Drug Companies and Profits -MSNBC

[ReiAyanami]

http://www.msnbc.msn.com/id/58...p;&PS=70102&SU

"The most startling fact about 2002 is that the combined profits for the 10 drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion). "

basically universities are funding a majority of research/pre-research for drug companies (essentially subsidizing them greatly). so why shouldn't americans enjoy the benefits the most instead of having to pay the most. to the point where we have to ship drugs to canada only to buy them back. <insert canadian currency joke here>

another fact to throw in is that most drug co's spend more on marketing than actual drug development

so i guess that explains why has health premiums risen 50% in the last 4 years driving double-digit recession proof growth for drug co's, not to mention college tuition risising several times inflation each year even though logically they'd be lower if the drug co's were fairly sharing that drug research bling bling

the former chairman and CEO of Bristol-Myers Squibb, Charles A. Heimbold Jr., made $74,890,918 in 2001, not counting his $76,095,611 worth of unexercised stock options. The chairman of Wyeth made $40,521,011, exclusive of his $40,629,459 in stock options

glad they got the double tax breaks they deserve.

 

[ReiAyanami]

Corporate Welfare at its best.

'cept perhaps the whole multi-billion sugar subsidy thing. and/or military industrial complex

 

[CycloWizard]

The solution? People need to lay off the drugs. Our society is waaaaay overly medicated - this is why they're reaping enormous profits more than any other reason. They develop one drug, costing them hundreds of millions of dollars, but then everyone and their brother goes on the drug from now until doomsday. They're creating their own demand.

In my opinion, the problem is not with the pricing on pharamceutical drugs - the problem is with doctors overprescribing them. Why does this happen? Drug companies give doctors CASH BONUSES if they meet prescription quotas. THIS is the big problem, IMO, and one that no one knows about unless they have a doctor in the family.

 

[smashp]

wow, just wow.


Pure and simple Greed to justify profit margins of the such.

No Wonder big Drug companies dont want us to go to Canada for drugs.

 

[smashp]

Originally posted by: CycloWizard
The solution? People need to lay off the drugs. Our society is waaaaay overly medicated - this is why they're reaping enormous profits more than any other reason. They develop one drug, costing them hundreds of millions of dollars, but then everyone and their brother goes on the drug from now until doomsday. They're creating their own demand.

In my opinion, the problem is not with the pricing on pharamceutical drugs - the problem is with doctors overprescribing them. Why does this happen? Drug companies give doctors CASH BONUSES if they meet prescription quotas. THIS is the big problem, IMO, and one that no one knows about unless they have a doctor in the family.

I agree


There are So many problems with the US healthcare system that its hard to focus on one area.


They need to Stop advertising their products on TV and in Non-industry mags. When Im watching Football, I dont Need to Know about herpes Medication or its side effects. I need to See beer commercials and chicks in Bikinis

 

[CycloWizard]

Originally posted by: smashp

Originally posted by: CycloWizard
The solution? People need to lay off the drugs. Our society is waaaaay overly medicated - this is why they're reaping enormous profits more than any other reason. They develop one drug, costing them hundreds of millions of dollars, but then everyone and their brother goes on the drug from now until doomsday. They're creating their own demand.

In my opinion, the problem is not with the pricing on pharamceutical drugs - the problem is with doctors overprescribing them. Why does this happen? Drug companies give doctors CASH BONUSES if they meet prescription quotas. THIS is the big problem, IMO, and one that no one knows about unless they have a doctor in the family.

I agree


There are So many problems with the US healthcare system that its hard to focus on one area.


They need to Stop advertising their products on TV and in Non-industry mags. When Im watching Football, I dont Need to Know about herpes Medication or its side effects. I need to See beer commercials and chicks in Bikinis

Agreed 100% - there is absolutely NO reason that prescription medications should be advertised. If you have a malady, then the doctor is supposed to prescribe the treatment, not the drug company. Asking your doctor for a drug is simply ridiculous, and doctors do not appreciate it in the least, unless they're actually going for a bonus from the drug company.

Indiana took some petty steps towards this a few years ago by disallowing drug reps to take doctors and their staffs out for meals. Instead, now the drug reps bring food to their offices. What a joke.

 

[IndieSnob]

It's insane the amount of ads from pharm companies that advertise the newest miracle drug, telling you to ask your doctor about that drug, but yet they DON'T EVEN FREAKING TELL YOU WHAT THE DRUG IS FOR! That and the whole new crop of ad's showing the guy saying that development is so expensive, but worth it, and I'd be willing to bet they spent millions on those ads. There really needs to be some sort of legislation to cap the advertising and kickbacks to these money grubbing jackass's.

 

[smashp]

Originally posted by: IndieSnob
It's insane the amount of ads from pharm companies that advertise the newest miracle drug, telling you to ask your doctor about that drug, but yet they DON'T EVEN FREAKING TELL YOU WHAT THE DRUG IS FOR! That and the whole new crop of ad's showing the guy saying that development is so expensive, but worth it, and I'd be willing to bet they spent millions on those ads. There really needs to be some sort of legislation to cap the advertising and kickbacks to these money grubbing jackass's.

even Better when the research for the above described Miracle Drug comes From university research or government grant monies.

 

[chess9]

Maybe Americans should take care of the bodies God gave them rather than fill them with crap?

Most people wouldn't need a cholesterol lowering drug if they ate properly. But Americans are junk food addicts and that is the underlying problem, plus an aging population of relatively wealthy baby boomers who can afford junk drugs like Viagra.

Anyway, with better eating habits we'd see a major decline in obesity, diabetes, heart disease, stroke, and cancer.

-Robert

 

[CycloWizard]

Originally posted by: chess9
Maybe Americans should take care of the bodies God gave them rather than fill them with crap?

Most people wouldn't need a cholesterol lowering drug if they ate properly. But Americans are junk food addicts and that is the underlying problem, plus an aging population of relatively wealthy baby boomers who can afford junk drugs like Viagra.

Anyway, with better eating habits we'd see a major decline in obesity, diabetes, heart disease, stroke, and cancer.

-Robert

Agree 100%. But again, the problem is the doctor isn't supposed to give you Lipitor unless your diet/exercize isn't working. They are, but they're not supposed to.

 

[Napalm]

LOL - that article was a big steaming pile... For starters:

-no mention of the fact that ?marketing? expenditures include clinical research looking into safety and efficacy in special populations (i.e., elderly) and new indications/diseases for medications already on the market - i.e., pharma spends much, much more than 11% on research...

-no mention of astronomical cost to discover and bring to market a successful medication...

-the profits margins discussed in the article seem to be much higher than any industry averages I've seen...

-the statement that ?drug companies no longer have to rely on their own research for new drugs ?? is pure fallacy...

-the statement that ?if it didn't like something about the FDA, the federal agency that is supposed to regulate the industry, it could change it?? is also pure fallacy...

-the statement that you can go from academia, where you can lead a "good" life, to the pharma industry, where you can be "ultra-rich" is not true - though I wish this one was...

Cheerio,
Napalm

 

[Sassy]

In my opinion, the problem is not with the pricing on pharmaceutical drugs - the problem is with doctors over prescribing them. Why does this happen? Drug companies give doctors CASH BONUSES if they meet prescription quotas. THIS is the big problem, IMO, and one that no one knows about unless they have a doctor in the family.

A good doctor does not over prescribe meds for his patient. This is dangerous. I?m not saying this doesn?t exist but generally it isn?t the norm. That being said, the doctor is not receiving a bonus for over prescribing, he is receiving the bonus for frequently prescribing a specific medication. There is a difference here. Let?s say Johnny has an infection. The doctor needs to prescribe a broad-spectrum antibiotic. He has several to chose from within the same group, all produced by different pharmaceutical companies. Does he choose company A that is offering him a bonus, or company B no bonuses?. If both medications will produce the same end result, why not chose company A?

Agreed 100% - there is absolutely NO reason that prescription medications should be advertised. If you have a malady, then the doctor is supposed to prescribe the treatment, not the drug company. Asking your doctor for a drug is simply ridiculous, and doctors do not appreciate it in the least, unless they're actually going for a bonus from the drug company.

The medications that are advertised on TV are often the most expensive in their particular group, which results in huge profits. The client sees the advertisement, and then demands the doctor prescribe that med. The doctor will not prescribe the med., bonus or not, if it doesn?t produce the result of a healthy outcome for the patient. On the other hand, if the same med being advertised is within the same group of meds. the client is currently on, the physician may reluctantly due to a demanding client, prescribe it, bonus or not.

Maybe Americans should take care of the bodies God gave them rather than fill them with crap?

Right on. Unfortunately many don't realize this until they have health problems

 

[onelove]

this appears to be a "they are making too much money" thread... so what? don't use their drugs if you don't like it.

better yet, start a company to buy their overpriced drugs in foreign markets and ship them back to US consumers if only it were so simple.

(and, of course, big money will almost always be a corrupting influence - lobby lobby lobby.)

 

[Sassy]

this appears to be a "they are making too much money" thread... so what? don't use their drugs if you don't like it.

Even better, buy stock in those companies. As long as people continue to abuse their bodies, and we know they will, all healthcare companies will profit.

 

[glenn1]

"The most startling fact about 2002 is that the combined profits for the 10 drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion). "

Absolutely, completely, absurdly and recklessly false. If anyone doubts this I will link you to the appropriate Edgar filings with the SEC.

 

[Hugenstein]

Originally posted by: glenn1

"The most startling fact about 2002 is that the combined profits for the 10 drug companies in the Fortune 500 ($35.9 billion) were more than the profits for all the other 490 businesses put together ($33.7 billion). "

Absolutely, completely, absurdly and recklessly false. If anyone doubts this I will link you to the appropriate Edgar filings with the SEC.

I guess you are hoping noone actually calls you on this, huh... I guess you didn't even bother to Google this. The answer was way down in the 4th spot on the page(search: fortune 500 profits 2002).

Honey, I Shrunk the Profits

...Reported profits looked even worse, plunging 66% after a record drop last year to land at a mere $69.6 billion...

Guess what 35.9 + 33.7 equals...

Although you can thank AOL Time Warner for the nice statistic, TWX(AOL Time Warner) lost $98.696 billion in 2002.

 

[thuper]

One other BIG F***ING cost is the fact that drug companies court doctors' offices BY FEEDING THEM!

My aunt told the whole family abou this in February. A rep from a drug company comes by the office she works at three times a week with a completely catered meal for the whole office. She said they used to do it every day, but some people were eating too much and gaining weight.

 

[glenn1]

I guess you are hoping noone actually calls you on this, huh... I guess you didn't even bother to Google this. The answer was way down in the 4th spot on the page(search: fortune 500 profits 2002).

Honey, I Shrunk the Profits

...Reported profits looked even worse, plunging 66% after a record drop last year to land at a mere $69.6 billion...

Guess what 35.9 + 33.7 equals...

Although you can thank AOL Time Warner for the nice statistic, TWX(AOL Time Warner) lost $98.696 billion in 2002.

You do know the difference between operating profits and GAAP profits and why the difference is important, don't you? If we go on GAAP profits then you would think that 9/11 was a positive thing for American Airlines 9/11 because they got to post an extraordinary gain for the insurance payment on the plane that was flown into the WTC. Or that a company that was cash flow negative but because of unrealized gains in their employee pension fund account, that the company was profitable? In every way that matters, Pfizer is the closest candidate and even it pales compared to Altria (nee Phillip Morris) or General Electric, and it gets demolished when you put it next to a company like Exxon-Mobil.

 

[ReiAyanami]

take imaginary losses on a stupid merger to save on billions in future taxes. another form of corporate welfare.

oh and medicare going up 17% in a single year next year...

 

[CycloWizard]

Originally posted by: kissnup
A good doctor does not over prescribe meds for his patient. This is dangerous. I?m not saying this doesn?t exist but generally it isn?t the norm. That being said, the doctor is not receiving a bonus for over prescribing, he is receiving the bonus for frequently prescribing a specific medication. There is a difference here. Let?s say Johnny has an infection. The doctor needs to prescribe a broad-spectrum antibiotic. He has several to chose from within the same group, all produced by different pharmaceutical companies. Does he choose company A that is offering him a bonus, or company B no bonuses?. If both medications will produce the same end result, why not chose company A?

I'm saying that it does, and the doctor chooses the company to support based on which will line his pockets more. As I said, I have a doctor in my immediate family, and he is disgusted by this. One company offered him a $10,000 bonus if he prescribed a certain quota of one particular drug in a year.

Sorry, but your assertion that bonuses are not driving overprescription is naive. It costs doctors nothing to prescribe, so they're basically putting money in their pockets every time they prescribe a certain drug. This most certainly causes some doctors to prescribe certain drugs much more than they should.

Originally posted by: glenn1
Absolutely, completely, absurdly and recklessly false. If anyone doubts this I will link you to the appropriate Edgar filings with the SEC.

I don't doubt that it's false, but I'd like to see the filings.

 

[glenn1]

I don't doubt that it's false, but I'd like to see the filings.

Here's a table which shows reported earnings vs. core earnings (operating earnings less some of the accounting shell games like tax benefits from pension plan overfunding and from not expensing options, etc). It's still not a perfect reflection of earnings, but at least it's somewhat closer to reality.

2002 Reported vs. Core earnings for S&amp;P 500

Since I don't think it's really practical to link 500 Edgar 10K filings, just let me know which ones you're interested in and I'll link them, or you can search yourself here.... The point is not that the pharma companies aren't hugely profitable (because they are), but that saying the top ten of them earned as much as the rest of the S&amp;P 500 combined is only true in an bizarre accounting sense, not in any fair comparison sense. It's like saying you're richer than Bill Gates because at the moment of comparison you had $10 in your pocket and he didn't have any money on him because he was taking a shower.

 

[CycloWizard]

Originally posted by: glenn1
...

Thanks! :beer:

 

[1EZduzit]

Originally posted by: thuper
One other BIG F***ING cost is the fact that drug companies court doctors' offices BY FEEDING THEM!

My aunt told the whole family abou this in February. A rep from a drug company comes by the office she works at three times a week with a completely catered meal for the whole office. She said they used to do it every day, but some people were eating too much and gaining weight.

They also fly the Docotrs off on all expensive paid vacations, I mean seminars about their drugs.

 

[BaliBabyDoc]

Originally posted by: Napalm
LOL - that article was a big steaming pile... For starters:

-no mention of the fact that ?marketing? expenditures include clinical research looking into safety and efficacy in special populations (i.e., elderly) and new indications/diseases for medications already on the market - i.e., pharma spends much, much more than 11% on research...

Most recent figures show Big Pharma spent $12.9B in R&amp;D AND $15B in marketing. IIRC, $8B in 2000 went to journal ads (despite the fact many doctors don't read the journals), $4.8B was for direct-to-consumer advertisement (designed to get patients to ask for YOUR drug instead of the competition), and less than $500m went for samples . . . a total that hasn't changed in the five prior years. The remaining $2.5B is for a practice called "detailing" (think used car salesman). Sales totaled $55B . . . $13B of that total was "off-label" often the treatment of the special populations (children) and new indications that these same companies REFUSE to properly research. Despite the lack of clear efficacy and safety data these same companies have sued FDA by claiming FDA violates their 1st amendment rights.

-no mention of astronomical cost to discover and bring to market a successful medication...

Costs are not astronomical. Only 1/1000 preclinical agents ever see any amount of human testing. The primary reason is they are either unsafe and/or don't work in animal models. Once a drug enters clinical trials 70% pass Phase I, 50% pass Phase II, and 2/3 pass Phase III. In essence, good drugs (safe and effective) win approval . . . BS walks. If you believe industry figures then it takes $800m to bring a drug to market. Each of the top 15 drugs sold in America easily total $800m in sales EACH year. In fact, several drugs approach that total just by counting "off-label" prescriptions.

-the profits margins discussed in the article seem to be much higher than any industry averages I've seen...

Well let's see $12.9B R&amp;D, $15B marketing are the primary expenses against over $55B in revenue. Accordingly, the profit margins cited are certainly in the ballpark. Contrary to popular belief the manufacture of drugs is quite cheap. Pfizer alone has 60 plants in 30 countries.

-the statement that ?drug companies no longer have to rely on their own research for new drugs ?? is pure fallacy...

It's overstatement but no moreso than the drug company ads implying that MOST of the profit from drug prices goes into research.

-the statement that ?if it didn't like something about the FDA, the federal agency that is supposed to regulate the industry, it could change it?? is also pure fallacy...

If you review the history of the FDA, typical expansions in FDA mandate follow human disasters like the elixir sulfanilamide and thalidomide. To the contrary, drug companies and various business interests often "win" in DC. In fact, the 2003 Pediatric Research Equity Act provides a clear mandate for FDA to REQUIRE appropriate testing of safety and efficacy for drugs that likely have pediatric applications. Sounds good . . . until you read the fine print. There are so many caveats, waivers, and "discretion of DHHS Secretary" sections that only moral and exceedingly ethical drug companies will actually test their drugs in kids . . . don't hold your breath.

-the statement that you can go from academia, where you can lead a "good" life, to the pharma industry, where you can be "ultra-rich" is not true - though I wish this one was...

It's an exaggeration. Three faculty members from my department have left in the past 18mo. One tripled his salary the other doubled. That's certainly not "ultra-rich" but the doubling or trebling of 6-figure salaries ain't chicken scratch, either.

 

[Sassy]

I'm saying that it does, and the doctor chooses the company to support based on which will line his pockets more. As I said, I have a doctor in my immediate family, and he is disgusted by this. One company offered him a $10,000 bonus if he prescribed a certain quota of one particular drug in a year.

Sorry, but your assertion that bonuses are not driving over prescription is naive. It costs doctors nothing to prescribe, so they're basically putting money in their pockets every time they prescribe a certain drug. This most certainly causes some doctors to prescribe certain drugs much more than they should

Oh?.. I believe I understand what your saying. Feel free to correct me if I?m wrong. We both realize doctors are offered bonuses from pharmaceutical companies to prescribe their meds. I live with a doctor, so I?m aware of this fact. I believe I was correct in stating, and we both agree, ?the doctor is receiving the bonus for frequently prescribing a specific medication.?

What I failed to see is the impact these bonuses have on the cost of other drugs. Obviously, pharmaceutical companies have to make up for the loss in the bonuses somewhere and they do this by raising the cost of medications across the board. If I had stayed on topic, I would have realized this. My fault.

Please clarify your statement, ?This most certainly causes some doctors to prescribe certain drugs much more than they should.? Are you saying that doctors are prescribing meds. that a patient doesn?t need to meet his quota? I hope not. This would be detrimental to the client. Yet if I stay on topic, this is precisely what your saying. Hopefully, you will be posting today and explain so I can discuss this issue further this evening when I take him out on a date. Confused? All this means is that it?s my time to choose where we go and vice versa when he dates me. I won?t get into specifics.