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Where Is Senator Kefauver When We Need Him?

A call to action against high prescription drug pricing in the United States.

By

Updated March 24, 2004

Over the last couple of years we have all seen the headlines; "Seniors By The Busload Buying Drugs In Canada" Or "Crossing the Mexican Border To Save Money On Drugs". The facts are clear enough, the U.S. buys one third of the world's prescription drugs, and also pays the highest prices in the world for those same drugs. According to a paper presented to the Prescription Drug Task Force - US House of Representatives by the Boston University School of Public Health several things are also true:
  • One in four Americans have no prescription drug coverage. As the population ages and drug prices rise the number of uninsured or under-insured is expected to rise. Because insurers generally negotiate discounts on prescription drugs, the cost to the uninsured is disproportionately higher.
  • Prescription drug costs are rising 3 times faster than overall drug costs.
  • The pharmaceutical industry is the most profitable industry in the United States with return on equity of a whopping 39.4%.
  • Drug companies claim that high research and development costs are the reason they much charge so much for drugs, yet pharmaceutical research accounted for less than 1%(0.97%) of health spending in the US as compared to an average of 1.53% in the U.K., France, Japan, Italy and Canada. Interestingly enough 1/4 of all new drugs developed between 1970 and 1992 came from the U.K., Japan, Sweden and Germany who all have price controls in place. The presence of price controls does not appear to stifle innovation.
  • While the drug companies claim that 20% of the cost of a new drug is due to research costs that may be misleading. Rolled into that 20% cost is the cost for marketing research.
What is surprising, is that this is not a new phenomenon, the inequity in drug prices that Americans pay has been going on for at least 70 years. In an article in the Washington Post discusses an investigation of the pharmaceutical industry led by Senator Estes Kefauver (D-Tenn.) that was held over 40 years ago. This investigation uncovered those same pricing practices that we are familiar with today, "medications priced higher than research and production costs warrant, and priced higher for Americans than consumers elsewhere". The Senator and his committee at that time recommended several reforms that would have saved Americans millions over the last 40 years while still ensuring reasonable pharmaceutical profits and not impeding research. Then as is the case now, pharmaceutical industry pressure prevented any meaningful reform. The bottom line is the pharmaceutical companies continue to see record profits at the expense of the American consumer. It also seems that they maintain these profits with a steady stream of exaggerations and falsehoods.

ENOUGH IS ENOUGH

This is a call to action. American healthcare consumers and providers need to call the pharmaceutical companies bluff. They need to let their elected official know that, in those famous words by Howard Beale from the movie Network, "I'm mad as hell, and I'm not going to take it any more." Let your health care provider know that you would like him to stop taking favors (as in trips and cruises for so called continuing medical education from the pharmaceutical companies that drive up the cost of drugs, while encouraging them to prescribe higher priced products.

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