On Monday, November 29, 2010 and May 20, 2010 I did posts on the cost of drugs.

I really don’t give a flying fuck if the pharmaceutical companies start to realize less profits…say from 500% or more to a more normal 15 or 20% like most businesses do. They got all upset and pissy when Americans began to buy their prescriptions from Canada. They were even scaring the public and telling them that Canadian drugs were not reliable, dangerous and downright lower in quality…but if it is good enough for Canadians, it is good enough for me…and so is their health care system which I think we could all benefit from if we had something like it here.

It has become sufficiently clear that some of these drugs are way overpriced. The drug manufacturer claims that it is investing in research, testing and such so that they are in a spot where they must charge those prices in order for the drug to be profitable for them…honestly?

I really could see if there was a 50% mark up after they are through deducting the cost of research, testing, manufacturing and the ingredients…and still have enough left over to make a very handsome profit. But it is ludicrous to think that a 500% or even higher percentage mark up is justified.

Then there is the question of whether these drug manufacturers are reputable and on the level…what prevents them from putting a bunch of ingredients in one pill and leaving out a key element and then making a companion drug that contains only that ingredient missing from the first drug…in reality what it amounts to is selling a near placebo…you see how they tell you that a certain drug must be taken together with this other one…they don’t recommend it, they require it. (this was revealed to me by a pharmacist friend who requested anonymity)

The cost of these drugs is exorbitant…one would think that they actually put ground up gold in them, but in reality some of the ingredients are quite common and inexpensive.

The government of Brazil has embarked upon a project where they are now manufacturing generic drugs that are the most used and the most expensive when they are brand names. As a consequence, because of the competition even those name brand drugs are considerably lower in price than in America; and of course the generic is quite affordable. Call it SOCIALISM, I don’t care but I also think that it is unethical to make a profit out of people’s misery and it is IMMORAL to make an obscene profit out of it.

But when all is said and done; I really don't have that big a beef with the drug manufacturers because at least they produce something...a medicine that is going to keep people alive...they sell a product...albeit at an exorbitant price and that is my main resentment towards them. Unlike the health insurance companies that don't produce anything, don't offer a useful service, don't even take the risks that would be the reason for their existence...they are true parasites.


Brand Name
of Drug

Consumer Price/100 tabs

Cost of General
Active Ingredients

Percent Markup

Celebrex 100 mg




Claritin 10 mg




Keflex 250 mg




Lipitor 20 mg




Norvasc 10 mg




Paxil 20 mg




Prevacid 30 mg




Prilosec 20 mg




Prozac 20 mg




Tenormin 50 mg




Vasotec 10 mg




Xanax 1mg




Zestril 20 mg




Zithromax 600mg




Zocor 40mg




Zoloft 50mg




This chart is of dubious accuracy and has little relevance (other than an inflammatory one), as far more goes into the retail pricing of drugs than the raw cost of their active ingredients. Pharmaceutical companies expend money on the research and development costs of creating the drugs, plus the overhead costs of manufacturing, marketing, and shipping them; as well, pharmacies must sell drugs for more than their wholesale prices in order to cover the overhead costs of store operations (including pharmacists' salaries).

That is what their excuse and spin was but I don’t really buy it.

Since the cost of prescription drugs is so outrageous, I thought everyone should know about this. Please read the following and pass it on. It pays to shop around. This helps to solve the mystery as to why they can afford to put a Walgreen's on every corner. On Monday night, Steve Wilson, an investigative reporter for Channel 7 News in Detroit , did a story on generic drug price gouging by pharmacies. He found in his investigation, that some of these generic drugs were marked up as much as 3,000% or more. Yes, that's not a typo.....three thousand percent! So often, we blame the drug companies for the high cost of drugs, and usually rightfully so. But in this case, the fault clearly lies with the pharmacies themselves. For example, if you had to buy a prescription drug, and bought the name brand, you might pay $100 for 100 pills. The pharmacist might tell you that if you get the generic equivalent, they would only cost $80, making you think you are 'saving' $20. What the pharmacist is not telling you is that those 100 generic pills may have only cost him $10!


Since the introduction of generic drugs in Brazil five years ago, the country's pharmaceutical industry has undergone a transformation. Generic drugs have been steadily gaining market share and today represent 11.6% of total production. Their rise has led to a decline in the influence of major multinational drug companies that sell branded products in the domestic market. Generic drugs, however, are not the only danger confronting these multinationals. In an attempt to negotiate discounted prices, the Brazilian government is threatening to violate the patents on medications used to treat AIDS. That threat alone, say the multinationals, will lead big drug companies to reduce their investments in Brazil's pharmaceutical sector.

The story of generics in Brazil begins in 1996 with the passage of the Patent Law, which recognizes international patent rights over certain products, services and innovative ideas. Relying on this legislation, the Brazilian government decided to regulate the pharmaceutical sector, an industry known for its abuse of intellectual property rights. Indeed, Brazil had become a paradise for pharmaceutical fraud, including the practice of freely copying drugs without paying required royalty fees to the drugs' manufacturers.

In 1999, the government passed the Generics Law, which allowed companies to legally produce generic drugs that were perfect copies of patented drugs. The result was the introduction of generics into Brazil, a situation that clearly made Big Pharma multinationals uncomfortable. Relations between them and the generic manufacturers eventually stabilized, however, despite the fact that generic drugs had acquired a growing share of the market. During the third quarter of this year, generic manufacturers produced 11.6% of all drugs in Brazil, or 9.05% of the market in terms of dollar value.

According to Vera Valente, executive director of Progenéricos, the Brazilian association of generic drug manufacturers, "The Brazilian market for generics has grown steadily, month to month, and will continue to do so. The growth has been in production volume, most importantly, and also in value. During the last four years, the overall market for pharmaceuticals has been practically paralyzed."

If one takes into account only those products that are no longer protected by patents, generic products have stolen away a considerable share of the market from "blockbuster" drugs made by multinational pharma brands, Valente says. "We did an analysis of the 50 biggest products in the pharmaceutical market that are not under patent. We compared them to the introduction of generics, which have gone from having only a minimal share of the market in 2001 to a 41% share of the market at present."

Jorge Raimundo is president of the consultative council of Interfarma, the Brazilian association for scientific research, which represents the big global laboratories. He and other multinational executives say that coexistence between generics and Big Pharma can be achieved without conflict. "If a product goes through the processes of 'bio-equivalence,' 'bio-stability,' and 'bio-availability,' if the manufacturing method is perfect, and if it has complied with the time period in the patent, then the most appropriate thing is to permit generics [for that product]," Raimundo says, adding that he believes research-based pharma companies have a major competitive advantage. "When a laboratory discovers, invents and then launches a product, it has a period of exclusivity guaranteed by law, during which it can exploit the product covered by the patent worldwide. Brazil is no exception to that rule. So I see nothing wrong with allowing a generic product to enter the market when a patent expires."

According to Raimundo, when generics first arrived, it looked as if the multinational pharma firms opposed them, but that wasn't the case. "We were opposed to what was being sold as generics -- namely, drugs that were similar [but not identical], and were being passed off as generics," he says, suggesting that producers of similar drugs were hoping their products would be confused with generic drugs.

Manufacturers of generics agree that production of drugs that were similar [but not genuinely generic] was the main problem in the market, especially because producers of these products do not invest in research or look for 'bio-equivalence' and 'bio-availability' in order to meet the requirements of the law. "We have a common enemy -- those who produce 'similar' drugs," says Valente. "Competition between generic products and branded products is becoming more balanced, and we realize that each of us has our share of the market."

Lower Drug Costs for Some

Apart from differences between the players in the pharmaceutical market, generics are viewed in the academic world as an extremely positive way to democratize access to medications.

Indeed, the development of the generics sector in Brazil has led to reduced costs for drugs. Geraldo Alécio de Oliveira, who coordinates the pharmacy curriculum at Anhembi Morumbi University in Sao Paulo, says that "whenever a patent expired, the price for that drug fell by between 30% and 40%. That means generic drugs fulfill a major social role. One of the biggest problems in Brazil is that the people who make up to three times the minimum salary (the equivalent of 900 reais or slightly more than $400) cannot afford to pay for healthcare or drugs. With the arrival of generics, poor people began to have greater access to drugs, which had not been true before."

Naira Villa Lobos Vidal de Oliveira, a pharmacist active in both the Ministry of Health and the pharmacy department of the Federal University of Rio de Janeiro, "applauds" generics because of their high quality. "ANVISA (Brazil's national agency for monitoring healthcare) has invested a great deal inspecting laboratories that were starting to manufacture generics. We had to do that because we had serious [quality control] problems with the products made here in Brazil."

For Vidal de Oliveira, what's important is that people are now in a better position to buy drugs, even though approximately 40% of the population in Brazil still cannot afford to pay even for generics. "The situation has improved for those people who could already afford to pay," she says. "Now they are paying lower prices."

A Paralyzed Market

Contrary to expectations, those who were already consuming drugs began to substitute cheaper generic products for brand-name drugs. Most people had anticipated an increase in the number of drug consumers because low-income people would start buying generic drugs. That didn't happen. "In 1997, for example, before the introduction of generics, 1.35 billion units of drugs were sold in Brazil," says Raimundo. "In 2005, the industry is going to wind up the year selling 1.35 billion units. In other words, we are selling exactly the same volume we sold before generics [came on the market]. What happened was that middle-class buyers bought generic products instead of branded products."

According to Gerardo de Oliveira, the Generics Law has, in fact, had an impact on the major pharmaceutical companies. The law "benefited many smaller labs, many of which are Brazilian; they now were able to produce these drugs at a much lower cost .... In reality, we now have a group of cheaper drugs that have the same quality and efficacy as the much more expensive branded drugs. This has cut into the sales of the Big Pharma labs, and that's why they resist accepting the generics."

He contends that the adoption of generics contributes to progress in Brazilian drug manufacturing. "In the pharmaceutical sector, there has been a great deal of hiring in Brazilian-owned labs. These labs have grown as the generics industry expanded. Day by day, they have acquired a certain share of the market." Multinational labs such as Novartis, he adds, are entering the generics segment of the market. "That means it's not just the Brazilian labs making generics. Now that the big multinational companies have lost [market share], they are also starting to invest in generics."

The generics segment is expected to continue growing in the medium term. "Their goal is to conquer 20% of the entire drug market by 2009," says Valente, adding that "this forecast is somewhere between realistic and pessimistic. Only time will tell if it pans out."

Costly Confrontation?

The Brazilian government stresses that generics manufacturers must show that they behave within the "laws and rights" of the global economy. However, some actions by the government made the pharmaceutical sector uncomfortable. During the administration of President Fernando Henrique Cardoso (1995-2002), Brazil's minister of health threatened to violate the patents on the drugs that make up the cocktail for combating AIDS. His goal was to lower the purchasing price of these products. More recently, the current government has adopted a similar strategy.

For example, during price negotiations with U.S. manufacturer Abbott Laboratories, Brazil's minister of health threatened to break the company's patent on Kaletra, the anti-retroviral medication that is one of the components of the anti-AIDS cocktail. That threat was never carried out because Abbott ultimately agreed to lower the price of its medication by 46% -- and distribute it free-of-charge to 163,000 of the 600,000 carriers of the HIV virus in Brazil. Although the government decided to preserve the patent intact, that confrontation could nevertheless prove harmful to Brazil.

"Because of the continued danger that patents will be violated, employment in Brazil's scientific research sector has dropped to about 20,000 from a total of 24,000 jobs in 1999," says Raimundo. "Until 1999, Brazil was attracting annual investments worth about $350 million [in this sector]. In 2005, the figure has dropped to about $90 million. The investments are moving instead into Mexico, South Korea and other countries. Pharmaceutical research requires a great deal of money, a lot of people, and a lot of time.

"When you invest in something, you have to assume you will acquire intellectual property rights for it," Raimundo notes. "When you threaten a foreign investor and tell him, 'Look, I am going to violate your patent on AIDS,' the foreign investor is going to say, 'Today, they violate my patent on AIDS and tomorrow they will do is becoming increasingly cautious about making new investments in Brazil, says Raimundo. "It is sad to see a country like Brazil, which is so large, making a threat that goes against international agreements .... We don't think it is fair for the government to threaten to violate a patent; you don't get any money if you sell more cheaply in Brazil than anywhere else in the world. This is an extremely inappropriate move. And it will only create problems for attracting capital to Brazil." the same thing to my patent for heart drugs and the next day to my patent on analgesics.' If you threaten to violate one patent, people become much more aware of the possibility that you could violate other patents, too."

As a result, the pharmaceutical industry

Of course it is inappropriate and it should be because it all depends on your position on the issue. If you are a drug manufacturer all you care about is your profitability; but if you are a person that depends on a particular medication to survive and it is obscenely overpriced then the matter takes a whole different hue.

Moving operations out of Brazil is only an indication that the manufacturers are getting cheaper labor elsewhere. It is the same concept that decimated manufacturing in America.

And as far as attracting capital…well let us just say that Brazil might be in a better situation than that in the United States where capital is out of control and the fight for a PLUTOCRACY is more vigorous than ever. Does Brazil want for only 2% of the population to own most of its wealth? Does Brazil want to bring people out of poverty instead of sinking them deeper into it? Does Brazil want to decimate its middle class as America has done? These are all legitimate questions and there are no concrete or correct answers. Perhaps a balance could be realized…I should think that with the introduction of generics the prices would become more competitive…and isn’t that what the FREE ENTERPRISE SYSTEM is all about?

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SOURCE: http://knowledge.wharton.upenn.edu/article.cfm?articleid=1338

PHOTO SOURCE: http://www.google.com/imgres?imgurl=http://www.medicineway.info



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