Tuesday, September 06, 2005

Drug Companies Want Profit? How Awful!

Writing my August 30 blog on the $253 Merck/Vioxx verdict got me thinking. Isn’t it interesting that drug companies are such convenient whipping boys for the public when that same public expects and demands instant drugs to cure every ailment imaginable? The jurors and plaintiff’s lawyers who felt so self-righteous about sticking it to Merck because it’s got deep pockets —and the simultaneous piling on of thousands of other lawsuits by plaintiffs with the same pot-of-gold dream—all emanate from a gut-level belief: Evil drug companies are interested in profits, not people’s health.

I know logic won’t do much to dent ideology, but let me try anyway. First of all, here’s how free market economics works: if sick people aren’t helped by a drug, there are no profits for the drug company. Second, have you ever considered the tens of millions of invested dollars and thousands of dead-end tries necessary before one promising drug emerges? And then the millions of dollars to fully test the drug and get approval by the FDA? If there’s no profit, where is the incentive for a company to plow money and manpower (a.k.a. employees and jobs) into these ventures? Indeed, without profit, where are the funds to do this at all? And without some significant profits, where is the incentive to come up with any new drug that has patent protection for only seven years before it becomes available as a generic product copied by any rival? I’m always intrigued by certain political advocates who seem to think that pharmaceuticals and their shareholders should do business at a loss, or as a charity, for the good of mankind.

Last week while channel surfing, I spent a few minutes watching an infomercial by a guy named Kevin Trudeau who was peddling his book “Natural Cures”. I’m actually a big proponent of alternative approaches to health, but I was taken aback by Trudeau’s monotonous diatribes about how awful drug companies are because they seek—gasp!—profits! I went online to get some information on Trudeau and found that readers’ reviews of his $29 book on Amazon were at best mixed, but what intrigued me was that some negative reviews referred to the fact that to get complete information, apparently one must go to Trudeau’s website and pay a fee. Meanwhile, even though Trudeau has no background in either healthcare or science, he’s sold 3 million copies of his book over the past year through heavy marketing and sales efforts that would do a drug company proud. Sounds to me that with his book, website, commercials and infomercials, old Kevin is very interested in making—hold on to your hat—a profit!

Pharmaceuticals have made a lot of stupid, profit-reducing business decisions over the past couple decades, from self-defeating mega-mergers to myopic operational budgeting. But seeking profit is not a stupid decision. Nor is it immoral, whether you’re a book hustler or a drug company.

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