As a retired senior on Medicare, you might expect me to
be grateful that Pfizer has started a discount drug program for low-income
Medicare recipients. At the risk of sounding like a grumpy old man, let me
make clear why I am not.
American seniors need a comprehensive prescription drug benefit program as
part of Medicare. We don't need a charity program that's more public
relations than good public policy.
Pfizer's Share Card may help some individuals, but it also takes the pressure
off Congress to do its job. Moreover, people's prescriptions are produced
by a host of different companies. Are seniors supposed to enroll in a discount
plan with each pharmaceutical? I only have two prescriptions so I guess I
could fit the discount cards in my wallet, though neither of the companies
producing my drugs offers a discount plan right now. What if I had a dozen
prescriptions (relatively common in today's drug-oriented medical system)
from a dozen different pharmaceuticals? Must I enroll in a dozen plans? It's
clear discount drug cards are only a small band-aid where major surgery is
required.
Pfizer
estimates this program will reduce their gross revenues by 2.5% in the United
States. Given that their net income during the first three quarters of 2001
was $5.8 billion (the fourth quarter is not yet available), Pfizer won't feel
the pinch. If they did, they would just shift the cost by raising prices
for other people. When you consider the public relations benefit of helping
seniors, the complimentary media stories as a result of their announcement,
the potential delay in congressional action, and a database of seniors whose
gratitude they can manipulate into lobbying on their behalf, and in the end,
Pfizer will probably come out ahead.
Pharmaceuticals justify high drug prices by touting their research expenses.
However, 40% of pharmaceutical company research is developing unnecessary
me-too drugs and producing marginal, minor modifications of existing drugs
to extend their patents and shut out cheaper generic products. Conflating
marketing research with drug research also exaggerates their true research
expenditures. Likewise, the $1.8 billion pharmaceuticals spent on advertising
last year had more to do with the high price of prescriptions than research.
I certainly support pharmaceutical research. Mostly I support it with my tax
dollars. A 1997 National Science Foundation study of biomedical patents found
that only 17% of key discoveries came from private industry research. The
bulk of pharmaceutical advancement is government funded. That the government
does not charge pharmaceuticals a licensing fee or force them to pay us for
the patents produced on our dime is appalling, particularly, when pharmaceuticals
turn right around and charge us outrageous prices for our drugs — higher
prices than are paid in other countries.
It's time to look at pharmaceutical profit margins. Most industries have
profit margins of 5 to 10%. Pharmaceuticals average over 20%. Pfizer's profit
margin was just over 25% during the first three quarters of last year. Other
countries enforce price discipline by bargaining with pharmaceuticals, settling
on prices that are realistic reflections of the cost of goods sold and operating
expenses. America abandons consumers to the "free market" — but when
sellers hold all the cards, the market is not free. When you're sick, you
can't wait two weeks for the Eli Lilly President's Day Sale. Pfizer doesn't
run a Valentine's Day Special on Viagra. For some people, it's buy or
die. There is no free market in medicine.
Congress lacks the will to take on pharmaceuticals - or is too beholden to
pharmaceutical contributors, so prescription prices continue to reflect corporate
greed more than corporate costs. It's time to reverse this trend, but not
through self-serving corporate charity. We need a prescription drug benefit
plan that insists on fair pricing. This is an election year, let's elect
people who will make this happen.
Joe Mahoney
SW Portland, OR