The PR Disasters of Big Pharma
My doctor put me on Nexium—one capsule a day. Since I am paying for the new drug coverage from Medicare, I don’t think about the cost. I swipe my credit card, sign away $87 for 90 pills, take the container and go home.
Then I glanced at the receipt and saw the following:
Eckerd regular cash price would have been: $463.05.
I blinked and re-read the number.
More than $5 for each of those teeny purple capsules!
With these things being produced in the hundreds of millions, the actual cost per pill is maybe 10¢.
If so, the $5 price tag per pill represents a 5000 percent mark-up—more than my beloved Stoli vodka. From Alex Berenson’s March 2, 2005 story in The New York Times:
In 2003, the last full year for which data is available, AstraZeneca spent $260 million promoting Nexium to American consumers, by far the highest consumer marketing budget for any drug. That relentless marketing helped drive Nexium sales to $2.7 billion in the United States last year, and $3.9 billion worldwide, an 18 percent increase from 2003 ... Thanks largely to Nexium, AstraZeneca’s overall profit rose to $3.8 billion in 2004 from $3 billion in 2003.
The New York Times was thrilled to be able to dump all over AstraZeneca for its pricing practices. At the same time, I am thrilled to be free of heartburn and acid reflux.
What’s going on?
The big pharmaceutical companies—and their vast research engines—are enabling people to live longer and enjoy far more productive lives than our ancestors ever dreamed.
Yet they seem to find themselves up to their ears in one PR disaster after another.
Big Pharma—The Upside
From the speech at the 2005 Competitive Enterprise Institute Annual Dinner by Billy Tauzin, President and CEO, PhRMA: