Posted by: samhenry | September 3, 2009

Overlooked in Health Care Debate: Drug Companies Illegal Activities Increase Costs

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By SamHenry

The White House, Congress and just about everyone else debating HR 3200 and other pending legislative delights, have overlooked yet another factor in the high cost of health care: Illegal activities by pharmaceutical companies.  When caught, they pay large fines (that could be increased) but they also pay large settlements in lawsuits over false claims about their marketed drugs. Under the law, drug companies can only market their drugs for FDA approved uses. Doctors can, however, prescribe them for any use (called off label use).  Giant drug maker Pfizer is about to pay the Federal Government the largest settlement of its kind -$2.3 billion –  over charges that it illegally promoted several of its drugs.

By the end of the year, Pfizer will have sealed a $68 billion deal to purchase another pharmaceutical company, Wyeth. Time was when Wyeth seemed the most sued pharma company in the world. Wyeth made drugs marketed as Redux and Pondimin, which were used as the fenfluramine half of the fen-phen combination formula for weight reduction that caused valvular heart failure in some patients. [http://en.wikipedia.org/wiki/Fen-phen]   It was alleged that Wyeth knew the drug could be fatal and did not withdraw it in a timely manner from the market. They suffered legal damages of over $13 billion –  a hefty sum that kept  them from being a buyout candidate for many years.

Pfizer and Wyeth are prime examples of the high stakes business big pharma has become.  Research costs are substantial, CEO salaries excessive and of course there is the costly retention of  large legal departments to fend off  lawsuits.  Drugs cause changes within the human body and that’s the tricky part – the sometimes costly part.

Congress and the President are in no way thinking of tort reform as part of reducing the cost of health care. When one thinks of tort reform, one immediately thinks of lawsuits directed at health care providers.  But what about lawsuits against the drug makers that may need to be capped to keep costs down? In short: here are two large areas of needed cost containment NOT considered in the current debates.  Either our leaders are ill informed (no pun intended) or deaf and blind.  But of course, how silly of me, they are, for the most part, attorneys and would one attorney tell another attorney that his business practices need to be “managed”?

http://www.philly.com/inquirer/business/20090902_Pfizer_expected_to_pay_record_settlement_to_U_S_.html


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Responses

  1. […] Although warned in a post in these pages about the overriding power of the pharmaceutical companies, it seems so many people, so many in Congress, were so delighted in the support for Health Care Reform 2009, few questions were asked; little research into the way of the Pharma industry was undertaken.  Now comes word that the costs have hit the fan in the area of Medicare as an area that will primarily fund the public component in HR 3200. VotingFemales Friends Speak! […]


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