U.S.-HEALTH: Drug Companies Use Monopoly Prices to Scam Consumers

By Pratap Chatterjee Reprint | | Print |

Pratap Chatterjee

LAREDO, Texas, Jul 4 1996 (IPS) - Want Valium? Prozac? Sleeping pills? Diet pills?

Go down to the end of town and cross the bridge over the Rio Bravo into the border town of Nueva Laredo, Mexico. There, your pharmaceutical needs can be met at prices far below those on the U.S. side of the border.

At the root of this puzzling difference in the cost of brand- name drugs made by the same company is a common practice by multinational drug manufacturers that produce billion-dollar profits at the expense of consumers.

In Nueva Laredo, self-styled tourist guide Luis sits in his horse-drawn buggy at the border, wearing a Budweiser beer t-shirt. As tourists come by, he jumps out.

“You want Valium? Prozac? Diet pills? Young girls?,” he asks. “Just twenty dollars. Finding no takers he gets back in, but he does not have long to wait for someone to accept his offer.

A half-hour later he returns, but he won’t reveal where he took his client. “My clients, most of them, maybe 80 per cent, want medicines,” he tells IPS before asking, “What do you want?”

It takes little urging for him to agree on a quick tour of his favourite drug stores within three blocks of the border, where anyone can purchase Prozac and Valium — two brand-name medicines used to treat depression and stress — for a lot less than one would pay on the U.S. side of the border.

At Jorge Mendoza’s dispensary a bottle of 90 tablets of 10 milligrammes of Valium sell for 90 pesos (12 dollars) while at the El Puente drug store a similar bottle of Valium sells for 100 pesos (13.33 dollars). Prozac sells for 240 pesos (32 dollars).

“I know another store. Valium is only 65 pesos. No, you don’t want any more? How about a dentist?” he says, gesturing with a wide sweep of his hand at the clutter of billboards outside little offices on the main street. “Maybe next time? OK?” he asks, a little disappointed, but already looking for another customer.

On the other side of the border a quick visit to Safeway, a U.S. supermarket chain, reveals that Valium sells for 109 dollars for a bottle of 90, 10-milligramme tablets, while Prozac sells for 68 dollars for 30 ten-milligramme tablets.

Although the products in both countries are identical, the drug manufacturers sell the product for less in Mexico in order to increase sales. The cost of manufacturing the drugs, however, is far less than the price on either side of the border.

Valium, unlike Prozac, faces competition from generic substitutes which sell for less — much less. A bottle of 90 generic tablets sells for 10 dollars at Safeway.

“Eli Lilly (the manufacturer of Prozac) sells its products for more in the United States because they can charge more. It’s not because it costs any more to make but that they want higher profits,” charges Jamie Love, from the Taxpayer Assets Project, a group in Washington, D.C., which is fighting over-pricing in the drug industry.

In April, Eli Lilly filed a lawsuit in Indiana courts against New York-based Barr Laboratories to block its rival from manufacturing and selling fluoxetine hydrochloride — the chemical name for Prozac — for lower prices once Lilly’s patent expires in 2001.

Eli Lilly, which has held exclusive patents on the drug for 14 years, sells two billion dollars worth of Prozac every year, accounting for a considerable percentage of the company’s 6.8 billion dollars in annual revenues.

“We believe that the patents protecting Prozac and the monopoly pricing that results are unjustified in this case (and) the burden on American consumers is unwarranted,” says Bruce Downey, the chief executive of Barr.

“Without (patent) protection, few, if any companies, could afford to invest the nearly half-billion dollars and the 10 to 12 years of effort that are required to bring a new medicine to those who need it,” counters August Watanabe, Lilly’s vice president for science and technology.

Barr’s lawyer Paul Bisaro discounts this argument, saying, “They have had 17 years of exclusivity. That’s an extraordinary return for a half-billion dollars.”

Lilly’s patent on Prozac in Canada expired in March, but the company obtained a temporary injunction to prevent generic versions of the drug being sold. Later this year, the German patent for Prozac will expire, and generic brands may get a foothold in other European countries when similar patents expire at the turn of the century.

Barr has won some battles, but lost others. In 1993 Barr reached a settlement with Zeneca to sell tamoxifen citrate, a patented breast cancer drug. But in January, it lost a five-year fight with Glaxo Wellcome Inc. to sell AZT, an AIDS drug.

Love points out that the drug companies, who are quick to take all the credit for new drugs, fail to point out that much of this research is funded by the U.S. government. He estimates that some 42 percent of health care research and development in this country is funded by the government.

A TAP study of 37 cancer drugs approved by the U.S. Food and Drug Administration between 1955 and 1992, showed that 92 percent were developed with the help of federal funding.

Taxol, a breast cancer drug, which was approved in 1992 and is currently sold exclusively by Bristol-Myers Squibb is an excellent example. TAP estimates that the cost of manufacturing the drug is about 500 dollars, considerably less than the some 10,000 dollars charged for a full course of treatment.

According to the National Cancer Institute (NCI), TAP notes, the federal government was “totally responsible” for the development of taxol, at a cost of 35 million dollars over 30 years.

In 1989 Bristol-Myers Squibb won the right to manufacture taxol defeating three other companies that bid for the same drug. Bristol-Myers Squibb had an advantage, according to TAP, because it had just hired Robert Wittes, a former NCI official, who was knowledgable about the taxol programme.

As multinational drug companies battle over manufacturing rights, in the ‘Los Dos Laredos’, U.S. citizens continue streaming across the border to avoid being gouged.

U.S.-HEALTH: Drug Companies Use Monopoly Prices to Scam Consumers

By Pratap Chatterjee Reprint | | Print |

Pratap Chatterjee

LAREDO, Texas, Jul 4 1996 (IPS) - Want Valium? Prozac? Sleeping pills? Diet pills?
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