Category Archives: Humor and Observations

The last several federal administrations, including Clinton, Bush and Obama’s have been pushing to buy oversees drugs because they are cheaper.  American pharmaceutical companies have been the target of many lawsuits and have become villains in the mainstream media.  Today, 40% of drugs in the United States are imported and 80% of the active ingredients are manufactured abroad.  So what is the concern?  Today, news leaked that there are potentially millions of doses of Avastin sent out since December that do not contain any active ingredient.  While American pharmaceutical companies are badgered, they maintain very high production standards.  Not so in other countries where they make them “cheaper.”  Leaving out the active ingredient certainly cuts out costs.  This means that people with colon, prostate and lung cancer receiving Avastin treatments might have been without any real treatment since December.  Many of them will die.

While pursuing my Masters in Economics I wrote a white paper on the topic of whether drug companies profits were excessive.  In the 60s, when the thalidimide disaster occurred, rules for drugs changed dramatically.  The drug had been given to women to help them sleep but pregnant women had terrible birth defects in their children.  Thousands were born without legs or arms.  No FDA administrator ever wants to approve another thalidimide.  The result is that for every 10,000 drugs researched, only one gets approved, and it takes about 15 years and costs between $500 million and $1 Billion per drug.  The patent on a drug lasts for 12 years, after which everyone can make it.  That means our pharmaceutical companies have to recover the cost for 20 years of research on 10,000 drugs on the one successful one they produce within just a 12 year period.  That is why a drug that costs 5 cents to manufacture can cost upwards of $20 per pill.

If you spent $1 Billion for a drug with 100,000 users that will take the pill once per day and you have 12 years to get your money back, plus a 10% profit you have to charge $2.55 per pill PLUS the cost of manufacturing, advertising, marketing, distribution, lawsuits and hope no one else comes up with something better.  Your pill will probably run $100 per month, so insurers and Medicaid and Medicare will force your doctor to use cheaper, older pills first, and only let you use it if the others don’t work, which will cause the pharma company to have to raise the price to $200 per month.  It is basic math.

By buying these drugs from unregulated and unreliable sources outside the country, we are making it impossible for new drugs to be economically developed.  At the same time, we are opening up the possibility of more Avastin disasters.  How would you like to know that the heparin you take to avoid blood clotting after a surgery might not have active ingredients, or may have three times the normal amount?  How about your anti-stroke medicine, your high blood pressure treatment, your insulin?  Think about that when politicians tell you about the evil pharma companies and how they plan to save you money.  With nationalized healthcare, do you think your bureaucrats would even let you know this had happened?  I don’t.