Canadians pay 16 to 40 per cent more for drugs than the average of industrialized countries. A national Pharmacare program, as a half-dozen countries already have, would save Canada over $10 billion a year on its $25-billion drug bill. Even other reforms short of a full national program would save billions in administration costs, drug costs (through bulk buying) and eliminated tax subsidies.
This claim is the argument of a report released by the Canadian Centre for Policy Alternatives. Since rising drug prices are one of the main drivers of a health-care system said to be headed for unsustainability, shouldn’t we be curious about checking this out?
Instead, the report looks like a one-day wonder. The Fraser Institute was on it immediately with a blast of privatization ideology (its solution is full privatization of all drug plans). The Globe and Mail‘s editorial said forget it, just concentrate on a catastrophic drug plan. General opinion seems to be it’s useless to even talk about it with the Harper government in power, politics in a muddle and the fact that health is the jurisdiction of squabbling provinces.
Yet, if we can’t even talk about it, we might at least admit the ultimate reason why reasonable drug prices, however delivered, seem so impossible: the control exercised by the pharmaceutical companies that have parlayed a handful of “miracle” drugs into a suffocating — and spectacularly profitable — influence on the economics of medicine.
This is documented all over the place. It’s just that the forces in place are so dominant that the real story always dies on the vine.
The 10 top drug companies — five American, five European — are among the most profitable enterprises on Earth. Over the past decade, their profits have run from two to five times the average of the Fortune 500. But don’t fret, they say. Big prices for drugs are needed to discover more miracles, since it costs a billion dollars to develop a pill.
Pure bunk, say the experts. It costs less than $100 million — the rest is for promotion. Plus, of that $100 million, up to 80 per cent is in fact publicly funded “pure” research. The drug companies take that research and develop the pill. The public pays twice.
Further, up to 80 per cent of new drugs are a long way from miracles. They’re in fact knockoffs of existing drugs — a molecule changed, a new name, and a marketing campaign in the hundreds of millions. Since these knockoffs are tested against placebos, and not against each other, their relative value is really unknown and some may even be harmful. One of the money-saving recommendations of the CCPA report is a national assessment procedure for drugs, so we don’t pay a fortune for glorified Aspirin.
Some pricing practices are predatory in the extreme. The story of thalidomide is instructive. This anti-nausea drug caused dreadful birth defects in the 1960s when given to pregnant women. But in 1999, it was discovered to have a, yes, virtually miraculous effect on the blood cancer multiple myeloma (also leprosy and childhood leukemia). Immediately upon publication of this finding, the price doubled, and within five years, it was up 500 per cent — at $3,600 per month for a treatment, putting it out of range for many sufferers. The catastrophic price of cancer drugs in general is the source of much legitimate suspicion about price gouging.
In Canada, economic policy kicks in. Prices of patent drugs are kept high by a government board to favour manufacturing here — mainly in Quebec and Ontario. The poorer provinces, like the Maritimes, pay dearly to support these jobs in Central Canada. Except that even these benefits are illusory. Subsidies and tax write-offs are so high that the country actually pays over a billion dollars for industrial benefits worth half that, says the report.
What else do profits from inflated drug prices buy? Most importantly, political influence. Big Pharma has more lobbyists in Washington than there are congressmen. From Ottawa, there’s a sharp telling of the story in a book called Corrupt to the Core, by Shiv Chopra. Chopra and two other scientists at Health Canada were fired seven years ago, apparently for insisting that drugs — in this case, agricultural drugs — actually meet the requirements of Canada’s health laws, and at apparent behest of the drug companies. They were fired for “insubordination.” They’ve sued and it’s still before the courts. They’re eager to discover how applying the law amounts to insubordination.
One final point. One of the funders for a Nova Scotia project called ANCHOR, aimed at reducing the risk of heart attacks, and hailed for some initial success, is Pfizer Inc. Since there’s no obvious profit motive at work here, what’s up? Was this a computer glitch at the world’s largest drug company? A Lone Ranger move by a low-ranking employee about to be fired? Or has there been a twinge of conscience up top? Or, at least, an urge to put a better face on Big Pharma before the real story starts to stick?
Ralph Surette is a veteran freelance journalist living in Yarmouth County. This article was originally published in The Chronicle Herald.
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