Why are we paying so much for drugs?

Drug companies develop many life altering drugs that are desperately needed. However, they have managed to maintain profit margins of about 20% and up to 42%, substantially higher than other corporations of their size.

They do this through pricing and marketing. As a physician it makes me ashamed to note that most doctors succumb to these techniques to prescribe drugs where there are equivalent generics at far lower cost. And they also write for medication with little or no proven effect!

For example, in 2013, trials with two new (and very expensive) diabetes drugs, saxagliptin (Onglyza) and alogliptin (Nesina) — found no effect on preventing heart attacks and strokes even though they did lower the sugar a small amount. And we are not treating diabetes just to lower the sugars; we really want to prevent the complications; which these drugs apparently do not. Sanjay Kaul, a frequent FDA adviser, pointed out "So, we have a drug that yields modest glycemic efficacy [lowering sugar], is neutral with respect to cardiometabolic factors (lipids, weight, blood pressure), does not kill you or land you in a hospital, and yet is a blockbuster drug nearly five times over! What is the big news here? That it does not kill you or land you in a hospital? Or that it is a blockbuster drug nearly five times over without evidence of microvascular or macrovascular outcome benefit? Miracle of medicine or miracle of marketing?"

In a recent article in JAMA, it was found that substituting equally effective generic drugs could save $70 billion dollars from 2010-2012. Researchers interviewed 100,000 U.S. people about their prescription drug use. Over 3 years, an estimated $760 billion was spent on prescription drugs. Excess expenditure because a brand-name drug was used instead of a generic within the same class accounted for roughly 10% of total prescribed medication expenditure. One of the worst culprits was cholesterol drugs. In my practice I spend many visits changing patients from overpriced brand drugs (about $150-$200 a month) - usually prescribed by cardiologists - to generics (about $5 per month) that are equally effective.

It seems that physicians will never learn and we need to allow insurance companies and the government to negotiate with Big Pharma!