What's the Prescription on Prescription Drugs?

Research and Development - A drug can take as long as 10-15 years in R&D. Then, only 1 out of 5 make it to market, many failing a rigorous FDA approval regimen. The industry claims it costs $800 million to complete the process. Even using opponents' more conservative figure of $240 million, the up-front investment is large while the time in which a company can profit from sales is limited.

20-Year Patents - To encourage R&D, patents for pharmaceuticals are for 20 years. With no competitors selling the same product, companies can charge high rates for the most effective and in-demand products in its line. The industry claims it takes 7 to 8 years for a drug to show a profit, justifying the long patent period.

Advertising and Marketing - Financial reports show that many pharmaceutical companies spend more on advertising, marketing and administrative costs than they do on R&D. Advertising directly to consumers is more effective than to medical providers but considerably more expensive than advertising in medical journals and conventions. The industry points out, however, that marketing budgets include millions for free samples.

Blockbuster Drugs - These medications break $1 billion dollars in annual sales. In 2001, there were 29 on the market, accounting for 34% of U.S. drug sales. On average, blockbusters cost twice as much per prescription as other medications. They are popular because, compared to other prescription drugs, blockbusters are highly effective and have few side effects.

Price-controlled Markets - Many countries (Canada, Germany and Japan, for example) limit the amount of profit a pharmaceutical company can make. In a sense, open markets such as the U.S. subsidize R&D for the world. The industry strongly opposes price control in the U.S. because of the results seen around the world - specifically, restricted access. While medicines cost 20-80% less than in the U.S., patients may experience limited availability, may have to show extreme need or may not have any access to some of the newest, most effective treatments available.

Given all these complications, what can we do? Smuggle our medications from Canada or Mexico? Ease FDA hurdles? Lobby for re-importation laws? Demand better benefits for Medicaid and Medicare? Buy into group discount programs? Support a national health care system? There are as many proposed solutions as there are blockbuster drugs.