Merck

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NPR’s All Things Considers documents the creation of the blockbuster drug Fosamax.  Physicians use Fosamax to treat patients with osteoporosis and the less severe osteopenia.  To summarize what took place:

  1. Pharmaceutical companies start lobbying to expand Medicare coverage for bone density tests.
  2. Medicare expands coverage to include bone density tests.
  3. Physicians purchase equipment to test for osteoporosis.
  4. If the physicians find evidence of osteoporosis, they prescribe the drug.
  5. Pharmaceutical companies market the drug to people who do not have the disease (osteoporosis), but who have the potential for developing the disease (osteopenia).
  6. Physicians recommend that marginally ill or healthy patients with osteopenia take the drug.
  7. Patients notice their peers are taking the drug, physicians notice other physicians prescribing the drug, and a tipping point occurs
  8. A blockbuster drug is born.

…drug companies produce incredible drugs that can greatly relieve suffering. But one way they profit from those drugs is to extend their use to as many people as possible, which frequently means that medications are used in populations with milder and milder versions of a disease, so that the risks of medicating can come to outweigh the benefits.”

People who hate the American health care system will say, look at all this wasteful spending.  There are no long-term studies that look at what happens to women with osteopenia who start Fosamax in their 50s and continue treatment long-term.  Those who like the American healthcare system will say that all the wasteful spending helped induce Merck to bring Fosamax to market and the drug truly does help patients with severe osteoporosis.

Neither camp is incorrect.

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There is a law which states that drug companies must sell drugs to Medicaid at their the lowest price.  It turns out the Merck was selling drugs to hospitals at a steeper discount than what they were giving to Medicaid.  Merck will pay $399 million for overcharging in Philadelphia and $250 million for overcharging in Louisiana.

According to the New York Times (“$671 million“):

Merck…was hiding the steep discounts it gave to hospitals by reporting higher prices to the government, prosecutors said.

From 1997 to 2001, Merck also gave money and perks to doctors and other health care professionals to entice them to prescribe Merck drugs, a practice the government called excessive.

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