This blog features information about the political campaign nationally and in the state of Pennsylvania. it will discuss congressional races western PA, but it won't restrict comments to those jurisdictions. On many occasions, it will feature humor, but its main purpose is to "cut the legs off" political jihad. This is a site for political grown-ups of all ages.

Location: Ambridge, Pennsylvania, United States

I have a Ph.D. from the University of Rochester (English and American Literature). I taught for 10 years at various educational institutions (Univ. of Rochester, my alma mater, College of William and Mary, and University of Georgia, where I was also Asst. Ed. of the Georgia Review. Later, I worked as a speechwriter and "thinker" at various large companies, including Phillips Petroleum, Gulf Oil, Aetna, Merck (consultant), and Eli Lilly (consultant), among many others. I'm a full-time writer and political commentator/analyst. Favorite company: AudioTech Business Books. Favorite female: my wife, Patricia Ann Maloney. Favorite politcal candidate: Diana Lynn Irey (PA's 12th congressional district)

Wednesday, January 10, 2007

Pharmaceuticals: Upside Down Economics

I have a doctor in Ambridge, PA, Kathleen Osten. She is to family doctors as Peyton Manning is to NFL quarterbacks, just outstanding. She's an Air Force veteran, tough, extremely smart, and a dedicated mother of three children.

When Dr. Kathleen prescribes a medicine, she checks her PDA and tells you: (1) if it's available in generic; (2) how much it costs. Many doctors -- most in my experience -- have no idea how much medications cost. That happens for two reasons, first, because they usually have first-dollar prescription drug coverage and, second, because they can get all the "free samples" they need.

Kathleen Osten is a REAL doctor, not just a money machine masquerading as a physician. By the way, a doctor of similar quality is Nicollette Chiesa in Bridgeville, PA. Her facility offers generic drugs on-site.

Too many physicians don't even know the generic names of drugs. Since they don't pay out-of-pocket for the branded version, why should they learn other names?

All too often, doctors faced with a patient who has Type 2 diabetes (again, excepting doctors like the ones I've mentioned) will prescribe branded Avandia, costing about $170.00 per month, without a second thought. They won't ask if the patient has drug insurance, and they won't seek to determine if Metformin, costing $4.00 per month, will work just as well as Avandia.

Here's a good guess: if a doctor tells a patient of modest means -- and without insurance -- to take a drug costing as much as Avandia, that patient eventually will become "non-compliant." In other words, he or she will stop taking the medicine, and the diabetes will get worse.

Eventually, some of those untreated diabetics will end up in emergency rooms, where the doctors find they need an amputation (foot? leg?) or two. Who will pay for the surgery for their uninsured individuals? Directly or indirectly, you will.

If your doctor finds out you and your spouse both need 40 mg. of Simvastatin (anti-cholesterol medicine), will they prescribe 80 mg. tablets that you can break in half? They probably won't, but they should because the 80 mg. version costs much less (at Costco, for example) than two 40 mg. tablets.

In fact, go to, click on the pharmacy link, and then look up Simvastatin prices, both for 40 mg. and 80 mg. The 80 mg., about the size of a horse-pill, costs less than the 40 mg., much less. That makes absolutely no economic sense, but then pharmaceutical economics is an oxymoron.

I'm not hostile to pharmaceutical companies (Merck, Pfizer, and others) or to pharmacies (CVS, Walgreens, Wal-Mart, and the like). I'm not hostile to responsible doctors, but I believe many of them should know more about the economics of pharmaceuticals.

I do want them to enter the world of free markets -- to get away from manipulated or controlled prices. In fact, some courageous souls are doing just that.

With the $4 generics, Wal-Mart is doing it, and so is Target. Giant Eagle in Pennsylvania is doing it with a smaller number of $4 generics -- and even giving away some generic antibiotics.

A year ago, the head of CVS -- John Ryan -- proposed that the government allow the importation of less-expensive Canadian drug. Walgreens suggested it might be open to that idea. In an industry that's traditionally had limited price competition, CVS and Walgreens are taking a stand that's almost heroic.

On the $4 drugs, I asked a Wal-Mart representative if the company was "making money" on them.. He said, "On many of them we are, on some of them we aren't." The loss leaders help attract people to the stores, where they buy things.

Let's face it: discovering and developing drugs can be very expensive, costing up a billion dollars or more. But just making pills, as generic manufacturers do, is only marginally more expensive per bottle than manufacturing a bag-full of M&Ms.

In the case of a drug like Lipitor, Pfizer has made back its investment at least 20-fold. Now, what it's doing is selling the pharmaceutical version of M&Ms at caviar prices.

Certainly, drug-makers who take big risks deserve the opportunity to make big money. But in some cases, the supposed development of drugs -- the case of ulcer medicines Prilosec and Nexium being a major example -- the process is little more than a giant scam.

Lavishly promoting a branded drug that's no better than its predecessor, as happened with Nexium, is an immoral act. If making money becomes the measure of all things -- even in life-and-death matters -- then we are in a sorry state.

For the full Prilosec/Nexium story, see David Gratzer, M.D., The Cure: How Capitalism Can Save Health Care, p. 146ff. Gratzer says the developer of Nexium found its "own data suggest[ed] limited limited difference between Prilosec and Nexium . . . ." Yet doctors continue on their merry way prescribing expensive, and mainly unnecessary, Nexium, "The Purple Pill."

Why does the Food and Drug Administration (FDA) allow the patenting of such drugs which, vigorously promoted, enrich their makers? It's a good question, particularly when so much economic damage gets done to Americans' health. Patenting something that's not innovative is bad medicine and bad economics.

Both medicine consumers -- patients -- and medicine prescribers -- doctors -- need to understand the health and economic consequences of specific drugs. Making or retailing a medicine with very limited benefits shouldn't be a license to print money.

That doesn't mean the Jason Altmires of the world -- he's a member of Congress from PA's 4th district, where I live -- should barge in and wreck the drug industry. If they do, they will cripple our nation's ability to overcome diseases like cancer and Alzheimer's.

A better approach is to encourage transparency, as I'm doing in these columns. If people know exactly what they're buying, what it costs, and what benefits it provides, they'll generally make good decisions. In fact, that's how the rest of our economy works.

If doctors and patients remain generally ignorant of what health care costs, then those costs will continue to skyrocket.


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