Dr. Richard Brown's Testimony on Drug Prices at NY State Hearing
Testimony of the New York Chapter of Physicians for a National Health Program
Hearing of the New York State Assembly Committee on Health
Prescription Drug Prices in New York State, December 5, 2002
My name is Richard J. Brown. I am a psychiatrist, recently retired, who has been in practice, both institutionally and independently, for over 35 years. I additionally received an M.S. in administrative medicine from a school of public health. My educational and working experiences have led me to look beyond my immediate clinical and administrative activities into the functioning of the health care system.
I am on the Board of Directors of the New York Chapter of Physicians for a National Health Program, an organization advocating a publicly funded, publicly administered health care system that provides equal access for all residents to quality, affordable care. Our nation is the only industrialized country that does not provide this for all our residents; more than 40 million people in the United States are medically uninsured, and a similar number are underinsured.
It is not that there isn’t enough money to provide health care for everyone. Our country spends more on health care (more than 14% of GDP) than any other country (10.5% of GDP is the most that any other country spends.) Yet we are way down on the World Health Organization’s performance list - only 37th -- lower than Canada, Japan, and all of Europe. Ours it the only industrialized country without a national health program.
I am here to speak about the pharmaceutical industry and the cost of prescription drugs in this country and in this state. The prescription drug industry is costwise the fastest growing sector within the 14% of GDP utilized for health care. Drug spending is rising 15-20% a year - doubling every five years.
Part of this increase is demographically driven. We are living longer, growing more numerous, and many of us require medicines for chronic conditions. The increase is also due to advances in the science and practice of medicine, including the development of newer drugs that help to manage high blood pressure, diabetes, elevated cholesterol, infectious diseases including HIV/AIDS, gout, depression and psychoses, among other diseases.
But another part of this rising cost is attributable to unconscionable profit-taking and profligate promotional practices. The pharmaceutical industry’s average profit after all expenses including research and development, advertising, promotions, lobbying, political campaign funding, contributions to law makers, and anti-consumer lawsuits to maintain uncontrolled prices is 18-19% - that’s over three times the profit margins of the other industrial sectors.
Looking more closely, we find that drug prices in this country average over twice those of the very same drugs in other countries. How does this happen? In every single country throughout the industrialized world except for the United States, drug prices are government controlled. Let me say that again: In Australia, in Canada, in France, in Germany, in Italy, in Japan the governments control drug prices. Also to be noted is the fact that direct-to-consumer advertising (DTCA) is banned in the European Union and Canada. Europeans visiting the U.S. are startled to see those ubiquitous “Ask Your Doctor” ads we find on TV and radio, in newspapers and magazines, and on billboards. While the industry claims that this advertising is “educational,” in yesterday’s New York Times it was reported that the General Accounting Office Congress’s investigative arm - has found that “drug companies have repeatedly disseminated misleading advertising, even after being cited for violations, and millions of people see the deceptive ads before the government tries to halt them.” These ads are hard to escape in the United States, and as I have indicated, are not to be found in Europe or Canada.
Promotions include lectures to physicians in expensive restaurants and often include paying the doctors up to $500 to help drive the point home that the drug being promoted is the Rolex of them all.
The pharmaceutical industry has thus far been successful in blocking even weak federal legislation that would lower drug prices. These costs are borne by Medicaid, state programs, and private insurers, as well as by individual patients without drug coverage who sometimes have to compromise expenditures on food, clothing, fuel and other necessities of life.
So far even modest attempts at reining in drug prices have failed at the national level. We in New York cannot afford to wait until this much-needed national reform is adopted. Other states either singly, or in partnership with other states, are beginning to take measures to control spiraling drug prices. It is high time for our great state of New York to take a leadership role in this endeavor; such a step would offer a decided benefit to our own people and to people around the country.
As you review your legislative alternatives, I ask that you consider very seriously the necessity of controlling pharmaceutical prices in order to defend the public coffers and to make affordable drugs available to all New Yorkers.
I thank you for this opportunity to testify before this Committee.