Where did these monster pharmaceutical companies come from? And how did Big Pharma become the most profitable industry in the United States, with an annual return of 17% on revenue? Dr. Paul S. Bradley tackled these and other thorny questions that impact household budgets for millions of Americans, wondering aloud, “Why is it that so many people can’t afford their medications?”
It’s a fair question, what with drug companies making billions of dollars per year, per drug: Pfizer’s Lipitor, before it went generic, was raking in $12.9 billion annually. There is the cost of innovation, of course, and Dr. Bradley concedes that a new drug takes 7 to 10 years to develop. Only 3 out of every 20 are approved, however, and when you consider those costs, bringing a single drug to market can cost upwards of $1.3 billion dollars.
With that said, vastly more is spent on marketing than R&D, and today there are 7 pharmaceutical representatives for every one doctor in the United States. Those “free” samples are alluring, but what happens when there’s a generic available? Insurance has played a role in the rise in drug costs as well. Prior to the rise of prescription benefit coverage, retail drugs most often cost $30/month. Today, the target co-pay is $30/month, with the remainder absorbed by the insurer.
Most insured Americans work for self-funded companies, and skyrocketing drug prices mean that everyone is getting squeezed. Companies are forced to pass those costs on to their employees, and statistics show that people who can’t afford their medications either don’t take them or take dangerous steps to economize. The result is $290 billion dollars annually in avoidable hospitalizations and emergency room visits.
Watch the full presentation here: