The real threat to the public’s health is drugs priced so high that an estimated fifty million Americans—more than a quarter of them with chronic health conditions—did not fill their prescriptions in 2012, according to the National Consumers League. The law allows pharmaceutical companies to pay doctors for prescribing their drugs. Over a five-month period in 2013, doctors received some $380 million in speaking and consulting fees from drug companies and device makers. Some doctors pocketed over half a million dollars each, and others received millions of dollars in royalties from products they had a hand in developing. Doctors claim these payments have no effect on what they prescribe. But why would pharmaceutical companies shell out all this money if it did not provide them a healthy return on their investment?
Drug companies pay the makers of generic drugs to delay their cheaper versions. These so-called pay-for-delay agreements, perfectly legal, generate huge profits both for the original manufacturers and for the generics—profits that come from consumers, from health insurers, and from government agencies paying higher prices than would otherwise be the case. The tactic costs Americans an estimated $3.5 billion a year. Europe doesn’t allow these sorts of payoffs. The major American drugmakers and generics have fought off any attempts to stop them. The drug companies claim they need these additional profits to pay for researching and developing new drugs. Perhaps this is so. But that argument neglects the billions of dollars drug companies spend annually for advertising and marketing—often tens of millions of dollars to promote a single drug. They also spend hundreds of millions every year lobbying. In 2013, their lobbying tab came to $225 million, which was more than the lobbying expenditures of America’s military contractors. In addition, Big Pharma spends heavily on political campaigns. In 2012 it shelled out more than $36 million, making it one of the biggest political contributors of all American industries.
The average American is unaware of this system—the patenting of drugs from nature, the renewal of patents based on insignificant changes, the aggressive marketing of prescription drugs, bans on purchases from foreign pharmacies, payments to doctors to prescribe specific drugs, and pay-for-delay—as well as the laws and administrative decisions that undergird all of it. Yet, as I said, because of this system, Americans pay more for drugs, per person, than citizens of any other nation on earth. The critical question is not whether government should play a role. Without government, patents would not exist, and pharmaceutical companies would have no incentive to produce new drugs. The issue is how government organizes the market. So long as big drugmakers have a disproportionate say in those decisions, the rest of us pay through the nose.
Robert Reich , from his book ‘Saving Capitalism’