Disease Is A Profitable Business

Sometimes useful insights come from unexpected places. Fortune Magazine publishes an annual report on Americas top 500 companies. Included in this is an overview of business sectors and how they have fared the previous year. Not surprisingly, 2009 was not a great year for many businesses.

There are of course exceptions. To quote Fortune, “For the drug industry it is as if the recession never happened”. Earnings in the pharmaceutical industry were up by one-third last year. Even sales of Botox came in at $1.3 billion; slightly down on 2008. A numbers of reasons were given for this. The most significant one in my opinion was that the industry is credited with the ability to raise prices even in tough times.

Given that this all occurred against the backdrop of major debate over health reform, lack of insurance cover for many, and the costs of healthcare in general, makes it all the more remarkable. So why is the pharmaceutical industry able to raise prices and make money when times are tough?

There are a few reasons for this. It is held that people are more likely to get sick in hard times, although this has been strongly disputed. Medications are seen as essential so people may cut back on other items before pills. However given that much of the cost is borne by insurers this is not the whole answer either.

In my view the reason is simple economics 101-supply and demand. There is an increasing demand for medications and this allows the suppliers a greater degree of price control than in areas where demand for product is less. Doctors, many of whom unfortunately see pills as the answer to most problems, drive much of this demand.

This was illustrated perfectly by a letter I got from a cardiologist in which he extols primary care physicians on the importance of treating diabetics with high doses of statin medication together with at least two blood pressure medications. As usual this advice is based on “evidence” which comes from trials. Whether or not pharmaceutical manufacturers funded these trials is not clear.

The letter did not mention weight loss, exercise or stress management. It also did not mention the study earlier this year, which showed once again that weight loss leads to lower blood pressure. The lead author of this study concluded, that it was important for people to know that they can try diet instead of pills and get the same results.

Other studies have shown reduced rates of heart disease and stroke in people who ate more foods containing vitamin B6 and folate. Those who ate more processed foods and foods with added sugar had higher rates of heart disease. Olive oil reduces inflammatory activity, again reducing heart disease as we see in those following a Mediterranean diet.

People see the world through their own eyes. Unfortunately doctors, in many instances have become conditioned to see pharmaceuticals as the answer to lifestyle related conditions. For some people there will be a role for pharmaceuticals. However the best solution to lifestyle related conditions are lifestyle changes.

These will not boost the profits of the drug industry though.