The U.S. has around 306 million of the global population of around 6.75 billion people. That's 4.5% of the world's population paying 40%-50% of pharma's revenue.

Please note, I am not telling you how many doses of medication the U.S. is buying for 40%-50% of pharma's pie. That's highly classified information. They won't tell us. They won't even tell us that information before they kill us.

Maybe some perspective is in order:

Elsewhere, governments regulate drug prices. But drug makers have successfully fought off public efforts to cut U.S. prescription drug prices. Consider the result. From 1981 to 2000, the average retail price per prescription rose from $9.50 to $44.11, up 360 percent. Then the average price soared to $53.92 in 2004. Consequently, needed medications are harder to afford. It is astonishing and terrible that the prices of dangerous illegal drugs have plummeted during these years. The average retail price of heroin and cocaine plunged from $1,341 per pure gram in 1981 to $247 in 2000 — a four-fifths drop. Consequently, more people can now afford more of these illegal drugs.

Yeah, you can get high as a kite, but you can't get well. It's more affordable to ineffectively self-medicate????

Doh! That brings me to my next point.

It doesn't take a rocket scientist to see that there's more money in controlling the progression of a disease or condition than there is in curing it. With that in mind, the pharmaceutical market has focused on getting people on board with the Disease Control Express. Greater Utilization (aka more frequent prescription refills) are the primary reason for pharmaceutical sales growth. According to R.W. Dubois et al., "Explaining Drug Spending Trends: Does Perception Match Reality?" Health Affairs (Mar/Apr 2000): 231–239 (sorry, no link...go to a library and look it up):

From 1987 through 1994, of the 11.9 percent average annual rate of spending growth, about half reflected the direct effects of increased prices, while the remaining half is attributed to utilization growth. In contrast, from 1994 through 1999 the growth rate remained in double digits, but only about one-fifth was directly attributable to price changes; nearly 80 percent of increased drug spending was related to growth in utilization.

How do you increase utilization? "Educate" the physicians about the "need" to control the disease or condition with a specific drug. You accentuate the postives, down play the side effects (the negatives) and hope nobody does their own homework. Educating physicians works best if you pay a high profile physician to conduct the "education".

According to the most recent data available from the national organization in charge of accrediting the courses, drug-industry financing of continuing medical education has nearly quadrupled since 1998, from $302 million to $1.12 billion. Half of all continuing medical education courses in the United States are now paid for by drug companies, up from a third a decade ago. Because pharmaceutical companies now set much of the agenda for what doctors learn about drugs, crucial information about potential drug dangers is played down, to the detriment of patient care.

That's why there's so many flawed studies on the effectiveness of statin drugs. That's why there's so much CME (Continued Medical Education) sponsored by pharmaceutical companies. There is some cries of Conflict of Interest and there is some blow back from Universities like Stanford, but for the average doctor trying to keep afloat? Free CME's look pretty good.

In 2007 drug sales increased at it's lowest rate since 1963; which has to be a revolting development for big pharma and now they are facing Team Obama and Health Care Reform. Pharma is preparing for additional regulation and creating organizations to deal with sales and marketing disclosure mandates for ther sponsored CME programs.

Another disclosure issue surrounds how much money is pharma paying physicians to participate in a drug study? Is the pharmaceutical company giving the physician stock for doing the drug study? Are there perks like all expense paid trips to pricey resorts?

Medicare Payment Advisory Commission (MedPAC) recently recommend(ed) that Congress require drug and device companies to publicly report spending on a broad range of categories including physicians, hospitals, continuing medical education (CME), professional organizations. MedPAC also recommended that companies disclose information about free drug samples to the Department of Health and Human Services. Senators Charles Grassley (R-IA) and Herb Kohl (D-WI) are expected to introduce a revised version of the Physician Payments Sunshine Act when Congress reconvenes next year. {emphasis and grammar correction added) snip, The First Annual Summit on Sales & Marketing Disclosure for Drug, Device and Biotech Companies will examine these numerous mandates and how companies are responding. Expert panels will explore the latest state initiatives and how state and federal enforcers view disclosure as a compliance tool. Case studies will examine how companies can effectively comply with competing and overlapping requirements while adding value to the company's bottom line. The Summit brings together the key players shaping disclosure initiatives with the in-house and outside experts developing programs to comply in a cost-effective fashion.

It seems that pharmaceutical companies are gearing up to try and "guide" health care reform efforts and they got an early win with Sanjay Gupta (shill for big pharma) tapped for Surgeon General. I hope the plan is for Gupta to be the face man for public health care policy derived by his supervisor, Tom Daschle and the rest of his team at the (CDC, AHRQ, NCI, NIH, CMS, FDA and more) over at HHS. Gupta has street cred, but people who work in health care policy see him for what he is, non-substantive, but easy on the eyes. As long as his message is controlled by people who know about public health, poverty, uninsured and underinsured; he'll deliver the messages well. If health care reform is in name only, big pharma will find loop holes to continue business as usual.

What are in pharma's plans?

They want another ineffective drug plan like Medicare Part D for the rest of us (complete with confusing donut holes).

They want to be able to hire high profile physicians (like Sanjay Gupta) to shill their products and down play the negative side effects.

They want no interference with the CME they offer physicians at large.

They want to prevent drug price negotiation with insurance plans.

They want no reform measures that will require any sacrifice on their part....other than giving up spending millions of dollars on pens, coffee mugs and sticky notes with their drug names on it.

They want as much as they can get to their bottom line.

Effective health care reform is all about the message. We have to stay on point. Throughout this diary and my last one I gave you the sources for the talking points. All these items are easily googled.

We have a fight on our hands.

Tactic #1:

Health Insurance Doesn't Guarantee You Health Care

Tactic #2:

We should use Big Pharma's position and leap frog over it and push for effective

pharmaceutical coverage for all.

Talking Points:

40 million prescriptions went unfilled last year due to too high out-of-pocket costs.

The U.S. is 4.5% of the world's population, but we are paying 40%-50% of pharma's revenue.

The U.S. is subsidizing the rest of the world's lower costs for prescription drugs.

Health Insurers need to be able to negotiate drug prices.

Preferably the government should be negotiating drug prices for the nation (no matter what your insurance status is) with drug makers.

Health Care consumers have a lack of confidence in the medical necessity of taking their prescription drugs because of undisclosed conflict of interest issues between physicians and drug makers.

Pharma spends twice as much on marketing their drugs as they do on R&D.

Pharma giving up giving out pens to physicians doesn't address the real problem where pharma sponsors 50% of physician CME's (Continuing Medical Education).

Pharma giving up giving out coffee mugs to physicians doesn't address the real problem where pharma pays high profile physicians' thousands of dollars to give CME's promoting specific drugs.

We need more transparency in the relationships between government health policy makers, physicians and drug makers.

and, finally

Pharmaceutical company Drug Assistance Plans are ineffective and sidesteps the real issue that pharma has priced their products beyond what the market can bear.

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*There are 2 figures for 2007 U.S. pharmaceutical sales from different agencies.

One is $268.5 Billion (from Fiercepharma.com)and the other is $286.5 billion (from Health Affairs). These figures come from different sources and the $18 billion difference is about the same as 2 months in Iraq or the total earmark spending per year for the federal budget. It's worth pursuing, but not for today's diary; because both are very big numbers as it reflects over 12.5% of overall health care spending.

I had to regress the 2007 numbers to arrive at 2006 pharmaceutical spending so 2006 spending was either $258.3 billion or $275.6 billion. Still, very big numbers as it reflects over 11.7% of overrall health care spending.

It appears that overall health care spending remained stagnant or slightly regressed between 2006 ($2.21 trillion) and 2007 ($2.2) as "adjusted" numbers are coming in that don't reflect earlier reporting at census.gov: 2006 at $2.21 trillion and estimates for 2007 expenditures at around $2.35 trillion and projections for 2008 to be $2.51 trillion. I will look more deeply into this disparity and write about it later. At first blush it looks like the free market has found the tipping point where health care is "elastic". I can only wonder at the number of people dying over this insane policy of promoting the free market to ration our health care.