The Drug Profiteers
It’s time to rein in the biggest drug peddlers of them all — the pharmaceutical industry. Author Marcia Angell talks about how to fight the other drug war.

Medicare was enacted in 1965 with no provision for outpatient prescription drug benefits for seniors. You point out that drugs were cheaper, people took fewer drugs and seniors could afford to buy what they needed. Today, because many seniors don't have supplemental insurance or collective bargaining power, prices are highest for the people who most need drugs. Will the recent Medicare reforms help? The Medicare drug benefit that was just passed in late 2003 will do very little to help senior citizens because it specifically prohibits Medicare from bargaining with drug companies for lower prices. All large private insurers already do this. So do some government programs such as the Veterans Affairs (VA) system. Medicare would be the biggest purchaser of all. It would have enormous bargaining power. The pharmaceutical industry did not want that to happen and they made sure it would be explicitly prohibited. And it was. What we are left with is a drug benefit that is inadequate to begin with. It has this huge donut hole for example. As prices increase at the rate they are now, and they'll probably increase at least that fast, [the benefit] will quickly be washed out by rising prices.

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The $200 Billion Colossus
"When I say this is a profitable industry, I mean really profitable. It is difficult to conceive of how awash in money big pharma is."

What's true of the eight-hundred-pound gorilla is true of the colossus that is the pharmaceutical industry. It is used to doing pretty much what it wants to do. The watershed year was 1980. Before then, it was a good business, but afterward, it was a stupendous one. From 1960 to 1980, prescription drug sales were fairly static as a percent of U.S. gross domestic product, but from 1980 to 2000, they tripled. They now stand at more than $200 billion a year. Furthermore, since the early 1980s, this industry has consistently ranked as the most profitable in the United States˜by a long shot. (Only in 2003 did it fall from that position to rank third among the forty-seven industries listed in the Fortune 500.) Of the many events that contributed to their sudden great and good fortune, none had to do with the quality of the drugs the companies were selling.

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