Health

Why Americans Spend More on Prescription Drugs Than Any Other Country

| by Michael Allen

Americans pay more for prescription drugs than people in any other nation, and it's not by accident or mismanagement, but rather design.

The New York Times recently reported that drug companies and medical device makers pay physicians about $380 million per year as speakers and consultants, according to data from the Centers of Medicare & Medicaid Services.

This new government webpage allows U.S. citizens to research and see if their doctor may be getting paid by pharmaceutical companies.

Former U.S. Secretary of Labor Robert Reich, who now teaches at the University of California at Berkeley, writes on his blog that doctors will often say these massive payments from drug companies don't affect their choices in which medications they prescribe, but why else would these corporations blow so much money if physicians didn't recommend their drugs?

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Reich also cites a 2014 report on 247WallSt.com that says Americans spend more money on prescriptions than any other country, but are not healthier than people in other developed countries.

Reich adds that many drug companies practice “product hopping,” which is when they make very small changes to drugs that are about to expire and go generic. By making these small changes, the drug is technically new and is sold at an expensive non-generic brand price.

Reich says that Forest Laboratories changed its Alzheimer’s drug Namenda from a tablet into a capsule called Namenda XR. That tiny change stopped pharmacists from using generic versions of the Namenda tablet.

Big Pharma will also advertise prescription drugs even after these same drugs have gone generic in order to get gullible patients to demand the expensive brand name drugs from their doctors, adds Reich.

Another trick used by drug companies is called “pay-for-delay.” According to Reich, drug companies will actually pay generic manufacturers to delay making their cheaper versions so that the expensive brand name drug is on the market for a longer period of time. Because Americans voice no outrage over this legal bribery, they pay an extra $3.5 billion a year.

European countries don't allow these sleazy payoffs, do place price limits on prescriptions, ban prescription drug advertising, and, as a result, their drug prices are far cheaper. Any American who has legally bought prescriptions through safe online pharmacies (via Europe) has seen the price difference.

However, Obamacare prohibits the U.S. government from negotiating lower drug prices for Medicaid and Medicare patients. Why was this part of Obamacare? Reich says it was necessary in order to get Big Pharma to drop their fearmongering campaign against Obamacare so that it could pass Congress.

Many U.S. drug corporations will claim they have to charge sky high prices to fund their research, but Reich reports that the U.S. government actually supplies much of that research via the National Institutes of Health (NIH).

In reality, drug companies pump hundreds of millions more into advertising than research. Big Pharma also spent $225 million on lobbying Congress to keep the laws written in their favor, notes the Center for Responsive Politics.

All that money is paying off. Americans consume a whopping 80 percent of the world's painkillers, according to the American Society of Interventional Pain Physicians, reported the BBC in 2012.

Sources: BBC, Center for Responsive Politics, 247WallSt.com, RobertReich.org, The New York Times, Centers of Medicare & Medicaid Services (Image Credit: J. Troha)