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A recent AARP study indicates that manufacturers' prices for prescription drugs rose nearly 3 times the rate of inflation. PhRMA counters that prescription drug prices increased at a lower rate than other health services (see "AARP Study Finds Brand Name Drug Price Increases Accelerate in First Quarter," AARP Press Release, 6/30/2004). Besides, chides PhRMA, AARP should spend more effort signing up as many seniors as possible for the Medicare-endorsed discount cards (see Statement by Richard I. Smith, Senior Vice-President of Policy, Research and Strategic Planning, Pharmaceutical Research and Manufacturers of America). So there!

Another argument often heard from industry supporters on the issue of drug prices is: "If we cut drug profits [by lowering drug prices], research will slow down and breakthroughs won't be there when we (or our children or grandchildren) need them." [See recent PHARMA-MKTING thread.]

People should be thankful that they have effective drugs, say supporters, and they should keep that in mind when they complain about drug prices. In other words, stop complaining about drug prices and be thankful we do this for you!

These and other typical pharma industry responses to criticism about rising drug prices may make economic sense, but they do not resonant with consumers' perceptions and emotions. In fact, sometimes it seems more like a slap in the face than a consoling pat on the back.

I think pharma is being caught off-guard by consumerism. In general, pharma doesn't seem to understand consumers and how to deal with consumer issues although they spend lots of money advertising to consumers and thus are partly responsible for creating the problem.

As more and more consumers pay higher co-payments for drugs (or don't have any Rx coverage at all -- the Census Bureau found last year that almost 44 million Americans had gone without health insurance for the previous year. That number has been increasing by roughly 2 million a year.), more and more consumers will be complaining about drug prices and demanding action from their representatives in Congress.

Pharma needs to realize that it just can't "win the argument."

The industry should stop arguing about drug prices, especially trying to make the price of drugs seem insignificant compared to other healthcare costs, and actually do more to lower prices while maintaining the profits they need.

Is it possible? A few members of the PHARMA-MKTING online discussion group think so. See the recent thread on this topic.

There is a 500-lb gorilla lurking here: the executive order by the president calling for the widespread deployment of health information technology within 10 years.

At a recent National Health Information Infra-structure conference I attended in Washington, DC, Dr. Mark McClellan, administrator of CMS, said that the new Medicare Law gives the government "new authority to move forward" with the rapid deployment of ePrescribing and other technologies that will reduce costs by allowing Medicare to pay for results. The pharma industry, in other words, will need to guarantee results worth the higher price of their products and the government will be able to use technology to accurately measure outcomes and hold drug companies accountable.