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This isn’t just an outdated model; it’s also deeply inefficient.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.

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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.

 

Creating Medicines With Less Side Effects Through a New Chemical Dividing Process

Overall, medications today have way too many harmful side effects, and so this breakthrough technological process should be helpful in reducing them. It also has the potential to “produce better medical and agricultural products, including medicines, food ingredients, dietary supplements and pesticides.”

Chemical compounds are made up of molecules. The most important molecules in biology are chiral molecules. “Chiral,” the Greek word for “hand,” describes molecules that look almost exactly alike and contain the same number of atoms but are mirror images of one another — meaning some are “left-handed” and others are “right-handed.” This different “handedness” is crucial and yields different biological effects.

Understanding chiral differences was made painfully clear by the drug thalidomide. Marketed to pregnant women in the 1950’s and 1960’s to ease morning sickness, thalidomide worked well under a microscope. However, thalidomide is a chiral drug -its “right” chiral molecule provides nausea relief while the “left” molecule causes horrible deformities in babies. Since the drug company producing Thalidomide did not separate out the right and left molecules, Thalidomide had disastrous results for the children of women who took this medication.

Though a crucial step for drug safety, the separation of chiral molecules into their right- and left- handed components is an expensive process and demands a tailor-made approach for each type of molecule. Now, however, following a decade of collaborative research, Paltiel and Naaman have discovered a uniform, generic method that will enable pharmaceutical and chemical manufactures to easily and cheaply separate right from left chiral molecules.

Their method relies on magnets. Chiral molecules interact with a magnetic substrate and line up according to the direction of their handedness — “left” molecules interact better with one pole of the magnet, and “right” molecules with the other one. This technology will allow chemical manufacturers to keep the “good” molecules and to discard the “bad” ones that cause harmful or unwanted side effects.

“Our finding has great practical importance,” shared Prof. Naaman. “It will usher in an era of better, safer drugs, and more environmentally-friendly pesticides.”

While popular drugs, such as Ritalin and Cipramil, are sold in their chirally-pure (i.e., separated) forms, many generic medications are not. Currently only 13% of chiral drugs are separated even though the FDA recommends that all chiral drugs be separated. Further, in the field of agrochemicals, chirally-pure pesticides and fertilizers require smaller doses and cause less environmental contamination than their unseparated counterparts.

The Amazing Treatment for Drug Addiction (Medication-Assisted Treatment) Too Rarely Used

Drug addictions need to be treated as health problems instead of as crimes, and in any case, it’d be valuable to direct more resources towards helping people with addictions. That could be rather than using the resources on a senseless or harmful pursuit such as building even more nuclear weapons systems that threaten to cause disasters.

The death toll from the opioids epidemic continues to soar – nearly 64,000 people died in 2016 alone.

Scientists are working to find creative tools to fight it, and President Donald Trump has called the overdose crisis a public health emergency. But he has not yet outlined any targeted solutions aside from calling for drug dealers to be given the death penalty.

A growing cadre of health professionals say we already have a science-backed treatment that works. It’s called medication-assisted treatment, or MAT, and it involves administering FDA-approved medications that help curb cravings and reduce the excruciating symptoms of withdrawal.

“Medications are an effective treatment for opioid addiction,” Kelly J. Clark, president of the American Society of Addiction Medicine, told Business Insider.

The problem is that very few people can get those medications.

Only about half of private-sector treatment programs for opioid use disorder currently offer access to MAT, and of those that offer it, only one third of patients actually receive the medication, according to a study published in the Journal of Addiction Medicine.

There are many reasons for this lack of access to medication. Some stem from a misconception about how the treatments – which can include buprenorphine, methadone, or naltrexone – work.

The stigma surrounding drug use and addiction plays a role, too. Still other issues include federal and state laws that restrict the availability of the medications.

“It’s more of an implementation problem than a basic science problem,” Clark said, “because we know what works.”

Medications do not ‘substitute one drug for another’

In someone with opioid use disorder, using the drugs is often not a pleasurable experience, but rather a practice that has become a necessary fact of life. Being without the drugs leads to painful symptoms that can include severe nausea, shaking, diarrhoea, and depression.

The need to use is simultaneously a physical and emotional compulsion – the lines between those kinds of pain are blurred.

One of the main misconceptions about medication-assisted treatment is that medications simply replace the drugs that hooked users – leading to more highs and fuelling a pattern of repeated use.

But that view is outdated and ill-informed, experts say. Instead, the drugs work by staunching cravings and reducing or preventing withdrawal and relapse.

Buprenorphine and methadone help suppress cravings, while naltrexone blocks the euphoric and sedative effects of opioids so users don’t experience a high.

“People ask me all the time, ‘well, aren’t they just substituting one drug for another?’ The answer is no. These are evidence-based treatments and they work,” Patrice A. Harris, the former president of the American Medical Association and a board certified psychiatrist, told Business Insider.

Several large studies suggest that as access to MAT rises, drug overdose deaths fall.

A study of heroin overdose deaths in Baltimore between 1995 and 2009 published in the American Journal of Public Health, for example, found a link between the increasing availability of methadone and buprenorphine and a roughly 50 percent decrease in the number of fatal overdoses.

“These treatments are life saving and they work,” Sarah Wakeman, the medical director of the substance use disorder initiative at Massachusetts General Hospital and an assistant professor at Harvard, told Business Insider.

From jail to court to rehab, medication-assisted treatment is hard to find

Despite the evidence demonstrating MAT’s effectiveness, it is surprisingly difficult to obtain.

One of the hardest-to-access forms of medication for recovery is methadone. In the US, the medication can only be accessed in specialised clinics; because of the way the treatment works, people on MAT must come to a facility to be injected daily.

But those facilities typically have negative reputations because of policies that restrict them to locations considered seedy or run-down.

And patients who come for treatment often have to push past active drug users – a big trigger for someone with substance use disorder – on their way to and from the clinic.

“You can access heroin pretty easily, yet we make it really hard to get a treatment that’s life-saving and allows you to live healthily,” Wakeman said.

On Friday, the US Food and Drug Adminstration issued a new set of guidelines aimed at underlining the important role MAT should play treating opioid use disorder.

“Unfortunately, far too few people who suffer from opioid use disorder are offered an adequate chance for treatment that uses safe and effective medications,”commissioner Scott Gottlieb said.

Other countries take a very different approach to medication-assisted treatment that makes the treatments easier to obtain. In Canada, for example, methadone is distributed in pharmacies.

Rehabilitation facilities and courts in the US often don’t offer medication-assisted treatment either. Instead, most operate on an abstinence-based model, in which patients must detox and then are offered counseling.

They’re encouraged to attend 12-step meetings like Narcotics Anonymous, which remains opposed to MAT despite the growing body of evidence behind it.

Patents and Copyrights as Plutocratic Tariffs That are Relics of the Medieval Guild System

A useful analysis rarely seen in the debate.

Many pundits have attacked Trump’s focus on steel and manufacturing because they argue, we should be more concerned about protecting US corporations’ patents and copyrights overseas. This doesn’t make sense.

At the most basic level, stronger and longer patent and copyright protection means that people in other countries have to pay more money. These government-granted monopolies often allow companies to raise the price of the protected items by a factor of 10 or even a 100. In this way, they are equivalent to tariffs of several thousand percent.

Just to be clear, this is not a point that can be honestly disputed by economists. If a government barrier raises the price of a good, it doesn’t matter whether we call that barrier a “tariff” or a “patent,” the impact on the market is the same.

This means if Pfizer’s patent protection on a drug allows it to raise the price it charges for a drug in China or some other developing country by a factor of 10 over the free market price, it is equivalent to imposing a tariff of 1000 percent on the drug. The difference is that instead of the tariff revenue going to the government, it goes back to Pfizer as higher profits.

It’s obvious that higher profits for Pfizer are good for its shareholders and top executives, but why should the rest of us be happy about people in developing countries paying more money to Pfizer for its drugs? Many of us care more about poor people being able to get drugs than Pfizer’s profits.

The story gets even worse. The more money that Pfizer and other US companies collect overseas for their patents and copyrights, the less these people have to spend on other goods and services. In effect, because Pfizer can charge more for its drugs, people in China and other countries have less money to spend on US-made cars and planes. How is this good for most of the people in the United States?

The pushers of stronger and longer patent and copyright protection will undoubtedly claim that higher profits will provide more incentive for research and creative work. This is true, but what are the numbers? If Pfizer gets another $1 billion in profit will they invest one percent of it in research?

That would be an increase, but that means the world would be spending $1 billion in higher drug prices to get an additional $10 million in research. That’s not a very good deal. And, even this research could be largely wasted on developing copycat drugs that are intended to gain a portion of a competitor’s patent earnings by duplicating a successful drug. Again, that could be good for Pfizer, but it is not especially helpful for the rest of us who want to see research focused on developing treatments for conditions where there is not already an effective drug.

To be clear, we do need a mechanism for financing research and creative work, but there is little reason to believe that patent and copyright monopolies are the most effective tool. These are relics of the Medieval guild system. We can do better in the 21st century.

Study Shows a Bigger Pharmaceutical Industry is Linked to Worse Health Outcomes

The ridiculously extreme profits of pharmaceutical corporations has allowed them to lobby legislatures and enact laws that further boost their profits — while being detrimental to the public interest. Much of this is due to drug patent monopolies, which are regularly equivalent to harmful, regressive tariffs of hundreds or thousands of percent.

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While Americans debate the rising cost of health care, a new study of 30 countries over 27 years found that medical expansion has improved overall health — with one major exception.

Researchers found that increased spending on health care and increases in specialized care were both associated with longer life expectancy and less mortality in the countries studied.

But pharmaceutical industry expansion was linked to negative health effects.

“This study isn’t the first to suggest prescription drugs can pose a health risk. But it is the first to find that the growth of the pharmaceutical industry itself may be associated with worse rather than better health,” said Hui Zheng, lead author of the study and associate professor of sociology at The Ohio State University.

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Two measures of expansion in the pharmaceutical industry — increased sales and more money spent on research and development — were linked to lower life expectancy among women aged 65 and older, and with increased mortality rates. The pharmaceutical measures were not associated with the other health outcomes studied.

The researchers ran tests to confirm that it wasn’t the other way around — that lower life expectancy and increased mortality were causing an expansion of the pharmaceutical industry. But that wasn’t the case.

That wasn’t the only negative finding about the growing drug industry.

“We found that as the pharmaceutical industry expands, there is a decrease in the beneficial impact of medical specialization on population health,” Zheng said.

This study can’t say why expansion in the pharmaceutical industry is leading to negative population health effects, Zheng said.

“It could be due to toxic side effects of drugs, doctors’ prescribing practices, patients’ misuse of prescription drugs, reasons related to pharmaceutical industry’s marketing strategies or some combination of these factors,” he said.

New Bill to Lessen the Pain of the Dysfunctional U.S. Healthcare System is a Reminder of Its Critical Flaws

Massachusetts Senator Elizabeth Warren has introduced a bill that attempts to “curb pain” emanating from the corrupted for-profit healthcare system of the United States. Among other things, the bill’s provisions would implement helpful but admittedly inadequate measures, such as making it illegal for insurance companies to revoke a patient’s plan during their course of treatment. There could of course be many reminders about the more critical flaws of U.S. healthcare made in relation to this.

For one, the U.S. spends about twice as much on healthcare compared to other wealthy countries such as Canada, Britain, and Germany. If that spending — which is annually $3.4 trillion ( about 18 percent of annual U.S. GDP) — was reduced by around half, it would be an enormous savings that (all else unchanged) would actually have the U.S. running substantial budget surpluses.

That isn’t to say that budget surpluses are necessarily good (budget deficits can be helpful and natural), but it’s to point out that subtracting the almost $700 billion ($5550 per U.S. household) in budget deficit totals that the U.S. ran in fiscal year 2017 from a $1.7 trillion in healthcare savings would still be about a trillion dollars of budget surplus. It’s strange how rarely this simple point enters the mainstream press, what with the irrational and even harmful attention corporate media such as the Washington Post has given to budget deficits. More importantly though, it’s over a trillion dollars that could be spent productively elsewhere in the economy instead of harmfully allowing health insurance corporations receive it.

Interestingly enough, Berkshire Hathaway, Amazon, and JP Morgan Chase announced plans earlier this year to jointly form a healthcare company for their employees that’s “intended to be free from profit-making incentives.” This is another revealing insight into why a for-profit healthcare system is too flawed to function well — building a healthcare system around corporate profits simply raises the costs too much. The executives at those three corporations aren’t the only parts of the business community to understand this as they seek to reduce their own expenses.

Businessman Warren Buffett has even admitted that single-payer is “probably the best” healthcare system for the U.S. He has made a comparison between U.S. healthcare in 1960 and in 2017 — in 1960, U.S. healthcare spending was only five percent of annual GDP, and almost 60 years later there’s been almost a four fold GDP-based increase in healthcare spending. This reveals again that the amount of resources being devoted to the overall mediocre U.S. healthcare system is excessive.

The for-profit element of the system has other consequences outside of direct economic costs though. One of them is unnecessarily lost lives, with strong evidence finding that over 20,000 people die a year in the U.S. due to being unable to afford health insurance. It is simply a major moral disgrace that world history’s wealthiest country suffers from such a problem.

Also disgraceful is the staggering number of medical bankruptcies per year in the United States. The amount of those per year has been estimated at hundreds of thousands in the U.S. alone (far more than other wealthy countries) and medical bills have been a leading cause of Americans filing for bankruptcy for years. All other OECD countries besides Mexico have universal healthcare and have a much more efficient healthcare system to prevent many of those problems to begin with.

For a practical example, Medicare (a predominantly single-payer healthcare service run by the government) has administrative overhead costs of about 1 to 2 percent, which is usefully contrasted to the 12 to 20 percent overhead costs typically run by the for-profit health insurance industry. This is because inefficiently having thousands of different healthcare payer plans necessitates higher bureaucratic costs with too much paperwork.

And another notable part of the high U.S. health costs is due to the ridiculous prices of prescription drugs there. In 2017, the U.S. spent $450 billion (2.4 percent of GDP) on prescription drugs, an amount that could almost certainly be reduced by about $370 billion ($2930 per U.S. household) by having prescription drugs sold without patent monopolies and other unjust protectionist measures. In a time when at least nearly one in five Americans are unable to afford their medications adequately, this proposal for savings should be considered much more.

It should also be noted what happens an extreme amount of undeserved resources are diverted to harmful corporations such as the pharmaceutical ones. Pharmaceutical companies — such as Purdue Pharma — have used their excess profits to manufacture an opioid crisis (to seek even more profits) through flooding economically downtrodden communities with highly addictive opioids. This has resulted in opioids becoming the leading cause of death for Americans under 50, and it’s also largely been what’s resulted in a decline in the average U.S. life expectancy rate, a phenomenon that’s probably otherwise unheard of in other wealthy nations in the 21st century.

In all, the U.S. healthcare system suffers from significant problems that will require more than tweaking around the edges to solve. Its system requires a major alteration, and the sooner that happens, the less health-based suffering among its people there can be.

Latest Price Gouging as Cost of Gleostine Drug is Hiked 1400%

Drug patent monopolies have long been detrimental to the general population. In 2017, the U.S. spent over $450 billion (2.4 percent of annual GDP) on prescription drugs, an amount that would probably have been one fifth of that total if there were no government-granted drug patent monopolies. Furthermore, in world history’s richest country, it is absurd that about 20 percent of seniors regularly cannot afford their medication. That happens as the top five biggest pharmaceutical corporations made a combined $50 billion in profits for the year too.

Gleostine, which had its patent expire recently, is the latest example of this systemic pharmaceutical failure. The drug companies must be reined in, or these outrages will keep continuing into the future.

Critics of the pharmaceutical industry have expressed outrage over a Wall Street Journal analysis that found the owner of a 40-year-old cancer drug used to treat brain tumors and Hodgkin’s lymphoma has hiked the cost of the medication by 1,400 percent since acquiring it in 2013.

Lomustine, which was introduced in 1976, “has no generic competition, giving seller NextSource Biotechnology LLC significant pricing power,” the Journal reports, noting that lomustine is just “one of at least 319 drugs for which U.S. patents have expired but which have no generic copies, according to a list the agency published earlier this month.”

While the U.S. Food and Drug Administration is reportedly working to speed up the approval process for generic versions of these drugs, some critics say the report demonstrates a need for a broader overhaul of the nation’s healthcare system, with the Robin Hood Tax campaign citing it as evidence for “why we need” Medicare For All, which has been promoted by Sen. Bernie Sanders (I-Vt.) and a growing number of Democrats in Congress.

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“This is simply price gouging, period,” concluded Henry Friedman, a neuro-oncologist at Duke University who wrote an editorial criticizing the lomustine price hikes earlier this year. “People are not going to be able to afford it, or they’re going to pay a lot of money and have financial liability.”