Those Poor, Embattled Drug Companies
John from Cleveland called in and pointed out that the poor pharmaceutical companies say they spend “billions of dollars” on ten failed drugs for every successful drug. That’s a really common argument that the drug companies and their supporters like to trot out at every chance.
Except it’s not true. In fact, the prices drug companies charge often have almost nothing to do with the cost of developing or manufacturing a given drug. They sometimes charge up to 20 times the actual cost of production on drugs when they neither conducted nor paid for the research.
In fact, companies spend 2.5 times as much on marketing as they do on research and development. And a lot of the R&D they don’t even do themselves — it’s performed by universities and government labs and then practically donated to corporations so they can make whopping profits. Or it’s performed by independent biotech firms and sold to the big companies after development.
And since pharmaceuticals is one of the most profitable industries, in terms of the actual margin, even after their gigantic marketing expenditures — how can it be remotely true that what we’re paying for is their design and testing costs? And how come those same companies are willing to sell the very same drugs to other countries, where caps are instituted, for less money than they charge American retailers? If we refused to pay more (or rather, if insurance companies refused or the government forced a ceiling on prices), they’d still sell the same drugs, and they’d still make huge profits.
So the next time you hear the violins playing for the Big Pharma, break the violin over your knee.
I am glad that I am the whipping boy here. If you listen to the replay, I will tell you that it is their argument and not mine.
Speaking of my personal beliefs, I am going to come across as the most horrible person in history.
Today, I spent hours in the hospital because my mother was having her knee replaced. I spent hours in the hospital last week when I have some minor back surgery.
Every time I am there, I always visit my personal doctor’s receptionist (who is friends with my mother). If you look at all the people who are waiting to see the doctor, you’d be kind of astonished. There was this cute girl, around my age, I asked what she was in for… Well, I was told that she brought her great grandmother in for her bi-weekly visit. Everywhere else you look, there is a sea of VERY elderly people.
The fact is that we all spend tens of billions of dollars each year keeping old people alive longer. Through medical research, medicare, and other expenditures, we are keeping people around much longer than they would naturally be. I know that this sounds completely cold-hearted, but why are pharmacutical companies spending time researching drugs on diseases that only affect the extremely old?
I won’t comment on your horribleness, John, but I did modify the text in my post to reflect that you said the drug companies “say they spend ‘billions of dollars’ on ten failed drugs…” Sorry if I misrepresented you, I was doing it from memory. If I hadn’t lost my Stiletto I could be recording shows. Instead I’m rocking a fucking Stratus until I can afford a new Stiletto…
Are drug prices in open markets affected by price caps in other countries? (ie, do open markets subsidize price controlled markets?)
I think part of the cost is because the drug companies manipulate the patent process to keep their popular drugs from going generic. Bush may have done at least one thing right, eh Pete?
Large profit margins mean drug company stocks are probably a good investment.
I wonder how many public teacher pension funds own significant oil and drug company stocks?
Todd wrote: “Are drug prices in open markets affected by price caps in other countries? (ie, do open markets subsidize price controlled markets?)”
If I understand your question correctly, that would mean that if there weren’t caps in overseas markets, the drug companies would charge US retailers less. In other words, the CFO of Pfizer would say, “Well, we’re making more in the Canadian market since they got rid of those caps, so let’s give Americans a discount rather than just raise our profit margin.” Is that something you can imagine without bursting out in laughter?
Bro, you failed to comment on Todd’s biggest point… We all guarantee that the NY teachers pension fund is heavily invested in these companies.
If they are so evil, along with oil firms, why do they continue to invest in them? Is it for the reasons I spoke about on the show??? Is it because most of us (including myself) are hypocrits?
yeah i think they’d still charge a bunch for thier drugs either way you go.
anyway, (by the way, i can understand the old people thing….but also, i couldn’t imagine losing my grandmother and grandfather)it is ridiculous how much they expect people to pay for medical prescriptions. my grandmother has to pay something like $300 a month for her meds, and then another $150 or so (not sure about that one) for my grandfather’s. they only make about 1000 a month from social security. and this is after my grandfather spend his entire life working for the Army and then for a trucking company, and then for the racetrack (the latter even after he “retired” just to make ends meet). while he’s still as spritely as ever, he can no longer work, but they still have to do something to pay the bills. so now my grandmother has taken up a job as a dishwasher a few days a week down at a restaurant, when she REALLY shouldn’t be working. oh, and in addition to the prescriptions, she has to go into the doctor every two weeks and pays for that too….how the hell does that work out? bunch of BS, thats what I say. im sorry, but a bunch of chemicals should not cost $100 for a monthly dose….there is no way you can tell me that it cost even half that much to manufacture 30 little pills to regulate blood pressure!
I didn’t comment on the teachers’ pension thing because I know nothing on the subject. But I don’t think there’s anything inherent to being a teacher that would suggest they wouldn’t profit off the exploitation of others. Has someone suggested that being a teacher is akin to being a Buddhist monk?
When i was a kid there was a movie called “Wild in the Streets”, and they carted all the old folks away to camps…but with the hordes of baby boomers about to gray out the only LOGICAL solution is to exterminate everyone over 50…so my days will soon be numbered:)
I don’t think Pete’s going to like the extermination of people over 50. That would include his daughters’ grandparents who provide respite for Pete and Val by entertaining the children. These days people are still functioning capably physically and mentally well beyond 50. Since I am 62 I’d like you to raise the maximum age. Thanks!
He was referring to my post… I was just discussing the fact that we spend billions researching drugs in an attempt to keepthe very elderly alive longer.
I understood what he meant. He was joking about it and I was joking back.