Fighting Cancer Now a Matter of Money - When is a Profit Enough?

Those suffering from breast or lung cancer have something new to anguish over. In addition to dealing with chemotherapy, weakness and mortality, they now must worry if they have the resources necessary to pay for extremely expensive medicine. Not the $50,000 price tag associated with current therapies, but $100,000-for just one year's treatment.

That is what many cancer patients will have to pay for a course of Genentech's Avastin, a drug shown in clinical trials to extend the lives of late-stage breast and lung cancer patients by several months when combined with existing therapies.

Avastin is currently used to treat colon cancer, at a price of about $50,000 a year. But since it will be used at higher doses for lung and breast cancer the cost will double, to about $8,800 a month. Even though the additional cost of producing a higher dose is minimal, Genentech does not plan to reduce the unit price.

With a price this high, some cancer patients will be priced out of the treatment; namely, those without insurance and those with high deductibles. But even some patients with insurance are thinking hard before agreeing to treatment, as out-of-pocket co-payments for Avastin could easily run $10,000 to $20,000 a year.

Genentech is currently seeking FDA approval to sell the drug specifically for the treatment of breast and lung cancer. Until the FDA gives the okay to sell Avastin as treatment for these diseases, insurance companies will not pay for it and patients must sign a waiver agreeing to reimburse the hospital for the price of treatment.

Avastin went on sale during the first quarter of 2004 and had 2005 sales of $1.1 billion. With this new application it has a potential patient pool of hundreds of thousands of people, meaning its United States sales could grow nearly sevenfold-$7 billion by 2009. Genentech's profits are forecast to triple to $4 billion in 2009, as sales climb to $18 billion.

Herein lays the moral-ethical question: When is a profit enough?

In the past, drug manufacturers said high drug prices were necessary to recoup the large research and development costs associated with new drug development. For every successful drug that comes to market, dozens of other drugs in development could not be sold, for a variety of reasons: the drug did not perform as anticipated or perhaps could not gain FDA approval.

Genentech's reasoning for the high cost of an Avastin treatment for lung or breast cancer is decidedly different. The company and its majority owner, Roche, say the inherent value of life-sustaining therapies is the justification for a high price. With 2005 sales of more than $6 billion, pure profit also seems to be a motivator for the South San Francisco, CA-based firm.

"As we look at Avastin pricing, right now the health economics hold up, and therefore I don't see any reason to be touching them," said William M. Burns, the chief executive of Roche's pharmaceutical division and a member of Genentech's board.

Genentech's president of product development, Dr. Susan Desmond-Hellmann, said that Genentech set Avastin's price based on "the value of innovation, and the value of new therapies." To assist those who cannot afford treatment, Genentech has patient programs and last year contributed $21 million to charities that help patients with their insurance co-payments, she said.

Because of Genentech's status as a leading developer of cancer therapies, some doctors fear that the company's pricing plans for Avastin may encourage other companies to charge more for their own oncology drugs. If this happens, the overall costs of cancer treatments may rise to unsustainable levels.

Many medical professionals are opposed to the ever-rising costs of pharmaceuticals, but few are willing to discuss it. Efforts were made to reach local medical professional for comments. No pharmaceutical sales representatives were able to comment, as all major drug companies require employees to sign strict non-disclosure agreements. Pharmacists at chain pharmacies such as CVS and Walgreens are also not permitted to comment either on or off the record, and pharmacists at the local independent pharmacies contacted were hesitant to comment.

Robyn Gleason, MSN, MPH, ARNP, PhD(c) and Bethune-Cookman Nursing professor, was willing to comment. "They'll charge what the market will bear," she said in an interview. "I don't think the drug companies are justified in charging $100,000 a year for cancer treatment. But look at the cost of HIV drugs. It's no different."

"I'm sure it cost them a lot to develop this drug. But I'm not so sure it costs them enough to justify the $100,000 price," she added.

So why do drugs cost so much? Is it because of the huge R&D costs, or something else? A report by the U.S. consumer group Families USA refutes the long-standing pharmaceutical industry's claim that high prices are needed to sustain research and development-an argument not only advanced by industry, but by major industrial countries, the World Trade Organization, and even parts of the World Health Organization.

The report, "Off the Charts: Pay, Profits and Spending by Drug Companies," documents that drug companies spend more than twice as much on marketing, advertising, and administration than they do on R&D. It also purports that company profits, which are higher than those of all other industries, far exceed R&D expenditures, and that drug companies provide lavish compensation packages for their top executives. These expenses have to be recouped, and as of late the method for that has been to charge more and more for drugs.

An outspoken critic of exorbitant prices is Dr. Marcia Angell, author of the book The Truth About Drug Companies: How They Deceive Us and What to Do About It. In her book Dr. Angell argues against the pharmaceutical industry's reputation as an "engine of innovation." According to Dr. Angell's research, the top U.S. drug makers spend 2.5 times as much on marketing and administration as they do on research.

She also found that a third of the drugs marketed by industry leaders were discovered by universities or small biotech companies and sold to the public at inflated prices. She cites cancer drug Taxol, which was discovered by the National Institutes of Health and then sold by Bristol-Myers Squibb at a treatment cost of $20,000 a year-20 times the manufacturing cost. Interestingly, Bristol-Myers Squibb pays the NIH only 0.5% in royalties.

The real test of legitimacy for extremely high prices is, how much profit are pharmaceutical companies making?

A PricewaterhouseCoopers study cataloged the profit per dollar of the largest, economy-driving industries. In the third quarter of 2005 the overall average was 18.5 cents of profit for every dollar of sales. The oil and gas industry earned 8.2 cents; banking, 18 cents; transportation a paltry 0.2 cents; and software, 9 cents. The pharmaceutical industry, however, earned 18.5 cents of profit for every dollar of sales-the highest of any industry.

Angell reports in her book that the top ten pharmaceutical companies make more in profits than the rest of the Fortune 500 companies combined. For many, this is evidence enough that too much is being charged for drugs.

Mandy Minor is the marketing director for St. Petersburg web design firm J Allan Studios.

Does American Manufacturing Really Matter?

The "Post-Industrial"Theory

It has recently become fashionable to talk about the U.S. as a "post-industrial" economy. The essential argument is that as national economies mature they move from making things (i.e. industrial economy) to designing things and providing the services necessary to support the making of things (i.e. post-industrial economy). Any pain felt in the older sectors of the economy, so the theory holds, is only temporary, as capital moves to newer economic sectors, and older workers are retrained and likewise moved into growth sectors. Under this theory, the economy's wealth never disappears, it just changes from one form into another (e.g. like energy).

Not All Economic Sectors Are Created Equal

Historical trends show that manufacturing is the economic engine. Since the advent of the first industrial revolution in the late 18th century, begun in England and driven largely by coal, the wealth of a nation has been determined by the vigor and competitiveness of its manufacturing sector. And since the time of the second industrial revolution, in the mid-19th century, driven largely by steam and other emerging energy technologies, the U.S. has been the leader in manufacturing technologies and production. History has clearly shown that nations which export manufactured products tend to generate higher rates of growth in GDP which supports higher individual incomes and produces the tax revenue necessary to produce a better quality of life for a nation's citizens.

Trends of American Manufacturing Under Fire

As a manufacturing engineer, I have come to discover that much of America's manufacturing sector has moved abroad to foreign markets. But I am not just talking about the making of products. I'm talking about the ability* to make products. Industrial equipment needed for manufacturing production, such as CNC Laser Cutters (used to process sheet metal) are now made in other countries and imported. What happens when America's economy depends on other nations for its manufacturing infrastructure? For starters, foreigners begin directing warnings to America's president, protesting Protectionist activities. They do not want America to "Buy American." They want America to buy European or Chinese products. That's because they know that the engine of an economy is manufacturing. And they want America's manufacturing sector to remain in their country rather than here.

Wealth Producing and Wealth Consuming Sectors

A national economy begins to decline as its wealth-producing sector shrinks. Wealth-producing sectors of the economy include manufacturing, agriculture, and mining. Manufacturing is traditionally defined as the process of transforming raw materials into new products by the application of physical, chemical, or mechanical processes, and includes many separate industries: aerospace, textile, computers, automobiles, pharmaceuticals, steel, printing, etc. When it comes to investing in the American economy, a distinction must be made between wealth-producing and wealth-consuming sectors of the economy, such as government, banking (yes, banking), information services, hospitality, education, insurance, health care, and consumer services. These sectors maintain and use physical wealth, but they do not create it. They depend on manufacturing and other wealth-producing sectors of the economy for their growth.[i]

Conclusion

American manufacturing is historically responsible for the relatively higher standard of living enjoyed by Americans compared to other countries, and a thriving manufacturing sector is necessary to allow that trend to continue. Manufacturing drives the engine of the US economy: this sector is responsible for 90% of new patent applications, annually. Manufacturing drives growth and innovation, investment in technology, new products and processes, and provides Americans with some of the best consumer products ever created.

If the manufacturing sector continues to move overseas, so also will the wealth previously enjoyed by Americans.

[i]. See David Friedman, "No Light at the End of the Tunnel, "Los Angeles Times, June 15, 2002; reprinted on New America Foundation web site.

Joel Barrett is a Manager and AutoCAD Engineer for a metal fabricating company in Buchanan, MI.
Berrien Metal Products, Inc.
Phone: 800-978-5300
Fax: 269-695-5300
Email: joel@metalfabrications.com
Website: http://www.metalfabrications.com

Social Media: Why the Number of Followers Matter

Last week, we talked about the fact that having great numbers with your social media outreach on Twitter, Facebook and LinkedIn was not as important as what you did with them. My point was that having good numbers alone was not the goal in and of itself, that you needed to serve those followers with great information so they have a reason to continue following you.

This week, I want to go back and focus on the importance of the numbers, because I feel I may have done that point a bit of a disservice. You see, the numbers of followers you garner will be the driver of your efforts and provide an instant way of establishing your credibility with audiences who may not have ever heard of you.

The principle is simple, really. The soul of public relations is the power to enhance someone's credibility with their core audiences. Whether that audience consists of potential customers, readers or clients, they all need to see you as a credible expert in your area. If they don't, you'll never be able to move past the word "potential."

The toughest question to answer when someone is introduced to your work is, "Who are you?" If they don't know your name or your reputation, they need to find out something about you up front that is either compelling or unique. So if the answer to that question isn't something like, "He's the guy who invented the rotary engine (that was Felix Wankel in 1957, by the way)," then you need something else to establish your credibility.

Now if you have a strong following, people don't necessarily need to know about you or your expertise. All they need to do is click on one of your profiles to see you have 10,000 or 20,000 followers, and it instantly communicates that you are an expert and that what you have to offer has value.

Moreover, the media is actually starting to use the social media contacts of the guests they book to promote their shows. Recently, we booked a client on a national TV show and the producer emailed back and asked us if the guest could promote his upcoming appearance on his Twitter and Facebook accounts. This particular client didn't have a Twitter account and his Facebook account is grossly under-serviced. However, my campaign manager did comment that I had 55,000-plus followers across all my accounts and that I'd be happy to put out the word. The producer was very happy and will now be more inclined to give consideration to all the guests we pitch him, because he knows we can help promote our guest appearances. In the fight for ratings, sometimes a few thousand viewers can make the difference between a show winning its slot or losing to a competitor, so media outlets are doing everything they can to boost ratings. If you're able to help them with that, and you have a sizeable social media following that instantly establishes your credibility, you'll be an imminently more attractive guest.

The most important thing to remember is that social media is not just a "fun" thing to do. This is serious business and you want to approach potential followers with strong, expert advice and education. Many people don't put a lot of thought into who they decide to follow, so if you can provide a modicum of substance in your social media dealings - as I detailed last week - then you will find it easy to add followers on a regular basis.

And, having a large number of followers can be like gold for you and your business, because it can make the difference between someone encountering your name online and saying, "Never heard of him," or "Never heard of him, but 20,000 other people have, so he must be good."

For 20 years Marsha Friedman has been a leading authority on public relations as CEO of EMSI. Go to www.emsincorporated.com to signup to receive her free weekly PR Tips today! More resources for authors can also be found at www.publicitythatworks.com. Or call at 727-443-7115, ext. 202, or email at mfriedman@emsincorporated.com.