Home > Articles > Business & Management > Global Business

Reasonable Rx: Solving the Drug Price Crisis

There is a huge outcry about prescription drugs, particularly their high cost. The authors of "Reasonable Rx" review the prescription drug crisis in the U.S. and suggest that there is a reasonable solution to the growing problem.
This chapter is from the book
If you want the rainbow, you gotta put up with the rain.
—Dolly Parton

Is it any wonder that there’s such a huge outcry about prescription drugs, particularly their high cost? Consider this: If your only source of information was commercial television, no one could fault you for thinking that GERD was a public health crisis in the United States on the scale of AIDS in Africa. In the time it takes you to read this paragraph, you can reasonably assume that American TV watchers saw dozens of advertisements encouraging them to check with their doctors to make sure they don’t need to treat GERD with the Purple Pill.

What’s GERD? It’s the acronym for gastrointestinal esophageal reflux disease, commonly known as acid reflux disease—a condition in which the stomach releases an acid back into the esophagus. Until the 1980s, physicians rarely used the term, and when they did mention GERD it was probably to describe a complication of a rare pancreatic disorder. But that was before drugs like Zantac and Nexium came onto the market.1

In the late 1970s, drugs began to be introduced to reduce the acidity in the gastrointestinal tract, which is a source of unpleasant symptoms that can sometimes be related to serious illness. These innovative drugs worked so effectively that they were imitated and, by the end of the 1980s, at least four drugs were doing very well in the marketplace: Zantac, Tagamet, Pepcid, and Axid. Then, in the 1990s, the next generation of acid-reducing medicines, with more elegant molecular mechanisms, became even bigger blockbusters than the originals. You know them as Prilosec, Nexium, and Prevacid.

In 1981, Glaxo (now part of GlaxoSmithKline) introduced Zantac, the trade name for ranitidine, for the control of gastrointestinal acidity. This chemically innovative drug inhibits the stomach’s production of acid, and its underlying process won its discoverer a Nobel Prize. While actually the second entrant in its therapeutic class (some call this a “me-too” drug), after Tagamet (cimetidine), Zantac had few adverse side effects and few negative interactions with other drugs. Glaxo wanted to match the success Smith, Kline, & French (also now part of GlaxoSmithKline) had with Tagamet and produced an excellent medicine—one promoted aggressively at a premium price.2

The initial indication for Zantac and similar drugs was to control and treat peptic ulcer disease. Manufacturers commissioned economic cost-benefit analyses to demonstrate that the drugs saved money by reducing the need for hospitalizations and surgical procedures, and the anti-ulcer drug market grew rapidly. But as successful as Zantac was in this market, a much larger market remained untapped—but not for long.

Physicians soon began to prescribe Zantac off label—in other words, for something other than what the drug was approved for (it’s perfectly legal to do this)—to control symptoms of acid reflux from the stomach to the esophagus and throat. Glaxo saw an opportunity and quickly won approval from the U.S. Food and Drug Administration (FDA) for its drug to be prescribed to treat GERD. For some people, GERD can lead to serious illness if left untreated—but most people who take medicines such as Zantac are not part of that at-risk population.

Tens of millions of people now have a box of Zantac or Prilosec, which are no longer prescription drugs, in their medicine cabinets. You take them when you have heartburn—a condition experienced episodically or chronically by millions of people. What was once classified as simply a physical discomfort has been medicalized by association with a sometimes serious disorder. And while you’re busy buying and taking those pills for something that you’re now told is a disease, a drug company is reaping the profits.3

The Zantac story illustrates how business has encroached on science in the world of pharmaceuticals. It’s surely not the most monumental example: The drug’s importance pales in comparison to cancer treatments, HIV drugs, or a number of others for much more serious diseases. But how Zantac came to be in your medicine cabinet is symptomatic of something that happens with drugs for more life-threatening conditions.

“There’s little point in diagnosing a disease until something can be done to treat it,” a physician colleague of ours is fond of saying. His point is aptly illustrated by the popularity of Zantac and several other new medication classes. As the focus of new drugs went from treating acute ailments such as infections to chronic ailments such as depression, drug companies set out to expand the markets for their products. When newly discovered drugs had beneficial effects that went beyond existing diseases they could treat, the industry worked to instill among consumers the idea that there was something very troubling these drugs could “cure.” Some critics have called this medicalizing ordinary life.

There are plenty of other examples of medicalization. For instance, who hasn’t been disgusted by seeing that nasty dermatophyte, Digger, in television advertisements for Lamisil? For as long as humans have been around, we’ve had to live with disfigurement, particularly of the toenails, caused by tiny fungal organisms. Onycomycosis, the technical name for toenail fungus, was never thought of as a disease. The condition is more of a cosmetic irritation than anything else, so you just endured it. Topical ointments and creams were of no use because the infection is internal to the nail surface. Nail fungus does respond to older, orally taken antifungal antibiotics, but these drugs came with some unpleasant side effects and large risks, particularly to the liver. So, doctors rarely offered any treatment for this condition.

Then came Lamisil, a new, “safer” antifungal drug approved by the FDA to treat onycomycosis. Annual sales of Lamisil exceed several hundred million dollars. People don’t want Digger living in their toenails.

The drug Flomax is another example. It was approved by the FDA for treatment of benign prostatic hyperplasia (BPH), a condition men face as they age. The prostate gland slowly enlarges, which may cause it to press on the urethra and cause a slower and less forceful flow of urine. The symptoms can be triggered by more serious diseases such as prostate cancer, a bladder infection, or bladder cancer, but having BPH is not a sign of risk for these conditions. It’s more a part of the normal cycle of life. And while BPH can be a sign, in some instances, of more serious troubles, whose grandpa doesn’t suffer the inconvenience of getting up in the middle of the night to visit the bathroom?

Boehringer Ingelheim’s advertisements for Flomax are everywhere. The target audience isn’t just BPH sufferers, but “people who care about men with symptoms.” If men complain to their doctors that they are getting up in the middle of the night and their wives complain about being disturbed while sleeping, doctors are more likely to prescribe the drug to address what may well be a lifestyle or convenience issue. The financial stakes in encouraging the use of Flomax are huge: “The incidence of BPH is estimated to equal the age of the men. Therefore, 50 percent of men in their 50s have the disease, and this increases to 80 percent for those in their 80s.”4

This example appears to be a case of the medicalization of some thing that is more an inconvenience for most patients than a real health problem. Oftentimes, it’s the satirists who show you the truth. Flomax has been spoofed on Saturday Night Live through a parody advertisement for “Urigro” for the treatment of “weak male urination syndrome.” The parody suggests you turn your weak stream (which the Flomax ads underline) into something a man can be proud of.

There’s nothing wrong with medications for inconvenient urination or heartburn or athlete’s foot. But if you want to understand why drugs cost so much in the United States, you can’t avoid this discussion of medicalization. And the discussion is tied intimately to the “blockbuster” model that drives the pharmaceutical industry.

The “Blockbuster” Mentality

Reports show that pharmaceutical companies spend hundreds of millions of dollars to develop a new drug, even in excess of $1 billion. A 2003 study by the Tufts Center for the Study of Drug Development estimated the cost at about $897 million, driven in large part by the pharmaceutical companies’ search for thousands of molecules that never become drugs. This is a substantial increase from the estimated $500 million that the pharmaceutical industry spent in 1996, as reported by the Center. Drug firms say prices for new drugs are so high because they need to recover the investment in all those failed efforts and compensate for the risk of a promising new chemical entity that ultimately does not work as a drug. No wonder, then, that since the late 1970s pharmaceutical companies have focused so much of their attention on discovering market blockbusters.5

What makes a drug a blockbuster? In the pharmaceutical industry, a blockbuster drug is one that achieves acceptance by prescribing physicians as a therapeutic standard for, most commonly, a highly prevalent chronic (rather than acute) condition. Patients often take the medicines for long periods. And then there’s the financial component of the definition. A blockbuster drug is typically defined as achieving annual worldwide sales exceeding $1 billion. Those staggering revenues are generated by two components: the large number of patients who take the medicine and the premium price typically charged (compared to the older drug it replaced). Longterm use by patients, often consistent with guidelines issued by professional physician organizations, creates an annuity for the pharmaceutical company—at least until the patent protection runs out.

Many individuals who follow the prescribed treatments realize benefits that include long-term control of symptoms and signs of illness, and improved qualify of life. But on the scientific side, a key point to make is that blockbuster drugs are, in essence, “one-size-fits-all” therapies. That fact alone feeds their market success.

Notably, fewer than 10 percent of new drugs introduced to the market achieve the blockbuster degree of success. But considering the potential financial results, the pharmaceutical companies keep trying to develop blockbusters.6

Since Zantac’s introduction in 1981, many other new drugs have grown to blockbuster status, including medicines to treat high blood pressure and high cholesterol, depression and anxiety, and asthma and allergies—to name several of the most successful therapeutic classes. You’ll surely recognize the names of a few of the 100 or so blockbuster drugs that have made it to market. Again, if you’re a TV watcher, then you’ve likely heard about Ambien, Lipitor, Nexium, or Plavix, to name a few. Based just on how many times you’ve seen the commercials, you can imagine the revenues these drugs generate for the manufacturer.

Researchers know that large numbers of people benefit from taking prescribed blockbusters, but they also know from clinical trial results that some proportion of patients—sometimes quite large, depending on the drug—do not benefit. Often, when patients are taking multiple drugs and feeling better, no one can tell which drugs help and which don’t; so, the patient continues with them all. And in still other cases, medicines are used inappropriately, in insufficient doses, or for too short a time for patients to benefit. From a profit point of view, though, it doesn’t matter: In every case, the manufacturer still generates sales revenue.

A class of drugs called leukotriene modifiers—you’ve probably heard of Singulair—is a good example of this phenomenon. These drugs offer significant benefits in controlling asthma symptoms, although many of the patients who tried them in clinical trials experienced no relief. Nevertheless, these medicines are popular with asthma sufferers partly because they can be taken orally on a daily basis, rather than having to fuss with a combination of other medications and unpopular inhalers. Plus, side effects are infrequent.7

It’s impossible to know for sure who benefits from taking Singulair or similar medicines for asthma symptoms. If a patient takes the drug in combination with other medicines and enjoys symptomatic relief, how could you gauge the relative contributions of the individual drugs? Right now, there is no way. The point is that if a laboratory test or some other diagnostic method comes along for predicting which patients actually benefit, the market for this class of medicines will likely decline, as will sales revenue. Therefore, the “one-size-fits-all”blockbuster drug will always have a better financial profile. And those blockbusters are going to cost you—the consumer—serious money.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information

To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.


Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.


If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information

Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.


This site is not directed to children under the age of 13.


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information

If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information

Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents

California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure

Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact

Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice

We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020