prescription-drug-costsPART ONE


Over the past half-decade, Americans have reeled under the relentless assault of ever-higher prescription drug costs. For senior citizens – who purchase 42% of all prescription drugs – the burden has been particularly onerous, at times leaving them the untenable choice of either buying food or medicine. But there is more underlying the problem than just higher prices. At its core, the problem is symptomatic of a change in the way medicine is practiced in the United States – a change that is driven by the greed of multinational pharmaceutical giants. A change that more and more looks for answers in the form of a pill. The effects of this change are all too evident in healthcare cost statistics.

In 2001, retail spending on prescription drugs rose by 17.1%, far outpacing other categories of healthcare costs. This was the fourth 15%-plus increase in as many years.

To put this in dollar terms, total spending on prescription drugs in the United States came to a whopping $154 billion in 2001, a $22.5 billion increase over the previous year. This figure is nearly double the $78.9 billion Americans spent on prescription drugs in 1997, and more than three times the $50.3 billion spent in 1993. Some fear that rising prescription drug costs may bankrupt the U.S. healthcare system. But solving the problem may be as complex as the factors that created it.


There has been a marked trend towards prescribing newer, more costly drugs, driven to no small degree by aggressive pharmaceutical company marketing. Consumers increasingly are asking their doctors to prescribe drugs they see advertised, and doctors giving in to pressure from their patients are complying with their requests. One study found that roughly 26% of patients visiting their doctors ask about an advertised drug. The same study found that 81% of the time, the doctors prescribe the requested medication. The reason this is important is that newer drugs are more costly than older ones. Indeed, the average price of a drug approved prior to 1992 was $30.47 in 2000, whereas the average for drugs approved after 1992 $71.49. This is not to say that the new formulations are necessarily better – they are just newer.

In 2001, this “shift” in the nature of drugs prescribed accounted for 24% of the overall increase in outlays. But even these higher prices were not the most important factor.

Fully 39% of the increase in spending on pharmaceuticals is a result of more prescriptions being written. In 1985, doctors wrote an average of 109 prescriptions for every 100 office visits. By 1999, that figure rose to 146 prescriptions per 100 office visits. The impact of this trend on the total number of prescriptions written is dramatic.

In 1992, physicians wrote some 1.9 billion prescriptions for various pharmaceutical products. By 2001 that figure had increased to 3.1 billion a rise of more than 63%. This year the number of prescriptions written may be double the 1992 level. Indeed, at the current growth rate, it is expected that total U.S. spending for prescription drugs will reach $366 billion by the year 2010. That would be more than double the current level, and more than 4.6 times the amount spent in 1992.

But why are so many more prescriptions being written? Is it a matter of new medical breakthroughs that permit us to treat previously incurable diseases? Is some sort of hidden epidemic being treated? Is the best interest of the patient driving the change?

The answer to all these questions, of course, is a simple no.

What is actually driving increased spending on prescription drugs is an aggressive, diverse and highly successful campaign by the multinational pharmaceutical industry to enhance its bottom line. More important, rather than being in the best interest of patients, it may actually be causing them harm.

The campaign is taking place across a number of fronts, but the most insidious may be the manipulation of the so-called “standard of care.”


In every jurisdiction in America, physicians operate under what are termed “standards of care.” These are guidelines that describe the appropriate treatment regimens for various medical conditions. The standards of care are established by specialty medical associations – the professional organizations certify a doctor’s competence to practice a particular medical specialty and are often based on federal recommendations.

Violations of standards of care are considered malpractice and open any physician who fails to follow them to both civil and criminal liability. They therefore are taken very seriously.

The trouble is that most of the panels that establish standards of care for each specialty are comprised of physicians who have ties to the pharmaceutical industry. They rely on the industry for research grants, honoraria, consulting contracts and other substantial financial benefits. As a result, the influence of “Big Pharma” on these panels is pervasive. A telling example of how these panels can manipulate standards of care to benefit their pharmaceutical company patrons is found in the recent change in standards of care for managing cholesterol.


In 1993, federal guidelines were established for managing cholesterol.

A key element of these guidelines was the determination that patients with cholesterol levels above 200 should make dietary and lifestyle changes to reduce their cholesterol level below that figure.

These included reducing the overall level of fat in their diet to no more than 30% and reducing the level of saturated fat to no more than 10%. It also recommended increasing the intake of soluble fats. If a patient’s cholesterol was above 300, the guidelines recommended placing them on cholesterol-lowering drugs.

In focusing on the total cholesterol level, the guidelines ignored the fact that the ratio of LDL, or so-called “bad” cholesterol to HDL, or “good” cholesterol was the real measure of a healthy cholesterol level. In fact if the HDL level was too low, even if overall cholesterol levels were low as well, the patient still faced an increased risk of heart disease.

Under the 1993 guidelines, 52 million Americans would fall under the category that required dietary changes and 13 million would require cholesterol-lowering drugs.

Last year, however, the National Institutes of Health issued recommendation that the guidelines for management of cholesterol be revised.  The panel recommended changing the dietary guidelines for patients with elevated cholesterol by reducing the permissible amount of saturated fat in the diet to 7% while raising the overall permissible level of fat to 35%. Most important, however, the panel recommended that cholesterol-lowering drugs be administered to patients with levels above 200 rather than 300. The impact of this change was stunning.

Under the new guidelines rather than 13 million Americans being candidates for cholesterol-lowering drugs, 36 million – three times as many – would now require drug therapy. The windfall “Big Pharma” will reap from the change is almost beyond imagining. On average a prescription for a cholesterol-lowering drug cost $88 in 2001. This comes to $1,046 per year. That means that if all 23 million candidates are put on these products, sales will jump by roughly $24.3 billion annually!

While this may be a blessing for “Big Pharma,” it may be a curse for the patients. Most cholesterol-lowering drugs are from the so-called “statin” family. Roughly 25% of all individuals taking statin drugs experience some degree of side effects – many of them serious. Among the most common are muscle weakness (sometimes quite pronounced) or cramps and muscle degeneration. But more serious side effects including liver or kidney failure are also possible. As a result, individuals on statin drugs are required to take liver function tests on a regular basis. Moreover, they will have to do so for the rest of their lives, since as a general rule, once a patient is placed on cholesterol-lowering drugs, they remain on them forever.

But what if a doctor doesn’t want to subject a patient with marginally high cholesterol levels to the risks statin drugs pose? They really don’t have a choice! The guidelines say drugs are appropriate if the level is above 200, so at 201 you get medication whether you and your doctor think you need it or not! If the doctor doesn’t write the prescription, he literally is in danger of losing his license!

It’s not just in regard to cholesterol levels that “Big Pharma” and “Big Medicine” have been able to manipulate standards. Think for a moment about the “obesity epidemic” you hear so much about. According to the “experts” 81% – that’s right, 81% of Americans are overweight! This is up from 58% just a little more than a decade ago. How could this be? Have we all spent the last ten years pigging out on McDonald’s? Worse, fully one third of us are defined as obese! If you think something must be wrong – you’re right.

The alarms about obesity are based in the notion that four out of five Americans have a body mass index (BMI) above 25, indicating that they are overweight. What they don’t tell you, however, is that a few years back, they changed the chart, moving the acceptable body mass to a lower point. With this one stroke of the pen millions of Americans who were considered within a healthy weight range were suddenly overweight! Suddenly they needed special counseling, doctors supervision and, of course, weight loss drugs like Fen-Phen or now, Meridian.

The other thing they fail to acknowledge is that BMI is not a reliable measure of actual body fat. For example, heavily muscled individuals, such as body builders, have high BMIs because muscle weighs more than fat.

People who are large-boned can also have a higher than average BMI. Also, genetics play a role. Some people naturally have more body fat than others, and live perfectly healthy normal lives. This information of course doesn’t sell prescription drugs or other medical services, so you’ll seldom hear it mentioned.

As with cholesterol levels, however, if doctors fail to act to treat “obese” patients may be violating standards of practice and leaving themselves open to liability.

But it isn’t just licensing boards and regulatory agencies that put pressure on doctors to write prescriptions. As mentioned earlier, it’s often the patients themselves who pressure doctors in response to the proliferation of medical advertising.


If it seems like every time you turn on the TV you see a new drug ad, you may be right. Since the FDA first permitted so-called “Direct to Consumer” or “DTC” advertising by pharmaceutical firms, spending on ads to push pills has skyrocketed, rising from $1.1 billion in 1997 to $2.8 billion last year! Of that amount, roughly 60% or almost $1.7 billion was spent on television ads. When you look at some of the most heavily promoted drugs, the extent of the effort becomes clear.

Take for example, the arthritis painkiller Vioxx.

In 2000, Merck, the manufacturer of Vioxx spent over $161 million to promote the drug. Compare that figure with some other familiar products:

  • Dell Computer spent $160 million to advertise all of its products.
  • Budweiser spent $146 million to advertise Budweiser beer.
  • PepsiCo spent $125 million to advertise Pepsi Cola.
  • Nike spent $78.2 million to advertise its running shoes.
  • Campbell’s Soup spent $58 million to advertise all of its products.

And that’s just one drug. Other examples include:

  • $108 million to advertise Prilosec.
  • $100 million to advertise Claritin.
  • $92 million to advertise Paxil.
  • $91 million to advertise Zocor.
  • $90 million to advertise Viagra.
  • $79 million to advertise Celebrex.
  • $78 million to advertise Flonase.
  • $67 million to advertise Allegra.
  • $65 million to advertise Meridia.

In fact, 15 of the 50 most heavily promoted drugs spent more than Campbell’s Soup promoting their product.

What is particularly ironic is that two of the most heavily advertised drugs, Vioxx and Celebrex are promoted largely on the basis of being safer than other, older alternatives. A just-released study, however, suggests that these so-called “Cox-2 Inhibitors” may in fact have more serious side effects than the drugs they were intended to replace. Yet DTC ads consumers rely on for their information about Vioxx and Celebrex continue to tout them as safer.

The failure of Merck and Pharmacia to accurately portray the risks and benefits of their product in DTC ads should come as no surprise. In 2000 an official of the FDA testified before Congress that between 1997 and 2000, the FDA has issued 45 “notices of violation” and three warning letters to companies concerning their television ads, and 44 notices of violation and one warning letter concerning print ads.

Most of these letters concerned either overstated claims, or failures to warn consumers of potential risks. What the FDA official failed to ad was that nothing was done to punish the offenders – even where they had repeatedly committed the same offense.

But DTC advertising is only part of the total. Overall, drug companies spent $15.7 billion on advertising in 2000, twice as much as they spent on pharmaceutical research. For example:

  • Merck and Co. allocated 15% of its revenues to advertising and just 6% to research.
  • Pfizer allocated 39% to advertising and 15% to research.
  • Bristol-Myers Squibb allocated 30% to advertising and 11% to research.
  • Pharmacia Corporation allocated 37% to advertising and 15% to research.
  • Abbott Labs allocated 21% to advertising and 10% to research.
  • American Home products allocated 38% to advertising and 13% to research.
  • Eli Lily allocated 30% to advertising and 19% to research.
  • Schering-Plough allocated 36% to advertising and 14% to research.
  • Allergan Inc. allocated 42% to advertising and 13% to research.


But the lion’s share of promotional dollars was still focused on doctors. A survey of 2,068 doctors by the Kaiser family Foundation found that 61% had received trips, tickets or free meals from pharmaceutical companies. Fully 92% had received free drug samples. Another study of physicians in Maryland indicated that 37% had received some form of compensation from a drug company.

Sometimes, however, there is much more than a free meal involved.

Just-released court documents from a lawsuit allege that sales representatives of Warner-Lambert participated in a program that paid physicians to allow them to review patient charts and make recommendations concerning what medications the patients should receive. The purpose of the program was to develop so-called “off label” uses for a drug called Neurotin. Neurotin had been developed and was approved as a treatment for epilepsy. Warner-Lambert wanted to increase the market for its product. According to the court documents, Warner-Lambert sales reps convinced doctors to use Neurotin for everything from pain to bipolar disorders to attention deficit disorder in children.

The only trouble was that Neurotin was ineffective as a treatment for many of these conditions and in some cases could actually make them worse.

Doctors were paid $350 for each day they allowed the Warner-Lambert rep into their examination room. They were also hired as consultants, paid to give speeches or to write journal articles (in some cases just to put their names on articles that were prepared by ghost writers) and paid to recruit patients for clinical trials.

Even if the drug wasn’t effective for many of the disorders the physicians were prescribing it to treat, the sales program proved very effective. In 2000 78% of all prescriptions written for Neurotin were “off-label.” More important, because of the widespread off-label use sales of the drug were increasing 50% per year. Dr. Jonathan Spom of NIH told the New York Times “Neurotin is being used like water for disorders where there is not much evidence that it is effective.”

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