Here, the NCPA report argues against price controls of drugs as ineffective, restricting research and development (R&D) of new drugs, and limiting access abroad to important new drugs through national drug formularies. It also argues that drug prices in other countries are often higher than in the United States.Unsupported claims are made: “On the whole, prescription drug prices in countries with national health insurance are comparable to U.S. prices despite stringent rationing of availability in the other countries” (4, p. 81) and “the United States produces by far the most innovative drugs” (p. 83). This argument breaks down under overwhelming evidence to the contrary:
78 / Geyman
• According to studies by the AARP Public Policy Institute, drug manufacturers’ drug prices are 69 percent higher in the United States than in Canada, wholesale prices are 72 percent higher, and retail prices up to 72 percent higher (71).
• According to IMS Health, a pharmaceutical industry research firm, in 2003 Americans spent $695 million on drugs bought from Canada (75).
• The average price for prescription drugs around the world is just one-quarter of the U.S. price (76).
• Even though R&D costs of many drugs developed in the United States are funded in large part by federal tax monies through basic research by the National Institutes of Health, drug manufacturers exaggerate their own
R&D expenditures, claiming that about $800 million are expended to bring a new drug to market (77). Studies by Public Citizen’s Health Research Group put that figure closer to $110 million (78).
• Most new drugs are not innovative and are merely “me-too” drugs with minimal structural change but maximal marketing hype as “breakthroughs,” launching another 17-year period of patent protection (79). The nonprofit
Myths about Single-Payer Health Insurance / 79
Table 3
Investor-owned care: Comparative examples versus not-for-profit care
Hospitals
HMOs
Dialysis centers
Nursing homes
Mental health centers
Costs 3 to 13 percent higher, with higher overhead, fewer nurses, and death rates 6 to 7 percent higher (56–61)
Higher overhead (25 to 33 percent for some of the largest
HMOs); worse scores on 14 of 14 quality indicators reported
to National Committee for Quality Assurance (62–64)
Death rates 30 percent higher, with 26 percent less use of
transplants (65, 66)
Lower staffing levels and worse quality of care (30 percent
committed violations that caused death or life-threatening
harm to patients) (67)
Medicare expelled 80 programs after investigations found
that 91 percent of claims were fraudulent (68); for-profit
behavioral health companies impose restrictive barriers and
limits to care (e.g., premature discharge from hospitals
without adequate outpatient care) (69)
Source: Geyman (55); adapted with permission from the American Board of Family Practice,
Lexington, Kentucky.
National Institute of Health Care Management estimates that 85 percent
of drugs approved by the FDA between 1989 and 2000 were modifications
of existing drugs (80).
• Fifty-seven percent of the more important new drugs are discovered by
R&D in other countries and later marketed in the United States (81). The
European Federation of Pharmaceutical Industries, despite the presence
of price controls in their countries, spent $47 billion on R&D in 2002, about
50 percent more than R&D spending by U.S. drug manufacturers (82, 83).
• The price of Lanoxin (digoxin), the most common drug used by the elderly,
rose seven times the inflation rate in 1998 (84). Tamoxifen (Nolvadex), a
long-term drug used by patients with breast cancer, costs $360 in the United
States for a 30-day supply, compared with $60 at the pharmacy at the Munich
International Airport in Germany (85).
Competing Abroad
http://www.pnhp.org/facts/myths_memes.pdf
