Drug Companies ‘Justified’ in High Prices Through Research, According to NPR Commentary
Drug companies that are trying to strike a balance between the "ethical and economic dilemma" of providing AIDS drugs at little or no cost to the developing world is a "thankless" task, according to a commentary on NPR's "All Things Considered" by Merrill Matthews, a visiting scholar at the Institute for Policy Innovation, a public policy think tank. According to Matthews, the drug companies' critics "usually justify their demands on two grounds": the claim that the U.S. drug industry is the "most profitable in the country" and the claim that the companies sell their products for prices higher than production costs. Matthews cited Fortune magazine's annual survey of the top 1,000 companies to demonstrate that drug companies "aren't all that profitable when compared to many other companies." The median profit of the 12 drug companies in Fortune's survey in 1999 was 18%, and most of the top companies were in the 15% to 20% range. Matthews argued that "there's nothing unusual" about companies selling products for more than it costs to produce them. "The money drug companies make today is turned into new life-saving drugs for tomorrow. And that's why drug companies face an ethical dilemma. If they charge little or nothing for the drugs they create, there is no money to continue research on new drugs that will cure or prevent cancer, heart disease, Alzheimer's and a whole host of other human plagues," Matthews concluded. To listen to the full report in Real Audio, enter http://search.npr.org/cf/cmn/cmnpd01fm.cfm?PrgDate=03/21/2001&PrgID=2 into your Web browser and scroll down to the "Drug Profits" story (Matthews, "All Things Considered," NPR, 3/21).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.