I agree with the thoughts expressed by some of the speakers in the interview. Mr. Sidney Taurel, CEO of pharmaceutical giant Eli Lilly, argues that they need a high profit margin to fund the research and development of new medicines and compensate for failed research. However, according to critics such as Mrs. Marcia Angell, a senior lecturer at Harvard Medical School, the pharmaceutical industry is profitable. Profits for the pharmaceutical industry remain above 18 percent while the rest of the fortune 500 companies seem to manage with 3 percent, while the rest of the economy is doing poorly. The net profits are higher than they spend on R&D. These profit margins maybe high, but Mr. Sidney Taurel thinks price control to reduce profit margin will lead to fewer new drugs in the future. Its true price control may stifle innovation, but there are other means to reduce drug price.
One of the ways to reduce the drugs price is reducing the marketing and advertising costs. The pharmaceutical companies spend massive amounts of money advertising. According to Oregon Gov. John Kitzhaber, “Merck (one of famous drug company) spent $160 million last year advertising one of their major drugs.” This number is startling to me. Before this video, I never pay attention to drug advertising, but now I am noticing drug advertising. I see drug advertising everywhere, they are in magazines, on every TV channel, in newspapers, and even on buses. If the pharmaceutical companies quit advertising on TV, the drugs prices would come down. Each drug company has a massive sales force going to see doctors every day. They use various ways to persuade doctors to help them sell their drugs. I don’t think advertising is important for drug companies. They say the drug market has furious competition. If they don’t advertise their drugs, they will be out of the market. If the drug is effective, people will buy it. If the drug is useless, large amounts of advertising will not help them increase their sales. As Mrs. Marcia Angell pointed out, many of the recently released drugs are not new compounds but simply “copycat” drugs that duplicate existing medication already on the market. That’s why the drug companies need to convince doctors and the public, using advertising and free samples to make people believe some how the new drugs are different and better from all of the other drugs. Increasing advertising costs is one of the reasons causing the dramatic increase of prescription drugs price.
In addition, drug companies should change their way of thinking. Drug companies should evaluate benefits of new drugs and get a good sense as a consumer of what they’re really worth and what they are getting for that expenditure. Aimed at the “copycat” drugs problem, Oregon created its own version of Consumer Reports to help doctors and consumers make wiser choices about prescription drugs. It’s a good start and helps spread the limited Medicaid budget to reach more poor people. Otherwise, drug companies should cooperate together to research and develop new drugs. It will prevent different drug companies from producing similar drugs at the same time. Also it can save time and research costs, and uses these resources to research and develop new drugs. If the pharmaceutical companies cannot make new products at prices that consumers are willing to pay, they need to go back to the drawing board.
Moreover, I think government should burden at least half of the responsibility for the high drug price. The government not only provides additional dollars for Medicare program and prescription drug benefits, but also should stop taxing the dollars that citizens spend on their own health cares costs. If government did that, people would have an easier time paying for their prescriptions and drug prices would be more affordable than before. Discovering and testing drugs, pharmaceutical companies face enormous administrative cost to obtain FDA approval to put drugs on the market. If the government can reduce the administrative cost, the drug price will come down too. The government should also give part of money to compensate for the price gap and protect the consumers.
As we have seen, pharmaceutical companies cannot put profits over people’s lives. Government needs to find the best way to reduce the drug price and help drug companies to develop new innovative drugs with lower costs in the future.