Wednesday, August 25, 2010

What's the true cost of pharmaceutical drugs?

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  • What's the true cost of pharmaceutical drugs?

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What's the True Cost of Pharmaceutical Drugs?

Dear Reader,

"Drug Industry Spends Billions On Free Samples Of Popular Meds"

That newspaper headline probably made a few people choke up as they imagined the selfless generosity of drug companies. Why, they actually GIVE their product away! That is so open- handed!

Free for all

In 2005, the industry spent $18 billion on free samples. Free!

And in 2007, five companies (Pfizer, Merck, Lilly, Baxter, and Abbott) collectively spent about $3 billion on 240 million samples. Again: free of charge. Go on! Take 'em! Enjoy!

So how can these guys make any money when they give so much of their product away?

Easy. They cook the books.

Circle game

A few years ago, Life Extension Magazine published a list that compared the consumer price of various drugs to the actual cost of manufacturing the active ingredient. Here are three examples from that list:

* Prozac (made by Lilly) — consumer cost: $247.47 per 100 pills / active ingredient cost: 11 cents per 100 pills

* Xanax (made by Pfizer) — consumer cost: $136.79 / active ingredient cost: 24 cents

* Prilosec (made by Procter & Gamble) — consumer cost: $360.97 / active ingredient cost: 52 cents

There's only one word for those mark-ups: obscene.

But when drug companies report the value of their free samples, they give the wholesale or market price, not the actual manufacturing cost of the stuff that makes the drug work.

So you can just imagine what cost they're quoting to the Taxman when it's time to write it all off as a business expense.

One thing is for sure: The actual drug in a "free" sample won't cost the drug company much. But it IS going to cost you.

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To Your Good Health,

Jenny Thompson
HSI Director


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Sources:

"Drug Industry Spends Billions On Free Samples Of Popular Meds" Jared A. Favole, Dow Jones Newswires, 6/4/10, nasdaq.com

"Consumer Rape" William Faloon, Life Extension Magazine, April 2002, lef.org

"Metformin-Induced Vitamin B12 Deficiency Presents as Peripheral Neuropathy" Southern Medical Journal, April 2010, medscape.com

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