Mar 4, 2002
Last year the 18 biggest drug companies had a rate of profit of 28.4% on stockholders’ investments, almost four times the average rate of profit of the 900 largest corporations in the United States. Nor was 2001 an exceptional year. The top five pharmaceutical companies have averaged a rate of profit of 30% a year since 1988.
The drug companies like to say that they need high profits because of their high research costs.
No, most of the research is, in fact, done by universities and government labs and is funded by the taxpayers. Working people, who paid taxes all their lives, help finance this drug research. But when they need drugs, they have to pay for the super profits of the drug companies.
Business Week certainly told the truth about drug prices: “the price set for a drug has little to do with development costs. Instead, pharmaceuticals are just like any other product: The producers charge what the market will bear.” And the market bears an awful lot since people often need drugs like Lipitor to keep them alive.
Modern medicines offer remarkable benefits to their users, relieving pain and speeding healing. But the production of pharmaceuticals is done entirely for profit.