Infographic Of The Day: The Dirty Ties Between Docs And Drug Makers

There's a perverse system of incentives behind the spiraling cost of drug prices.

Amid all the debate about our rising health care costs, one thing you almost never hear about is rising drug costs. Think about it: You hear plenty about emergency rooms and chronic care, but nothing about drug prices, which are the main interaction most of us have with the medical industry.

And that's totally ridiculous: No wonder health care costs are rising so fast, when your doctor prescribes you a $100-a-month drug that could be replaced by a generic, but whose cost neither you nor your doctor is aware of, thanks to the mediating presence of an insurance company.

There's something fishy afoot, and all you need to do is follow the money, as this superb, vitally important infographic from MedicalBillingAndCoding.Com does. Relying on hard-core investigative reporting from the likes of The New York Times and Pro Publica, it lays out the rivers of cash that drug makers use to ingratiate themselves with the medical community.

Obviously, the drug makers have every incentive to sway the decisions of doctors. They're protecting a $300 billion industry; keeping drug prices rising at an astronomical 8% a year is just good business. (If 8% a year doesn't sound like much, consider: If something whose cost is $100 now rose by that rate for 10 years, it would cost $216.)

prices

[Click to view full-sized]

Doctors, meanwhile, are the decision-makers in this whole process. And to be fair, they often don't realize that to prescribe a brand-name drug often means switching from a generic that costs many times less. Costs are invisible to them. Which perversely means that the money that drug makers pump into the system has that much more power to sway their decisions. If they're constantly being cozied up to by drug makers pushing potentially spurious benefits, why wouldn't they prescribe those brand names?

On the one hand, you have huge informal perks offered to practicing doctors, and on the other, you have a whole class of shady doctors hired to push drugs onto their peers. And these guys are often straight-up criminals:

doctors

Isn't all this wrong, you might ask? Doesn't it mean that doctors are swayed to over-prescribe drugs, and that big pharma has every incentive to make that happen? In fact, yes. And many of the major drug makers have paid hundreds of millions — even billions — of dollars in fines, related to such charges. But there are resources you can tap, if you want to help address the problem:

what-to-do

Granted, by acting according to those suggestions, you seem to be helping no one except maybe the insurance companies (although rising drug prices also allow them to justify higher premiums). But maybe it's enough comfort to know that you're helping fight the problem, just a little bit.

If you want to learn more about the perverse system of incentives that creates all this misbehavior in the drug industry, we highly recommend this report from NPR's Planet Money podcast.

[Click here to see the infographic larger; Hat tip to WeLoveDataVis]

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5 Comments

  • Abhijit Pednekar

    I guess Cliff seems to be oblivious of the fact that generic drug companies are lobbying heavily with policy makers in developing countries like India, China etc to use only generic drugs in public health systems. While apparently the generic drugs appear to be cheaper  at face value, the difference becomes clear in prospective outcomes research studies. In India in particular, the Medical Council of India guidelines are open flouted by most generic drug makers because the chances that anyone would be brought to book is 1 in zillion. Always remember, without an original , a copy cannot exist. Some credit is definitely due to the originator drugmakers. To brand them as crooks is the result of watching too many movies on satellite TV without being in touch with reality....

  • lee de cola

    these are beautiful examples of datagraphic design running amok...why not use simple points, lines, circles and rectangles to let the numbers speak for themselves?

    Lee De Cola
    Data to Insight

  • Cliff Kuang

    Ha that wasn't an intern Lev -- that was me. Entered the wrong growth rate in my formula! Was calculating for 10% growth.

  • Lev

    The $100 growing at 8% math is way off, fyi. After 10 years, that would become only $216. Still a lot, and, of course, 216 sounds an awful lot like 260 when an intern is yelling from across the office.

    Still, a very interesting article with helpful resources. Well done.