Editorial: Sales tactic is inflating drug prices

Friday, Dec. 27, 2002 | 4:08 a.m.

WEEKEND EDITION

December 28-29, 2002

One hundred years ago in the United States publishers of newspapers and magazines were about to be embarrassed by revelations that they had kept silent about "The Great American Fraud." This was the title of a series of articles published in Collier's magazine in 1905. The series exposed the infamous "red clauses" in the lucrative advertising contracts for patent medicines. The clauses stated that the ads would be pulled if laws were passed regulating the concoctions that promised cures for cancer and practically every known human ailment. This led editorialists to either remain silent about these harmful products or strongly advocate them.

The Collier's series broke the code of silence and led to strong federal regulation of medicines. Consumers today can trust that drugs have been tested and that there will be no lawful conspiracy of silence if harmful effects are discovered. But there is one more reform that needs to be adopted and the Bush administration is pushing for it.

This involves the marketing of prescription drugs. While they are mostly beneficial physically to patients who need them, they can be very harmful to that patient's finances. For years now, the pharmaceutical industry has quietly plied doctors with expensive gifts as a way of assuring the prescribing of certain brands. According to a story this week in The New York Times, the industry has even made payments to insurance plans when one brand of drug is promoted over another brand. The practice reeks of kickbacks, meaning that individuals and businesses may profit while millions of people pay extra.

A large number of drug companies and doctors are fighting mightily against reforms proposed by the Bush administration, which is ironic -- the American Pharmaceutical Association and the American Medical Association worked tirelessly on the reforms that ended the patent medicine fraud. Lobbyists for doctors, drug companies and insurers are saying that gift-giving in exchange for drug prescribing is so "well established" that it should continue unabated. We disagree. Federal and state governments pay dearly for drugs prescribed through Medicaid and individuals pay high insurance premiums for drugs and steep prices at the counter. People have a right to know they are paying for the drug they need, and not for a certain brand-name drug whose inflated price helps pay for somebody's vacation.