Health Care Solutions: Pharmaceuticals

Lately, I have been hearing this awful commercial on the radio:  “Have you been prescribed Lipitor for your high cholesterol?  Know that there is no alternative and that your doctor prescribed it for a reason.”  More FUD on the Health Care front.  Really, if there was no alternative, why would Pfizer spend money scaring you about changing?  What Pfizer is really worried about is that they maintain the high profit levels of Lipitor based on the high price of this drug (over $100 per month per patient in the US). The fact is that people are looking for other statins (yes, there are generics out there that do much the same as Lipitor for significantly lower prices). My bigger point is that Lipitor provides an astonishing amount of profit to Pfizer — by this account $2.86 billion dollars in 2008 that would not be generated if Lipitor lost patent protection.  Good news for the Pfizer investors, but bad news for all of the patients who are taking the drug and the health care system as a whole.

My vision is that we reduce the amount of time a drug can remain proprietary, in order to allow cheaper alternatives to come into the marketplace.  Drug companies can develop “plus” products if they want (and get proprietary timing on those), but each version of the drug should move into the generic phase faster to allow more patients to be served in a cost effective manner. Certainly some patients will benefit from the newest iteration of the drug, but a considerable number of patients would have some value from the older stuff.  I liken it to the PC marketplace.  There are some of us who need to the get the latest, greatest, hottest new products the day they come out.  Others are well served by utilizing the previous version.

Pfizer’s contention is that they work on a number of research projects that don’t work out and the profits from the big win cover some of these, but we can do better to hold down the cost of drugs.

According to this filing, Pfizer (as an example) spent 15.4% of revenue on R&D and 30.5% on selling, informational and administrative expenses.  Doesn’t sound like an R&D company as much as a marketing company to me. Lest you think I am out to get Pfizer, we can look at their competitor, Novartis.  According to this filing Novartis spent 16.9% of revenue on R&D and 35.1% on selling, general and administrative.  Again, about a 2 to 1 ratio.

So, I have another problem with the consumer advertising that Big Pharma utilizes.  These drugs are all prescription drugs that cannot be utilized without a physician’s authorization.  Why should Big Pharma advertise to consumers?  All it does is provides a way for consumers to demand that their physicians prescribe the name brand, whether or not it is the best solution for their condition.  In order to provide more profit to the pharmaceuticals, they should stop all consumer marketing and use those profits to devote to more R&D.  Think of it, no more goofy commercials with folks in bathtubs talking about ED or the advantages of Advair or birth control via patch, ring, pill or injection.  The result would be something like $10 million a day back to Big Pharma for R&D. Sounds like a winner to me.

Please start the discussion in the comments if you agree or disagree.  I’m sure there are other approaches that I have yet to think about.

Note that I am not a physician and certainly don’t take any medical advice from me.

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