Carpetbagging At Its (Worse) Best

In the U.S., whatever shape and form health care reform will take shall not prevent Big Pharma from satisfying the bottomless pit that is their greed (emphasis added):

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Drug Makers Raise Prices in Face of Health Care Reform

Even as drug makers promise to support Washington’s health care overhaul by shaving $8 billion a year off the nation’s drug costs after the legislation takes effect, the industry has been raising its prices at the fastest rate in years.

In the last year, the industry has raised the wholesale prices of brand-name prescription drugs by about 9 percent, according to industry analysts. That will add more than $10 billion to the nation’s drug bill, which is on track to exceed $300 billion this year. By at least one analysis, it is the highest annual rate of inflation for drug prices since 1992.

The drug trend is distinctly at odds with the direction of the Consumer Price Index, which has fallen by 1.3 percent in the last year.

(...) “When we have major legislation anticipated, we see a run-up in price increases,” says Stephen W. Schondelmeyer, a professor of pharmaceutical economics at the University of Minnesota. He has analyzed drug pricing for AARP, the advocacy group for seniors that supports the House health care legislation that the drug industry opposes.

A Harvard health economist, Joseph P. Newhouse, said he found a similar pattern of unusual price increases after Congress added drug benefits to Medicare a few years ago, giving tens of millions of older Americans federally subsidized drug insurance. Just as the program was taking effect in 2006, the drug industry raised prices by the widest margin in a half-dozen years.

“They try to maximize their profits,” Mr. Newhouse said.

(...) This year’s increases mean the average annual cost for a brand-name prescription drug that is taken daily would be more than $2,000 — $200 higher than last year, Professor Schondelmeyer said.

And this means that the cost of many popular drugs has risen even faster. Merck, for example, now sells daily 10-milligram pills of Singulair, the blockbuster asthma drug, at a wholesale price of $1,330 a year — $147 more than last year. Singulair is now selling at retail, on drugstore.com, for nearly $1,478 a year.

And what would be the baldfaced lie mendacious excuse business reason offered by Big Pharma for such de novo price increases? Read it if you can stomach it (emphasis added):

(...) Drug makers say they have valid business reasons for the price increases (...)

(...) drug companies say they are having to raise prices to maintain the profits necessary to invest in research and development of new drugs as the patents on many of their most popular drugs are set to expire over the next few years.

“Price adjustments for our products have no connection to health care reform,” said Ron Rogers, a spokesman for Merck, which raised its prices about 8.9 percent in the last year, according to a stock analyst’s report.

Raising prices in order to invest in R&D? Oh, really? Let's have but a quick rundown of recent news regarding Big Pharma R&D throughout the "Western world":

Federal Drug Watchdog Report: Brand-Name Drug Makers Break R&D Spending Promise for Eighth Consecutive Year - only 1.2% of Canadian sales revenues directed to new medicine discovery;

Drug firm to cut nearly 100 jobs - Pfizer will cut nearly 100 jobs when it closes its research and development sites in Berkshire and Hampshire next year;

Pfizer Shuts Six R&D Sites After Takeover - Pfizer, digesting its $68 billion takeover of rival Wyeth last month, will close six of its 20 research sites, in the latest round of cost cutting by retrenching drug makers;

Western Drug Makers Outsource R&D To Scientists in Shanghai and Beijing - global pharmaceutical companies are increasingly turning to China to conduct low-cost research and development;

As a matter of fact, the first thing to go when Big Pharma seeks to slash costs and maximize profits is R&D (emphasis added):

For much of this decade, pharmaceutical companies have been closing labs, laying off researchers and outsourcing more work from their once-sacrosanct R&D units. Pfizer previously closed several labs, including the Ann Arbor, Mich., facility where its blockbuster cholesterol fighter Lipitor was developed. In January, before the Wyeth deal was announced, Pfizer said it would lay off as many as 800 researchers.

(...) The sites Pfizer is set to close include Wyeth's facility in Princeton, N.J., which has been working on promising therapies for Alzheimer's disease, including one called bapineuzumab under development by several companies.

(...) Besides Princeton, Pfizer said research also is scheduled to end at R&D sites in Chazy, Rouses Point and Plattsburgh, N.Y.; Gosport, Slough and Taplow in the U.K.; and Sanford and Research Triangle Park, N.C. Pfizer is counting as a single site labs close to each other, such as the facilities in Rouses Point and Plattsburgh, Slough and Taplow, and Sanford and Research Triangle Park. Along with the Princeton facility, those in Chazy, Rouses Point and Sanford had belonged to Wyeth.

So, it's all about cutting costs and maximizing profit after all (emphasis added):

Drug makers are restructuring in anticipation of losing tens of billions of dollars in revenues as blockbuster products, such as Lipitor, start facing competition from generic versions. Setbacks developing new treatments have made the need to reduce spending all the more urgent, analysts say, and have reduced resistance to closing labs. The economic slump has only worsened the pharmaceutical industry's plight, pressuring sales.

(...) Pfizer executives wanted to cut costs quickly after the Wyeth deal's completion so the integration doesn't stall research. That was a problem with Pfizer's acquisition of Warner-Lambert in 2000 and its merger with Pharmacia in 2003. As a result, critics say the deals destroyed billions of dollars in shareholder value. Pfizer says it has learned from its past acquisitions.

"When we acquired Warner-Lambert, it took us almost two years to get into the position we will be in 30 to 60 days" after closing the Wyeth deal, Martin Mackay, one of Pfizer's two R&D chiefs, said in an interview.

But wait a minute, here - what was that about brand-name products about to face generic competition and whatnot? Why does this sound so familiar? Oh yes - Big Pharma is using this soon-to-come competition from generic products as the current self-serving excuse for raising prices! (see above).

So, let me get this straight: A) Big Pharma is closing down R&D labs and firing scientists and research personnel, because they need to "restructure" in anticipation of losing revenues as their popular brand-name products are set to face competition from generic versions in the coming years; and B) Big Pharma is fast-raising the prices of their popular brand-name products to maintain the profits necessary to invest in R&D, in anticipation of losing revenues as their popular brand-name products are set to face competition from generic versions in the coming years.

Anyone else see the obvious, mendacious, double-talk, contradiction here?

Well, here's the clincher - and a little reminder of the truth of it all (emphasis added):

Drug makers spend more on marketing than research: study

U.S. drug companies spend almost twice as much on marketing and promoting medications than on research and development, a new Canadian study says.

"These numbers clearly show how promotion predominates over R&D in the pharmaceutical industry, contrary to the industry's claim," the authors write in this week's peer-reviewed journal Public Library of Science Medicine.

Using data from two market research companies, the University of Quebec's Marc-André Gagnon and York University's Joel Lexchin found U.S. drug companies spent $57.5 billion US on promotional activities in 2004 compared with $31.5 billion on research and development.

Promotional activities included free samples, visits from drug reps, direct-to-consumer advertising of drugs, meetings with doctors to promote products, e-mail promotions, direct mail and clinical trials designed to promote the prescribing of new drugs rather than to generate scientific data.

The authors say their figure of $57.5 billion US is likely an underestimate, citing other avenues for promotion such as ghostwriting of articles in medical journals by drug company employees, or the off-label promotion of drugs.

All righty, then. What would be the real reason for Big Pharma to raise prices?

You guessed it: this is all part of their scam to maximize profits regardless of what happens with health care reform. Read it and weep (emphasis added):

The drug industry has actively opposed some of the cost-cutting provisions in the House legislation, which passed Nov. 7 and aims to cut drug spending by about $14 billion a year over a decade.

But the drug makers have been proudly citing the agreement they reached with the White House and the Senate Finance Committee chairman to trim $8 billion a year — $80 billion over 10 years — from the nation’s drug bill by giving rebates to older Americans and the government. That provision is likely to be part of the legislation that will reach the Senate floor in coming weeks.

But this year’s price increases would effectively cancel out the savings from at least the first year of the Senate Finance agreement. And some critics say the surge in drug prices could change the dynamics of the entire 10-year deal.

“It makes it much easier for the drug companies to pony up the $80 billion because they’ll be making more money,” said Steven D. Findlay, senior health care analyst with the advocacy group Consumers Union.

In other words (emphasis added):

Drug companies have long argued they are driven primarily by research, while critics charge that marketing and profits are their primary concerns.

It's not a surprising conclusion, said Steve Morgan, an expert on the economics of the pharmaceutical industry at the University of British Columbia.

"It's been known for a long time that manufacturers of prescription drugs spend more money on marketing than they do on research and development," added Morgan, who heads the program in pharmaceutical policy at the university's Centre for Health Services and Policy Research.

And that's because of the nature of the beast: all that matters is the bottom line. Period.

Hence the price gouging that has been going on over the last decade or so - and especially recently.

It's all, and always has been, about maximizing profits while cutting R&D costs.

And thus the continuing blackmail con game goes on ... while we keep on sheepishly allowing the unfettered, shameless and greedy carpetbagging of the wool off our backs.

Of our health.

Of our lives.

Are we having fun, yet?


(Cross-posted from APOV)