Drug Companies Monopolies, Profits and Ethics - Essay Example

Drug Companies Monopolies, Profit and Ethics In this present era, consumers are forced to spend huge amount of money for buying prescribed and brand-name drugs. This is because all big pharmaceutical companies are allowed to charge whatever they want from the consumers. These companies possess the patent rights due to which they can easily stop the competition in the market and can set the price at its highest level. The drug companies’ monopolies refer to the situation where big companies are controlling the sale of the brand-name drugs. These drugs are becoming the most expensive component of the health care expenses. According to the research, Americans are now spending more than $500 billion annually to buy prescription drugs (Davis‎, 1995). These monopolies can be categorized as government made monopolies. Actually, whenever the big pharmaceutical giant makes a new drug, it applies to the government to possess the patent right. And after getting the patent, the company gets the right to become the sole seller of that drug for a specific time period. This allows companies to charge maximum prices for the patented drug and, as a result, the company can generate immense profit. These higher prices enable companies to recover its R&D cost for that particular product, and also allow companies to focus on further research. But due to this monopoly, consumers have to pay a large amount of money for buying that product (Angell, 2004). The report launched by the U.S Government Accountability Office indicated that there is an extraordinary increase for most brand-name drugs due to the monopoly system of drug companies. According to this report, prices for many drugs have been doubled between 2000 and 2008. This report also highlighted the growing trend of the drug repackaging methods and drug company monopolies. The GAO report indicated more than 450 examples of intense price increase for most well-known brand-name drugs. The prices increased from 100 per cent to 500 per cent. In addition to this, a 1000 per cent increase is most common. Moreover, nine out of ten drugs have a price increase of around 200 per cent which makes 21 times higher prices than the original value. The most common price increase was related to the three types of drugs including anti-infective, cardiovascular and central nervous system drugs (Hoskins, 2012). Patents make monopoly in drug companies Patents are intellectual property rights and this is granted by the government to the company for the purpose of preventing others to copy its new invention. In the drug industry, the patent is given to the brand-name drug companies to stop competitors from selling, making or importing that particular drug. These types of restriction cause monopoly in the drug industry as few companies are controlling the sale of the drugs. This also leads to higher prices due to decreased competition. Pharmaceutical companies can easily take patent right for 20 years based on different aspects of innovative drugs. The World Health Organization program which was based on essential drugs indicated that patented drugs can only be marketed under the proprietor’s brand and this leads to more monopolies which increase price pressure on the consumers and results in generating higher profits for the drug industries (Elliot et al., ‎2002). Drugs are available at lower prices in developing countries Developing countries and underdeveloped economies make similar expensive medicines with generic or alternative sources. The major reason is that the purchasing power of the consumer in these areas is very low and they cannot afford high-priced medicine. The prices of these drugs are much lesser than the original one. Moreover, they can produce the same drug with such ingredients that are not healthy but are cheap. Sometimes, they find out local herbal ingredients to make similar medicines. These medicines give relief to patients for a very short time period (Angell‎, 2004). They can also import those expensive drugs illegally without import duties and can sell those drugs in developing countries at lower prices. Some brand-name medicines are available in the less developed countries at lower prices. This is because large pharmaceutical companies follow the strategy of differential pricing. According to this method, these drug companies charge different prices for different markets based on the economic conditions and purchasing power of the consumers of that particular market (Elliot et al., 2002). Prime profits of drug companies As the drug companies are practicing monopolistic system, therefore all giant pharmaceutical companies are experiencing huge profits. In 2005, Families USA issued a detailed report analysing the profit margins of the drug industry. The title of the report was “The option: Health Care or Drug Company Profits”. This report indicated that total revenues of the top eight U.S drug companies were more than $200 billion in 2004. It also showed that these big pharmaceutical giants are spending huge amount on advertising and administration. These companies have cut their spending on research and development that helps to make better drugs. This proved that the focus of drug companies is towards making profits rather than providing quality drugs (Hoskins, 2012). Ethics of Drug Companies There is no doubt that the pharmaceutical industry has a remarkable contribution to human health. This industry enables people to fight from dangerous disease like cancer and AIDS with the help of miracle drugs. But still there is a growing question is the drug industry is fulfilling its social responsibility by practicing ethical values (Santoro and Gorrie, 2005). Currently, the pharmaceutical companies are earning huge amount of profits every year. There is an on-going debate that these drug companies are just concentrating on making earnings and they are not following the golden rule. This rule says, “treat others as you wish to be treated,” but the drug industry is focusing on the rule that do whatever you can to reap the maximum benefit or gold without focusing on others values (Woodruff, 2009). In the drug industry, most of the companies are following unethical approach. They do not focus on the values and social responsibilities associated with the usage of the drugs. The most common type of unethical practice in drug industry includes hiding side effects or negative data of the drug, misleading marketing tactics, channel stuffing and off-label marketing (Rogers et al., 2004). Most companies try to hide actual ingredients of the products. The basic purpose is to make consumers ambiguous and not tell them about the any negative impact of the drug which can adversely impact the patient's health. Misleading marketing tactics refers to unveiling those features or composition of the drugs that it does not contain. This is done to mislead the consumers about the drug and increase the sale. This is one of the most unethical steps taken by most drug companies. The off label marketing indicates that most companies to reap maximum benefit start selling their products by using wrong labels. It also includes that pharmaceutical companies in the developing countries make false product in their homeland and then use the label of imported pharmaceutical brands to mislead the consumers. This helps in increasing their sales and reputation. In addition to this, pharmaceutical companies also give incentives to different doctors and surgeons to sell their products to their patients. These doctors act as agents and then supply these products without telling the side effect of the medicine (Rogers et al., 2004). Conclusion It is true that every business exists to seek profit. But companies must not try to maximize their profits at the expense of other health. Consumers expect too much from the drug industry. The government of every country must take serious steps to introduce a proper code of conduct for drug companies. In addition to this, consumers do thorough research before buying any medicine. References Angell, M. (2004). The Truth About the Drug Companies: How They Deceive Us and What to Do About It. New York: Random House Inc. Davis, M. K. (1995). Monopolistic Tendencies of Brand-Name Drug Companies in the Pharmaceutical Industry. Journal of Law and Commerce, 75(1), 358-74. Elliott, R, Bonin, M.-H., & Devine, C. (2003). Patents, International Trade Law, and Access to Essential Medicines (3rd ed.). Montreal: Canadian HIV/AIDS Legal Network & Medecins Sans Frontieres Canada. Hoskins, D. (2010). Sky’s the limit on monopoly drug prices. Retrieved from http://www.workers.org/2010/us/drug_prices_0128/ Rogers, W. A., Mansfield, P. R., Braunack-Mayer., A. J., & Jureidini, J. N. (2004). The ethics of pharmaceutical industry relationship with medical students. The Medical Journal of Australia, 180(8), 411-414. Santoro, M.A. and Gorrie, T.M. (2005). Ethics and the Pharmaceutical Industry. United States of America: Cambridge University Press. Woodruff, S. (2009). Drug company ethics and the pharmaceutical industry’s pursuit of profits. MEDS. Retrieved from http://www.kevinmd.com/blog/2009/08/drug-company-ethics-and-the-pharmaceutical-industrys-pursuit-of-profit.html Read More