antibiotics for ear infections for example wouldn't be hindered because you lack health insurance.

 

[vanesch]

All insurance works that way. You pay more if you're more likely to be making a lot of claims.

Hehe, the most finetuned policy is then that you pay EXACTLY what you cost to the company, + some profits for the company...
Eh, what's the use then of an insurance ?

 

[selfAdjoint]

Hehe, the most finetuned policy is then that you pay EXACTLY what you cost to the company, + some profits for the company...
Eh, what's the use then of an insurance ?

The company can't fine tune to that degree. There will always be variance, so some people's premiums will wind up paying off other people's claims, plus the company's vig. The strategy then is to be a high-side outlier.

 

[loseyourname]

Hehe, the most finetuned policy is then that you pay EXACTLY what you cost to the company, + some profits for the company...
Eh, what's the use then of an insurance ?

Even if it were the case that such an idealized insurance provider existed, it could still be of some benefit. Think of this way. If you weren't paying the premiums every month, would you be putting the money away in case of emergency? Chances are, you'd just be spending it, then when an emergency came up, you wouldn't be able to pay for it.

 

[hypatia]

My car insurance premium is based soley on my driving habits, thus another incentive to simply drive carefully.

Its also based on your credit score and where you live

 

[Kerrie]

Its also based on your credit score and where you live

some insurance companies are basing on your credit score, especially for renter's insurance, but not the company i use. but to get back to topic, i can understand that age is a true factor in how many health claims you make on your health insurance, but i think a physical done every so often that proves you lead a healthy life submitted to your insurance company (private health insurance, not group) should get you some sort of discount.

 

[SOS2008]

And getting back to pharmaceutical companies, here's this:

Selling Sickness to the Well

A new book looks at how pharmaceutical companies are using aggressive marketing campaigns to turn more people into patients.

...In their new book, “Selling Sickness: How the World’s Biggest Pharmaceutical Companies Are Turning Us All Into Patients” (Nation Books), Ray Moynihan and Alan Cassels examine how the drug industry has transformed the way we think about physical and mental health and turned more and more of us each year into customers.

-----------

Aren’t there enough sick people that the drug companies can target? Why try and convince others they’re sick?
The marketing people and the sophisticated PR people who work for them are doing what shareholders demand of them. They’re looking for ways to maximize markets.

The marketing strategies of pharmaceutical companies play out globally. However, the U.S. is the epicenter of the selling of sickness, of disease-mongering. Americans make up less than 5 percent of the world’s population but the U.S. ...account for half of total spending on drugs.

Why is that?
The U.S. is different because it allows direct-to-consumer advertising [of prescription medications], which has taken off in a huge way in the past eight to 10 years.

http://www.msnbc.msn.com/id/8789159/site/newsweek/page/2/