Pretty soon you’ll be seeing a brand new ad campaign, and it has nothing to do with computers, cars, or Christmas presents. It’s actually coming from the Pharmaceutical Research and Manufacturers of America (PhRMA), and it’s aimed at praising the virtues of free-market health care. The campaign comes in response to Barack Obama’s plan to control prescription drug costs. During his campaign, Obama’s health care reform plan included a policy that would change Medicare rules, allowing them to to negotiate for lower drug prices. This change would result in more affordable prescription drug options for the public, and a significant decrease in revenue for the drug industry - a decrease of $10 to $30 billion per year.

PhRMA maintains that although it may seem like a good idea for the general public, it would eventually end up hurting the country. If less revenue is received from Medicare, drug companies would need to charge more for drugs sold outside of the Medicare program, to make up the difference. Plus, lower profits would mean less money available for research and development, which means fewer new drugs being developed.

While this may seem like a daunting idea, we still can’t help but doubt PhRMA’s true intentions. Honestly, what good are the drugs if people can’t afford them? Prescription drug prices have skyrocketed over the years, and many people can’t afford the medications they need - even with insurance. Insurance companies themselves are struggling with the high prescription drug costs. Some insurance policies now have separate prescription deductibles, while others will only cover generic drugs.

Honestly, we do understand the concerns of the pharmaceutical industry. But when we took a look at their profit statistics, we began to think differently.

In the 2007 Fortune 500 List we see:

• 5 Health Insurance companies: UnitedHealth Group, WellPoint, Aetna, Humana, and Cigna.

Their profits as a percentage of revenue range from 2.3% to 7.0%  - Keep in mind that health insurance companies are always being singled-out and criticized for the profits they earn. However, these statistics show that they actually aren’t making all that much profit.

Now, let’s compare that to a completely un-related industry, but one that also receives a lot of criticism: Petroleum Refineries (oil and gas industry).

• 39 Oil & Gas companies appear on the list, while some of them hold the second, third, and fourth positions on the list.

Their profits range from 1.0% to 25.2%, with the average being only 7.1%.

Now let’s look at the Pharmaceutical industry:

• 12 companies appear on the list, including: Johnson & Johnson, Pfizer, GlaxoSmithKline, Novartis, Sanofi-Aventis, Roche Group, AstraZeneca, Merck, Abbott Laboratories, Wyeth, Bristol-Myers Squibb, and Eli Lilly.

And the most surprising part of it all… their profits range from 7.6% to 36.9% - with an average of 19.0%. Even the company with the lowest profit (Abbott Labs at 7.6%) has a higher profit margin than the average for the petroleum refineries!

With these statistics, it’s hard to feel sorry for the pharmaceutical industry. We have a feeling that even if Medicare is allowed to negotiate prices, the pharmaceutical companies will manage to survive. With those profits, how couldn’t they?