America’s leading drug producer, Pfizer Inc, recently called off its much disputed plans for a US$160 billion merger with its Irish counterpart, Allergan Plc, to slash its US tax bill.

However, an earlier decision to hike the prices of more than 100 of its products by as much as 20 per cent, as of January 1, still leaves a bitter taste in a lot of mouths.

Pfizer is not the only drug maker which has been hiking the prices of pharmaceuticals recently. But its attempt to merge with Allergan to reduce its taxes, as well as the sudden increase in the prices of so many drugs at one time, has kept it much more in the news than its rivals.

“In response to complaints that US drug prices are at least twice those in any other country, Pfizer and other US pharmaceutical companies have argued that the profits from these high prices—enabled by a generous intellectual property regime and lax price regulation—permit more R&D to be done in the United States than elsewhere,” according to a recent Reuters report.

“Yet from 2003 through 2012, Pfizer funneled an amount equal to 71 per cent of its profits into stock buybacks, and an amount equal to 75 per cent of its profits into paying dividends to shareholders. In other words, it spent more on buybacks and dividends than it earned, and tapped its capital reserves to help fund them. The reality is, Americans pay high drug prices so that major pharmaceutical companies can boost their stock prices and pad executive pay,” the report added.

The Harvard Business Review is quoted as stating in the same article that:

“The big drug companies now concentrate mainly on the late-stage development of drugs they’ve licensed from other sources, as well as on producing variations of top-selling drugs already on the market —­ called “me-too” drugs. There is very little innovative research in the modern pharmaceutical industry, despite its claims to the contrary.”

Locally, pharmacies have expressed concerns about the dramatic price increases, and the effect it can have on Jamaicans unable to access assistance from the Jamaica Drug For the Elderly Programme (JADEP), which was launched by the Ministry of Health in 1996, or the National Health Fund (NHF) card which provides subsidies to beneficiaries of all ages to treat 16 chronic illnesses.

In response, new Minister of Health, Dr Christopher Tufton, told the Jamaica Observer recently that his administration would focus on two basic areas: (1) Looking at how it can pool its resources to get the best prices for drugs, and; (2) looking at the issue of substituting more generic drugs for the name brands, and forming an alliance to increase access to the generic drugs, as well.

The current government has also given the country an assurance that it will not back down from its commitment to continue with its no-user fee policy at public health institutions to ensure that Jamaicans who are ill have access to these facilities even if they are broke.

But there are conditions attached to these benefits, including the fact that while JADEP provides a specific list of drugs free of cost to beneficiaries who are 60 years and over, for the treatment of 10 chronic illnesses, if a beneficiary has received their monthly supply, they cannot return to the pharmacy for a refill until 24 days have passed.

So obviously, when Jamaicans read in the international press that Pfizer has raised the prices of more than 100 drugs by up to 20 per cent as of January 1, this year, it sends jitters throughout the health sector.

But, newly appointed chairman of the Pharmacy Council, Dr Norman Dunn, believes that the answer to what is now accepted as constantly increasing drug prices is for more national focus on healthy living to reduce the spread of diseases, and the introduction of a national health insurance scheme to assist the public in meeting the cost of treatment, including purchasing drugs.

“With proper dieting and exercising, we can reduce the need for drugs for several diseases and thereby reduce the need for funding to deal with these diseases and make it part of the work paradigm,” Dr Dunn told the Business Observer yesterday.

A pharmacist and pharmacy owner himself, he does not think that local drug distributors and retailers will be seriously affected by a focus on a healthy lifestyle, because people will live longer and need drugs for various reasons.

He is also suggesting that private companies be encouraged to promote healthy living at the workplace by being offered tax credits for introducing these programmes into their firms.

However, while there is no doubt that Jamaica will have to move towards a national policy on healthy living to remove the scourge and cost of especially non-communicable diseases (NCDs), in the meantime, the spiralling cost of the prices of drugs that are currently in demand will continue to be a major challenge for the government and the health sector.