Fighting the Pharma Goliath

If you watch a lot of CNN or MSNBC, you've probably seen the pharmaceutical lobby's ads warning about "changes" to Medicare prescription drug program, because the program is "working." (Then again, you might have heard a few notes of the off-the-shelf Muzak-folk music not good enough to be used in ads for Nexium or Lipitor, and tuned the ads out.)

Nevertheless, these ads are part of a massive lobbying campaign to kill legislation empowering Medicare to negotiate for lower drug prices, repealing the current prohibition. Such a bill has already passed the House, and the Senate is expected to take up the issue later this month. This past Sunday, Center for Public Integrity found that Big Pharma has flooded Washington with $155 million and an "army" of lobbyists more than 1,000 strong.

Part of the lobbying campaign is to give the impression that huge numbers of people are satisfied with the status quo, despite the fact that 85 percent of the country supports having Medicare negotiate. (The TV ad currently airing includes flat lies about the stance of one newspaper's editorial board.)

The other part is a wonky misinformation campaign to claim private companies are already negotiating and lowering prices, and Medicare can't do as good a job. The campaign has been aided by the White House and abetted by parts of the media, particularly The Washington Post.

But the White House won't back up its claims. When asked by a House committee for the supporting data, Bush's Medicare officials refused to release it.

And on Wednesday, a new report from Institute for America's Future put to rest any notion that Medicare can't reap significant savings, finding that: "Allowing Medicare to negotiate for lower drug prices would bring around $30 billion in savings that can help American seniors and taxpayers." That's $30 billion each year, by the way. That is not chump change.

At a press conference announcing the report, Sen. Debbie Stabenow, D-Mich., called out the glaring contradiction in Big Pharma's arguments. The pharmaceutical companies insist that negotiating by Medicare wouldn't affect prices, yet also complain it would hurt research and development (a.k.a. cut into their enormous profits). Both can't be true.

Noting the ferocity and expense of Big Pharma's lobbying campaign, Stabenow said, "Their behavior does not fit the rhetoric."

Yet it is possible that a common sense position held by 85 percent of the public may become victim to a warped debate, because of that disingenuous rhetoric. We in the grassroots must do all we can to make sure the facts don't get trampled by the lobbyist army.

Bill Scher blogs for Common Sense. The above piece was originally published at TomPaine.com.

•  We are ruled by Big Pharma

  and oil companies. Both a root cause of many of our problems.

  by fayeforcure on Thu Apr 05, 2007 at 11:07:50 AM PDT

•  A well documented diary

  hence, I was somewhat dismayed to note a lack of a link to Big Pharma's "enormous profits" - could you kindly provide some facts and figures delineating just how enormous these profits are (perhaps in comparison to those of Big Oil or Big Defense)?  Just asking because word on the street is that they really aren't doing that well of late . . .

  Thanks muchly!

  by Roadbed Guy on Thu Apr 05, 2007 at 11:23:18 AM PDT

  •  profits

    This should help. This is from "The Truth About Drug Companies" by Marcia Angell, former editor-in-chief of the New England Journal of Medicine:

    ...research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.")

    ...

    In 2002, as the economic downturn continued, big pharma showed only a slight drop in profits—from 18.5 to 17.0 percent of sales. The most startling fact about 2002 is that the combined profits for the ten drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion).[12] In 2003 profits of the Fortune 500 drug companies dropped to 14.3 percent of sales, still well above the median for all industries of 4.6 percent for that year. When I say this is a profitable industry, I mean really profitable. It is difficult to conceive of how awash in money big pharma is.

    by BillScher on Thu Apr 05, 2007 at 11:40:25 AM PDT

    •  Thanks for the information

      However, my understanding is that the finances of Big Pharma have taken a dramatic downturn in the past one or two years and prospects are even bleaker for the foreseeable future (primarily because of assinine top management).

      Anyways, I've been doing my own googling and found

      The report found that the pharmaceutical industry's annual research and development spending increased by 147% to $60 billion from 1993 through 2004. During the same period, the number of drug applications to FDA increased by 38%, the study found. The report also found that the number of applications by drug companies to FDA generally has been declining since 1999. In addition, about two-thirds of new drug applications submitted to FDA represented modifications of existing drugs, while 32% of applications represented innovative medications . . .,

      from Medical News Today

      So, for context Big Pharma appears to:

      1. Spend considerably more on research ($60 billion/year) than they make in profits ($36 billion, from your post).

      2. Spend twice as much on research as the public (the NIH budget remains at ~$28 billion for going on the fifth year now).

      So yeah, do make alot of money, but they also do twice as much biomedical research compared to The Public - hence, their constant villification remains a tad vexing to me.

      by Roadbed Guy on Thu Apr 05, 2007 at 12:02:42 PM PDT

      •  Clarification

        The $36 billion figure represented 10 companies (albeit the 10 largest,) while the $60 billion figure is for the entire industry

        Starve the corporate beast, buy local!

        by EthrDemon on Thu Apr 05, 2007 at 12:14:48 PM PDT

•  I cringe everytime I hear those commercials

  and then I shout at the TV.  Great diary - I hope folks are paying attention AND acting.

  Oh - and thanks for sending a notice through the Daily Kos Health Care Diary Alert Google Group.  I probably would have missed it if you hadn't.

  by SarahLee on Thu Apr 05, 2007 at 11:49:12 AM PDT

•  PhRMA profits

  are a riddle wrapped in an enigma. The reports that you see are only for the publically held companies. Some are privately held, and others are so multinational it's hard to tell.

  Around 15% for R & D and 25% for marketing and admin with 28% profit, according to Families USA review of publically held companies. 53% that has little added value to most of the public, how obscene.Report here

  They ARE going to take major hits because many block busters are going generic, and their R & D can only come up with active metabolites and stereoisomers and gimmick release mechanisms to extend brand lives. I can't think of a single significant advance in quite a while. The Pharma equivalent of peak oil has passed.

  Meanwhile, because of incessant marketing, most antibiotics, antivirals, and antimalarials are becoming less useful, and because there is not a lifetime revenue stream from them, unlike say a anti-lipid drug, there is no research. So we might have 15 drugs for cholesterol, while simple pneumonia and skin infections will be killing us like 100 yrs ago.

  by UndercoverRxer on Thu Apr 05, 2007 at 01:19:56 PM PDT

•  Bill Clinton raised the patent time for medicine

  The big drug companies have been caught paying generic companies not to produce the generics of their most profitable drugs.  

  The taxpayer pays a lot of money for research and then it is given to the drug companies.  We should get a cut of those profits and use it for the medicaid and free kids insurances.

  If we could get a generic of all that we need, then most of us could blow off the prescription d program and that is why the insurance companies don't want to bid the prices down or go into generics.

  There are older drugs that sometimes do as well or better, with less side affects, like some blood pressure pills.  Most would be better off taking the old and tried ones.  Some of the new ones cause birth defects. And the prices are like $10 vs $150, $50 your part on regular insurance.

  I hear the insurance and drug companies are hiring like crazy.  I guess creating jobs while bankrupting people will justify their existence.  

  by relentless on Thu Apr 05, 2007 at 01:57:07 PM PDT