Profits over People: How Big Pharma’s Money Affects Our Health and Wallets

Americans pay the price.

Earlier this month, I posted two articles on Big Pharma, back to back. The first one was my classic approach: How PE Firms Are Flipping Drugs in Price-Gouging Scheme that Cannibalizes the Entire US Economy (with 109 great comments).

The second one was coincidence. The digital ink wasn’t dry on the first article, when its was revealed that the Justice Department was getting antsy: “More than a Dozen” Drugmakers under Criminal Investigation for Price-Fixing, Shares Plunge, after Getting Crushed All Year (56 great comments).

But as always, there’s more to it. Here are some hard numbers from a different angle that shed a lot of light on how the industry works.


Transparency in the pharmaceutical industry is long overdue – but thanks to a new law, these companies are now required to disclose payments made to doctors, teaching hospitals and to various other companies.

The result? A total of $3.49 billion in disclosed payments have been released. created the below infographic to share how much money was paid to:

  • 681,020 doctors
  • 1,135 teaching hospitals
  • 1,565 companies

How do these companies spend?

U.S. doctors received the bulk of payments from big pharma. The highest earning doctors practiced family medicine, pediatric critical care, orthopedic surgery, cardiovascular disease, and neurological surgery.

These companies also made payments to institutions training to next generation of doctors. Big pharma paid a total of $361 million to the City of Hope National Medical Center, followed by payments to hospitals in Denver, Cleveland and Rochester, as well as The General Hospital Corporation.

The highest spender is Genentech Inc.

The disparity between funding in marketing and research and development for the most common household drug names, such as Johnson & Johnson and Pfizer, is as much as double the difference.

Americans pay the price

Americans currently spend more per capita on prescription drugs than any other country in the world. In 2014, Americans spent a total of $374 billion on prescription drugs. In 2015, The Kaiser Health Foundation reported that the average American adult has more than 12 prescription drugs per capita – and this number rises to 27 for seniors.

Check out the below infographic to learn more about the power and influence of big pharma on the health of Americans, and to see how a “conservative prescribing” approach can help resolve this problem.


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  56 comments for “Profits over People: How Big Pharma’s Money Affects Our Health and Wallets

  1. Ivy says:

    The declining, and aging, viewers of the national evening news shows are treated to an onslaught of advertising about new drugs. Few other companies advertise on those shows. That seems to indicate at least two things:
    1. The drug companies have a lot of money to spend
    2. The aging viewers are targets

    Maybe I’m still to young, but just cynical enough, to feel that those drugs really are not that necessary for treatment. There are such long disclaimers about side effects on those ads, to check a legal box, but not to be noticed. People seem to have become inured to the background noise of television advertising so only the most refined ads get through with the right colors, sounds and motions to carry the messages.

    • JerryBear says:

      About 2% of people prescribed the oxy or hydro codones by their regular doctors are addicted to the drugs. On the other hand their are about 100 million chronic pain patients in America, a condition that is very seriously under treated in much of the rest of the world. You don’t just throw opiates at a pain condition, you need a fully developed treatment plan to deal with severe chronic pain. But without an opiate in there too, everything else often doesn’t work well. Opiates play a keystone role in the management of pain, but in chronic pain should not be used by themselves.
      This is a complex subject that is a medical, not a moral issue.

      • night-train says:

        Very true. Chronic pain treatment should be individualized, as people respond differently to meds. When possible, physical therapy is helpful in managing pain, restoring and maintaining movement and helps with depression which often accompanies chronic pain. Sadly, politics has gotten wrapped up in the practice of medicine to the detriment of those in need of care.

      • Andy says:

        2 billion asians can squat for long periods amd dont get back pain. How many Americans can squat for even two minutes. Drugs are only an answer for drug companies, Americans afe being dudded by big pharma but arent smart enough to see it.

  2. Frederick says:

    99percent of Hydrocodone and 88 percent of Oxycontin thats nuts Nation of addicts how sad is that?

    • Chicken says:

      The best healthcare money can buy! Oxycodone is a dirt-cheap drug, it’s the process of obtaining it that’s expensive.

      • JerryBear says:

        Preferred opiates vary a lot in different parts of the world. In many 3rd World countries, the favorite is Pethidine, regarded as less effective and kind of nasty here. Hydrocodone is the biggest favorite here, followed by oxycodone then morphine.

    • night-train says:

      As opiates have become harder to obtain, heroin has made an astounding comeback. Treatment should have always been the mainstay of our national drug policy. Instead, we have had the failed war on drugs which has hurt many, helped few, but has certainly driven the growth of big government, loss of privacy, personal freedom, and other unintended, unwanted consequences.

      • Frederick says:

        Heroin is indeed making a comeback Makes one wonder what that false flag attack was really all about doesnt it?

  3. Albert E says:

    Doctors like myself go into medicine often primarily for the right reasons such as the desire to optimise the health of humans and hence humanity. The perception may be that doctors are amongst the brightest and most altruistic amongst us- but that may not be the case. As Wolf demonstrates some doctors can become incredibly rich through somewhat dubious means. When I look back at my cohort from school the brightest invariably did not go on to do medicine. So I think the cliché of (at least some people) not going into medicine primarily or at least secondarily for the money is often just that, as well as status and as a career rather than a true vocation. Also, like modern finance, modern economics, modern politics, modern journalism, modern business and many more: modern medicine is a system which probably needs a good sort out. The best way I can summarise health is the WHO definition which coincides with the birth of the NHS in the UK. Health equates to biological, psychological and social wellbeing. Too few of us enjoy that. How doctors could and should help each and every patient is to center and optimise their patients within this biospychosocial paradigm. To do that medicine needs a rethink.

    • Paulo says:

      I have never had a bad experience with any doctor. In fact, I just sent my family doc a thank you card for being so pro-active on a routine physical 6 years ago which caught my cancer at stage 1. I am now off a surveillance program 5 years early because of his diligence and the skill of my surgeon!!

      In Canada, we patients are not scheduled for unnecessary surgery as the system is one of triage and limitations; who needs it the most gets operated on, first. The idea of someone being operated on who didn’t need surgery is ludicrous. It just wouldn’t happen. The surgeon would lose his/her license and hospital privileges.

      The prescribing of unnecessary meds as described in this article really caught my attention. I talked to my wife about it (who had the unfortunate luck to develop type 1 diabetes at age 12). She has been type 1 for over 45 years, and is in very good health. She has 4 prescriptions of which are designed to pro-actively keep her BP lowered and maintain heart health, a big killer of diabetics. While her GP is paid piecework (a fee for each visit set forth by Govt regulation), I have never ever witnessed him speeding up a visit to increase his wages. If she needs 20-30 minutes, he takes 20-30 minutes. He receives the same pay for her visit as a patient who requires just 5 minutes and a quick looksee. Unnecessary meds will only cause complications and negative results. He would never do it.

      My sister, who lives in the States, also has very good medical service, probably as a result of having an excellent insurance plan. In fact, she received emergency surgery on a July 4th holiday when it looked like a heart attack was imminent. Her follow-up care was excellent. Her only complaint is with the insurance company she has had. Her doctor/neighour finally bailed from her practice due to hating her insurance interactions and the management style of her clinic and hospital. It simply made her angry and frustrated every day, as clinic management continually pushed for increased billing.

      Doctors in the US are taking a bad rap for the system, as far as I’m concerned. I’m not talking about plastic surgeons and the like, but average GPs and specialists who look after our health. I have found with the acceptance of the internet into our lives that almost all sectors are under attack these days. While doctors have lost their God-like mystic with the advent of Googled second opinions, nevertheless, theirs is often a thankless job full of stress and threatened litigation should they err. A simple thank you once in awhile goes a long way in developing and nurturing doctor/patient relationships. We are lucky to have them, regardless of where we live.

      My South African doctor often walks out to the waiting room to collect his patients. He invariably asks after our families and how life is going for us?….this is well beyond a “what can I do for you today”? His couteousness is most appreciated. We are treated as valuable people, first….as patients, second. He deserves the same consideration as far as I am concerned, as do most people, whatever their career or relationship is to us.


      • Terry says:

        I completely agree that the US system is in dire need of a shake-up, but Cute-n-Cuddly Canadian (TM) system you describe is not the solution either. I think that since Pharma companies were allowed to pitch their products on TV, drug use has skyrocketed in the US. that, to me, would be the first place to re-institute some control.

    • nhz says:

      I’m a biochemist involved with medical diagnostics etc. and agree that modern medicine – and many other fields – need a serious shakeup.

      I see much of what is going on behind the scenes at institutions like CDC and FDA and it’s a disaster – it’s all about business interests, careers, politics etc. and not about better health for the population. And it’s not just the financial side, the science is also desperately lacking or controlled by clueless and often corrupt ‘experts’. Modern medicine is starting to cause more harm than good, just look at the number of deaths every year due to side effects of prescription drugs – drugs that the big majority of these patients should never have taken.

      But patients themselves also need a shakeup, nobody forces you to use all those drugs and many of them are poison – you have to be very gullible to believe that this is always good for you (even more so with many of the recent $100.000 prescription drugs). There is no relation between amount of prescription drugs taken or money spent on drugs (very high in e.g. US and France) and general health of the population – on the contrary. Take control of you own health, there is only so much the healthcare system can do for you whatever the amount that is spent. Living conditions, food, chosing a healthy lifestyle and sometimes personal genetics are far often more important.

      There is a lack of scientific method in the medical study and in the way many doctors deal with facts, diagnostics, guidelines etc. Yes, for many medicine is first of all a license to print money and not so much a way to help people. It was like that when I studied long ago and I hear exactly the same nowadays from students venturing into traditional medical studies. It doesn’t help that medicine is a field with lots of boring theory, requiring very hard studying but not the brightest minds (who indeed often prefer something more challenging). Fortunately there are still many good doctors, but you may need some luck to find them.

      The shakeup is going to occur anyway, if not from inside than from outside the system because in many developed countries the costs are surging out of control. Aging populations, a surge in astronomically priced new (and often almost useless) drugs and treatments, endless entitlements with the patients – it will collapse the system as we know it very soon. Choices will have to be made …

  4. Felix_47 says:

    And after drugs comes pointless surgery. Doctors need to be put on government salary. This Kevin Foley, neurosurgeon……is the published number above a joke?

  5. Petunia says:

    My experience with doctors is that they are always trying to push drugs on you. Several times I took prescriptions and didn’t fill them, because the doctor became angry when I told him I didn’t want to be on any prescription drugs. All the drugs they prescribed were on Do Not Take lists and all were addictive. The doctors also rattle off the names of these drugs and assume you know what they are, which was not the case with me.

    I was also surprised many years ago, when I first moved to the suburbs, to find that many suburban housewives are hooked on all manner of prescription drugs. This was something that wasn’t at all common when I lived in New York City. It was so common in the suburbs, that it came up in normal conversation.

    • Frederick says:

      In the 60s my aunt who lived in Vermont had a jar of a thousand valium pills on her windowsill Thats why they called them “mothers little helper” Evidently the stress of raising three kids in the country was way too stressful for her the poor thing

      • JerryBear says:

        Valium and the benzodiazepines are perfectly fine drugs on a short term basis but become increasingly dangerous on a long term basis. They can cause serious addiction with devastating and violent withdrawal symptoms and long term mental derangement.

        • nhz says:

          they may be “perfectly fine” for some people but definitely NOT for the legions that are using them, just like with pain killers and other stuff that is used massively in countries like US without any proven benefit. As Lee says below, United States of Addicts.

          Over 90% of current prescription drugs would not even pass a honest test (double-blind placebo controlled etc.), most of them were approved on manipulated science or through outright fraud. And the few that do pass are often modern versions of traditional medicine. For many of the most popular drugs, even much of the medical and pharma world admits that they don’t work for a BIG majority of all those who take them. But they accept that supposedly for the few % who do benefit (just too bad for all the others that they get the cost and the bad side effects without the benefits …); of course it has nothing to do with the outrageous profits that are generated by Big Pharma and that corrupt everything including people’s minds ;-(

        • Frederick says:

          That explains alot about my aunt bear

  6. Anon says:

    From the San Diego Union-Tribune 7/29/15: “For example, two San Diego doctors top the list of recipients of drug money for the nation. Dr. Sanjiv Narayan and his wife, Dr. Sujata Narayan, co-founded a private, venture-backed medical device company and received $54.8 million when it was bought out by Abbott Laboratories in December 2014.”

    Sometimes muck raking articles need to be researched as well. Trust but verify.

  7. Lee says:

    The USA: the United States of Addicts.

    Geez, a nation of pill poppers and nutters.

    Maybe we’ll see an increase in scripts for the lefties as they try to cope with the Donald being elected!!

    Pass the valium please!

    In the good ole days when we lived in Japan we had a GP who was a friend and was always treated us for free: never a charge for the visit or the meds until the Japanese government finally had a light bulb go off: they were spending too much on drugs.

    In most cases the GP’s owned their own practice and had a pharmacy in their clinic: the more drugs they ‘sold’ the higher their profit.

    So in order to reduce spending the Japanese government reduced the amount they would pay for drugs being dispensed by the doctors.

    Yeah, so instead of getting ‘free’ medicine we now had to pay a whopping 200 yen (+/- US$3) for a fill. The visit was still free.

    Here in Australia we have a mixed system of public and private and of course a very complicated system of who pays how much for their meds.

    The most you’ll pay for a fill on the approved list is A$38.80. Many fills are around the A$6 level and if you take a a whole bunch of different meds once you reach a certain level/age they are free.

    How would you even keep track of taking so many medications a day? The mind boggles!!

    I can hardly wait to get off the ONE medication I am taking and hope to never take it again although it looks like I’ll probably be on aspirin for the rest of my life as a result of complications from the injury I had.

  8. Mary says:

    I can just imagine Trump checking out that list of zillionaire MDs for possible cabinet appointments. If there’s one thing the Donald admires, it’s folks who know how to milk the system.

  9. PrototypeGirl1 says:

    Wolf, Thanks for tackling this difficult subject. Perscription drugs are a major problem for my business, people are sick all the time. I get an average of 2 cancelations a week due to people being sick, they have no clue their drugs are making them sick. So they go in for more procedures and more drugs. A lady canceled last week because she had a terrible urinary tract infection, I told her oh you should take some liquid garlic capsules, you’ll feel better quick, she decided instead to go get a $1,200 MRI to check if the pain was being caused by a blood clot. I was at a house a while back where a 9 yr old had a terrible whooping cough. I said wow that sounds like the whooping cough and the mom said well it can’t be whooping cough he was just immunized against that a week or so ago. People need to wake up and see how dangerous our modern medical world has become. Or easier yet I need to shut up.

    • nhz says:

      For many common medical problems there are very simple and cheap natural treatments. And of course many problems will heal within a few days or at most a few weeks, whatever you do to ‘treat’ them. But most doctors will never tell you because they didn’t learn it in college (or later on), because they can’t make money from those simple solutions and because they are continually being brainwashed by the Big Pharma mob.

      And they are always inventing new tricks to get people hooked, e.g. I abhor much of what I see in the recent genetic testing; it may look ‘scientific’ to the average user but most of it is just ‘entertainment’, unfortunately of a very dangerous kind because people draw all the wrong conclusions from such tests. If you run enough diagnostics, you will always find something that ‘needs’ treatment, bingo!

  10. r cohn says:

    Anyone who watches the nightly national news programs can see that the big pharma companies dominate the advertising.
    In a previous article ,Wolf cited the fact that Americans are the second fattest people after Mexicans.The bottom line is that many medical conditions would disappear if we exercised regularly and radically reduced our consumption of crap processed food .And there would be much less need for many of drugs currently on the market.

  11. John Doyle says:

    BIG PHARMA is another behemoth indulging in distortion of reality, as do Big Ag and Mainstream economics. All trade in falsities and lies. All trade only for profit and however it gets there is fair trading for them. Economics is a little different in that is it a Theology, an “old fashioned religion” [Paul Samuelson] but the damage and evil it causes are as pernicious as big pharma and big ag, and big tobacco.
    It’s a wonder how our society functions in such a miasma of lies and falsehoods! It’s certainly dysfunctional enough.

  12. Bobbi Kline MD says:

    In my 20 years of practicing medicine in both insurance and cash-based practices, I believe today’s current problems are the result of a perfect storm of many different factors from all the players:
    1. The presence of big pharma companies in residency training programs creates a very distorted education. Because they bring so much money, many hospitals gladly make the trade-off to allow them to prosthelytize and very quickly using their drugs become ingrained in how young physicians are trained.
    2. Despite all the science (which often takes far too long to make it into clinical practice, and is often very skewed in the academic world toward procedures and medications), much of medicine is still taught by apprenticeship in many ways, and there is a dearth of physicians experienced in nutrition and lifestyle involved in physician training. Even today, only about 1/4 of all medical schools teach any nutrition at all, and at the residency program level it is highly variable. So even if a physician wants to do more with diet and lifestyle, they typically don’t have the knowledge and skills and have to do more training on their own after finishing their 7-8 years of official professional training.
    3. Then, when out in practice, the environment for many is a never-ending treadmill of trying to see patients within the time allotted – something set by the insurance companies, bean-counters and management teams. Many physicians long to spend a lot more time with patients, but you don’t get paid by insurance for “soft” time – that not spent directly addressing a diagnosable condition.
    4. Direct to consumer advertising means many patients believe a pill is the cure for their ailment, and it takes more time for the physician to discuss other options that might take more effort on the part of the patient- and many physicians don’t want or are unable to take that time, and many patients want to just take the pill. They don’t want to spend the time and effort to take responsibility for their own health.
    5. Insurance reimburses much better for medication management or surgery; it often reimburses a physician little or nothing for diet and lifestyle management. If you have diabetes or heart disease, insurance may cover limited dietary counseling.
    6. Physicians are overwhelmed with insurance hassles – figuring out appropriate codes, submitting claims, fighting insurance companies for reimbursement as well as getting claims covered for patients needing other services elsewhere. At the end of the day, fatigue can win as it is just wearing to fight this battle every day.
    7. And, lastly, physicians are human too, subject to all the human frailties of greed, laziness, fear of change, and the rest.
    The powerful want to hold onto their power, and in order to do so will resist change they feel threatens their own interests, even if it creates a larger good. In order to change things, there has to be demand from consumers of health services in conjunction with shakeup of the powerful medical organizations, teaching institutions, legislative bodies, insurance companies, pharmaceutical companies, along with the lobbyists. And people have to be willing to be more proactive in their health. Only when we have a confluence of all of these will there be real change.
    While I see small changes happening in small pockets of physicians and patients, I’m not holding my breath for meaningful change anytime soon.

    • nhz says:

      Good points, I see the same in my country (Netherlands, with supposedly one of the best health-care systems in the world but in reality almost as dysfunctional and costly as the US system).

      Both the medical system in the West AND the patients need a shakeup. It looks like politics and big business (and many consumers) are unwilling to change direction (and why would they, like has never been better for the Big Pharma mob) so probably the system will get shaken up by hard financial limits that are approaching fast. Maybe then people will see that spending LESS instead of MORE money on commercial “health-care” can be very beneficial.

  13. Dan Romig says:

    After picking up a family member Wednesday evening from Mayo Clinic in Rochester MN and being granted powers to pay bills for a while, I am stunned by the costs. Medicare and AARP insurance through UnitedHealthcare cover quite a bit, but it is still incredibly expensive to cover the pharma bills.

    Stem cell transplant to fight Multiple Myeloma is quite the science and art; Mayo is the best place to be taken care of. God speed to nhz and others who working to better our health!

  14. walter map says:

    Amerikans obviously suffer from acute hydrocodone deficiencies.

    An average of twelve prescriptions easily explains the recent election results.

    Drug pushers: “Suckers!”

  15. Petunia says:

    I watched a show on Spanish TV in Florida about some guy with a form of hepatitis which is very expensive to treat. I forget how much it cost, but the cost was high enough that he was willing to go to prison to get treatment. He needed to commit a federal crime because the state prison system in Florida did not treat inmates with this condition, but the federal prison system did. And the crime needed to be something that wouldn’t sentence him to too much time. This is not a joke, they actually had this guy on a tv show.

  16. chris Hauser says:

    there oughta be a law. and that’s the problem, there is.

  17. Herbalist says:

    I’ve been an acupuncturist for 20 years. There is absolutely no reason to take drugs for most ailments. Most drugs are prescribed to treat diseases the drug companies make up.

    If you have pain, you can take bromelain, FYI Restore, and other natural pain relievers. No side effects, they work better than drugs,

    Doctors do not have the ability to do anything but prescribe toxic drugs. Anti Everything. Anti-inflammatories, Anti-biotics. They work against the body, not with it.

    On top of medical procedures that kill more people than they cure, like colonoscopies and heart bypass surgery, not to mention back surgery which is 90% a failure, by their own estimates, but they keep doing it because they make money. They destroy people’s lives to make money.

    America will never have affordable healthcare as long as the populace is brainwashed to believe that drugs are the answer for anything. They control the media, and they spend billions advertising to brainwash people that they have a disease that drugs will cure.

    Cholesterol drugs? Big scam! All of us have to pay for the Zombie minds of the mass-brainwashed hordes. Until the system collapses, it will be like this. There is no small amount of cure. The mafia does not have it so good. Hospitals can charge whatever they want, there is no requirement to post prices for procedures.

    In addition, chemo and radiation are the biggest crime committed in humanity. How many people die from this farce? Even Medical Deities admit they only get a 4% cure rate at 5 years post treatment. They kill people quickly with that. Cancer is not a death sentence, chemo and radiation are.

    • JerryBear says:

      You know something? One extreme doesn’t justify the other. Back when medicine was dominated by the treatments you prefer, the average life span was more than 30 years less than it is now. I developed a form of leukemia that before 1970 was absolutely 100% fatal with no exceptions whatsoever and almost always in 3 weeks. The only reason I survived was because of all those advanced high tech remedies, including chemo. I have known several people who were talked into abandoning chemo therapy and radiation and in every case they died in unspeakable suffering as the cancer galloped uncontrolled through their bodies. If you are convincing cancer patients to go off their treatment regimens for your worthless quackery then you are committing cold blooded murder!

      • nhz says:

        You are so wrong about suggesting that modern medicine increased the average lifespan by 30 years.

        It’s totally bogus and many scientific publications prove it. Yes, there has been a big jump in AVERAGE life span due to vaccines that treat childhood diseases which means many more people survive beyond 1-4 years, skewing the statistics. But we are now starting to see how many of these childhood vaccines have serious and costly consequences later in life. Health and lifespan has increased tremendously over the last century or so, but most of that is due to better food, better hygiene, better working conditions and other lifestyle changes – not to people filling themselves up with dangerous toxins. Btw, in some ‘modern’ countries – and I think the US is one of them – average lifespan has already started to decline while drug and surgery spending keeps growing; go figure.

        I’m convinced from much of the SCIENCE that I have read that many cancer treatments, especially the extremely expensive ones, are nothing better than placebo. Unfortunately, there is so much money at stake here that brainwashing of the average citizen and the medical community and authorities is a given. For many (not all) types of cancer, additional radiation therapy will increase ones chances of survival beyond a certain date with a few % at best, and it isn’t without nasty side effects.

        I’m not suggesting anyone to get off their treatment but your view on the subject seems severely tainted by your own experiences.

        • JerryBear says:

          The use of statins and drugs for high blood pressure have strongly reduced the death rate from heart disease and stroke. When I was young, it was perfectly normal for men to die of a heart attack in their 40’s and 50’s. Now it seems unusual. We live longer because of those medicines. Like I said, one extreme doesn’t justify another and you are being extreme. Modern medicine can accomplish miracles of healing if it is used properly. The problem is that it isn’t.

  18. r cohn says:

    The book “Dreamland” describes the symbiotic relationship between Oxycontin and black tar heroin,the drug that is at the center of the new heroin epidemic in smaller cities and towns.For a protracted period of time after it was introduced in 1996,Oxycontin was promoted as being relatively non -addictive,when it fact it was not.

    • JerryBear says:

      The real cause of the drug epidemic is despair. The cause of the despair is the economic conditions.

      • Frederick says:

        You are exactly correct Jerry about the despair and its driving alcoholism and suicide as well

      • chillbro says:

        Very true, mass additions and other social problems are symptoms of bad economics times.

  19. Cliche says:

    Informative article Wolf ! Good website for doctor conflicts below.

  20. PrototypeGirl1 says:

    Another thing going on in the medical world is the mysterious deaths of many natural health / problem solving doctors. Seems to be dangerous to expose the lies.

  21. wkevinw says:

    Whenever you see any market with high profit margins for a long period, something in the free market is not functioning. In a free market, competitors arrive to force margins down via competition. One thing that is broken in this market is the lack of legal retail pharma imports. I think this is one of the protections that allows the big margins.

    Comparing what is the proper of R&D vs marketing spending is probably not a meaningful activity. For example, if you tell somebody that the bag, transportation, marketing, etc. costs more than the bread when you buy a loaf, they will say that is ridiculous. However, that is how a healthy economy has structured the markets for loaves of bread.

    Open up competition, properly administer the patent system, and prices will fall into line with what is “proper”. By the way, that will also mean that other countries’ prices will rise.

    • walter map says:

      “By the way, that will also mean that other countries’ prices will rise.”

      Not likely. Naturally the global Medical Industrial Complex also has adverse effects on pricing outside the U.S. Removal of those adverse effects would cause all costs to fall.

      The MIC expects to prevent that by making sure everybody needs another treatment.

  22. JimTan says:

    Great post Wolf.

    Part of the problem is that doctors determine demand for drugs (they write prescriptions), while drug prices are determined by insurance providers that cover most of the sick people who need these drugs (Medicare, Medicaid, VA). Once public insurance (Medicare, Medicaid, VA) agrees on a drug price, doctors are free to write as many prescriptions as they like on behalf of patients. Pharmaceutical Companies hire third party consultants like IMS Consulting Group to perform detailed surveys of Health Insurance and Medicaid Plans and lobby for the maximum “acceptable” price for a drug that will not trigger Coverage Restrictions, which limits annual sales of the drug. This is commonly referred to as Access-Optimized Pricing. I’m not saying that individuals should choose their own medications, and pay for them out-of -pocket, but I suspect that Pharmaceutical companies well understand how this system can be gamed to maximize profits. Basically all they have to do is get a high drug price approved by public insurance, and provide monetary incentives for doctors to prescribe their drugs as much as possible. This does not necessarily have anything to do with actual drug value, or treatment efficacy. The rewards for this gaming are actually pretty significant. Fortune ranks Gilead Sciences the 5th most profitable U.S. company ( 2015 annual profits ). Of their $18.1 billion profits, the Hepatitis C drugs Sovaldi and Harvoni (priced at $1,000 per pill or $85,000-$95,000 per treatment course) accounted for $19.1 billion:

    Hepatitis C drugs have driven their profits higher than every other U.S. company in 2015 except Apple, JP Morgan, Berkshire Hathaway, and Wells Fargo. With regard to drug development costs, Sovaldi was acquired by Gilead from the New Jersey biotech company Pharmasset for $11 billion in 2011, a premium price which works out to about 60% of one years worth of Hepatitis C drug profits.

  23. PanamaBob says:

    Wow this is a hot topic, too many responses for reading.
    I’m lucky having the same primary Doctor since his beginning in the practice of Medicine(1978). On our first visit he took a full history and then asked what I expected from a Doctor.
    Although I was surprised with his question, I asked two questions or statements.
    First, I told him when I or my wife or kids come for a visit, if he determines that the illness or distress with pass with time without the intervention of drugs or other treatments that’s great, $25 for an opinion is the best news.
    Second, I requested that if drugs are required, please prescribe a drug that has a history of use instead of the latest and greatest. My concern wasn’t cost but only the safety versus side effects.
    To this day my Doctor will review options and try to pull me into the decision process and I usually defer back to his expertise.
    There is a back story, I went to his Father for ten years previous to his practice. It was always the same with Senior Doctor K entering the room and listening to concerns. As soon as I finished he would leave the room followed in 5 minutes with seeing his nurse enter with a Hypodermic needle of B-12 and an envelope of pills with instructions.
    Price $25

  24. PanamaBob says:

    I might add that on my last visit he received a Gold Eagle 1 oz for his years of service.

  25. Genevieve Hawkins says:

    We just got back from Mexico my husband needed a topical steroid cream for psoriasis that the US has recently raised the price on, to $340 for a one month supply. In Mexico it cost $12 for the same. The stuff works great with no side effects it’s probably been on the market for decades…

  26. WX Wall says:

    NB: I’m a neurosurgeon , so you may assume I’m biased but I’ll try to be objective :-)

    I have no love for big pharma and I agree with the overall conclusions of this post, but several of the stats are misleading:

    1) As part of their ‘# of prescriptions per average American” stats, the group appears to include inpatient drugs and/or drugs taken for a limited time for a specific illness (e.g. an antiobiotic for a week for an infection). If you are sick in the hospital, it’s not uncommon to ultimately have dozens of medications over the course of your hospital stay (perhaps too many, but that’s another topic…)

    The average number of *outpatient* drugs that the average American take *regularly* is 2.2. I think this is the statistic most of us are interested in. This is still higher than any other country so we are probably overmedicating, but I doubt any of us know that many people who take 20 drugs on a regular, daily basis (except for small populations of patients like cancer or post-transplant patients).

    2) The implication is that all this advertising money spent on doctors is leading us to prescribe more which is leading to the increased cost. They even state that “the solution starts with doctors”. In actuality, the percentage of generic drugs prescribed vs. brand-name drugs is rising. It crossed 50/50 in 2007 and is now 80% generic, 20% brand name. IOW, despite all the money being spent by the pharma companies to tout their latest, greatest, most expensive new drugs (no one advertises generics or pays doctors to prescribe them), doctors are prescribing far more generics and far fewer brand-name drugs than before (some of this is due to increasingly strict HMO payment policies for these drugs, BTW).

    The fact that our total pharma spending is still going up just shows you how much more expensive brand-name drugs are becoming each year, which is swamping physicians’ efforts to manage their patients with more affordable generics. If the group wants to solve the problem of Americans taking too many meds (generic or brand name), then I agree that the solution starts with doctors. But if the problem is that we’re spending too much for drugs, then the problem rests squarely with pharma.

    3) I can’t read the references on that poster, so I’m curious whether the ‘99% of hydrocodone’ and ‘88% of oxycodone’ stats are by prescription, by total number of pills, or by dollar value? It makes a big difference considering the U.S. pays far higher prices for these meds, which can skew numbers. That said, I believe the U.S. does have the highest rates of opioid use, but I don’t know how much higher those numbers are compared to other countries (regardless though, the addiction rate is definitely too high and is something we need to address).

    4) Re: payments to physicians. IMHO, the poster lists individual payouts to doctors and hospitals purely for an incendiary purpose, because if you try to calculate an *average* payment per doctor / hospital / company, it becomes pretty small. For example, if you assume half of the $3.5bil went to physicians, by their numbers, it works out to $2,500 per physician. If the average physician income is $166k, that is around 1.5% of their income. Of course, the money isn’t distributed evenly, and generally “thought leaders” within the community get paid a lot of money to give speeches at conferences which in turn likely influence a lot of doctors, so I’m not saying this money doesn’t have an effect, just that we should demand appropriate stats and numbers if we want to understand how it affects prescribing practices and how we can change that.

    5) About those specific physicians. I know Kevin Foley (not personally, but we’re both neurosurgeons so I know his work). I suspect that the vast majority of that money is royalty payments for technology he invented years ago. He was responsible for designing new pedicle screw systems that significantly improved spine surgery. And he still collects royalties from licensing those patents. If that’s the case (that most of the $22mil was from royalties), then IMHO, it shouldn’t be lumped in with marketing: he created something that truly advanced the field, and he’s profiting from his invention.

    Given this caveat about Foley, I wonder if there aren’t similar caveats with the individuals cited. If this group wants to single out individual physicians and hospitals for taking enormous money, it behooves them to explain what that money was actually for (royalty payments? Speakers fees? Research grants? Medication samples? A very, very expensive meal? :-) so we the public can decide whether that’s improper or not.

    I liken this to the brouhaha that came out when Medicare released its list of the physicians who got the most money from Medicare. At the top of the list were a bunch of ophthalmologists, oncologists, and pathologists who “earned” many millions. But when you investigated further, you found out that due to the quirks of Medicare payment systems, ophthalmologists and oncologists include the drugs they administer in their charges, which meant that the vast majority of their Medicare money went to paying big pharma for their drugs, and only a small percentage was left over as their actual salary. Meanwhile, pathologists had huge payments because it’s not uncommon for an entire lab of a dozen pathologists to bill all of their services under one name, and then split the pot of revenue among lab expenses, lab tech salaries, and their own salaries.

    At the end of the day, I do agree that Americans take too many medications. I also agree that prescription pain killer addiction is a big problem. These are problems we physicians should take responsibility for and work to change. However, I disagree that we physicians are responsible for ballooning pharma costs. And if we want to address how pharma spending influences physicians, we need a much better analysis than just throwing up some big, misleading numbers that will inevitably lead to incorrect conclusions and counterproductive solutions.

  27. ML says:

    Whenever my father went to a doctor he (father) wanted a diagnosis. Although the prescribed cure invariably involved drugs, my father would use the diagnosus to work out for himself what he needed to do for the cure. Invarably his cure did not involve taking the drug, at lwast not for anything life as long as the doctor had prescribed.

    Shortly before my father died, age 92, having outlived all his contemporaries, he was admitted to hospital for his final days. The dictors there were amazed just how little medication he had been taking.


    I have a slightly different approach to my father. Having discovered I am a gifted healer, I realise that the majority of illnessness and ailments are self-inflicted – often as a consequence of putting mind over matter, (that ability for use in emergency, and not as people generally do most of the time) – I reckon it is possible to self-diagnose simply by retracing the steps of what I said or did. Having identified the cause, I identify the benefit and from that work out how to achieve the same benefit without harming myself. The entire process usually takes anything from between a few seconds to a day or two, depending upon how quickly I can switch off from over-thinking.

    For anything I am not entirely sure of, I ask my friend: she’s a vet.

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