John Carey of BUSINESS WEEK (4/19/2004:24) reviews a new book about big pharma.
It is the 800 MILLION DOLLAR PILL: THE TRUTH BEHIND THE COST OF NEW DRUGS, by Merrill Goozner, University of California Press, and 297pp.

What Goozner suggests pretty much sets the stage for the debate on cost of pharmaceuticals? WELLMARK, BLUE CROSS/BLUESHIELD bulletin (M-2338*3/03) tells members that the high cost of drugs is due to following:
1. We are getting older.
2. Drug companies are spending more money on advertising.
3. Our diseases are being treated with more drugs.
4. Receiving care as an outpatient means drugs are being covered under a pharmacy plan instead of a medical plan.
5. We are better following doctors orders for taking drugs because dosages are more convenient, drugs have fewer side effects and we have become savvier drug consumers.
Goozner, former chief economics writer for the CHICAGO TRIBUNE suggest that
Big pharmacy is partially correct in their statements and the list indicated above... However, he notes that 30 billion dollars was spent on drugs that are mild versions of the same old drugs dressed in new persona.
Many drugs are created by government and paid by tax payers, but pharmaceutical houses charge immodest prices for these medicines. He also provides supporting data that drug industries do not require 800 million dollars to develop a new drug. That R& D budgets are geared to profitable but not greatly improved drugs. Much of the R&D spending is not aimed at medical advances.

On the other hand, many other industries are doing the same thing to maximize profits.
There is an ongoing conflict of doing well financially and doing what is best for medicine.

Perhaps the answer is pricing structure. With the advent of more free trade, drug companies must compete with open borders. U.S. Senator Charles Grassley (R) of Iowa wants Canadian distributors to be able to compete in drug distribution with U.S. distributors. The outcome may be reduction in prices.

Free trade also means that other countries may compete for the large American market too, driving prices downward. Generics may also help in price reduction.

Wellmark, Blue Cross/Blue Shield also note that from 1996 to 2001, pharmaceuticals have doubled their advertising. Some one has to pay for that.