Thursday, July 15, 2010

How Greed Not Obama Controls the Health Care System - CVS Exorbitant Drug Profits


For several years we have reported on different aspects of the health care industry and how the American public is being charged outrageous prices for prescriptions, examinations, and treatment far beyond what is reasonable and good for our health and economy.

Now Obama has passed his Health Care Reform and rather than attempting to clean out the greed and lies powering the profit of the industry, he has institutionalized it in a way that may make it impossible to fix. The system now works in a way that makes it harder and harder to get to the truth, and that assumes Congress and the president have any desire to investigate those throwing money into their campaign funds.

Let me give you a real life example of how the shell game works that makes you feel good about your health care while others make outrageous profits. In the end you are paying for these profits, all consumers are paying, because your health insurance just increases premiums to make up for it.

I needed an antibiotic for a treatment and I do not have health insurance. Most small businesses like mine cannot afford health insurance and in spite of that Obama intends to fine me for it. But that is another story about the loss of freedom and choice in America.

So my doctor calls in a prescription to CVS Pharmacy in Leonardtown, Maryland, a huge chain that advertises how they are taking care of the needs of their consumers. Since I live down on the Potomac River about 25 miles away I asked a friend to stop by and pick it up. Also I said to check whether it was generic or the brand drug.

I am always nervous about the brand versus generic drugs because as with most products, there is a reason generics are cheaper. In many product lines it may be that inferior materials or packaging are made in China where there is no effective quality control. It may be the size of package or weight of the product are smaller than the brand name they are meant to replace.

Whatever the reason I know when I get something cheaper at WalMart I have most likely given up something in terms of quality and quality control since most stuff is now made in China. However, when it comes to pharmaceutical drugs I am not inclined to take the cheaper route because the government and health care industry say brand names are better because quality control is better since it is made in America, not China.

When my friend stopped by CVS the Pharmacist said if I wanted the brand name I needed to have health insurance and since I didn't they recommended a cheaper generic alternative. The cheaper alternative still cost over $73 for 100 pills, far more than any recent prices I had seen for antibiotics. When he called me back with the information I did some research.

First I called CVS and said why did having health insurance dictate whether I would get brand or generic drugs? She advised me that without health insurance most people cannot afford brand names. If you have health insurance they will just process the insurance claim if that is what you want.

So I asked what the cost for the brand name medicine would be and she looked it up and replied it would be over $700 for the same prescription. Now I was not a math major but I was the Assistant Treasurer of the State of New Jersey, back when we had a state budget surplus, and I questioned how the brand name could cost ten times as much as the generic. She didn't know.

Then I pointed out that virtually all brand prescriptions for penicillin type antibiotics in America now have their major ingredients made in China to lower the cost so they could compete with generics. She was not aware of the recent FDA revelations of the manipulation of brand manufacturing and the use of Chinese components in them.

So I then got the actual cost of the generic medicine from my doctor, who was outraged by the cost of the generic drug, and absolutely astounded by the cost of the brand name. In one phone call he determined the generic drug cost CVS about $7.50 for 100 pills, in other words the pills cost CVS about 7½ cents each. They sold them to me for 73 cents each. But if I had health insurance and bought the brand name they cost $7 each, even though major ingredients were now made in China. That means CVS was marking up the generic drug to me almost ten times! CVS, the friendly neighborhood drug store, was taking me to the cleaners for 10 times their cost for the drug!

Not even the big bad oil companies have the guts to charge consumers ten times more than their cost to produce gasoline. In fact I know of no industry outside the health care industry where such outrageous profits are charged. This is what the Obama health care reforms have brought to us.

Just as important, if major pharmaceutical companies are now manufacturing some of their drug components in China, why is their price continuing to increase and why is it already ten times more expensive than the generic drug which is already marked up ten times more than the cost to CVS?

We Americans have been sold a bill of goods in health care. No one is looking for meaningful ways to reduce the cost of health care, just to make sure that the outrageous costs are covered by health insurance. Many billions of dollars in excessive profits are being charged by the pharmaceutical industry, and clearly the retail pharmacies like CVS, and no one in Washington seems to care.

Any responsible congressman should initiate a congressional investigation of the pricing structure for drugs by the pharmaceutical companies and their retail partners like CVS. It is not the health of Americans that is driving up health care costs it is the cost of the greed inherent in the industry and the protection the government has given to protect these excessive profits.

Ironically, my congressman is Steny Hoyer, the Majority leader of the House and the force behind the Obama Health Care Reform. Hoyer is the recipient of thousands of dollars from health care providers and has shown no indication of questioning the cost of health care that he is protecting. We citizens are being held hostage by politicians who place a higher value on special interests like health care providers than the value they place on American citizens.

Congress should investigate this matter. The Justice Department should investigate this matter. The Obama administration should investigate this matter and the people should investigate this matter. If we don't go after excessive profiteering, unfair business practices and price manipulation then we have no representation in Washington. No reform will work when the industry is trapped in a cycle of greed like we face.

Prescription drug prices in the United States are the highest in the world. "The prices Americans pay for prescription drugs, which are far higher than those paid by citizens of any other developed country, help explain why the pharmaceutical industry is — and has been for years — the most profitable of all businesses in the U.S. In the annual Fortune 500 survey, the pharmaceutical industry topped the list of the most profitable industries, with a return of 17% on revenue."

As an example of the extremely high U.S. drug prices, consider the cholesterol drug Lipitor, the best selling drug in the world. At CVS, a leading U.S. pharmacy, Lipitor (40 mg/90 tablets) costs $361.99. At, another U.S. pharmacy, the same drug costs $335.97. While in Canada at pharmacy, the cost is $215.46, in The Netherlands $177, and in India at licensed pharmacy, the identical generic drug costs $120.94 (Source: All costs in US$,19 May 2008, from the respective pharmacy websites).

The rise in costs of prescription medicines affects all sectors of the health care industry, including private insurers, public programs, and patients. Spending on prescription drugs continues to be an important health care concern, particularly in light of rising pharmaceutical costs, the aging population, and increased use of costly specialty drugs. In recent history, prescription drug costs have outpaced other categories of health care spending, rising rapidly throughout the latter half of the 1990s and early 2000s. While the rate of growth in spending has slowed somewhat, it is projected to exceed spending on hospital care and other professional services in 2010 and through 2019.

Come on Steny, show us how much you care about deficit spending and runaway costs of your constituents health care by checking this out. As for CVS, for shame. You are the poster boy for the greed that has crippled the health care industry in America.


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