Why Medicines Cost Too Much -- Blame the Lawyers!

So I've stated that the problem is that medicines in this country cost too much. But why? There are many reasons. The first, and probably the most or second-most important one, has to do with lawyers.

The next time you have to actually pay for a prescription (yeah, I know, there are oh so many of you out there who never see anything but a co-pay, and that's also part of the problem), when you take out your wallet or your credit card and hear it scream as the money is ripped viciously out of it, blame a class-action lawsuit. Or two. Or three. Or fourteen. Or any big number you want to pick; at the rate we're going in the USA, we'll reach it right quick. The class-action lawsuit is sucking money out of our economy at a tremendous rate, and that rate is accelerating. And only a certain group of individuals benefits from this vacuum effect -- the lawyers.

Don't get me wrong here. I am not anti-lawsuit. If someone is truly harmed by a product or a person or a corporation, they certainly have a right to seek legal redress in a court of law. Unfortunately, the way class-action lawsuits work today, you don't have to be actually harmed by a product, etc., in order to sue. Just using a product puts you at potential harm. Never mind that you never experienced any adverse reaction from the product. You might have experienced one. And that's enough to put you and everybody else that walked by the drug bottle into a group (a class) that's so big that the judgment (when it comes) has to be big as well.
What's wrong with this? In legal terminology, a harm is called a tort. In order for a tort to have occurred, you must have come to harm. A potential harm is not a tort. It didn't happen. No harm, no foul, no reason to be compensated. Or that's the way it should be. That's the way it used to be. Until the lawyers realized that the bigger the group, the bigger the judgment, so they came up with a way to to maximize the size of the group by including even the potentially harmed, who technically have not received a tort. Supposedly the basis is that of psychological or emotional distress (oh, my, it could have been me!) but that's a bunch of hogwash.

Let's look at an example. A few years back, a diabetes drug called Rezulin came onto the market. It was the first in a new class of diabetes drugs that worked by improving the resistance to the action of insulin that is the hallmark of non-insulin-dependent diabetes mellitus. But there was a problem. A tiny fraction of the human population contain a gene that causes them to react badly to Rezulin thus causing liver damage and/or failure. The percentage of people who have this gene is so small that the reaction could not have been statistically detected by even the largest reasonable pre-release drug trial. Within the first 18 months that Rezulin was on the market, over 1.5 million people took the drug. Tragically, 64 people (that's 0.0043% or less -- less than 1/200th of a percent) were harmed by the drug and either died or required liver transplants. Those 64 people or their families had a right to sue the manufacturer (Warner-Lambert, now owned by Pfizer). But what happened? Ultimately a series of class-action lawsuits were filed, on behalf of not just the 64 injured parties, but on behalf of almost everyone who ever took the drug. Pfizer settled most of these suits, after losing the first few, to the total amount of several hundred million dollars. But how was the money divided? The persons actually harmed were compensated adequately; the exact amounts were not revealed. The vast majority of the other "litigants" got a $25 coupon to use on their next prescription fill. But the majority of the money, tens or even hundreds of millions of dollars, was divided by the handful of lawyers that tried the cases.

This lawsuit abuse is not just in the realm of medicine however. I recently saw a "Notice of Proposed Class-Action Settlement" in the TV Guide. It was a suit brought against 3M Corp alleging that their rebate program for 3M tape products caused people to pay more for their tape than they should have. (This fails to consider that a retailer can charge whatever he wants for a product; it's called capitalism.) The class here is defined as anyone who bought 3M tape products between certain dates that extend over many months to a year or more. (Potentially including almost every American.) The proposed settlement was for 3M to pay the 15 "representative" members of the class a sum to compensate them for their time, which sounded like it was going to be around $15,000 each. 3M would also donate $41 million of tape products to various charities. There would also be a fund established to pay the lawyers which would not exceed (and I'll bet would not be less than) $7 million. Who is getting the greatest benefit here? It would seem to be only the lawyers!! As an aside, I bought 3M tape during the specified period. No one put a gun to my head; if I had thought the price was too high, I would have bought another brand. I'm writing a letter to the court asking to be excluded from the class as I refuse to take part in the legal extortion of an American corporation.

Let's look at one more example in the field of medicine, and here I'll demonstrate how this is driving up the cost of your medicines. Take for example poor Wyeth. They made most of the products now more readily recognized by the pseudonym Fen/Phen. Wyeth has so far agreed to pay in settlement of Fen/Phen lawsuits (and more are still pending) 27 Billion dollars. That's billion with a 'B'. Now, do you think Wyeth has $27 billion sitting in a vault or a back room somewhere? Of course not. Where will they get that money? Why, from selling drugs -- that's what they do. If they decide to recoup this loss with the sale of the next 500 million prescriptions that they sell, which may take them 7 or 8 years or more, that increases the price of each of those prescriptions by $56! Your $30 drug is now a $86 drug. Your $60 drug is now a $116 drug. And on and on. Such is the effect of only one set of lawsuits against one drug company regarding only one drug. And there are many more where this one came from.

The Vioxx lawsuits against Merck will ultimately lead to payouts well in excess of $27 billion. And poor Wyeth faces an even bigger payout when the Premarin suits start coming in (despite the fact that they are unwarranted). And these suits are just the tip of the iceberg. Only this iceberg isn't just going to sink the Titanic, or Wyeth, or Merck. It could sink the entire economy. You can't destroy giant pharmaceutical companies (and yes, these suits could bankrupt these companies) without there being a ripple effect through the entire economy. Not to mention the detrimental effect on the advancement of pharmaceutical research.

Oh, by the way, all that money going to the lawyers? Think it comes from the drug companies? You'd be wrong. Ultimately it comes from you and me. Let's see......that's $90 from every man, woman, and child in the United States just from the Fen/Phen suits. It was a little less from the Rezulin suits, and it'll be a lot more for the Vioxx, Premarin, et al. suits to come. Just make your check out to your local pharmacy.