We Foot the Bill for Big Pharma

This article was written by Cath Kestler, a nurse and Silver Creek resident and a friend of New NY 23rd


This past Saturday there was a packed house at the Town Hall meeting with Tom Reed;most of you will be thinking that I will launch on a personal attack on him, but I never thought I’d actually say this, he agreed with me on a question I asked regarding big pharmaceutical companies and the prices of drugs.

The question in particular was regarding the out of pocket prices that the consumer incurs when a drug isn’t covered under the formulary (the list of medications that the Big_pharma_greedinsurance company will cover the cost for).  In my research I came across one particular medication that I will not mention, but many are on this particular medication, if you have the ‘usual’ insurance coverage such as Independent Health or Community Blue the cost of that drug is $426/month; if the consumer has Medicaid the cost is $519/month; and if the consumer has no coverage at all the out of pocket expenditure is $709/month.  We both agreed that something must be done and I offered my assistance in a solution.

The discrepancy isn’t a small amount, is it the pharmaceutical companies or the pharmacies dispensing the medications?  Before asking my question, I did do my homework and this is what I found:

Taxpayers fund 85% of the basic research, yet at the end of the day when a drug is FDA-approved we, as Americans are paying at least twice the price for the medication as those outside of the United States.

Most of the drugs that have actually made it to market are made by a smaller company—they developed the medication and set the price for less than half of what the larger companies charge you for the medication.

When you hear about a company complaining about the cost of these medications, it simply boils down to this: the big company buys the small company and the cost of that company is actually built into the price of the medication that the bigger company puts onto the market for the consumers.  The smaller company already absorbed the cost of research and development and relatively the cost to make the drug is not very expensive.

The figure passed onto us, as consumers is inflated because it includes ancillary expenses, bloated salaries, bonuses, and other indirect costs not related to research and development, as well as an 11% compounded discount rate over ten years based on stock market speculations and returns on their capital investments.

Drug companies have a dual mission, they want to help consumers and at the same time line their pockets at our expense.

Critics of pharmaceutical companies point out that only a very tiny portion of the drug companies expenditures are used for research and development; the majority of their money is spent in marketing and administration costs.  You know the advertising revolution that has taken over the airwaves much to the dismay of healthcare professionals.

Doctors used to hold the key to the gate of prescribing medications for the consumer, pharmaceutical companies spent enormous amounts of money to get a doctor to write a prescription the medication of the moment.  It was taking too much time for the pharmaceutical companies to see the fruits of their labor and while they were hawking their wares it took time away from the consumers when they were at the doctor’s office to see the doctors.

By now the pharmaceutical companies grew tired of this process and they decided to cut out the middle man—the doctor and appeal directly to the consumer.  Get the consumer to specifically ask for the drug they were selling regardless of whether or not it was actually what the patient needed.  Those subliminal messages were working, consumers are asking for medication to make their life easier, or so they’re told by the flashy PR firms producing these commercials.

Today, pharmaceutical companies spend billions of dollars per year on ads aimed at the consumer and the faux reality that their medication can give you the lifestyle you want.  The Nielsen Co. estimates that there’s an average of over 80 drug commercials every hour of every day on American television.

Many physicians have banded together and are starting to fight back by expressing an n increased concern over the fact that consumers are making appointments and asking for medications that they have no reason to take other than the hope of sharing that bathtub on a hill overlooking the sunset in Napa Valley—it’s a smokescreen.  This is indirectly leading to the rising costs of healthcare that needs to be curbed.  Petitions are being circulated and physicians are voicing concerns over the lobbying power that big pharma and insurance companies hold and obviously they don’t have the best interest of the consumers involved, it’s the bottom-line.

Time will tell whether Congress can achieve some relief for their constituents in the very near future.  Tom expressed the same concerns I have and here’s hoping to see so positive movement for us in the near future.


About pystew

Retired Teacher, political science geek, village trustee. I lean a little left, but like a good political discussion. My blog, the New NY 23rd (http://newny23rd) is about discussing the issues facing the people of our new congressional district. Let's hear all sides of the issues, not just what the candidates want us to hear.
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3 Responses to We Foot the Bill for Big Pharma

  1. whungerford says:

    Yes, those ads follow a common outline: praise for the alleged benefits, “sotto voce” list of side effects, then “ask your doctor if XXXX is right for you.” Doctors must hate this.


  2. josephurban says:

    Tom Reed is a master at feigning agreement. In the last campaign he assured us he would support Social Security, then the first bill he introduced was to cut benefits for SS Disability by refusing to authorize a redistribution of funding.. He loves to “agree” who whomever he is talking to at the moment. Check his voting record.
    For many years liberal have attempted to pass a law allowing Medicare to negotiate drug prices in bulk, which would drastically reduce the cost to the consumer. Where has Reed been on this issue? The ACA helps poor working people get medical insurance for the first time. Has not Reed voted over and over to abolish the ACA?
    In 2011 Reed voted for HR34, which would have ended Medicare and replace it with a voucher system. In 2015 Reed voted for HR1190 which would have increased Medicare costs by eliminating the proposed Review Board. The CBO estimated if this had become law it would have cost the taxpayers at least $7 billion.
    According to “Medicare Votes” which tracks Congressional votes, over the last 7 important votes for Medicare Mr Reed was on the WRONG side 6 times.
    Don’t be deceived by anything he says. He will couch his language in general agreement, but his votes do not correspond to his claims.



  3. Deb Meeker says:

    Thanks Cath Kestler for this report. You got me wanting to know more!
    I do doubt that Tom Reed will attempt to even ” look into it”, however; Reed has enjoyed too much money from this area of corporate greed. “Contributions [below] are for the last two years of available data, Apr 1, 2013 – Mar 31, 2015 —–Pharmaceuticals/Health Products -$96,100.”

    Even given those legislators that would try, “Big Pharma” can easily manipulate production of certain drugs to create shortages – blaming the shortage on trouble finding raw materials – even saline solution ( salt and water), government regulations on safety, etc.

    “It’s hard to know what incentives will work for the pharmaceutical companies to increase drug production,” said the University of Utah’s Fox. “But we need more production lines that’s for sure.”

    Because of course – more production leads to cheaper prices.


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