The Medicine Cabinet...
A Pill for every Ill!

Is your medicine cabinet your best friend? It shouldn't be; it's probably your worst enemy. Just to be clear, the "medicine cabinet" here is symbolic word play for the pharmceutical industry.

There's an old 1979 rock'n roll song by Robert Palmer called "Bad Case of Loving You (Doctor, Doctor)". It has the refrain...

“I say DOCTOR, DOCTOR,
gimme me the news,
I’ve got a bad case of loving you,
no pills gonna kill my ills,
I got a bad case of loving you”…

That’s right folks, “no pills gonna kill or cure my ills. The thing about prescription drugs is that in general they don’t cure anything. They manage our symptoms and maybe keep us comfortable while our body heals itself.

Thomas Alva Edison, who died over 75 years ago, stated it quite eloquently:

"Until man duplicates a blade of grass, nature can laugh at his so-called scientific knowledge. Remedies from chemicals will never stand in favour compared with the products of nature, the living cell of the plant, the final result of the rays of the sun, the mother of all life." - T. A. Edison

I wonder what was in Edison's medicine cabinet; if he even had one.

The purpose of these pages is not to present a tutorial on the pharmaceutical industry but to show that there is a better way to health than becoming an addict to the medicine cabinet. In order to do that it is necessary to describe the industry to reveal some truths about it.

The first is that the drug companies could care less about our health; what they do care about is selling us pills and making sure that we take those pills for life.

The second is that there is nothing they won't do to market those pills to us, the doctors and the hospitals.

The third is that all prescription drugs are poison, have side effects, interact and mostly don't cure anything. At best they treat symptoms and do make us feel better, else why would anyone continue to take them.

If the big pharma that stocks your medicine cabinet cares at all about this, it is only to the extent that they want to avoid large class action law suits.

So with that as an introduction, we will jump into an overview of the prescription drug industry and then shift the focus to how we can live our lives without their products.

It's not easy because they have powerful accomplices in the government who don't hesitate to use the power of law to force people to "shut up and take your drugs", especially the most vulnerable and defenseless...children.

So here we go!

The Prescription Drug industry goes by a lot of names; the pharmaceutical industry, big pharma, drug dealers, pill pushers or the medicine cabinet.

If they don't have a pill for an ill, rest assured, one is probably in development; at least it's in development if enough people have the illness and the projected return on investment is high enough.

The medicine cabinet is a money making machine and profits are king. How big is it? In 2007, medicine cabinets were filled to the tune of $219 billion and that was a slow year. Growth was only 1.3 percent compared to past growth rates of:

18.8% in 1999

14.9% in 2000

16.9% in 2001

11.8% in 2002

11.5% in 2003

That's an average of 14.78 over the five-year period. We will get to why the growth rate was so paltry in 2007 later in the page.

Sales are one thing but what was the industry profit margin? The media likes to jump on sales figures or gross profits, especially if it's an oil company sparking the outrage. What they should be reporting is net profit margins.

Sales and net profit are just numbers but net profit margin measures how much out of every dollar of sales a company gets to keep.

Net profit margin is useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors.

Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a net income of $0.20 for each dollar of sales.

So how does the medicine cabinet stack up against other industries? Well, we pretty much know how bad the auto makers have it lately and their net profit margin of -1.20% reflects their problems.

The aerospace and defense industry comes in at 5.20%, Food companies have a respectable profit margin of 7.20%, the integrated oil and gas industry is 9.40%, electric utilities 9.5%, and way up near the top, we have big pharma at 18.60%. Contrast that with for-profit hospitals with a 1.80% margin.

In the list above, we see a declining rate of growth with 2007 coming in at 1.3%. Maybe there is hope. Maybe people are wising up and kicking the prescription drug habit.

Photo right: Lots of money in those litte pills!

Unfortunately, that's not the case; people are still as hooked on prescription drugs as they ever were. So why is the growth declining?

The answer is apparent in just two words...Managed Care. Managed care is the purview of insurance companies and pharmacy benefit managers who hold the keys to the medicine cabinet and use a strategy known as "outcomes-based access" to control costs.

They keep costs under control by determining which meds deliver the greatest benefit at the lowest cost. The burden of proof is on the drug companies to show, in dollars and cents, how their new drugs are cost effective to the payers. The payer is not usually the patient and that's where the big criticism of managed care comes in.

There is a growing concern by patients and the public that insurers are over-riding the doctor’s treatment decisions; getting in between the patient and doctor.

For the drug companies, it means fewer new drugs are coming to market, with the predictable drop in revenues.

One casualty of "outcomes-based access" is Pfizer's Caduet, a combo pill for high blood pressure and high cholesterol, that has been a big disappointment in term of revenue in spite of all the "Ask Your Doctor" commercials on prime time TV.

Insurers don't care about snazzy ads and cool science...it's strictly a cost/benefit consideration.

OK, moving on to look at big pharma's players and profits, click the link to the next page, The Pharmaceutical Industry.

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