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An Industry Under Fire by Jon Palfreman
Palfreman is the producer of FRONTLINE's "The Other Drug War" and spent eight months researching and reporting on the high cost of prescription drugs for Americans. In this article he offers his reflections on the powerful and closed pharmaceutical industry and weighs the five most common arguments heard against it.

In the history of public relations, the pharmaceutical industry surely stands out as a singular exercise in failure. Think of it: a 150 billion dollar industry, dedicated to the search for new life-saving medicines that somehow has managed to end up being compared with big tobacco.

Mostly, I suspect, this comparison derives from the fact that the drug industry, like the tobacco industry before it, is rich, powerful and inaccessible. Most drug companies shun the media, trusting the Pharmaceutical Research and Manufacturers Association (PhRMA), a Washington-based trade organization, to communicate their point of view. In my experience, PhRMA reps, like those from the Tobacco Institute before them, seem resigned to the fact that the press is hostile and, while the reps will answer media inquiries seeking factual information, they make little effort to win in the court of public opinion. PhRMA gears its activities towards aggressive lobbying and litigation. And it's very good at it--something that makes the industry even more unpopular.

The drug industry is not just unpopular with the press. Today, it finds itself under fire from a remarkably broad set of players: federal and state politicians, disgruntled doctors, uninsured seniors, activists for the poor, US business and the managed care industry. These critics have a litany of complaints: from the industry's "obscene" profits (18.5% in 2001) to its "unfair exploitation" of federally-funded public research, from the proliferation of high priced (but allegedly derivative) "me too" drugs to the advent of direct-to-consumer advertising on television.

But does the industry really deserve to be demonized to this degree? There are five main arguments one commonly hears against the drug industry. They sound damning. But are they all true?

1. Price gouging.
Critics claim the industry overcharges Americans for prescription drugs. And, critics complain, these same drugs are sold for less everywhere else in the world--sometimes much less. So, what about the charge of price gouging?

2. Profiting from public research.
The fact that Americans pay the highest drug prices in the world is doubly unfair, say critics, because of a second charge: drug companies base many of their breakthrough drugs on discoveries made by university-based medical researchers, Because this research is financed by the US tax payer, critics say, the public is paying twice. So, is the drug industry profiting from public research?

3. Marketing "me too" drugs.
A third argument holds that, in recent years, drug companies have reduced their efforts to discover breakthrough drugs because such medicines are simply too risky (and therefore too expensive) to develop. Increasingly, critics claim, drug companies prefer to copy successful products already on the market. Does this argument hold up?

4. Unethical marketing to consumers and doctors.
The fourth major charge against the drug companies is that they indulge in wasteful and unethical marketing practices. Is this true?

5. "Gaming" the patent system.
A fifth charge is that drug companies cheat the American consumer by using legal tricks to extend their patents beyond their 20 year period, thereby preventing cheaper generics reaching the consumer. Is this another argument that holds up?

 

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posted june 19, 2003; last updated july 8, 2003

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