Bitter pill

Cents & Nonsense: The candy man was the only thing on my mind when I shuffled my egg-shaped body through the door

Cents & Nonsense:The candy man was the only thing on my mind when I shuffled my egg-shaped body through the door. I was huge and those transactions - I mean contractions - really slayed me, writes Margaret E. Ward.

From the exact moment I became a wild animal in a cage or, to use the more technical term "was officially in labour", I wanted the man with the needle. My husband thought this was really odd since I have sweaty palm, heart-palpitation-inducing fear needles. Candy man, candy man, where are you?

Talking was over. I was pain itself. Then, ahhhh . . . the epidural. Bliss. I was so relieved from the pain that, for the next hour, I practically did a stand-up comedy routine for the student nurse. Things weren't so funny later on but, five years after the birth of my first hugechild, I still remember that moment and wonder: who developed that incredible drug?

Most of us need drugs - from paracetemol to Claritin and Prozac to Viagra - for medical reasons during our life.

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Thousands of scientists in white lab coats, and healers from ancient tribes, have invested years of research into the discovery and development of those medicines.

For decades, we have been told that drugs are expensive because research and development is a very cash-intensive business. Yet this week, Kelly Martin, chief executive of Dublin-based pharmaceutical company Elan said drug prices were too high.

He told the Financial Timesthat the industry should offer groundbreaking new drugs at a lower price.

"The psychology of the industry is that if you are first, the price should be high."

Before you ask if poor Kelly still has his job, let's look at why drugs are so expensive here and why things are changing. Since we have so many bright young things living here (and a low corporation tax rate), we have attracted some of the largest pharmaceutical companies in the world: Pfizer, Johnson & Johnson, AstraZeneca, GlaxoSmithKline, Eli Lilly, Bristol Myers Squibb and Wyeth. The many homegrown drug and research companies are not doing too badly either.

Once pharmaceutical companies develop their branded products, they need to sell them, lots of them, to recoup their costs. Not surprisingly, they market heavily to doctors. The branded paperweights, notepads and pens all keep the drug's name in front of the doctor. More valuable gifts may also be given.

Keeping doctors happy is good business. Pharmacists also make a nice mark-up on the wholesale price of branded drugs - 50 per cent. This is one of the highest margins in Europe.

New drugs need to make their money in the early years, as the patents only last a certain length of time. After that, the formula must be released so other companies can make generic versions of it. Generic medicines are exactly the same as the brand name drug, only without the label and marketing budget. They are a bit like a Skoda to a Volkswagen.

Despite this, branded drugs account for an incredible 95 per cent of the prescriptions written in Ireland. In Britain, only 40 per cent of prescriptions are branded; in Germany, 70 per cent.

If generic and branded drugs are exactly the same, why aren't more doctors in Ireland prescribing the generic version? Do patients insist on designer pills? "No, doctor, my intestines just don't do generic. I insist on paying more for the cute little branded pills. Besides, what would the neighbours think if I brought home a - I feel sick thinking about it - generic prescription!"

Like a new designer shirt, the majority of new medicines do little that is really new. They are often just a twist on an existing design. A study of 2,500 drug introductions between 1997 and 2004 by IMS Health found that 46 per cent of new drugs were like these shirts. Almost 33 per cent of the new drugs were scientifically innovative but only 11 per cent were considered first-in-class chemical entities - or those that were actually original and justified their cost.

Pharmaceutical companies are under serious pressure from consumers and government - those who actually pay for the drugs - to deliver value for money. Countries are introducing systems to assess the worth of the drugs and medical technology they buy.

The National Centre of Pharmoeconomics, for example, is currently conducting assessments for the Health Service Executive (HSE).

Branded prices here have also fallen dramatically after a deal struck by the HSE late last year.

Generic drug prices are the ones that are not moving and in some cases the difference between branded and generic is just a few cent.

We all need good medicine but there are still too many greedy people adding mark-ups to our misery.

Margaret E. Ward is a journalist specialising in personal finance and consumer issues. She is also a director of Clear Ink, the Clear English Specialists. Please write to her at cents@clearink.ie