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Pharmaceutical companies are evil – until you need them

Some people love to bash pharmaceutical companies. People complain about drug companies and bash them, but then lo and behold they often (always?) at some point need the drug companies cutting edge technology and medications to save or extend their lives. This is just another one of those examples that show the lack of critical thinking.

What do we mean by this concept of people think drug companies are evil until they need them? Lets look at a some examples and expand on it.

Many Americans complain about pharmaceutical companies when it comes to the cost of prescription drugs. But then, when something like the Coronavirus strikes, one of the places they turn to for help or to “save them” is those same pharmaceutical companies. They hope that drug companies come up with vaccine or cure to “save the world”. They also turned to drug companies when Ebola was spreading, the bird flu, SARS and many other conditions.

Or, on an individual level, when someone has cancer, or they need medications to help them with blood pressure or countless other medical conditions, they turn to drug companies for help.

But the drug companies are ripping us off!

Are they really? Is it really that simple?

What if we if we did not have a strong, innovative, profitable privately held pharmaceutical industry? There would probably be a zero percent chance of them helping with a pandemic or for the medications you need to extend your life. After all, socialist/communist countries like China, Italy, Russia, and others; those countries are also turning to the American pharmaceutical industry for help for Coronavirus and cures to other medication conditions.

Now what if there were price controls for the drug industry in the US? What if the risk/reward equation for drug companies was not the same as it is today? For example, it costs anywhere from $700 million to $2.5 billion dollars to develop a new prescription drug all the way from invention to clinical trials to pharmacy shelves. (The range varies as there are contradicting studies). That is a big up front cost (or risk) incurred by these drug companies.

Keep in mind that the majority of that potential billions of dollars in up front investment needs to take place and there are no guarantees that the drug will be approved or sold. In other words, the way the system works, a drug company may invest a billion dollars or more and they have no guarantee of making that money back. What if the drug fails or is not approved? In that case the pharmaceutical company just lost a billion dollars from incurring that up-front risk.

Bring it down to your own personal finances. Would you risk thousands of dollars of your own money with no guarantees in making it back?Or risk losing all of that money? It is really a form of gambling, which is what drug companies do. They risk their own money with no guarantees of making it back. No granted they try to control that risk, but at the end of the day these companies can’t make the risk zero…there is always a good chance of them losing hundreds of millions or billions of dollars.

A perfect example of this – Eli Lilly has invested almost 4 billion dollars in trying to solve arguably the most costly and devastating health problem in the US, and that is Alzheimer’s. Eli Lilly invested 3 billion+ up front, and the drug they tried to solve Alzheimers (solanezumab) failed. Eli Lilly lost 3 billion dollars plus taking a chance. Now the only reason that Eli Lilly was able to even take that chance and invest 3 billion is that their other medications are profitable.

If a drug company needed to invest $2 billion dollars into a medication, they need to charge enough to not only make their investment back, but they also need to make enough as a return to justify that investment risk. They need to justify the cost of those high priced scientist and doctors who try to find innovative solutions to medical programs. They also need to make enough of a return to recoup the up front investment- losses for those drugs that failed. This means that the cost of drugs can be high, which leads people to bash drug companies.

We hate the drug companies until we need them!

Now we are facing a worldwide pandemic. And people want a quick vaccine to save us all! If the drug industry was not strong and stable, and if they were not rewarded for taking those previous risks over the past years, then the drug companies would be in no place to help. If pharmaceutical companies did not have highly educated (and well compensated) scientists, executives, engineers and others working for them, then they would not have the talent or processes to develop vaccines quickly.

Let’s look at another example of the contradiction of people complaining about the drug industry until they need them. Since 1/3 of Americans are obese, with data showing millennials even fatter than other generations, those people often turn to drug companies to lower their blood pressure, come up with cancer fighting medications from conditions caused by their obesity, and address other health care needs. People bash the industry for charging us for medications, but then they would complain if the drug company did not have the drugs to “save them” from their own poor lifestyle decisions. And those pharmaceutical companies only have those drugs because they took the billions of dollars of risk in trying to invent them.

What does this mean? It means that many people bash drug companies in one breath, but then in another breath they are popping pills to help them live or extend their lives. They are relying on those same drug companies to save their lives at the same time they bash them.

Now we do agree that the system can be improved. But is is complicated. Like almost everything in life.

As an example, the price of prescription drugs are higher due to many factors, including pharmaceutical benefit managers (PBMs), foreign governments in effect paying less money to American companies for those drugs and not taking on the risk, maybe some too high executive salaries, and other factors. Of course some improvements can be made to make medications more affordable, but the risk – reward system in itself is not what is wrong.

But what is 100% wrong is the hypocrisy of people in one breath bashing companies, but at the same time they want cutting edge (which are expensive to develop) medications to save their lives. Or they want vaccinations to save them from a Coronavirus or other pandemic. It is just lack of critical thinking and not seeing the complication to a situation.


Jon McNamara is the CEO of needhelppayingbills.com, a company that he started in 2008 and that specializes in helping low income families as well as those who are in a financial hardship. He also found NHPB LLC, a company committed to helping the less fortunate. Jon and his team also provide free financial advice to help people learn about as well as manage their money. Every piece of content on this website has been reviewed by him before publishing and many of the articles he has personally written. Jon is the leading author for needhelppayingbils.

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