And Who Shall Profit from Caring for the Sick? The Case of Generic Drugs

In 1988, I wrote a book And Who Shall Care of the Sick? The Corporate Transformation of Medicine in Minnesota.

It was a collection of editorials I had written as editor of Minnesota Medicine.

My concern in the book was that corporate medicine would diminish the role of independent medicine. I said corporations had these advantages over independent physicians : 1) access to capital to finance growth; 2) effective mechanisms for dealing with bureaucratic phenomenon; and 3) the skills of management – organizing complex technology, mazimizing talents of specialists, and bringing together different people from different professions to deliver service as a team.

What I did not say was that corporations had the ability to maximize profit on a massive scale. Profit is necessary to stay in business and to grow, but it must be coupled with social responsibility.

Well, medicine has become a big business, a $3 trillion dollar enterprise in the United States, and some companies, like United Health, which originated in Minnesota, have $10 billion in annual revenues and over 100,000 employees . Many CEOs of hospitals make over $1 million a year, and certain medical specialists average over $400,000 in income. In the main, independent practice has retreated into the weeds with more than half of physicians becoming employees, mostly of hospitals.

In 1981, the late Arnold Relman, M.D., then editor of the i>New England Journal of Medicine, warned about the medical-industrial complex with its accompanying for-profit companies would ruin the image of health care and drive the cost of care out of sight.

For some observers, particularly liberal lawmakers, “profit” has become a dirty word. The latest example is the generic drug industry ( “Lawmakers Look for Ways to Provide Relief for Rising Cost of Generic Drugs,” November 24, New York Times.)

Prices of common generic medications has soared over the last 18 months. About 10 percent more than doubled in cost. Some medicines rose over 500 percent, including the thyroid replacement hormone, the antibiotic doxycycline, the heart pill digoxin and the asthma pill albuterol. Many generic drugs in the United States have surpassed those of their brand-name equivalents.

These skyrocketing prices are not the case in Canada, where the government regulates drug prices.

According to the New York Times, 90-day supply of the generic heart medicine digoxin sells for $187 in New York; the branded version, Lanoxin, sells for $24.30 in Canada. A month’s supply of a generic steroid to treat inflammatory bowel disease sells for $1,625 in the United States, while the branded version sells for $155.70 in Canada. A three-month supply of the generic cholesterol lowering drug pravastatin costs $230 in this country, but $31.50 for the branded drug Pravachol in Canada.

There are many reasons that generic prices may fluctuate. The price of a key ingredient may increase markedly, or competition may decrease as manufacturers leave a market, leading to price rises.

Some states have been taking matters into their own hands. Last fall, a new law in Maine began allowed residents to mail order prescription medicines from licensed pharmacies in Canada, Britain, Australia and New Zealand.

What to do? The Senate has responded by holding hearings to get generic drug makers to explain why prices have risen so dramatically and why U.S. generic manufacturers should not compete with foreign generic manufacturers.

As the American humorist, Josh Billings (1818-1885) explained, the generic drug makers “have got some ‘splainin to do!”