Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 26, 1994 TAG: 9407220018
SECTION: BUSINESS PAGE: F1 EDITION: METRO
SOURCE: John Levin
DATELINE: LENGTH: Medium
The drugstore clerk mustered an understanding smile but could do little but take the money and hand over the small white paper bag of drugs.
The incident happened more than five years ago. Yet the mental image is still sharp. It defined in human terms the dilemma of health care for Americans: We are unwilling to do with less than the best even if we're unable to pay for it.
Perhaps what's emerging in the political debate over reform is whether we pay enough.
With other goods and services, consumers buy what they can afford. With health care, we demand the highest technology, the latest breakthroughs and the best-trained professionals, despite the costs. That's because someone else - insurance, government, employers - will pay.
``One of the problems is the patient hasn't had enough of a vested interest in it,'' said Dr. Newell Falkinburg, a Roanoke nephrologist and president of the Roanoke Valley Academy of Medicine.
Consumers are probably more aware of the cost of drugs than of other health products and services because medicine is purchased directly by patients, even if they are later reimbursed.
Doctors and drug makers, however, are becoming more aware and more sensitive to prices.
The cost of medicine is something Falkinburg said he talks about with patients. ``But I'm as guilty as the next guy of thinking about that last.'' He acknowledged that the price affects the treatment he administers, because it determines how quickly a prescription is filled and how regularly the patient takes the medicine.
A new hypertension medication is a good example, he said. Unlike previous versions, the new drug has few side effects, meaning patients who need it are more likely to take the dosage the doctor orders.
``It's the best thing since sliced bread, but it costs a fortune to develop, and it's expensive,'' Falkinburg said. And he thinks twice about prescribing it, telling patients that they are paying for creature comforts more than for control of their blood pressure.
Pharmaceutical manufacturers, undoubtedly hearing the threat of congressional legislation as well as consumers' concern, are looking for cost controls.
The 16 major U.S. drug makers have agreed to hold price increases to no more than the rate of inflation. Bristol-Myers Squibb Co., for example, last year raised its drug prices by 2 percent, while the Consumer Price Index rose by 2.7 percent and the CPI's drug component was up by 3 percent.
Also, the New York-based company cut its sales force by 38 percent in two years and held its research and development budget to 1993's level, said Milton Goggans, the company's vice president for the mid-Atlantic region, including Virginia.
The sales force cut means Bristol-Myers Squibb now has 1,500 people visiting doctors and hospitals, leaving literature and samples of medications. The company spent $1.26 billion last year to advertise and promote its products, or 14 percent of $8.84 billion in total expenses. That includes promotion of consumer products - nonprescription medications such as Excedrin and Bufferin and beauty products branded as Clairol, Sea Breeze and Ban deodorant. This is an outfit that last year reported sales of $11.41 billion, net income of $1.96 billion and an operating profit margin of 24 percent.
Of greater concern is the decline in research dollars, $1.13 billion in 1993 for Bristol-Myers Squibb. The leadership of American companies in the pharmaceuticals industry is based on companies' traditional generosity with their research and development scientists.
``These companies make a profit for stockholders, but they also generate great medications,'' Falkinburg said, ``90 percent of which come out of the U.S., not Great Britain or Canada.''
But while the health care debate rages in Washington, Bristol-Myers Squibb and other manufacturers will take a wait-and-see attitude about developing new drugs, said Goggans, who last week made his industry's pitch to Roanoke health care professionals and economic developers.
``It is causing us to look hard at what we bring to market,'' he said. A new drug represents 10 to 12 years and $350 million worth of research, and one in three earns a payback. After six years patents expire, allowing generic makers to produce the compound more cheaply.
Bristol-Myers Squibb, therefore, is focusing its research efforts on enhancing and extending the life of existing medications, finding uses that broaden their markets.
All that may slow the price increases for the old woman for whom buying medicine was probably a genuine burden. But will it make those drugs less valuable for all of us?
by CNB