Drug pricing practices unethical, says retired JAMA editor

Drug manufacturers have disquietingly high profit margins and the industry must rein in some of their more excessive practices, argues the retired editor-in-chief of JAMA in the most recent issue of Milbank Quarterly.

Catherine DeAngelis, M.D., who is also professor emerita at the Johns Hopkins University School of Medicine (Pediatrics) and Public Health, observed that drug manufacturers had profit margins in 2013 ranging from 10 percent to 42 percent, with an average of 18 percent. She noted that the banking industry had similar profit margins, but that the range was in a lower range of 5 percent to 29 percent. While most people could live without the use of a bank, many can't live without certain medications.

"Big Pharma has crossed the line from reasonable to unethical profits," she says.

As examples, DeAngelis singled out ongoing mergers and acquisitions among pharmaceutical companies, and lobbying that has effectively barred Congress from authorizing the Medicare program to negotiate bulk discounts for drugs.

Meanwhile, the surge in drug prices in recent years--no other cost driver in healthcare has risen faster--has forced both payers and providers to collaborate to try and tame such costs. And there have also been troubling and high-profile actions taken by companies such as Turing Pharmaceuticals, which acquired the rights to Daraprim, a drug that has been available since the early 1950s, and increased its price by more than 50-fold.

DeAngelis also observed that this behavior has caught the attention of lawmakers at the state level, with California, Massachusetts, North Carolina, Oregon and Pennsylvania considering bills that would curb some of the excesses of the pharmaceutical sector. 

"We can only hope that legislative action, or even the threat of such action, will sting the consciences, or at least alter the business practices, of pharmaceutical executives," DeAngelis concluded. "Thus far, nothing else has."

To learn more:
- read the entire Milbank Quarterly article

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