Friday, 23 August 2013


When a friend from Cyprus informed me that the cost to have a pacemaker runs around $1,500, I had to investigate why it goes for as much as $75,000 in the US. Actually the price of the unit in the US is roughly the same as it is in Cyprus. While the unit price runs around $1,500, the patient will pay between $25,000and $75,000, depending on the hospital. Why is that?  One answer is the enormous corruption that takes place in pharmaceutical companies, scandals that are world-wide and involve bribes that go to doctors directly, hospital unit management, as well as others in health ministry positions.

Eli Lilly is the latest company in headlines for bribery of millions of dollars to Chinese doctors. However, Lilly is not alone, for there is hardly a company that does not engage in bribery to push its products. How does the system work? Just to enter the national market, the drug company has to go through several steps where along the way it could be required to grease palms of officials to secure its drugs in the domestic market and to keep generics off the shelves. It was not until the IMF-EU austerity teams across southern Europe that the issue of generics vs. brand names arose as a major cost factor and burden to the government budget and to the EU that subsidizes pharmaceutical products.

The next step is for the sales force to contact the hospitals where administrators and unit managers also need to have their palms greased to accept the product of machinery. For example, if an eye laser machine costs $500,000, the price will rise based on the bribes paid along the way until that machine reaches the hospital. In some hospitals in Greece, for example, there are machines waiting to be used because there are no operators trained to use them. Then comes the individual doctor who actually uses the machine or prescribes the drug, and finally the pharmaceutical association and wholesale pharmaceutical companies. All along the chain, the price tag for the product rises and the final cost is then passed on to the consumer, and/or the taxpayer if the product is one that receives a subsidy.

The bribery scandals are routine on the part of US and EU drug makers and medical devices companies. Besides the chain of bribery I mentioned above, there is another level of bribery that takes place and it has to do with bribing government officials directly to keep generics at a minimum in the market.  Because drug companies bribe tens of thousands of doctors, hospital and pharmaceutical personnel, and government officials, and because the money runs into tens of millions, the cost of health care is enormous. Even so, how do we explain that health care is ten to fifty times higher in the US than it is in many non-Western countries where bribery is more commonplace?

Even for bribes taken into account, why does a pacemaker cost up to $75,000 in the US and it is only a fraction of that cost in Cyprus? Why does health care cost twice as much in the US as it does in Canada? Clearly, that cannot be the bribery so commonplace around the world perpetrated by the same US and EU drug companies doing business in the US. 

Some reasons for high medical costs include:
1. over-prescribing of drugs and procedures (the notorious overly-medicated society issue that is now spreading beyond the US);
2. excessive profits by drug companies, insurance, and health care providers;
3. waste and inefficiency, fraud and bribery;
4. absence of government regulation to streamline procedures and products, so as to eliminate wild price variations - as in a pacemaker costing $25K in one hospital and $75K in another;
5. multimillion-dollar compensation packages for top management and executives that are at the core of the corruption scandals; and
6.  lack of preventive care services.   

Big pharmaceutical companies have always argued that research and development costs warrant both protection from generics as well as high prices. However, many of them make incredible profits marketing drugs for long-term incurable, but temporarily treatable diseases. This means taking medication in order to live in relatively high level of pain and/or vegetative mode. Naturally, the family of the patient will go along with the doctor who recommends the treatment and/or procedure, even though the patient will suffer and die within a few months.

This "disease management" mode is where the big money rests with big pharma, whether the disease is chronic mental disorder or physical one. Even worse, extremely costly procedures that cause immense pain for the patient in the last few months of life is where big profits rest for health care providers and big pharma. What are some answers to benefit the patient, family members and protect society from big pharma that is interested in "disease management" and prolonging the life by a few months, a few weeks, a few days? Government must protect the patient first as well as society from predatory big pharma. But what if people who are in government receive substantial political campaign contributions and some individuals in key positions receive bribes to protect the big profits of big pharma?

Although health care is very costly, the costliest in the world for Americans, does this translate into longer and better life? Absolutely not. Ironically, the life expectancy for the US is not as good as one would think, given that it ranks 27th among 34 of its peers - 51st in the world - or about the same as financially bankrupt Cyprus where pacemakers cost 20-65 times less than they do in the US. Even worse, the US has experienced a rise in chronic disabilities caused by poor dietary habits, smoking, physical inactivity and alcohol. This despite the fact that the US is the world's largest consumer of legal drugs, just as it is of illegal ones.

The lesson from all this is that globalization has been spreading the US drug culture around the world, even if it means using bribes to impose its pharmaceutical and medical devices products on the rest. But even if we accept bribery as a part of doing business, is the end result an improvement in the quality of the consumer's life? Judging from the US statistics on life expectancy and health wellness, the end result is not good. The neoliberal (laissez-faire) approach to the health of people is a crime that only government can stop. But what if government is itself corrupted by the criminals dishing out money legally for campaigns and illegally for favors?

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