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The Pharmaceutical Industry

Riding on the heels of discoveries that have finally provided physicians the ability to treat chronic and debilitating diseases, the Pharmaceutical industry has quickly become the most profitable industry in the world. This profit has come at a price. The massive political influence of the pharmaceutical industry has helped secure it not only favored tax status, but also the ability to bypass advertising restrictions, influence drug approvals, and even craft legislation like the Medicare Prescription Drug plan.

High prices for prescription drugs continue to force many patients to decide between expensive treatment for their illnesses and basic necessities like rent, food, and clothing. Total spending for pharmaceuticals exceeded $140 billion in 2001, more than tripling since 1990. While most other countries have prices much lower than the United States, the pharmaceutical industry has argued that high U.S. prices are necessary to adequately fund research and development. An analysis of where drug companies invest their revenues, however, shows that they invest twice as much into an enormous marketing apparatus rather than R&D.

Drug Prices

Average cost of top ten selling drugs 1
Vermont - $120.33
Canada - $75.54
Mexico - $69.35
 
Average cost of brand name prescriptions: 2
1992 - $28.50
2000 - $72.94
 
Brand Name Price vs. Generic Price 3
Generic = $21.96
(113% increase since 1990)
Brand = $72.94
(162% increase since 1990)
 
Percent of patients not filling a prescription in past year due to cost: 4
Medicare 8%
Private Insurance 8%
Medicaid 26%
Uninsured 29%

Drug Company Structure, Profits, and Taxes

How Drug Companies spend their revenue: 5
27% - Manufacturing
35% - Marketing/Administration
13% - Research & Development
7% - Taxes
18% - Profits (After Taxes)
 
U.S. Taxes as a percent of income: 6
27% - All industries
16% - Pharmaceutical industry (lowest of any industry)
Notes
  1. U.S. GAO. (Zocor, Ticlid, Prilosec, Relafen, Procardia XL, Zoloft, Vasotec, Norvasc, Fosamax, Cardizem CD)
  2. Kaiser Family Foundation
  3. Kaiser Family Foundation
  4. Center for Studying Health System change - Issue Brief #51, 4/2002
  5. Health Affairs 2001; 20(5): 136
  6. Congressional Research Service 12/13/99
   
   
 
 
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