Drug Companies Wage War on Consumers; Win Billions in Excess Profits with Insider Lobbying, Campaign Cash

Nov. 30, 2001

Drug Companies Wage War on Consumers; Win Billions in Excess Profits with Insider Lobbying, Campaign Cash

Statement by Public Citizen President Joan Claybrook

There?s a serious drug war going on in this country. And I?m not talking about illegal drugs. I?m talking about the war against consumers being waged by Big Pharma in Washington. It?s a war that has taken many civilian casualties ? men, women and children throughout the world. It?s a war being waged with money and political connections. And real people are suffering.

This must stop.

The ultimate irony of this war is that while the drug companies say they want to save us with their medicines, they?re strangling us with their artificial, unfair prices ? prices that cannot be justified in the face of the millions who suffer from AIDS and other diseases worldwide or who can?t afford to buy the medicines they need to stay alive and healthy in this country.

This must stop.

How do they get away with this? It?s simple. They methodically and callously purchase public policy at the highest levels of government. During the last election, this industry spent more than a quarter of a billion dollars in campaign contributions, lobbying and advertising to buy influence with the federal government. That includes $65 million to deceive the American public in TV advertisements designed to stop legislation aimed at reining in their outrageous prices.

This must stop.

These companies employ an army of well-connected lobbyists to carpet-bomb the Capitol with their false propaganda. The industry?s 625 lobbyists amount to one for every member of the House and Senate, and another 90 for good measure. Hoffman-La Roche alone spent over $7 million in the past four years to lobby Congress. Bayer tossed in another $4 million.

And boy do they get their money?s worth. Big Pharma today is one of the most government-coddled industries in the country. The companies reap the benefits of government-funded research, get enormous tax breaks and receive 20-year monopoly patents with absolutely no control over what they charge. Plus, our government works on their behalf to keep desperately poor countries from getting AIDS drugs and medicines for other diseases at reasonable prices ? all in the name of so-called “free” trade. And still, the industry clamors for even more.

This must stop.

In the past few weeks, both the House and the Senate passed legislation that is yet another handout to the drug companies. It works like this: If drug companies agree to test a drug like Cipro for use by children they get an extra six months of monopoly patent protection. How incredible. Testing drugs for children is something they should do anyway. If a company wants its drug approved by the FDA for pediatric use, it should make sure the drugs are safe for kids.

Pediatric testing costs only about $4 million per drug. But a drug company can reap hundreds of millions ? if not billions ? in extra sales because of the six-month monopoly extension. All told, this anti-consumer legislation will reap drug companies an extra $30 billion in sales. This all comes out of the pockets of consumers, employers and taxpayers.

This must stop.

In the case of the anthrax-fighting antibiotic Cipro, Bayer would net an additional $358 million in sales   almost 90 times what it will spend to test the drug for children. Meanwhile, Health and Human Services Secretary Tommy Thompson talked tough about forcing Bayer to sell Cipro at reduced prices to the government for fighting bioterrorism. But the company ended up with a sweetheart deal. The government still will pay 95 cents per pill for a drug that reportedly costs 20 cents to make and that Thompson?s own department is buying for 43 cents under one program. And by the way, if the government can threaten to take away patent protection for Cipro, as Thompson did, why can?t it do the same for AIDS drugs and other critically needed medicines?

In part because of the lack of controls on drug prices, unlike in most European countries, the pharmaceutical industry is the nation?s most profitable enterprise ? and it has been for the past two decades. In fact, last year, the top drug companies were four times more profitable than all Fortune 500 companies.

The pharmaceutical drug companies claim they need these enormous profits so that they can invest in research and development for new drugs. Not true. Their real priority is advertising and marketing. Last year, the industry devoted nearly three times as much money to marketing and administrative costs as it did to R&D.

They claim to spend $500 million for each new drug brought to market. Also not true. A recent Public Citizen study found they spend only $110 million. Another example of this industry misleading the American public in its attempts to justify its unconscionable prices.

They claim their research leads to life-saving therapies. Rarely true. Only about one in five new drugs actually represents a significant therapeutic breakthrough. The rest are copycats designed primarily to increase profits.

This is an industry that has become too powerful. It is an industry that has lied to the American public. It is an industry willing to sacrifice lives and the health of millions of people to preserve its exorbitant profits.

This must stop.

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