Term Paper: Prescription Drugs and the Health Care Industry

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Prescription Drugs and the Health Care Industry

The cost of health care in the developed world and in the United States has risen rapidly in recent years. Total U.S. health care expenditures are projected to "...increase from $2.17 trillion in 2006 to $2.88 trillion in 2010, with annual increases averaging about 7%" (Introduction to the Health Care Industry...). Furthermore experts state that total health care expenditures around the world are estimated at $4.5 trillion. One of the aspects of the Health Care Industry that is increasing at an alarming rate is Prescription Drugs, which accounted for $219.2 billion of total health care market in the United States in 2006. Another statistic that helps to present a view of the enormous range and influenced of the prescription drug market is that in 2006 the global prescription drug market was globally estimated at between $500 and $550 billion. (Introduction to the Health Care Industry...)

In the United States and elsewhere there a growing concern at the increase in prices and the reduction in the affordability of prescription medications. "Patients and insurance companies are also dealing with sticker shock as the nation's prescription drug bill soars. Prescription drug costs have increased more dramatically every year, with increases exceeding 10% yearly from 1995 through 2005 "(Introduction to the Health Care Industry...).

Pundits also point out that there has recently been a shift in the structure and the profile of health care in the country, and this is largely due to the rapid growth in the prescription drug sector, coupled with a slower growth in spending for hospital inpatient care. For example, spending on prescription drugs in 2003 amounted to as much as twenty percent of overall medical care expenditures; compared to twelve percent in 1996.

Prescription Meds Changing Health Care) Studies also note that, "Pharmaceutical expenditures as a percentage of U.S. health expenditures fell steadily from 10% to 4.9% during 1960-1980, but then they rose steadily to 9.4% in 2000..." (Sunquist)

What all these statistics do is to emphasize a cardinal fact - that the prescription drug industry and the companies that manufacture these drugs are extremely powerful and influential, not only in the United States but throughout the world. In fact pharmaceutical companies are rated as number one of a total of thirty-seven industries in terms of return on revenue, surpassing all other Fortune 500 companies in 1998. (O'Connor)

One of the critiques of this industry is therefore the escalating prices, which are often beyond the pocket of the common man. This is a deplorable reality for many ill people and particularly for the elderly in society who often have to survive on a fixed budget or pension.

Nearly 40% of all seniors have no prescription benefit. Most Medi-gap (supplemental) policies with a prescription benefit have a $250 deductible, 50% co-payment and a yearly maximum that ranges from $1,250 to $3,000 before it reaches a maximum - totally inadequate for today's needs. Seniors use medications more than any other group. (O'Connor)

Another possibly even more disconcerting criticism of the prescription drug industry is the numerous allegations of manipulation and even false information. As the saying goes, with power comes corruption and there have certainly been assertions in the media and in many research studies that the drug companies are exploiting the health care market to a great extent. For example, there is the allegation that the drug companies are manipulating the public through their advertising campaigns and are in fact influencing the way that doctors and other health care professionals prescribe drugs.

This point-of-view is related to the power of the media and advertising and to the fact that with the 1997 FDA advisory the prescription drug industry gained the right to advertise its drugs in the mass media. The assertion from many experts is that these advertising and marketing campaigns have taken much of the power for prescribing drugs away from the medical doctors. "...doctors themselves are incapable of making informed decisions related to their prescription writing, so they need prodding from their better-informed (i.e. TV-watching) patients. The result -- prescription drugs are now the largest component of growth of U.S. health care costs "(Sundquist).

In other words, through the use of advertising and marketing campaigns the drug companies are adversely influencing and interfering in the prescription of medications. The power to prescribe medication have largely then been taken out of the hands of the medical professional where it belongs.

In relation to the freedom of the large drug companies to advertise there are a number of other aspects have been questioned. One of the most significant is these is the view that "Prices of prescription drugs are spiraling out of control. Prices are well beyond what would exist under free market conditions." (Sundquist) Sundquist also notes that much of the problem lies in the fact that "...huge subsidies for prescription drug consumption that dull consumers' interest in price-oriented decision-making that would normally exist under free-market conditions. "(Sundquist) Even more disconcerting is the allegation that drug companies are directly and indirectly influencing doctors to prescribe certain drugs. It is also suggested that the large drug industry sales and marketing staff who visit doctors in their offices are "degrading the quality of information used in doctors' prescription-making and subjecting the process to less-than-objective pressures" (Sundquist).

These allegations are supported by many formal inquiries and studies. For instance, a recent (2006) report by the FDA has found that deceptive prescription drug marketing tactics are "common and dangerous." (Deceptive Prescription Drug Marketing...) There is also the view from the U.S. Public Interest Research Group and the NJPIRG Law and Policy Center that, "Prescription drug marketers made deceptive claims to doctors and consumers about 150 different drugs including Vioxx and OxyContin..." (Deceptive Prescription Drug Marketing...) as Abigail Caplovitz, an advocate for NJPIRG Law and Policy Center Consumer, states: "Powerful prescription drugs can improve or save lives, but if they're marketed to the wrong people, they can cripple or even kill," (Deceptive Prescription Drug Marketing...).

The 2006 FDA report, which analyzes five years of regulatory letters from the FDA to prescription drug companies, find that there have been numerous cases of false or misleading advertising for prescription drugs. Among the findings are the following important points:

Thirty-eight percent of deceptive messages to doctors and consumers made unsupported or misleading claims.

• Thirty-five percent misrepresented risks or side effects of taking the drugs.

• Twenty-two percent promoted unproven drug uses.

(Deceptive Prescription Drug Marketing...).

The report also makes mention of false or deceptive marketing that was aimed especially at doctors. For example, among the findings is the fact that "Physicians were inundated with 38 different types of dangerous and misleading marketing tactics." Other sources also allege that doctors are given bribes for using certain drugs; however these allegations are harder to substantiate. The FDA report goes on to state that "Drug companies know who they have to influence, if they want to jack up sales and profits." (Deceptive Prescription Drug Marketing...).

The report also indicates how drug advertising can mislead the consumer. Among the main results in this regard was the finding that direct-to-consumer ads, via the internet and other media, potentially mislead millions of people, and that this exceeds the influence of marketing aimed solely at doctors. (Deceptive Prescription Drug Marketing...) Furthermore, it way also found that some drug companies had "suppressed unfavorable clinical trials" (Deceptive Prescription Drug Marketing...). Another practice that was noted in the report referred to drug companies using public relations firms to write favorable research reports and then list a doctor's name on the report as the creator of the report." (Deceptive Prescription Drug Marketing...) False messages that are given out by drug companies are also referred to in the report. A breakdown of the seriousness of these false massages is as follows. "...35% misrepresented risk; 22% promoted unproven uses; and 38% made unsupported or misleading claims. For deceptive messages targeting doctors, 37% misrepresented risk; 24% promoted unproven uses; and 36% made unsupported or misleading claims" (Turning Medicine Into Snake Oil...).

In conclusion, recent reports of the withdrawal of certain prescribed drugs due to possible adverse and even lethal effects, has not helped to lighten this rather dark picture of the industry. A prominent example of the danger of prescribed drugs was the recent case concerning Vioxx. This drug was prescribed to millions of Americans but was recalled in September, 2004, when it was found that it doubled the risk of heart attack after a certain period of usage. (Borden) in another more recent cases, executives of Purdue Pharma pleaded guilty in Federal Court to having"... misled doctors, federal regulators and patients as to the addictive nature as to the prescription drug, OxyContin." (Oxycontin Manufacturer Agrees...) OxyContin is a powerful narcotic that was sued for pain relief. Similarly, the drug Avandia, which is was commonly prescribed to Type 11 diabetes patients, was shown to increase the risk of heart attacks. (Silberner)

In the light of these findings it comes as no surprise that… [END OF PREVIEW]

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