June 5, 2005
AUTHOR: As Seen on 60 Minutes
BOB SIMON, co-host:If you think you're paying a lot for prescription drugs, you're right. Drug prices have been rising faster than inflation, and Americans pay more for brand name prescription drugs than anyone else in the world. Why? Well, the drug companies and the government say we have to so the companies can keep developing new drugs. But that's no consolation to the tens of millions of elderly an uninsured who can't afford to pay for the drugs they need. You're about to meet a man who thinks he has a solution to the problem. His name is Dr. Peter Rost, and he's a critic of the way drugs are priced and sold in the United States. He also happens to be a vice president of marketing for the pharmaceutical giant Pfizer. He's taken a risky and possibly career-shattering step of opposing his own employer and the rest of the drug industry by saying America can have cheaper drugs if we set up a system like they have in Europe.
SIMON: Drugs are more expensive in the United States than in any other country?
Dr. PETER ROST: Virtually, yes. In Europe, drug prices are about half the price of the US.
SIMON: Half the price?
Dr. ROST: On average. You have certain drugs that cost 10 times more in the US.
SIMON: Are we talking about the same drugs?
Dr. ROST: Yes, we're talking about exactly the same drug made in the same plant by the same manufacturer.
SIMON: Made in the same plant?
Dr. ROST: Yes.
SIMON: That is stunning.
Dr. ROST: It is stunning. Once people become aware of it, it is stunning. And obviously, they get upset.
(Footage of packages of Lipitor; Simon and Rost; Rost at his computer; drugs)
SIMON: (Voiceover) One example: the commonly prescribed cholesterol-lowering drug Lipitor made by Pfizer, the company he works for. In the US, the full retail price is about $76 for a month's supply. The exact same drug costs $55 in Canada and just $43 in Italy. It's the high price of drugs in the US that has outraged Dr. Rost and led him to put his career on the line to try and help America's uninsured find a way to get cheaper drugs. He's a physician and a businessman who's worked in the drug industry for 20 years, both in America and Europe, marketing and pricing prescription drugs.
Dr. ROST: We're the wealthiest nation on earth, yet we have between 49 and 67 million Americans without any kind of insurance for drugs. And they pay cash, full price, and they can't always afford drugs.
(Footage of pharmacists; bottles of prescription drugs)
SIMON: (Voiceover) He says that's because drug pricing is not a free market in the United States the way it is with most other industries. Brand name drugs have patents, which means no other drug company can make the same drug until the patent runs out in 20 years. And remember, when you listen to what he's about to say, that Dr. Rost is an executive for Pfizer, but he's not speaking for the drug company.
Dr. ROST: The industry likes to talk about the US as a free market. A free market in this case simply means that the drug industry is free to set whatever price they want. And mostly patients and others simply have to pay, there isn't a choice. And in a situation like that, you can obviously raise your prices as much as you can get away with.
SIMON: OK. A car company can charge whatever it wants for a car.
Dr. ROST: And what's going to happen is if they double their price on cars, imagine what's going to happen to their sales. A new car is not a necessity, but when you're sick, to get treatment, to get well and to survive, that is a necessity.
SIMON: OK. But couldn't I buy a generic?
Dr. ROST: For some areas, that works fine. For many areas, there aren't generics available.
(Footage of people getting off a bus; Canadian pharmacy; a European city)
SIMON: (Voiceover) Instead of Americans taking buses across the border to Canada to buy affordable drugs, Dr. Rost thinks the drugs should come to them. That's what happens in Europe, where a tightly regulated system of importing drugs from country to country has been in place for over 20 years.
Here's how it works in Europe: pharmaceutical companies sell the exact same drug to different countries at different prices; for example, most drugs cost less in Spain than they do here in Denmark. So an entire industry has developed that buys up drugs in countries where they're cheaper, and sells them in countries where they're more expensive, at a discount of course. The practice is called parallel trading.
(Footage of a Paranova plant)
SIMON: (Voiceover) Paranova is a parallel trading company just outside Copenhagen, owned and run by Eric Pfeiffer. Paranova is stacked with drugs coming from and going to different European countries. Pfeiffer showed us how parallel trading works to get cheaper drugs into the marketplace. This asthma inhaler is expensive in Denmark and cheaper in Spain. Pfeiffer's company bought a lot of it from Spain, and is now re-packaging it to be sold in Danish pharmacies at a discount. They don't make drugs, they're just the middle men.
Mr. ERIC PFEIFFER: Effectively what we do is take it out, put the label on, and then it's put back in the boxes again with a leaflet in Danish language.
SIMON: We sort of walk a little bit into the world of the absurd when you figure out that what you're doing is spending money to make something cheaper.
Mr. PFEIFFER: Yes.
(Footage of Paranova workers)
SIMON: (Voiceover) The original asthma inhaler is never opened. In fact, no one at Paranova ever touches any of the drugs, only the outside packaging, and the factory is inspected regularly by the Danish health authorities.
This same sort of thing could happen between Canada and the United States?
Mr. PFEIFFER: Sure, it could. Or between Europe and the United States.
SIMON: Uh-huh.
Mr. PFEIFFER: And by doing it from Europe, it would even be cheaper than from Canada.
(Footage of packages of drugs; pharmacy)
SIMON: (Voiceover) To help ensure safety in Europe, you can't buy parallel traded drugs over the Internet, only from a licensed pharmacy. Danish pharmacist Uta Porksen showed us how it works for the consumer.
What have you got?
Ms. UTA PORKSEN: A lot of different drugs.
(Footage of asthma inhaler boxes)
SIMON: (Voiceover) She showed us an asthma inhaler that's called Spirocort in Denmark. It happens to be the exact same drug as this product called Pulmicort, which was imported by Paranova.
Can we take them out of the box?
Ms. PORKSEN: Yes, we can.
SIMON: OK.
(Footage of asthma inhalers)
SIMON: (Voiceover) The big difference: the Spirocort costs about $40 more.
If I come in and I've got a prescription for Spirocort...
Ms. PORKSEN: Yeah.
SIMON: ...you're going to give me the Spirocort, right, the more expensive one?
Ms. PORKSEN: Yeah. The law in Denmark is--is made the way that I have to ask the patient if he wants a cheaper one. And we always ask the patient.
SIMON: OK. So you ask me if I want one that's $40 less.
Ms. PORKSEN: Yeah.
SIMON: And I'll ask you `Is it the same thing?'
Ms. PORKSEN: Yeah.
SIMON: And you'll say yes?
Ms. PORKSEN: Yes.
SIMON: And I'll say, `Well, give me the cheaper one.'
Ms. PORKSEN: Yes, and you will get the cheaper one.
(Footage of Paranova workers)
SIMON: (Voiceover) But is parallel trading safe? It depends who you ask.
Mr. PFEIFFER: I would be happy to let FDA in here to see how we do it. And they would have no problem whatsoever.
SIMON: So if the big question for Americans, as it is, is it safe to ship drugs from country to country as long as it's properly regulated, your answer is?
Mr. PFEIFFER: Yes, for sure.
(Footage of drugs on a conveyor belt; pharmacist; Pfizer plant)
SIMON: (Voiceover) But in America, the drug companies say they aren't so sure that importing drugs from country to country really is safe. Pfizer, the drug company Peter Rost works for, declined to talk to us about Rost, but Pfizer's vice president of global security, John Theriault, did tell us that importing drugs is potentially dangerous.
Mr. JOHN THERIAULT: The position that we take is that the more times a product changes hands, the more opportunity there is for the introduction of bad medicine.
SIMON: Some people might be skeptical of your saying it's not safe to import drugs from overseas. You do work for Pfizer, and all the drug companies tend to lose money if drugs are cheaper.
Mr. THERIAULT: I'm not making a pricing argument today at all, but I don't think that patient safety should be sacrificed for affordability. I think there needs to be a solution to this problem, but opening the floodgates to product from all over the world to freely enter the US market I think is a mistake.
Dr. ROST: Clearly, this is a matter of profits, it's not necessarily a matter of safety. I mean, I think it would be derogatory to claim that Americans would not be able to handle re-importation when the rest of the educated world can do this.
SIMON: How many cases of death or serious disease have there been due to this practice?
Dr. ROST: There is none known due to this practice.
SIMON: So, it works?
Dr. ROST: It works very well.
SIMON: Has anyone in Europe been hurt by taking a bad drug because of parallel trading?
Mr. THERIAULT: I don't know that anyone has. But the point is that--that we're making the safety issue before that happens.
Dr. RICHARD CARMONA: My job is to ensure the safety of the American public.
(Footage of Simon and Dr. Richard Carmona)
SIMON: (Voiceover) Dr. Richard Carmona is the surgeon general of the United States. He recently chaired a task force to study drug importation, which concluded that building a safe system to do it in the US would be difficult and very expensive.
Dr. CARMONA: It could be done. The evidence that we have says it could. But the cost to do it, the additional regulatory authority necessary, the hiring of more people, then you have to step back and say, `Well, is that cost going to outweigh any savings benefit that we provide the American public?' And that's a very tough one.
SIMON: Why are drugs so much more expensive in the United States than they are in almost any other country?
Dr. CARMONA: The United States does a lion's share of the research in the world, the research and development of drugs. So it's why the Canadian government sells it cheaper, they don't have the overhead.
(Footage of a drug commercial; Peter Rost walking down a sidewalk; drug researchers)
SIMON: (Voiceover) The surgeon general's task force report agrees with the pharmaceutical companies that, if they lower their prices, they'll spend less on creating new drugs on R&D. Peter Rost doesn't buy that argument, he says drug companies won't cut back on research and development because it's their bread and butter; they have to develop new drugs or they won't have anything to sell when the patents on their existing drugs expire. He recently testified before a Senate committee urging Congress to pass a bill legalizing the importation of cheaper drugs from overseas, even though his own employer is against it.
Dr. ROST: (At Senate committee) Stopping good reimportation bills has a high cost, not just in money but in American lives.
Senator EDWARD KENNEDY: Now, Dr. Rost, do you still work for Pfizer company?
Dr. ROST: Yes, I do. Yes, I do.
(Footage of a Pfizer building; Pfizer letters)
SIMON: (Voiceover) Pfizer, however, claims that Rost lacks the credentials to say anything about importing drugs from other countries. The company sent a letter to the Senate committee saying, "We have no basis to support Dr. Rost's purported expertise in this area." Pfizer also sent 60 MINUTES a letter saying, "Dr. Rost has no substantive grasp of how importation threatens the safety of the US drug supply."
Dr. ROST: It's an attempt to discredit me. And they should have known better because they know that I have a lot of experience in this area. So it's completely wrong, and they knew it. I mean, you have an insider here who knows how things really work, who has lived this.
SIMON: When you go to work, what kind of response do you get from your co-workers?
Dr. ROST: The majority of the feedback has been basically treating me like a sinner, somebody who has fallen from the righteous way.
(Footage of Rost's home; Rost at computer)
SIMON: (Voiceover) Rost works from home a lot now. He's still employed by Pfizer, but he's not sure how long that will last.
Do you ever look around at this lovely house of yours and wonder whether it might go away?
Dr. ROST: Every day.
SIMON: A bill has been introduced in the Senate that, if passed, would allow the United States to import cheaper drugs from other countries just as they do in Europe. The pharmaceutical industry opposes it, but the large drug companies have announced they're expanding their programs to offer low-cost drugs to the poor.
