Saving a Few Hundred Billion Dollars a Year on Prescription Drugs in America

Cost savings of a few thousand dollars per household that are eminently possible — if Big Pharma can be defeated or at least constrained much more. The main basic problem is the patent monopolies that allow pharmaceutical companies to charge exorbitant prices, and a main solution is to use direct public funding as a more efficient process at producing innovation.

Broadly speaking, a prescription drug in the United States goes through three main stages of development: On the front end, researchers make a scientific breakthrough in their labs, discovering the building blocks of a new drug. Then it goes through the second stage, which includes the often-costly process of clinical research and trials. Last, once the FDA has reviewed and approved it, the drug goes on the mass market, sold at drugstores and doctor’s offices.

The United States is already involved in the earliest stages of drug development. It’s the top funder of basic science research in this country through the National Institutes of Health, which has an annual budget of $37 billion, more than what the federal government pays for Head Start and Pell Grants combined. Most agree that this is money well spent: Every one of the 210 new drugs approved between 2006 and 2010 trace their origins back to government funding.

The government is also involved in the third stage, as a top purchaser of medicines. Through Medicare, Medicaid, the Department of Veterans Affairs, and other programs, the federal government pays for $300 billion worth of prescription drugs each year.

Where the system runs into trouble is in the middle of the process, when the government hands over a glittering prize: the multi-decade patents that give private companies a monopoly on life-essential products. Through a mechanism established by the Bayh-Dole Act of 1980, private companies are allowed to claim patents on promising compounds discovered with government funding–and that means exclusive rights to manufacture and sell the resulting drug for a period of 20 years and often longer.

This isn’t just an outdated model; it’s also deeply inefficient. Companies can price medicines at hundreds of times what it costs to make them (it’s how a hepatitis C medicine could cost $1,000 for each pill that is manufactured for a few dollars), and with the government providing a guaranteed market for the drugs, companies like Gilead and Pfizer have had years where their reported profit margins exceeded a staggering 40 percent. All of the Big Pharma companies average between 15 and 20 percent profit each year. Most Fortune 500 companies are happy to claim half of that. There is “absolutely no reason why the taxpayer should be forced to subsidize a private monopoly and have to pay twice: first for the research and development and then through monopoly prices,” Senator Russell Long insisted when Bayh-Dole was passed in 1980.

[…]

If the United States were to move towards a NASA system, the federal government would have to find up to $75 billion in its budget to replace what private industry spends on R&D. But that’s not an insurmountable obstacle. There should be plenty of money available. Baker and other economists calculate that a NASA for drug development, which would eliminate patents and the price markups for prescription drugs that come with them, would save Americans hundreds of billions of dollars every year thanks to drugs being generic-level cheap from day one. The savings to government spending alone would be more than enough to pay for every penny of the $75 billion that the private pharma industry claims it spends on R&D–and replace it with research that is more widely shared and targeted more at public health than at quarterly profits. In this alternate universe, scientists and labs could switch their focus away from developing yet another iteration of an erectile dysfunction drug towards tackling challenges like tuberculosis.

 

Giving Big Pharma Public Hearings, Inspired by the Big Tobacco Hearings

The U.S. Congress – in its decay over the last four decades after being further corrupted by big business interests – rarely has held public hearings in the last several years. It should hold many more public hearings, however, and it should do so on the most important issues facing society today.

Senator Sanders though provides yet another example of why he’s justifiably the most popular U.S. politician, as he continues to focus on the real problems (healthcare, wages, the opioid crisis, etc.) instead of on the regressively McCarthyist and largely nonsensical Russia drama that drains too much news focus. The proposal he has about making the pharmaceutical corporations pay to reimburse the communities they ruined is also clear-sighted and sensible.

Sen. Bernie Sanders (I-Vt.) called Monday for the Senate to hold pharmaceutical companies accountable for any role they’ve played in fueling the opioid epidemic that has spread despair in his state and across the U.S.

In a letter to Sen. Lamar Alexander (R-Tenn.), the chairman of the committee on health, education, labor and pensions, Sanders encouraged him to hold hearings on the matter just as the Senate had once compelled Big Tobacco executives to testify about the deadly hazards of smoking.

“That committee had the courage to demand that the leading executives of the tobacco industry tell the American people what they knew and when they knew that tobacco was addictive … and had killed millions of people,” Sanders wrote. “Though all denied under oath believing tobacco was addictive, we now know they were lying. But the hearing eventually led to real change,” with the Food and Drug Administration regulating tobacco and the rate of smoking in the U.S. at a record low.

Sanders pointed out that the hearing helped states reach massive settlements with the tobacco industry. Several local jurisdictions have already filed lawsuits against painkiller manufacturers. Some have already received settlements. The opioid crisis, Sanders, wrote, “did not happen in a vacuum.” He praised investigative journalists for exposing Big Pharma’s lies about opioid painkillers not being addictive and how small-town pharmacies were flooded with opioids.

“Yet, while some of these companies have made billions each year in profits, not one of them has been held fully accountable for its role in this crisis,” Sanders wrote. “Individual states have received small settlements from companies after taking legal action, but not nearly enough to pay for the costs associated with the opioid epidemic. The states cannot do it alone.”

Sanders sees an economic cost as well as a human cost to the epidemic. And he wants the industry to be liable for the economic costs. Sanders noted in his letter that he plans to introduce legislation that would in part require companies to reimburse communities for the devastating economic consequences that their painkillers have caused.

The Stupid Border Wall Proposal

Demonizing immigrants is among the oldest of scapegoating tricks used by demagogues. A border wall is a hallmark of a repressive society — see East Germany and China — and people thinking about this issue should remember that. There are also simply numerous superior uses of about $18 billion worth of taxpayer funds.

This comes after President Trump held an extraordinary meeting with Democratic and Republican lawmakers at the White House on Monday, in which President Trump appeared to support a wide-reaching deal on immigration that could grant millions of undocumented people a pathway to citizenship.

During the meeting, Trump repeatedly said he would “take the heat” for a sweeping immigration deal, which would likely be opposed by much of his far-right-wing anti-immigrant base. President Trump also said he wanted a “bill of love” to protect the 800,000 young undocumented people, known as DREAMers, whose protections he attempted to rescind late last year. To the surprise of many, the majority of the meeting was televised, which aides said was meant to show the president’s mental acuity, amid mounting questions about the president’s mental health.

But much of what Trump said during the televised meeting appeared to run counter to his campaign promises and his immigration policies, which have included demanding $18 billion in funding for a militarized border wall, rescinding DACA and canceling immigration protections, known as TPS, for hundreds of thousands of Salvadorans, Haitians, Nicaraguans and Sudanese immigrants who have been living in the United States for years.

better-uses-of-18-billion

For the source of many of the real problems in American society, one must look to places such as Wall Street and the pharmaceutical industry, not immigrants.

Atrocious Consequences of Pharmaceutical Price Gouging

The greed of the pharmaceutical industry has caused far too much suffering already, and it is long past time that the industry payed a high price of its own for the damage it has caused.

Particular important to highlight again is the part where — in the wealthiest country in world history — “Shane Patrick Boyle, a founder of Zine Fest Houston, died on March 18 after his GoFundMe campaign to pay for insulin came up $50 short.” What kind of society can that sentence even be written in?

Last year The New York Times published an op-ed urging the break up of the “insulin racket.” But rather than break it up, Trump has nominated one of its architects, Alex Azar, for secretary of Health and Human Services.

From 2007 to 2017, Azar worked for pharmaceutical giant Eli Lilly. While he was a senior VP, Lilly paid a record $1.415 billion to settle a case on its off-label promotion of the antipsychotic Zyprexa. Rising up the ranks, Azar became president of Lilly USA, the largest division of Eli Lilly, in 2012, a position he held until resigning in January of this year.

During Azar’s tenure, Eli Lilly raised the prices on its insulins in the United States by 20.8 percent in 2014, 16.9 percent in 2015, and 7.5 percent in 2016. Eli Lilly’s biggest seller, Humalog insulin, is now off-patent. But rather than becoming cheaper, Humalog costs more now than when it first came to market in 1996. When Azar started working at Eli Lilly in June 2007, the list price for a vial of Humalog was $74. When he quit in January 2017, it was $269.

At T1International we asked people with type 1 diabetes around the world how much they paid each month to stay alive. The United States topped every country, spending on average $571.69 per month on diabetes costs. Even with insurance, some Americans are spending around half their income on insulin and other supplies.

In fact, price gouging from Eli Lilly and other insulin manufacturers has already had deadly consequences. Shane Patrick Boyle, a founder of Zine Fest Houston, died on March 18 after his GoFundMe campaign to pay for insulin came up $50 short. Alec Raeshawn Smith, age 26, was found dead in his apartment on June 27. He was rationing his insulin after he aged out of his parent’s insurance coverage. The sad fact is more people would be alive today if insulin was affordable for all Americans.

Contrary to pharma propaganda, insulin is neither “new” nor “innovative.” It was developed in Toronto in 1921. The discoverers turned down the chance to create for-profit clinics. Instead, they licensed their creation for $1 (Canadian) a piece. Their recorded reason for doing this was to make sure insulin would be available for all who needed it. Eli Lilly’s was tasked with manufacturing insulin for North America. There was an understanding insulin would be sold at a reasonable price until there was a cure for diabetes.

What difference a century makes! Eli Lilly is currently under investigation by multiple state attorneys general for price fixing. It is also named in a class-action lawsuit that alleges that it colluded with Novo Nordisk and Sanofi to keep the prices in the US insulin market rising. These “Big 3” insulin makers control over 90 percent of the global market and maintain their lock on it in many ways. One is “pay-for-delay schemes,” like when Sanofi paid Eli Lilly to delay the launch of an insulin similar to its Lantus brand. Another is to sue potential competitors for intellectual property infringement, such as when Merck attempted to enter the insulin market in 2016. The companies also funnel money into patient-advocacy groups, both big and small. This might explain the inaction or even outright opposition of these groups on measures that may rein in prices.