"me-too" drugs that offer little therapeutic
from lower-priced foreign markets, or old-
advantage over cheaper and older ones.
fashioned political scapegoating, the com-
Drugmakers are also accused of exploiting
mon focus is to force down prices. Under one
legal loopholes to extend their patented drug
guise or another, government would confis-
monopolies well beyond reasonable bounds.
cate revenue from firms, in effect seizing
Negative treatment of drugmakers in the
their property.
media may have hit its peak last May, when
The steady political barrage aimed at
ABC News aired an hour-long special report,
"demonizing drugmakers" is having danger-
"Bitter Medicine: Pills, Profit and the Public
ous effects. The most recent annual survey by
Health," which leveled a series of one-sided
the polling firm Harris Interactive finds that
charges against the pharmaceutical industry.
the public image of pharmaceutical firms has
The program stated that there was little evi-
plummeted over the last five years. In 1997,
dence that the huge increase in drug spend-
79 percent of respondents thought that drug
ing over the past six years has dramatically
companies did a good job of serving their
consumers; in 2002, only 59 percent did.7
improved the health of Americans. Narrator
Peter Jennings observed that much of the
Although brand-name drug manufacturers
profit from prescription drug sales comes
have not yet sunk to the political pariah sta-
It seems that
not from breakthrough drugs but from
tus of tobacco companies, oil companies, and
the more good
drugs that are similar to already popular
HMOs, it increasingly seems that the more
medications. ABC News quoted National
good drugmakers do, the more hated they
drugmakers do,
Institute of Health Care Management
become.
the more hated
Foundation president Nancy Chockley as
they become.
finding that "most of the growth was really
The Problem of Costs
in drugs that did not show any significant
clinical improvement." Jennings made other
accusations about the drug industry, includ-
What's driving the political attacks on the
ing that its lawyers and lobbyists have created
pharmaceutical industry is the rising cost of
or found so many loopholes in the patent
prescription drugs. In its latest survey on
laws that some generic drugs are delayed or
drug pricing, the NIHCM Research and
never get to market. The program concluded,
Educational Foundation found total phar-
"The rules by which this hugely profitable
maceutical outlays rising 17.1 percent during
industry operates do not always serve cus-
2001--almost twice as much as the annual
tomers adequately."6
increase in total medical expenditures (9.6
Even in the aftermath of last fall's elec-
percent) and much more than overall med-
ical inflation (2.3 percent).8 NIHCM expect-
tions, which restored Republican Party con-
trol of both houses of Congress and a mar-
ed drug costs to continue rising, at a 13.5 per-
ginally more favorable Capitol Hill climate
cent rate in 2002, an average 11.7 percent a
for the pharmaceutical industry, the crusade
year between 2003 and 2007, and a some-
against drug companies continues. The heat
what slower average annual rate of 10.3 per-
cent between 2008 and 2011.9
is still on brand-name drugmakers to yield
more of their profits and the patent rights
With government outlays accounting for
that protect them so that generic imitators
more than 45 percent of all health care
can flood the market with lower-cost ver-
spending (plus another 10 percent in tax sub-
sions of today's drugs and officeholders can
sidies for private health insurance premi-
dispense them more widely to public health
ums), soaring drug costs weigh heavily on
program beneficiaries. Whether the issues
federal and state government budgets,
ahead are indirect price controls, coerced
encouraging legislators to clamp down. For
"discounts," dilution of patent rights, re-
example, Medicaid spending for outpatient
importation of U.S.-manufactured drugs
drugs increased by an average of 18.1 percent
3