The Costs of Medical Care & The Future of Medicine – PART 4

America's High Cost of Pharmaceuticals Compared to Other Countries

BY:  Stephen C. Schimpff, MD

Some, including many of our political leaders, advocate for re-importing drugs from Canada that were made in America. But we need to focus on the real issue and deal with that. Drugs are very expensive to bring to market. The pharmaceutical industry estimates that the R&D costs including the costs of obtaining FDA approval approach nearly $1 billion. That’s a lot of money and the drug company needs to recoup its expenses. Patent law helps by giving the company 17 years of freedom before any other company can market the same compound. So the cost per pill is much higher than the actual [marginal] cost to produce that individual pill. But other countries essentially have price controls and they dictate that the company must accept a lower price per pill in order to sell in that country. The pharmaceutical firm agrees and sells for much less than what it charges in the United States. So in effect, Americans subsidize the cost of research and development. That is inherently unfair to Americans. Rather than allowing re-importation, which would create havoc for testing to ensure the drug was what it was supposed to be, the federal government should simply rule that it will purchase drugs only at the price that all other countries pay [with an exception for some developing countries that cannot afford full tilt.] If a company lowers prices in other developed countries, then it will not be allowed to sell to Medicare, Medicaid, the Department of Defense or the Veterans Administration, i.e., about 50 percent of the marketplace. The result will be some reduction of price at home and an increase in other countries so that all help to pay for the R&D expense.

But we can’t let physicians off the hook here. Physicians all too often offer a drug for a problem that could and indeed should be dealt with by changes in life style. Lose weight [eat less, exercise more], reduce stress [meditation, adjust activities], exercises are not emphasized by doctors when they should be; pills are prescribed instead. Frankly, it is easier and the patient expects it. And most unfortunately, the insurance company will pay for the often expensive pill but does not pay the doctor to spend the time needed with the patient to deal with the real issues. Our insurance tends to pay for pills and procedures but not time to deal with promoting wellness or preventing disease.

There are wide variations in care expenditures from geographic region to region. One might assume that those regions with higher expenditures reap better health but that is simply not the case. Unfortunately, much of medical care is not delivered based on evidence of efficacy but rather on long standing practice, tradition or training many years before. For example, it is known that patients that suffer a heart attack are benefited from treatment with certain drugs but many patients leave the hospital after a heart attack without being placed on these drugs.