Why the cost of medicines is killing us

Photo form news sky.

(1st of 3 Parts)

“Jane,” a bank employee whose daughter has been suffering for years from lupus and failing kidneys, didn’t know where to get P110,000 for a single vial of Rituximab, a drug used to treat cancer and autoimmune diseases.

To her surprise, her daughter’s doctor provided the answer after quizzing her about her family’s financial capability, which included inquiries about how many of her relatives were working abroad.

“Jane said she half expected the doctor to advise her to seek help from the Philippine Charity Sweepstakes Office or the Philippine Amusements and Gaming Corporation.

Instead, the physician bluntly told her to ask money from her brother.

The good doctor, “Jane” surmised, probably remembered very well a detail she casually mentioned when she and her daughter met her for the very first time for consultations. She remembered telling the doctor then that her brother was a vice president in one of the country’s largest banks.

No receipts were issued by the drug supplier or the doctor, thus no taxes were paid on both the drugs and the doctor’s professional fees.

“At first, I asked myself, did the doctor stalk me in my Facebook account? But then it dawned on me why she was asking me too many questions, like where we live and whether I have relatives who were well-off,” Jane said.

“Jane” was in for more surprises as after she coughed up the P110,000, including the doctor’s P10,000 professional fee for administering the vaccine delivered via an intravenous drip, the doctor changed her tune.

While initially saying one vial may do the trick to control lupus and enable her daughter to undergo treatment for her kidney ailment, such as dialysis, the glib-tongued doctor told “Jane” four doses were actually needed.

“She sounded more like a med rep (medical representative) rather than a doctor in selling me the notion that one vial of Rituximab was all that was needed. I was later told the P110,000 for the single shot I raised with so much difficulty was money down the drain if I didn’t get three more vials costing P330,000 more,” she lamented.

“Jane” said she eventually managed to raise the P440,000 for the four vials, each of which was delivered by the drug’s supplier to the doctor’s office, rather clandestinely, during her off-clinic hours.

No receipts were issued by the drug supplier or the doctor. That means no taxes were paid on both the drugs and the doctor’s professional fees.

The doctor justified the non-issuance of receipts by claiming the P440,000 was actually a discounted price.

The high cost of the drug has raised questions about the justification for its pricing. While Rituximab is sold under many brand names, Consumer Union (CU), the advocacy division of the US-based Consumer Reports, asked: “Is the cost of a single dose of Rituximab under the brand name Rituxan reasonable?”
CU noted in its website that it costs the manufacturer $300 to make, test, and ship the drug. However, the manufacturer charges the hospital $3,500 for the drug, and the hospital charges the patient $13,702.

“The manufacturer’s mark up to the hospital is over 1,065 percent and the hospital mark up to the patient is over 290 percent,” the organization pointed out.

In the case of “Jane,” the markup — based on CU’s claimed manufacturing cost of $300 for every Rituximab vial or roughly P16,400 at the present peso-dollar exchange rate — would be P83,000.

Multiply P83,000 by the four vials and the unconscionable profit amassed by the supplier alone from a mother who raised heaven and hell to save her sick daughter would be a whopping P332,000.

How much of the P400,000 paid by “Jane” for the four vials went to the doctor as commission?

That’s a question begging to be answered with the high-pressure tactic the doctor employed, touting the drug as a sort of a miracle cure for her daughter’s lupus to convince her to raise money.

“It’s as if all she really cared was to sell the drugs, even if its effect was marginal at best or if it had any effect at all. I knew then that I have to find another doctor who could really help us,” “Jane” said.

CU acknowledged that “drug companies need to make a profit to cover the research and development (R&D) of drugs, including ones that never get to market.”

Still, the organization said the markup on “Rituxan is much more than” what should be deemed conscionable.

“What’s more, for every dollar pharmaceutical companies spend on ‘basic research,’ $19 is spent towards promotion and marketing,” CU said.

In the industry, it is common knowledge — a fact confirmed by at least two doctors interviewed by the Daily Tribune — that pharmaceutical marketing involves pampering doctors by showering them with gifts, money and travels under the guise of medical conferences.

For drugs still under patent or exclusive to pharmaceuticals that developed them, the leverage to charge astronomical prices exists. A doctor in private practice told the Daily Tribune that over and above R&D costs, the markup in prices shouldered by the end users allows drug companies to pad their profit.

“The commissions that doctors get from drug companies are passed on by the later to patients,” the doctor said. “The commissions are given to make us doctors brand loyal,” he added.

Even for off-patent drugs already with generic equivalents that are three times cheaper than branded ones, big pharmaceuticals have co-opted doctors through decades of commissions, junkets and largesse so they’d be “guided accordingly” when writing prescriptions.

In the tallying of doctor’s commissions, the system has already been perfected. It was even updated for the electronic age.

Marcus, a hypertensive 40-something employee in Makati, pointed to the discount cards given by a big pharma selling a branded version of the blood pressure maintenance drug Amlodipine.

“Apparently, every time the electronic card is swiped at the drug store for the discount, the card number assigned to a particular doctor reflects the commission he should get from that transaction,” Marcus said.

“No wonder that even after the discount, the branded Amlodipine is still twice as expensive as the generic version. Aside from the excessive profit, the pharmaceuticals still have to pass on the commission for the doctors to the poor patients,” he pointed out.

Gerry, a senior citizen who ordered insulin delivered to his house in a posh subdivision, said he got curious and asked the delivery personnel why he was noting every detail from the prescription, especially the total cost of the transaction.

“Sir, that’s for the commission of the doctor who prescribed the insulin to you,” the deliveryman answered.

End of part 1

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