March 15, 2002
Seattle--
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***
Items to be added to our donor-only zone "LTC Week in Review" feature
on Monday, March 18, 2002 are listed after this Bullet and before the
boilerplate. ***
What's
the connection between drugs, technology and long-term care?
An interesting juxtaposition of articles on the pharmaceutical industry
got us thinking about that relationship recently.
On
the surface, the connection is very simple.
When medicines and technology can delay the onset or control the symptoms
of chronic illness, everyone wins. Patients
benefit; physicians are more effective; and drug companies profit.
Disease
management is a good example. According
to an article in the Wall Street Journal (1/4/2), disease management is the
close monitoring of patients with chronic ailments such as heart disease,
diabetes and asthma to prevent symptoms from worsening into life-threatening
events, such as heart attack or stroke. "The
need is great for better tools in disease management . . ..
[C]hronic diseases account for more than 75% of national direct medical
expenditures. The number of Americans suffering from chronic conditions,
now nearly 100 million, is expected to increase to 157 million -- half the
population -- by 2020, as aging Baby Boomers deal with heart disease, arthritis,
hypertension and other ailments. About
80% of those 65 or older now have at least one chronic condition."
Who's
pushing "disease management"? Nancy
Steele, vice president of Pfizer Health Solutions, a unit of the pharmaceutical
giant, says effective disease management "is the one remaining opportunity
to make the U.S. health system cost-effective."
Indeed, it is not difficult to see the staggering potential value of
disease management to our long-term care service delivery and financing system.
Consider
another aspect of the relationship between drugs, technology, and long-term
care. Forbes Magazine (1/7/2) ran
an article about the huge risk another pharmaceutical giant is taking
"Betting on the Brain." Patent
protection is about to end on meds to reduce cholesterol and control high blood
pressure that Merck--another big pharmaceutical company--developed in the 1980s
and '90s. So Merck is "taking
a giant gamble on the last big frontier in medicine:
the brain." The company
"will spend nearly $400 million of its $1 billion basic science budget on
brain research this year, up tenfold from five years ago."
Merck wants to do for "Alzheimer's disease, stroke, Parkinson's and
schizophremia" what the company did for heart disease:
"Thousands of people are living longer, and Merck has reaped
billions in profits."
What
do Pfizer's advocacy of disease management and Merck's flyer on brain research
have in common? Both companies are
taking huge financial risks in the hopes of making bigger-than-ever profits by
providing wonder drugs and treatments that make the lives of people with chronic
illnesses better and longer. Would
they take these chances and do this path-breaking research if huge potential
profits were not part of the gamble? Probably
not, but that doesn't make them evil, just pragmatic.
And who cares what their motives are if we all benefit?
A
recent Wall Street Journal editorial ("Europe's Addiction," 1/2/2)
sheds light on this issue. "Everyone
likes to complain about the prices Americans pay for prescription drugs, with
the political blame falling mostly on the supposedly price-gouging drug
companies. . . . In . . . Europe,
by contrast, governments usually act as monopsonist price setters.
(A monopsony market is one in which there is only one buyer for a
commodity or service.) For
political reasons, governments force down prices, which means that European
consumers pay less but also that European countries are in effect refusing to
pay their fair share of drug R&D costs.
In other words, American consumers are financing the drug innovations
that couldn't be developed as quickly, if at all, at European prices."
So,
let me see if we have this all straight. American
pharmaceutical companies invest billions and take huge risks in order to develop
miracle drugs and treatment modalities that benefit everyone who has now or will
ever have a chronic illness. But Canada, Europe and other countries arbitrarily cap the
price of these drugs thus forcing American consumers to pay the lion's share of
the cost for research and development. These
other countries are getting the best of both worlds--great drugs developed by
American companies and paid for by American consumers at artificially low
prices.
In
that case, why not cap the prices here too so we get the same benefit?
Then there would be no incentive for the pharmaceutical companies to
spend the money and take the risks to develop the new products.
We'd lose out and no one would get any new wonder drugs at any price.
Well,
then, why not stop selling drugs we paid to develop to other countries at
arbitrarily low, government-capped prices?
That may be the only solution in the long run. In the meantime, however, manufacturing more pills or
capsules once a drug has been developed and approved by the FDA is very
inexpensive. At that point it's
profitable to sell each marginal unit even at extremely low prices.
If companies refuse to sell, they lose.
You
can see the dilemma. We don't want
to go without our wonder drugs, so we pay for them. Once they exist, and others want them too, the temptation to
sell marginal units even at low prices is great because it maximizes revenue.
But if companies do sell at the low prices, they are fostering the other
countries' "entitlement mentality," their belief that they are somehow
entitled to the products developed and paid for by Americans without bearing a
fair share of the costs. Once you
understand this, it is easy to see the ridiculousness of urging Americans to go
to Canada or overseas to buy drugs developed in the United States at cheaper
foreign prices. When we do that, we
just become part of the problem instead of part of the solution.
The
WSJ opined "that the price of socialism is fewer life-easing and
life-saving products." We've
been paying that price for others by shouldering here at home most of the cost
to develop new drugs and treatments. We're
either knowing benefactors or unknowing suckers. This being the case, why are so many people angry at the
pharmaceutical companies and not at the free riders who are shifting the burden
and expense onto us?
***
LTC Week in Review items for the week of March 18, 2002:
"Medicaid Problems Intensify," "How to Discuss LTC With Parents
and Elders," "On Middle-Aged Motorcyclists, Osteoporosis, and
Alzheimer's," "LTCI Up Big Although from a Small Base," and
"Taxing Sin to Support LTC." To find out how to qualify for the Center's donor-only zone,
email amy@centerltc.org. ***