Tuesday, January 25, 2005

Pharmaceutical PR: Fool Me Once, Fool Me Twice

Well, the elections are over and the industry's best boy -- G. W. Bush -- and Republican congressional cronies are in place and eager to spend the "political capital" gained. Without skipping a beat, it seems that the pharmaceutical industry is recouping all the money it donated to politicians and then some. Today's WSJ reports that "Of the 50 biggest-selling medicines in the drug industry, 31 had price increases since the November elections through Jan. 19" (see "Prices Increase on Popular Drugs", WSJ, 01/25/2005).

For example, prices for VIOXX alternatives -- such as Mobic -- have risen between 7% and 11% just this month alone! Obviously, Boehringer Ingelheim Corp. and Abbott Laboratories, co-marketers of Mobic, are taking advantage of the increased demand. No sympathy for any of the 40 million or so consumers without health insurance who must pay for these drugs out of their own pockets! Speaking of pain!

"Pfizer Inc. kicked off 2005 by raising the price this month on most of its U.S. medicines by nearly 5%, including an increase of about 5% on its hugely popular cholesterol-fighter Lipitor." I guess Pfizer is anticipating a huge loss when Celebrex crashes and burns as I predict it will! (see "Cox-2's Die Hard: With a Vengeance").

Many experts have warned that drug prices will continue to rise ahead of the effective date of the Medicare drug benefit (January 2006) and, as the WSJ article states, "This is a crucial year for drug makers, and the current round of increases could set the tone for 2005."

Eroding Industry Image
Even with recent profit gains by most of the big pharma companies, profits going forward are not guaranteed (see "Pharma Profits on Slippery Slope?") and the industry is very concerned about future profits (see "Drug Prices/Declining Profits Top Issues for 2005").

While it may be argued that the industry needs to maintain profits in anticipation of problems ahead, the TIMING of these price increases speaks volumes. It just negates all the recent PR efforts about drug discount cards and will only further erode the industry's negative image.

Fool Me Once, Fool Me Twice
It will now be just that much harder to defend drug price increases using the standard arguments -- needed to finance R&D, for example.

As Barnum said, you can't fool all of the people ALL of the time. You can, however, fool all the people SOME of the time - especially during a presidential election season!


  1. I believe the expression is
    "Fool me once, shame on you. Fool me twice......um, err, err...err, um, um, err, Won't get fooled again!"

  2. Anonymous7:55 PM

    The industry is responding as predictably as any economic rationalist would. Knowing they are going to take a haircut from Medicare Part D they are raising the baseline to minimize the impact on net. From the point of view of the shareholder, they would have a tough time justifying not doing so. For the economic rationalist, the qwuestion becomes does the blowback from such rational behavior outweigh the benefit. The answer is not clear to this poster. When Big Pharma is in the same boat as Big Tobacco, can you really fall off the floor in the eyes of the public? On the other hand, the Democrats will demagogue the living daylights out of it, which may fan the flames of EU like controls on the industry. Four more years of W does shield them from short term retribution, so they are probably banking a short public memories to insulate them from the repercussions. Not a terrible bet from a businessperson's point of view. Is it moral? Is it ethical? Is it just? Depends on your viewpoint. As I say to my 83 year old mother who decries the $5/pill cost of Ambien. "Ho much would you pay for a good night's sleep?" Some people pay $500 a night at the Plaza. What's $5 compared to that?


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