Medication nation: U.S. Health Care

Americans pay the world’s highest prices for brand-name drugs. Are we getting our money’s worth?

Absolutely, say the pharmaceutical companies. Prescription drugs are “the best value in health care – saving lives, reducing pain and suffering, keeping people out of hospitals and nursing homes and reducing other forms of health care spending.”

In fact, the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA) says that every dollar spent on newer medications saves $4.44 in future hospitalizations.

Let’s check the math.

Between 1980 and 2002, the average American’s share of the nation’s prescription drug bill soared from $52.08 to $569.82. That’s a nearly 11-fold increase.

Over that same 22-year period, the average American’s share of our nation’s hospital bill grew rather than declined. It jumped from $440.54 per person in 1980 to $1,704.02 in 2002. That’s not the kind of dollar savings most of us would recognize.

If the American health care system is a fun-house mirror image of capitalism, the drug industry is Alice’s rabbit hole – gateway to a world where decades of new, money-saving drug therapies have resulted in skyrocketing spending, a place where the rules of logic don’t necessarily apply.

Even PhRMA’s name is misleading. Five of PhRMA’s 10 biggest members are not “of America.” GlaxoSmithKline and AstraZeneca are both based in England; Novartis and Roche, both in Switzerland; and Aventis, in France. All three of those countries have national health insurance, the very thing drug companies say would destroy their incentive to innovate if it were adopted in America.

Beyond price

Let’s start with a primer on how Americans have gotten hooked on an expensive medicine cabinet of new pills. The pharmaceutical industry accounts for a relatively small piece of the nation’s health care spending – about 10 percent.

But that’s double what it was in 1980, and in recent years drug spending has been growing at double-digit rates. Overall drug spending quadrupled between 1990 and 2002. It is projected to grow an additional 50 percent before the end of next year.

Higher prices are part of the reason for increased drug spending. But price isn’t the only reason, or even the biggest reason, we’re spending more on drugs.

The real reason is that we are filling more prescriptions and using more medicines. The nonprofit Kaiser Family Foundation estimates that increases in the number of prescriptions filled account for 42 percent of the increased spending. Another third is attributable to changes in the drugs prescribed, more specifically a switch to newer and more expensive medications. Only about 25 percent of the increased spending is caused by drug companies raising their prices.

Medications have come to play an increasingly important role in the treatment of many diseases. The newest generation of psychiatric drugs, for example, have revolutionized treatment for people with schizophrenia and depression. There are many similar success stories.

But not every new drug represents a breakthrough. Despite industry advertising claims, newer drugs aren’t always better. Most aren’t even an advance over current treatments. Instead, they are new formulations of existing medications, or so-called “me too” drugs. Cialis and Levitra, for example, are me-too drugs that work the same way as the anti-impotence drug Viagra.

During the first 11 months of this year, the U.S. Food and Drug Administration approved 99 new drugs. Just 19 of those were classified by the agency as a “significant improvement” over available treatments. That’s about the same ratio as previous years. You wouldn’t guess that from watching the ads. And since the FDA loosened rules governing drug advertising aimed at consumers in 1997, we all have spent more and more time watching those ads.

Image and advertising

Drug companies say ads directed at consumers are an educational tool to raise awareness about various conditions, and to inform patients about available treatments. There is some truth to that. But the primary purpose of drug ads is to sell drugs, and they are very effective. Heavy advertising transformed Celebrex, Vioxx, Claritin and a number of drugs into blockbusters with sales of more than $1 billion a year. Those ads also go a long way toward convincing patients that newer drugs are more effective, even if they aren’t.

For a study published earlier this year in the journal Health Affairs, Dartmouth Medical School researchers asked patients to rate the effectiveness of the arthritis drug Vioxx – first, after having seen a commercial for the drug, then after having reviewed objective information about its benefits. After having seen only the commercial, 65 percent of patients rated Vioxx as very effective at treating arthritis symptoms. Fewer than 10 percent rated the drug as ineffective. After having read the objective information, just about 25 percent rated Vioxx as very effective; more than 20 percent rated it as ineffective.

As it turns out, Vioxx was not only less effective than many patients believed, but it also was more dangerous than many doctors realized. It was withdrawn from the market after studies showed it increased the risk of heart problems and strokes in certain patients. Despite the marketing buzz that drugs like Vioxx and Celebrex created, most published studies found them to be about as effective as ibuprofen in controlling arthritis pain. That should come as no surprise, since both the new and older drugs reduce pain the same way: by blocking an enzyme called Cox2.

Research that specifically compares newer drugs to older ones is rare because drug companies fund most drug research, and they have nothing to gain by paying for studies that might find their new product less effective than a competitor’s existing one. Not surprisingly, when drug effectiveness studies are paid for by drug companies, they tend to find significantly better results than when such studies are conducted by independent reviewers.

Look for Part Two of this report in the Friday, December 31 issue of The Garden Island