Thread: Your thoughts on the White House's request to send fishy emails on National healthcar

Originally Posted by antimony

I am sorry, I did not understand why there should be a downturn in equity markets. Can you elaborate?

The equity markets are where stocks, bonds and so on are traded. If a retirement account, such as a 401K or an IRA is based on stocks, etc., its value rises and falls as the underlying stocks fluctuate. When a major, prolonged downturn occurs, drawing on these accounts for retirement expenses tends to deplete the account faster. I think you see the picture...

I am confused about this one. I see your point that investments in research makes drugs costly, but consider this:
[LIST=1][*]Doesn't the government already provide subsidies and tax credits for new research in prescription drugs?[*]

It does, but I believe a company can't use both at the same time. Pharmaceutical companies tend to opt for tax credits which gives them a credit up to 20% off their net income. Subsidies for research is less attractive to these companies because the results may end up in the public domain.

But, like all companies, they carry R&D on their balance statements as a cost of doing business and offset them against revenues when calculating earnings (negative or positive).

Since drug companies drill a lot of dry holes (develop drugs that end up not working), their R&D costs tend to be a much greater percentage of revenue than most other types of companies. They try to make it up on their successful products.

Pricing will vary country to country. If a government is the main buyer of a drug, the drug maker can afford to sell it cheaper than to individual retail pharmancies. In the US, the government is a limited bulk buyer (VA, Medicare...) The drug must be marketed to retail pharmacies. That makes the cost higher. A drug company averages its sales prices around the world to meet a specific revenue target. So when Americans take advantage of the lower cost of a drug in another country, the drug companies lose anticipated revenue. They might then raise prices here to make up for the "loss". Americans buying a drug cheaper in Canada may cause Americans who buy it here to pay more. Just a thought.

Originally Posted by JAD_333

The equity markets are where stocks, bonds and so on are traded. If a retirement account, such as a 401K or an IRA is based on stocks, etc., its value rises and falls as the underlying stocks fluctuate. When a major, prolonged downturn occurs, drawing on these accounts for retirement expenses tends to deplete the account faster. I think you see the picture...




It does, but I believe a company can't use both at the same time. Pharmaceutical companies tend to opt for tax credits which gives them a credit up to 20% off their net income. Subsidies for research is less attractive to these companies because the results may end up in the public domain.

But, like all companies, they carry R&D on their balance statements as a cost of doing business and offset them against revenues when calculating earnings (negative or positive).

Since drug companies drill a lot of dry holes (develop drugs that end up not working), their R&D costs tend to be a much greater percentage of revenue than most other types of companies. They try to make it up on their successful products.

Pricing will vary country to country. If a government is the main buyer of a drug, the drug maker can afford to sell it cheaper than to individual retail pharmancies. In the US, the government is a limited bulk buyer (VA, Medicare...) The drug must be marketed to retail pharmacies. That makes the cost higher. A drug company averages its sales prices around the world to meet a specific revenue target. So when Americans take advantage of the lower cost of a drug in another country, the drug companies lose anticipated revenue. They might then raise prices here to make up for the "loss". Americans buying a drug cheaper in Canada may cause Americans who buy it here to pay more. Just a thought.

Rx R&D Myths: The Case Against The Drug Industry’s R&D "Scare Card"

Click Here for PDF Versions of the Report, Appendix A and Appendix C

Executive Summary

This new Public Citizen report reveals how major U.S. drug companies and their Washington, D.C. lobby group, the Pharmaceutical Research and Manufacturers of America (PhRMA), have carried out a misleading campaign to scare policy makers and the public. PhRMA’s central claim is that the industry needs extraordinary profits to fund expensive, risky and innovative research and development (R&D) for new drugs. If anything is done to moderate prices or profits, R&D will suffer, and, as PhRMA’s president recently claimed, "it’s going to harm millions of Americans who have life-threatening conditions." But this R&D scare card – or canard – is built on myths, falsehoods and misunderstandings, all of which are made possible by the drug industry’s staunch refusal to open its R&D records to congressional investigators or other independent auditors.

Using government studies, company filings with the U.S. Securities and Exchange Commission and documents obtained via the Freedom of Information Act, Public Citizen’s report exposes the industry’s R&D claims:

The drug industry’s claim that R&D costs total $500 million for each new drug (including failures) is highly misleading. Extrapolated from an often-misunderstood 1991 study by economist Joseph DiMasi, the $500 million figure includes significant expenses that are tax deductible and unrealistic scenarios of risks.
The actual after-tax cash outlay – or what drug companies really spend on R&D – for each new drug (including failures) according to the DiMasi study is approximately $110 million. (That’s in year 2000 dollars, based on data provided by drug companies.) (See Section I)
A simpler measure – also derived from data provided by the industry – suggests that after-tax R&D costs ranged from $57 million to $71 million for the average new drug brought to market in the 1990s, including failures. (See Section II)
Industry R&D risks and costs are often significantly reduced by taxpayer-funded research, which has helped launch the most medically important drugs in recent years and many of the best-selling drugs, including all of the top five sellers in one recent year surveyed (1995).
An internal National Institutes of Health (NIH) document, obtained by Public Citizen through the Freedom of Information Act, shows how crucial taxpayer-funded research is to top-selling drugs. According to the NIH, taxpayer-funded scientists conducted 55 percent of the research projects that led to the discovery and development of the top five selling drugs in 1995. (See Section III)
The industry fought, and won, a nine-year legal battle to keep congressional investigators from the General Accounting Office from seeing the industry’s complete R&D records. (See Section IV) Congress can subpoena the records but has failed to do so. That might owe to the fact that in 1999-2000 the drug industry spent $262 million on federal lobbying, campaign contributions and ads for candidates thinly disguised as "issue" ads. (See accompanying report, "The Other Drug War: Big Pharma’s 625 Washington Lobbyists")
Drug industry R&D does not appear to be as risky as companies claim. In every year since 1982, the drug industry has been the most profitable in the United States, according to Fortune magazine’s rankings. During this time, the drug industry’s returns on revenue (profit as a percent of sales) have averaged about three times the average for all other industries represented in the Fortune 500. It defies logic that R&D investments are highly risky if the industry is consistently so profitable and returns on investments are so high. (See Section V)
Drug industry R&D is made less risky by the fact that only about 22 percent of the new drugs brought to market in the last two decades were innovative drugs that represented important therapeutic gains over existing drugs. Most were "me-too" drugs, which often replicate existing successful drugs. (See Section VI)
In addition to receiving research subsidies, the drug industry is lightly taxed, thanks to tax credits. The drug industry’s effective tax rate is about 40 percent less than the average for all other industries. (See Section VII)
Drug companies also receive a huge financial incentive for testing the effects of drugs on children. This incentive called pediatric exclusivity, which Congress may reauthorize this year, amounts to $600 million in additional profits per year for the drug industry – and that’s just to get companies to test the safety of several hundred drugs for children. It is estimated that the cost of such tests is less than $100 million a year. (See Section VIII)
The drug industry’s top priority increasingly is advertising and marketing, more than R&D. Increases in drug industry advertising budgets have averaged almost 40 percent a year since the government relaxed rules on direct-to-consumer advertising in 1997. Moreover, the Fortune 500 drug companies dedicated 30 percent of their revenues to marketing and administration in the year 2000, and just 12 percent to R&D. (See Section X)

I think the drug companies can well afford a haircut. Not only do tax dollars pay for much of the research they claim drains profits they are an extremely profitable industry. There is nothing wrong with making money but at what point does a claim of hardship due to research become ridiculous? What's the return on investment to taxpayers on our research costs? We also don't allow the government to negotiate bulk discounts on medicare. It's one of the reasons that prescription drug plan is referred to as pharma welfare by liberals. A great start for cutting some costs imo would be to eliminate public advertising.

Big Pharma Spends More On Advertising Than Research And Development, Study Finds
ScienceDaily (Jan. 7, 2008) — A new study by two York University researchers estimates the U.S. pharmaceutical industry spends almost twice as much on promotion as it does on research and development, contrary to the industry’s claim.


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The researchers’ estimate is based on the systematic collection of data directly from the industry and doctors during 2004, which shows the U.S. pharmaceutical industry spent 24.4% of the sales dollar on promotion, versus 13.4% for research and development, as a percentage of US domestic sales of US$235.4 billion.

The research is co-authored by PhD candidate Marc-André Gagnon, who led the study with Joel Lexchin, a long-time researcher of pharmaceutical promotion, Toronto physician, and Associate Chair of York’s School of Health Policy & Management in the Faculty of Health.

“In our paper, we make the case for the need for a new estimate of promotional expenditures by the U.S. pharmaceutical industry,” says Gagnon. “We then explain how we used proprietary databases to construct a revised estimate and finally, we compare our results with those from other data sources to argue in favor of changing the priorities of the industry.”

The study is important because it provides the most accurate image yet of the promotional workings of the pharmaceutical industry, says Lexchin.

The authors examined the 2004 reports of IMS Health (IMS) and CAM Group (CAM), two international market research companies that provide the pharmaceutical industry with sales/marketing data and consulting services. IMS obtains its data by surveying pharmaceutical firms, while CAM surveys doctors, which explains important discrepancies in the data they provide.

The researchers used 2004 as the comparison year because it was the latest year in which information was available from both organizations.

CAM reported total promotion spending by the U.S. pharmaceutical industry as US$33.5 billion in their 2004 report, while IMS reported US$27.7 billion for the same year. The authors observed, however, important differences in figures according to each promotion category. By selectively using both sets of figures provided by IMS and CAM, in order to determine the most relevant data for each category, and adjusting for methodological differences between the ways IMS and CAM collect data, the authors arrived at US$57.5 billion for the total amount spent on pharmaceutical promotion in 2004. The industry spent approximately US$61,000 in promotion per physician during 2004, according to Gagnon.

“Even our revised promotion figure for 2004 is apt to be understated, as there are other promotion avenues that are not likely to be taken into consideration by IMS or CAM, such as ghost-writing and off-label promotion,” says Gagnon. “Also, seeding trials, which are designed to promote the prescription of new drugs, may be allocated to other budget categories.”

IMS and CAM data were used for comparison purposes because data from both are publicly available, both operate globally and are well regarded by the pharmaceutical industry, and both break down their information by different promotion categories. Most importantly, the two organizations use different methods for gathering their data, allowing the researchers to triangulate on a more accurate figure for each promotion category.

The authors focused their study on the United States because it is the only country in which information is available for all of the major promotion categories, and it is also the largest market for pharmaceuticals in the world, representing approximately 43% of global sales and global promotion expenditures.

Gagnon’s and Lexchin’s new estimate of total promotional costs is also consistent with estimates of promotional spending by the U.S. pharmaceutical industry from other sources they scrutinized, including reports by Consumers International, a non-governmental organization which represents consumer groups and agencies worldwide; Office of Technology Assessment, which extrapolated results from the cost structure of Eli Lilly, a global pharmaceutical company; Marcia Angell, former editor-in-chief of the New England Journal of Medicine, who extrapolated data from Novartis Inc., a company which distinguishes marketing from administration expenditures in its annual reports; and the United Nations Industrial Development Organization.

As well, note the authors, the number of meetings for promotional purposes has dramatically increased in the U.S. pharmaceutical industry, jumping from 120,000 in 1998 to 371,000 in 2004, further supporting their findings that the U.S. pharmaceutical industry is marketing-driven.

Thus, the study’s findings supports the position that the U.S. pharmaceutical industry is marketing-driven and challenges the perception of a research-driven, life-saving, pharmaceutical industry, while arguing in favour of a change in the industry’s priorities in the direction of less promotion, according to Gagnon and Lexchin.

Their study, “The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States,” appears in the January 3, 2008 issue of PLoS Medicine, an online journal published by the Public Library of Sciene

Public Citizen | Publications - Rx R&D Myths: The Case Against The Drug Industry?s R&D "Scare Card"
Big Pharma Spends More On Advertising Than Research And Development, Study Finds

blues,

You aren't seeing it. You want me to break it down for you?

much appreciated. i blame my slowness on chronic monday morning-itis.

America's Big Problem | Newsweek Voices - Fareed Zakaria | Newsweek.com

Fareed Zakaria

America’s Fatal Flaw
If it's not a crisis, we can't fix it.

In the past few weeks, we've seen the twin personalities of the U.S. government come out: one is impressive, the other deeply worrying. Good news first: we now have increasing evidence that Washington's response to the global financial collapse was effective. Recall the fall of 2008. The financial markets seized up, credit froze, the economy went into a nosedive. Almost every metric by which we judge the economy moved into its darkest territory since the 1930s. And this was happening at the worst possible time. A lame-duck U.S. president faced an opposition party in charge of both houses of Congress. It was a recipe for paralysis, bickering, and inaction.

In fact, the administration and Congress collaborated fast and well, and within two weeks, Congress appropriated a staggering $700 billion to rescue the financial system. As the Bush administration left office, it worked closely with the incoming Obama team, which continued the basic framework of the rescue, modifying some aspects of the Bush programs and adding others. Both groups worked carefully with the Federal Reserve, the lead player in this drama, which acted aggressively and creatively. Democrats like Barney Frank supported the Bush administration. George W. Bush put aside his ideological blinders and massively intervened in the economy.

As with any successful policy, it is now easy to say that it was unnecessary or overdone. At the time, of course, the dominant criticism was that the rescue effort was too weak—the banks needed to be -nationalized!—and the fiscal stimulus was too small. As with all emergencies, one can always suggest, in retrospect, that more sophisticated strategies could have been taken. And the measures that were adopted may lead to other problems over time, such as inflation. But faced with the distinct possibility of an economic depression, Congress, the administration, and the Fed all worked together and brought stability to the system. In a crisis, they responded. Why? Precisely because it was a crisis.

There is something about America—the system, the government, the people—that allows us to react to a crisis with astonishing speed. Think of Pearl Harbor, or even 9/11. Whatever one may think of the Bush administration's later strategy, in the weeks after 9/11 both parties came together and put in place important policies—getting international cooperation in making counterterrorism a top priority, improving safety on airplanes and in airports, tracking terrorists and their money, chasing Al Qaeda. These actions have helped to keep terrorists on the run and continue to make it difficult to plan and execute spectacular attacks.

Now, to see the weakness of the American system, consider the past week or two and the debacle of the health-care debate. It is demonstrably clear that the U.S. health-care system is on an unsustainable path. If current trends continue—and there is no indication that they won't—health care will consume 40 percent of the national economy by 2050. The problem is that this is a slow and steady decline, producing no crisis, no Pearl Harbor, no 9/11. As a result, we seem incapable of grappling with it seriously.

It's not as if the problems aren't apparent to everyone, whatever your political persuasion. Costs are rising so fast that every day, more than 10,000 Americans lose their insurance coverage. In 1993, 61 percent of small businesses provided health insurance for their employees. Now that number is down to 38 percent. Larger firms face greater and greater health-care costs. And yet, Americans do worse on almost every health measure than most advanced industrial countries, which spend about half as much on health care per person and have proportionately more elderly people.

The political debate that is taking place is unreal, with conservatives suggesting that Obama is endorsing euthanasia and murder boards, and turning America into Russia. (I guess they haven't noticed that Russia isn't communist anymore.) The lack of serious discussion is a tragedy, because the Democrats' proposals leave much to be desired. They include only a few, vague measures to rein in costs, and the chief one—a medical board—assumes (improbably) that Congress will cede massive powers to five unelected people who would have the power to deny people treatments and drugs. The likely scenario is that expanded coverage and new benefits will be enacted, while the cuts and curbs will be pushed off to be tackled another day.

Health care is the nation's most serious long-term problem. But think of Social Security, government pension liabilities, state--government deficits, and energy dependence, and you face the same issue. Each one of these problems is getting worse by the day, and yet the political system seems unable to take them on and make major reforms. On these very important issues, America is caught in a downward spiral. It makes you wish for a crisis.

Zakaria is the Bestselling Author of The Post-American World.

The Republicans cannot not do anything. The Senate will shape a compromise, if any is to be had.

Originally Posted by Roosveltrepub

How much do you pay for health insurance? Is it a private plan? You talk a lot about the private sector. Is that theories or experience?

I could answer that, I pay about twenty bucks a paycheck (bi-weekly) for Blue Cross Blue Shield, that's a plan my company offers me (I am free to pursue other options if I wish). Call my present plan 'private sector.'

I have previously been employed by a company that didn't offer a 'group-rate' health-plan and I (again; on my own my present plan is entirely voluntary) bought a plan from the same company Blue Cross Blue Sheild that was about $40 a month. Let's call that 'public sector.'

Both instances, I had health insurance, granted, the one I'm on now is probably a bit better coverage, I use it as much as I used the other one, i.e. not at all. It's all there to cover catastrophic stuff.

Praise be, that no catastrophe (sp?) has occured, but it is there, and as long as I can pay it it will always be there. I might drink a bit less (that's all beer money you know) but it will be there.

Now contrast that with one of your 'millions' of uninsured, they get to drink a bit more beer, smoke more pot, etc than I do. They make their choice, I make mine.

I both do buy it (health insurance) and don't buy it (the idea that health insurance is some sort of 'inalienable right')...

Moreover, I don't buy the idea that someone who doesn't buy health insurance somehow is entitled to the same benefit I've worked and sacrificed to secure for myself.

I don't think anybody's mommy loved them enough, but that doesn't seem to indicate that I should make gov't your mommy (or daddy, whatever...)

Grow up, pay your way. Work a bit. Put food on your own table, a roof over your own head, take some responsiblity for yourself.

Hasn't hurt me all that much... (I don't get as drunk as often as I like, but I think we can all agree that is a good thing...)