19th Annual
J.P Morgan H&Q Healthcare Conference

On the road for Info.Resource, publisher of Oregon-Bioscience.com

Drug Costs: a Function of Perspective

By Lorraine Ruff and David Gabrilska, Partners
Milestones, the critical thinking company
Seattle, WA

Perspective. If you're one of the 10 million Americans over the age of 65 who has no prescription drug coverage, a Medicare drug benefit matters a lot.

Perspective. Al Gore and most Democrats consider Medicare reform, including a drug benefit, well nigh a right. Republicans are focused on tax reform, budget and defense.

Perspective. Americans love their doctors, hate their health care plans and insurers and have very high expectations for the pharmaceutical industry. They want magic bullets available to treat the ills that ail them in front of their need for them, but they aren’t necessarily willing to pay for the "insurance." In fact, Americans fund the full cost for drug research and development for the world. A good example of this resides in the differential pricing for drugs. Example: the prescription allergy medicine Claritin™- one pill per day - costs Americans approximately USD $70/month; Canadians pay USD $24/month for the same drug.

The history of drug price increases has been uneven and opportunistic since the 1970s. Depending upon when the respective interests weigh in colors perspective. In fact, in recent years drug prices have increased two-to-four percent. The political diatribe we've heard throughout the 2000 presidential election stems from drug price increase excesses of the 1980s when there was very little price sensitivity compared to flat line drug price increases pre-1970s.

The "high price" perspective the American public has of pharmaceuticals has taken on a life of its own and it’s gotten up close and personal. The boomers have impacted every institution they’ve touched as issues become relevant to their interests…watch out. We believe that the drug industry will need to make fundamental changes in the manner in which it relates to the American public, elected officials, and boomers in particular, if they are to avoid knee-jerk universal healthcare reform and a liberal backlash in 2002. Moreover, now’s the time for the pharmaceutical industry to demonstrate leadership in the public affairs arena, an industry that needs to go beyond the self-serving "benefit" assertions of industry association-sponsored TV advertisements. Without it, the pharmaceutical industry could lose control of its own destiny at a time when there are truly significant therapeutic opportunities in development.

The good news:

Listening to the predictions of the J.P. Morgan H&Q panelists about what Congress is likely to do was akin to visiting the sausage factory out of the misguided notion that you’ll enjoy the sausage more if you see how it’s made. Not so with Medicare drug benefit legislation or what motivates it.

It’s time for the pharmaceutical industry to recognize a Medicare drug benefit as the larger-than-life issue that it has become. Without leadership, the industry may find management of its own business model taken up by newly elected officials on critical legislative committees such as Senate Finance (Senators Boxer and Clinton) and House Ways and Means (Thomas and Johnson) many of whom are woefully unprepared to deal with drug industry business realties and political hubris.

As Star Trek Enterprise captain Jean Luc Picard would say: "Make it so."


* Source: Pharmaceutical Research and Manufacturers of America.

Back to J.P. Morgan H&Q Healthcare Conference Archive

Advanced Technology Construction

Copyright 1996-2003 Info.Resource, Inc., Seattle, WA, USA. 800.709.8907. All rights reserved.
Privacy Policy . Advisory Board . Terms of Use . Advertising

Oregon-Bioscience.com is published by Info.Resource in collaboration with the Oregon Bioscience Association.