In a fascinating set of letters to editor in the New York Times, responding to an article about six-figure prices for some drugs for those with chronic diseases like diabetics, this caught my eye, from reader Ed Schmith:
Last year, according to my calculations, these four [manufacturers], with a total of about $100 billion in sales, had nearly $22 billion in after-tax profits (21.9 percent). By comparison, in a highly competitive industry, Campbell Soup’s net profit was 8.4 percent, and we can choose whether or not to buy its products, a choice not available to those with Type 1 diabetes.
As outrageous as these numbers may seem, it’s really even worse in the United States. As the article points out, countries with universal health care systems are able to negotiate much lower prices with health care providers. As a result, Americans are shouldering not only much of the research and development costs but also the high health care company profits.
Why don’t we negotiate with drug and device makers for lower prices? Because Congress banned Medicare from doing so, when it added prescription drug coverage to Medicare. Money talks in our nation’s capital. And taxpayers pay the price.