Governor Brown signs California’s Drug Price Transparency Act and Big Pharma Kills Ohio’s Drug Price Reduction Referendum

Last month, California adopted a law that requires drug makers to explain and justify price hikes, making it only the third state in the country to demand some transparency in response to rising medicine prices. While this act does not control pricing, the pharmaceutical industry vigorously fought this effort over concerns that other states will take similar actions.

California’s action is a response to the failed leadership of congress and the president to control the outrageous growth of prescription drug costs. Other countries with national healthcare such as Canada, Germany, England, France, Italy and many others require financial accountability and transparency from pharma companies and then negotiate drug prices based on the value produced and the best interest of their country.

By comparison, the United States Congresses and presidents have developed a hands-off policy with Big Pharma and have legitimized excessive drug prices by prohibiting Medicare from negotiating drug prices, like the VA does. They have also prohibited Americans from reimporting prescription drugs from Canada, England and other countries at a fraction of the prices charged in the US.

It should also be noted that Big Pharma spends hundreds of millions of dollars in the US on: direct marketing of prescription drugs to consumers and healthcare providers; and campaign contributions and lobbying congress and state legislatures to oppose any change in pharma’s dominant position with federal and state governments.

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Big Pharma’s Success in Killing Ohio’s Referendum to Reduce Drug Prices

On Election Day, Big Pharma scored another victory by crushing a grassroots initiative to reduce the inflated pharmaceutical drug prices paid by the State of Ohio down to the rates paid by the VA for the same drugs.

Big Pharma spent more than $75 million to kill recent Ohio ballot initiatives that threaten pharma’s massive drug revenue. They flooded Ohio television with negative, misleading and deceptive ads with the intent of creating confusion and opposition to change and were successful in defeating this consumer initiative.

In the absence of any congressional or presidential leadership on controlling drug prices, federal, state and local deficits will continue to rise due to outrageously high drug costs along with rising employer, individual and family debt.

Why Insurance and Health Care is so Expensive in the United States?

And, What Congress Should Do to Increase Access and Lower Costs.

For the past nine years, a group of politicians and talk shows have flooded the media with doom, gloom and blame for the “impending implosion” of Obamacare.

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Ten Facts that your Congressional Representatives Doesn’t Want to Talk About:

1. US health insurance and health care is a $3 trillion-dollar industry with strong economic and political forces that focus on growing larger, increasing profits and having taxpayers assume their financial losses while they maintain control of their industry.

HealthcareSpending

2. The industry is led by special interest groups, that spends over $100 million a year on lobbying and contributions to politicians, healthcare providers and advocacy groups, in exchange for their loyal support.

This comes at the expense of patients, employers, state and local governments who pay for the outrageously higher cost of insurance, health care and prescription drugs than the rest of the world.

3. There are only a handful of large national health insurance companies. These include United Healthcare, Anthem, Aetna, Humana & Cigna.

These insurers are very concentrated in populated areas of the country and this leads to less competition, higher premiums and greater conflicts with health care providers.

4. The major reasons why there are high cost and limited ACA Exchange insurance plans offered in some areas of the country (primarily in rural areas and less populated states) are:

  • (1) there has been no commitment by Congress to maintain the individual insurance mandate and provide ACA funding subsidies to insurers,

  • (2) insurers have no obligation to sell ACA health insurance policies for more than one year at a time and

  • (3) there is no public option insurance (like Medicare) to compete with private insurance for health care and prescription drugs that is available to adults under 65.

ACA.Insurers

5. Individuals, employers, federal, state and local taxpayers pay for the cost of healthcare for people who are uninsured or don’t want to pay for their insurance.

Allowing people to refuse to buy health insurance, without a substantial late enrollment penalty (like Medicare) will result in an increase in medical services bad debts and an increase in the cost to taxpayers and the majority of individuals and employers who buy insurance. There is no free lunch.

6. Nineteen republican governors (primarily from sparsely populated western and southern states) have followed their party’s leadership in refusing to accept  federal funding (since 2014) to expand Medicaid eligibility (with 90% federal funding) for their low-income, uninsured residents.

As a result, these states have substantially higher uninsured residents, higher costs and fewer insurers interested in selling plans in their states.

7. While the overall national uninsured population has been reduced from 20% in 2013 to 10% in 2016, republican governors that have refused to expand Medicaid have experienced substantially higher rates of uninsured residents.

These include; Texas, Oklahoma, Florida, Georgia, Mississippi and Idaho. Blocking people from receiving insurance results in higher premiums, medical expenses and taxes to cover the costs of services to people who are uninsured.

UninsuredRatesMap2017

8. However, the seven republican states that have accepted additional funds for Medicaid expansion have achieved substantially lower uninsured rates including: Iowa, Michigan, New Hampshire, Arkansas, Indiana, Arizona and Montana.

9. The ACA and Medicaid offers flexibility to states that take the initiative to modify ACA and Medicaid regulations with waivers to tailor these programs to their specific states’ needs and preferences.

A small number of large and small, republican and democrat states that have taken advantage of these opportunities and achieved much better-than-average results including: Massachusetts, Vermont, Hawaii, Minnesota, Iowa, Delaware and New York.

10. Over the past decade with the recession and growth of technology that has reduced the need for employees, 40% of workers are now classified as “contingent workers” in order to reduce payroll expenses including paying for a portion of health insurance and other employee benefits.2016-US-Employed-Labor-Force

What Your Federal and State Representatives Should be Doing to Maximize Insurance Coverage, Improve the Nation’s Health and Reduce Taxpayers Costs:

• Approve and enforce, meaningful state and federal ethics legislation that prohibits legislators from: voting on legislation, funding, or seeking preferential treatment for individuals or organizations that they or their family have a real or potential conflict of interest.

• Expand Medicaid Eligibility in the 19 Republican states that have blocked their residents from receiving health care.

• Propose waivers to Medicaid and ACA like other progressive states to better meet the needs and preferences of your local citizens to reduce costs and increase insurance coverage.

Why are New York and Minnesota the only states that have utilized an ACA waiver to establish a very popular Minimum Essential Health insurance plans that has provide coverage to hundreds of thousand citizen who were previously uninsured?

• Approve federal legislation to legalized to importation of prescription drugs from Canada and European counties and reduce the high cost of drugs in half.

• Approve federal legislation that allows Medicare to negotiate prices (on behalf of the 50 million Medicare recipients) with pharmaceutical companies like the VA, Medicaid and every other county in the world does.

• Approve federal legislation to allow all citizens under 65, the option to buy into Medicare.

Medicare is widely accepted across the country and will provide a public option to citizens that live in sparely populated states and regions that experience high costs and few choices, due to the limited interest of private insurers.

• Approve federal legislation to reduce the criteria and length of pharmaceutical & medical device patents like other counties have already done.

These actions will significantly increase competition and reduce the uninsured rate across the country, along with reducing insurance & health care costs for individuals, employers & state and local governments.

Ask your Congressmember, if he/she will support these legislative actions, and if not, why?

Why Insurance and Health Care is so Expensive in the United States?

And, What Congress Should Do to Improve Access and Lower Costs.

For the past nine years, a group of politicians and talk shows have flooded the media with doom, gloom and blame for the “impending implosion” of Obamacare.

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Ten Facts that your Congressional Representatives Doesn’t Want to Talk About:

1. US health insurance and health care is a $3 trillion-dollar industry with strong economic and political forces that focus on growing larger, increasing profits and having taxpayers assume their financial losses while they maintain control of their industry.

HealthcareSpending

2. The industry is led by special interest groups, that spends over $100 million a year on lobbying and contributions to politicians, healthcare providers and advocacy groups, in exchange for their loyal support.

This comes at the expense of patients, employers, state and local governments who pay for the outrageously higher cost of insurance, health care and prescription drugs than the rest of the world.

3. There are only a handful of large national health insurance companies. These include United Healthcare, Anthem, Aetna, Humana & Cigna.

These insurers are very concentrated in populated areas of the country and this leads to less competition, higher premiums and greater conflicts with health care providers.

4. The major reasons why there are high cost and limited ACA Exchange insurance plans offered in some areas of the country (primarily in rural areas and less populated states) are:

  • (1) there has been no commitment by Congress to maintain the individual insurance mandate and provide ACA funding subsidies to insurers,

  • (2) insurers have no obligation to sell ACA health insurance policies for more than one year at a time and

  • (3) there is no public option insurance (like Medicare) to compete with private insurance for health care and prescription drugs that is available to adults under 65.

ACA.Insurers

5. Individuals, employers, federal, state and local taxpayers pay for the cost of healthcare for people who are uninsured or don’t want to pay for their insurance.

Allowing people to refuse to buy health insurance, without a substantial late enrollment penalty (like Medicare) will result in an increase in medical services bad debts and an increase in the cost to taxpayers and the majority of individuals and employers who buy insurance. There is no free lunch.

6. Nineteen republican governors (primarily from sparsely populated western and southern states) have followed their party’s leadership in refusing to accept  federal funding (since 2014) to expand Medicaid eligibility (with 90% federal funding) for their low-income, uninsured residents.

As a result, these states have substantially higher uninsured residents, higher costs and fewer insurers interested in selling plans in their states.

7. While the overall national uninsured population has been reduced from 20% in 2013 to 10% in 2016, republican governors that have refused to expand Medicaid have experienced substantially higher rates of uninsured residents.

These include; Texas, Oklahoma, Florida, Georgia, Mississippi and Idaho. Blocking people from receiving insurance results in higher premiums, medical expenses and taxes to cover the costs of services to people who are uninsured.

UninsuredRatesMap2017

8. However, the seven republican states that have accepted additional funds for Medicaid expansion have achieved substantially lower uninsured rates including: Iowa, Michigan, New Hampshire, Arkansas, Indiana, Arizona and Montana.

9. The ACA and Medicaid offers flexibility to states that take the initiative to modify ACA and Medicaid regulations with waivers to tailor these programs to their specific states’ needs and preferences.

A small number of large and small, republican and democrat states that have taken advantage of these opportunities and achieved much better-than-average results including: Massachusetts, Vermont, Hawaii, Minnesota, Iowa, Delaware and New York.

10. Over the past decade with the recession and growth of technology that has reduced the need for employees, 40% of workers are now classified as “contingent workers” in order to reduce payroll expenses including paying for a portion of health insurance and other employee benefits.2016-US-Employed-Labor-Force

What Your Federal and State Representatives Should be Doing to Maximize Insurance Coverage, Improve the Nation’s Health and Reduce Taxpayers Costs:

• Approve and enforce, meaningful state and federal ethics legislation that prohibits legislators from: voting on legislation, funding, or seeking preferential treatment for individuals or organizations that they or their family have a real or potential conflict of interest.

• Expand Medicaid Eligibility in the 19 Republican states that have blocked their residents from receiving health care.

• Propose waivers to Medicaid and ACA like other progressive states to better meet the needs and preferences of your local citizens to reduce costs and increase insurance coverage.

Why are New York and Minnesota the only states that have utilized an ACA waiver to establish a very popular Minimum Essential Health insurance plans that has provide coverage to hundreds of thousand citizen who were previously uninsured?

• Approve federal legislation to legalized to importation of prescription drugs from Canada and European counties and reduce the high cost of drugs in half.

• Approve federal legislation that allows Medicare to negotiate prices (on behalf of the 50 million Medicare recipients) with pharmaceutical companies like the VA, Medicaid and every other county in the world does.

• Approve federal legislation to allow all citizens under 65, the option to buy into Medicare.

Medicare is widely accepted across the country and will provide a public option to citizens that live in sparely populated states and regions that experience high costs and few choices, due to the limited interest of private insurers.

• Approve federal legislation to reduce the criteria and length of pharmaceutical & medical device patents like other counties have already done.

These actions will significantly increase competition and reduce the uninsured rate across the country, along with reducing insurance & health care costs.

Winners and Losers in the Repeal of the Affordable Care Act (aka Obamacare)

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With the election of Donald Trump as president, Congressional Republicans are scrambling to come up with a repeal and replace plan that is acceptable to their various factions and president-elect Trump.

House Republicans have a lot of experience in successfully approving bills to repeal the ACA more than 60 times (without a replacement plan) over the past 6 years knowing that the Senate lacked the necessary votes to approve their bill.

While Republicans have labeled the ACA a disaster since it began 6 years ago, they have opposed every opportunity to work with the President and Democrats to design and improve the health insurance legislation. They have also been successful in arm-twisting Republican members of Congress and Republican governors to oppose the establishing state insurance exchanges, expanding Medicaid and providing tax credit subsidies to eligible low-moderate income uninsured Americans. Their actions have had had a negative impact on the large percent of workers who’s employers do not offer health insurance and the 40% of workers who are treated as “contingent” with no employer commitment to a work schedule or any benefits including health insurance.

However, the ACA has succeeded in enrolling more than 20 million people in exchange plans and another 14 million people have enrolled in expanded Medicaid in 31 states. This includes 16 Republican governors.

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The Trump Wildcard

Now that Trump has been elected after campaigning on repealing and replacing the ACA, the fun really begins. While many people have jumped on the repeal bandwagon, the vast majority of people opposing the ACA don’t know what the impact will be on their ability to buy health insurance and receive services at a reasonable cost in the future.

The repeal and replacement of the ACA will also affect small businesses, state and local governments, health care providers and facilities, insurance companies & brokers, employees of large businesses and national and regional economies. The great uncertainty that remains is what specifically will be lost and gained.

Trump has campaigned as an independent, populist who is the “peoples’ choice” who is not indebted to any special interests. Time will tell.

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Who are the Winners of the ACA Repeal?

Career Republican Politicians

The obvious, big initial winners from the repeal of Obamacare are career Republican politicians who have opposed all forms of tax-supported social supports including Social Security, Medicare, Medicaid and every universal health insurance proposal presented over the past 100+ years, including those proposed by various Republican presidents.

It should be noted that the US spends more than double what every other country spends for health care and prescriptions drugs and has poor health outcomes. Our system is a patchwork of multiple insurers, providers, payers that is costly, inefficient and ineffective that leaves millions uninsured with chronic and costly medical conditions.

From a political standpoint, opponents want to kill, not improve or replace, “Obamacare”. They want to obliterate President Obama’s landmark legislation from the history books.

Higher Income Individuals and Business Owners

Other winners are higher income individuals, who have experienced an increase taxes as a result of the ACA and employers who have experienced increased costs associated with compliance and implementation of the ACA. What is unknown is the cost of repercussions resulting from the repeal of the ACA.

Insurance Companies

Large, national for-profit insurers have to make the most changes to comply with and participate in selling uniform ACA insurance policies in both state and the federal insurance exchanges. Some insurers chose not to participate, others entered the exchange market late after millions were already enrolled and others, such as Aetna, United Healthcare and Humana dropped out of exchanges for 2017 as federal subsidies for catastrophic claims were expiring and their plans for merging with smaller companies were being scrutinized by federal regulators.

With potentially millions of insurance subscribers displaced as a result of the ACA repeal, it will likely cause a “death spiral”, state and federal insurance exchanges and plans for individuals who are not covered by group insurance plans. If it does, insurers will be losers of both subscribers and income. If insurers can negotiate positive changes for them with rate-setting, regulations and federal subsidies for high-need subscribers and regulator support for planned insurer mergers, they will be big winners.

Who are the Losers with the ACA Repeal?

  • The majority of Americans who have indicated in polls, that they only want improvements, not repeal, of the ACA.
  • Individuals who have pre-existing conditions may return to paying between $15,000 (ind.) and $30,000 (fam.) a year for private policies with increased co-pays and deductibles.
  • 14 million low-income individuals may lose their expanded Medicaid eligibility in 31 states
  • Young adults may find their new health insurance costs are unaffordable and chose to go uninsured.
  • Individuals with pre-existing conditions, chronic diseases and those that require costly medical & surgical treatment may find insurance & health care unaffordable and file for a medical bankruptcy.
  • Families with young-adult children, less than 26 years old, who have been covered on their employers’ family plans, may have significant new costs.
  • People who are at risk of serious diseases that may not be able to afford preventative screening tests that have been free.
  • Employees and employers who will require more education and support to understand differences in new  regulations, plans, coverage, benefits and true costs. This will have a negative effect on employee morale and productivity.
  • Insurance companies will lose up to $20 million existing ACA insurance plan subscribers along with up to $16 million in subsidies for low-middle income individuals.
  • Loss of federal tax revenue from select taxes and closed loopholes included in ACA to pay a portion of insurance costs.
  • Loss of brand-name prescription drug discounts and higher out-of-pocket expenses. for seniors.
  • Small employers, who have purchased or directed low-moderate income employees to insurance exchanges for subsidized policies, may face higher health insurance expenses and/or higher employee turnover.
  • Hospitals and health care professionals will likely face loss of insurance income, an increase in bad debts and increased administrative expenses to manage changes.
  • Health care quality and cost containment standards and strategies will be lost.
  • Loss of consumer protections and assistance in navigating a very complex and costly insurance/healthcare system

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CBO Report on the Impact on Repealing the ACA

The non-partisan Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) just released a report on the impact of repealing the ACA on insurance coverage and premiums.

Without any replacement plan in place, the impact will be devastating including:

  • Increasing the number of uninsured by 18 million in the first year and rising to 32 million by 2026.
  • Premiums for individual policies would increase by 20%-25% in the first year and increasing by 100% by 2026
  • Eliminating subsidies to insurers and the individual mandate will destabilize the insurance market and reduce the participation of insurers in selling policies.
  • In the first year after subsidies are repealed, about 50% of the nation’s population lives in areas that would have no access to insurers participating in the individual policy market.

Final Thoughts

The first 100 days of the Trump administration should be very interesting. There will be a major transformation of The White House and management personnel.

And, the repeal and replacement of the ACA is just one of many domestic and foreign promises that Trump has made, but will be implemented by people who have largely not had any similar responsibilities or experience.

The public expects the positive results that Trump has promised and we will soon see the public’s reaction to the new administration’s performance.

With Congressional midterm elections scheduled for 2018, Republicans, who are up for re-election, have their political survival at stake.

 

 

 

The High Cost of Diabetes is Killing Americans and our Economy

Background

According to the Centers for Disease Control and Prevention – CDC , diabetes is a serious disease that affects 30 million Americans with another 86 million individuals who have elevated glucose levels that are considered pre-diabetic.

Diabetes can progress to become the underlying cause of other costly, disabling and deadly conditions such as cardiovascular diseases, damage to the brain, eyes, kidneys, nerves and result in lower limb amputations.

adv-cost-of-diabetes

Diabetes accounts for 4.6 million deaths worldwide and is the 7th leading cause of deaths in the US.

While the cost of treating diabetes and death rates varies considerably among counties, the US leads all other countries with $322 billion annually in direct and indirect costs.

By comparison, the United Kingdom, Japan and Norway have consistently had the lowest death rates due to diabetes over the past five decades and spend only a fraction of what the US does.

Why does the US Spends so Much and Get Such Poor Results?

The answer is simply because pharmaceutical companies, insurance companies and health care providers make billions of dollars with this costly, inefficient and ineffective method of selling, paying and delivering health care in the US.

According to the Center for Responsive Politics – open secrets , the pharmaceutical and health products industry employs more than 3 lobbyists for every member of Congress; spends about $1.2 million lobbying every day Congress is in session. It has also created a career path for loyal Congressional and federal employees to become well-paid private-sector pharma lobbyists.

Hundreds of million dollars are spent each year on lobbying and contributing to House and Senate members to maintain this monopoly and the industry’s control in setting their own drug prices, unlike the rest of the world.

Pharma Net Profits 2005-2012

Pharma’s huge profits occur at the great expense of taxpayers, employers and individuals with diabetes who experience the physical, emotional and financial pain and suffering.

Negative Impact of High Health Care Costs on the Economy

Health care spending in the US far exceeds that of other countries. It consumes 50% more of the economy than other countries. And, high health care expenses have a negative effect on patients, employees, employers, city, county, state and federal governments and the taxpayers that pay higher taxes for this efficient and ineffective system.

High health care expenses increase the cost of everything that is made in America and makes them less competitive to imports that don’t include high health care costs. High medical and drug expenses have resulted in decades of double-digit insurance premium increases, wage stagnation, high personal debt, medical bankruptcies, growing government deficits, higher taxes, the collapse of the middle class and a weaker US economy.

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Price Waterhouse Cooper – PwC   in its Pharma 2020 Vision report concludes: “the current pharmaceutical industry business model is both economically unsustainable and must fundamentally change the way it operates.”

Who Pays for Diabetes

The cost of diabetes treatment in the US continues to rise uncontrollably without any corresponding improvement in outcomes. And taxpayers, employers and patients pay the bills.

HCCIinfographicDiabetesCostFINAL_0

A study by the Health Care Cost Institute – HCCI, showed that employer health insurance spending on employees (under 65) with diabetes was $15,000 a year or 300% more than for people without diabetes.

And, Medicare spending is astronomical with over $5.5 billion dollars being spent on just two diabetes drugs- Januvia and Lantus insulin in 2014.

It Doesn’t Have to be this Way

The most troubling fact is it doesn’t have to be this way. Diabetes is not a rare, deadly infectious disease or an aggressive, deadly form of cancer that can’t be treated. And, no other country in the world allows drug companies to charge these exorbinate prices or regulate and require them to disclose more clinical testing and drug cost information.

Diabetes is a relatively easy to diagnose, monitor and treat disease in the majority of cases with appropriate education and interventions. But like other chronic diseases, diabetes has biological, behavioral, educational, care delivery, political and financial dimensions that need to be addressed in order to improve access to affordable and effective treatment.

Opportunities for Taxpayers to Save Billions and Improve Outcomes of Diabetes Treatment

Politicians frequently campaign on the need to cut wasteful government spending. However, after elected, they protect their sacred cash cows that finance them. They place their political and financial self-interest over the needs of millions of Americans with serious and disabling conditions to have access to affordable and effective health care including prescription drugs.

Numerous studies and reports have indicate that the US wastes hundreds of billions of taxpayer, employer and patient dollars that can be saved by:

  • Congress insuring that all citizens have access to affordable health services like the rest of the develop world.

The excessive financial burden placed on patients with serious and chronic medical conditions that require costly medications and treatment needs to be significantly reduced in employer-sponsored and ACA Exchange High Deductible plans as well as Medicare plans.

  • Medicare, Medicaid, ACA Health Exchange and employer-sponsored plans need to change from paying drug companies and medical providers based on the volume of medications, tests, procedures and visits provided to paying for the value and results of the drugs and treatment provided. To what extent does the treatment cure or manage the progression of the disease and minimize the patients’ pain, suffering and disability?

There is no positive relationship between medical care expenses and success in preventing or managing the debilitating progression of diabetes in the US. 

  • Congress needs to promote competition and free-trade by reducing drug and devise patents terms and extenders consistent with other countries;
  • Congress needs to approve a strict Code of Ethics and Conflict of Interest policies with civil and criminal penalties that prohibits members of Congress and individuals and corporations with a financial interest before the federal government from soliciting or accepting direct or indirect payments, gifts or favors that place private interests over the public good for members of Congress and other federal employees. Investigations and the prosecution of violators should be independent and the responsibility of the US Justice Department and not Congress.
  • The FDA should be adequately funded and authorized to impose sanctions against pharmaceutical companies including the revoking of patents when ethical standards, regulations and laws have been violated;
  • Congress needs to repeal the section of 2003 law that prohibits Medicare (the largest drug purchaser) from establishing reimbursement rates with pharmaceutical companies like the VA and every other country does;
  • Congress needs to eliminating the ban on the importation of lower cost prescription drugs and biologics from Canada and other counties;
  • The Federal government needs to become an equity investor and require a financial return including royalties, from all intellectual property and patents developed and sold that have received government-funded basic & applied research, grants and loans. 
  • Congress needs to ban direct marketing of prescription drugs to consumers and require that pharmaceutical companies fully disclosure the outcome of all clinical trials, drug research and the actual cost of research and development, manufacturing and administration including sales and marketing.

 Summary

The current $322 billion being spent on diabetes with such poor outcomes is not sustainable. For meaningful change to occur, there needs to be major changes in the pricing, financing and delivery of care.

With the entrenched pharmaceutical industry’s interest to maintaining their influence and control over Congress, change will only come about by confronting members of Congress  to determine whether they are for or against actions to lower the price of drugs and medical services, increase transparency and adhere to standards of ethical conduct.

Taxpayers, patients, employers and the US economy are being badly hurt by Congress’s lack of leadership and deference given to the trillion dollar health care and pharmaceutical industries over the interest and needs of American patients, employers and taxpayers.

2016 provides an important opportunity for citizens to learn the positions and records of national candidates for President, the House and Senate and elect candidates who will represent the peoples’ interest over their own political and financial self-interest.

You and your family’s life may depend on it.

How Congress Legalized the High Cost of Drugs in 2003

Rapid Growth of Drug Costs in US Compared to Other Countries

The rapid growth in drug prices and profits in the US over the past 12 years since the Medicare drug benefit law was passed in 2003, reflects what pharmaceutical companies believe they can receive from payers thanks to Congress and President Bush. And, the payers of prescription drugs are largely the federal and state governments, insurance companies and ultimately US taxpayers, employers and patients.

While the costs of drugs has been skyrocketing, Congressional leadership has done virtually nothing over the past dozen years to investigate price gouging or even allow Congressional discussions and votes on bills to modify and improve the Medicare drug law.

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The costs of pharmaceuticals in the US is $1,000 per person compared to $500 per person for 30 other benchmark counties.

As a result of the rapidly rising prices set by drug makers, federal, state and local taxes and deficits continue to grow, insurance rates continue to escalate and unpaid medical bills are the largest reason personal bankruptcies.

In addition, a large percentage of people whose resources  become depleted and don’t file for bankruptcy, they become eligible for Medicaid and their medical expenses are then shifted directly to federal, state and local taxpayers.

            Bankruptcy-Causes

As a result, Americans have substantially less access to affordable medications unlike most other countries around the world.

At the same time, Congress and many health care providers and researchers continue to accept millions of dollars each year from Big Pharma in support of their financial needs and interests.

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How Other Countries Control the Costs of Drugs

As illustrated below, the 2013 Canadian Patented Medicine Prices Review Board’s (CPMPRB) Annual Report, indicates that the average price of drugs in the US is 100% more than in Canada and other benchmark European countries.

Canadian to Foreign Drug Price Ratios

The huge price differential is attributed to the role and commitment that other governments have in assuring that their citizens have access to affordable and effective health care including new therapeutic drugs.

In Canada and Europe, the national governments review and approve the drug makers proposed prices based on a number of factors including: their cost; the evidence of added clinical benefits and outcomes; the comparative price in other countries; and the evidence of added value that these new therapeutics provide to patients over existing drugs.

None of this occurs in the United States.

 Drug makers set their prices unilaterally and may offer discounts to large buyers with the exception of Medicare, which has 55 million beneficiaries. This is due to the legislation approved by Congress and President Bush in 2003.

Growing Backlash from Stakeholders and Advocates

Big Pharma’s years of monopoly, greed, unethical sales and marketing has finally reached a tipping point. It has resulted in a revolt by various stakeholders including internationally known doctors, medical centers, pharmacy benefit management companies, insurance companies, advocates, patients, state governments, the media and federal prosecutors.

Cancer Specialists Take the Lead in a Call to Action

According to the Wall Street Journal, the highly respected, Dr. Leonard Saltz, chief of gastrointestinal oncology at Memorial Sloan Kettering Hospital (MSKCC), used the June    conference of the American Society of Clinical Oncology (ASCO) that was attended by 25,000 to express his harsh and growing criticism of the ever-growing high cost of cancer drugs.

physician group

Dr. Saltz’s illustrated the issues with Bristol-Myers Squibb’s new experimental regime that combines two drugs for the treatment of melanoma. While he acknowledged that the benefits of these drugs were truly remarkable, he noted that they would cost about $295,000 a year per patient.

Dr. Saltz observed that if all patients in the US with metastatic cancer took drugs priced at $295,000 a year, it would cost $174 billion, just for one year and that is neither affordable nor sustainable.

He went on to add that the cost of cancer-drugs has more than doubled in recent years and the cost increases are not always related to their increased value or any substantial improvement in treatment outcomes.

Dr. Saltz also recommends that Medicare needs to change the way it pays doctors for infused drugs to eliminate the financial incentives and conflicts of interest, resulting in doctors using the most expensive versus the most cost-effective drugs.

In July, over 100 highly-respected cancer specialists from across the country published and signed a commentary in the journal, Mayo Clinic Proceedings. These oncology and hemotology clinicians voiced their outrage over the years of soaring cancer drug prices.

They called for new government intervention in regulating these costly therapeutics in the absence of any industry self-regulation or restraint.

They reiterated the need for Congress to repeal the provisions of the 2003 Medicare Modernization Act that bans Medicare from  negotiating prices directly with pharma companies (saving $16 billion a year) and to decriminalize the importation of drugs from Canada and other countries at a fraction of the cost charged in the United States.

The group also recommended the establishment of a new regulatory body that would help set drug prices after they received FDA approval and for Congress to reform patent laws that can restrict the timely development of less expensive generic drugs.

They also suggested that the newly created Patient-Centered Outcomes Research Institute and similar groups include the cost of drugs in their assessment of the value of treatment.

The cancer treatment leaders also urged other cancer specialists to critically consider:

  • the cost of different drug options and the financial burden placed on patients; and
  • the evidence of comparative benefits, side-effects, outcomes and limitations of different drugs when recommending treatment options to patients and families.

To assist cancer specialist, doctors at MSKCC have created a DrugAbacus calculator to assist in the education of clinicians and patients. The calculator currently provides information on 54 cancer drugs and calculates the relative value of drugs by adjusting the price to reflect both side-effects and benefits that they bring in extending life.

Finally, the cancer treatment leaders encouraged a public education campaign regarding these issues and a grassroots effort to protest the high cost of drugs and to demand changes that are in the best interests of patients.

Negative Media Exposure

In an October, 2014 60 Minutes interview, Dr. Saltz, MSKCC, provided the example of when the new patented drug, Zaltrap, was approved by the FDA for treating advanced colon cancer. He compared Zaltrap to Avastin, a similar drug that had been on the market and concluded that both deliver the same result – extending the median survival by 42 days. However, Zaltrap cost $11,000 a month, more than double the cost of Avastin. As a result, MSCC took the unprecedented position to reject  using Zaltrap over Avastin at MSCC due to its substantially higher costs and lower value.

Dr. Saltz added that the high cost of drugs has negatively impacted patient care and high insurance co-payments have forced some patients to forego effective therapies because of the financial burden it imposes on them and their families.

Op-Eds and Editorials critical of Big Pharma’s pricing practices and its negative impact on public health and the plight of individuals have appeared in various media including 60 Minutes, The New York Times, The Wall Street Journal, USA Today, The Washington Post, Bloomberg, News, CNN and a variety of professional and public publications.

The High Cost of Other Specialty Drugs

The controversy surrounding high-priced patented drugs and biologics in the US is not limited to cancer treatment. It is also present with drugs for the treatment of other debilitating chronic diseases such as AIDS, diabetes, hepatitis C, multiple sclerosis cystic fibrosis, and various mental illnesses that affect millions of Americans.

Pharma Net Profits 2005-2012Bloomberg Business and the professional journal Neurology have reported that old brand-name medications for MS have become more expensive with each new therapy that has been developed.

Medications for MS that were introduced years ago now cost as much as newer, high-priced therapies. Now, all the MS drugs cost between $50,000 and $65,000 a year including the ones that were sold for less than $10,000 when they were first introduced.

Express Scripts, a large pharmacy benefit management company (PBMC) just reported that for the fourth consecutive year, medications to treat diabetes (which affect 29 million Americans) were the most expensive traditional therapy class.

The annual spending for drugs increased 18% in 2014, primarily from a 16% increase in specialty drugs.

Gilead’s new Hepatitis C drugs: Sovaldi and Harvoni are sold in the US for $1,000+ a pill and up to $100,000+ for a course of treatment. However, Gilead sells the same drug in the United Kingdom, where prices are regulated, for 33% less

In 2014, Gilead cashed-in more than $12 billion in sales revenue just from these two Hepatitis C drugs. And, there are more than 3 million Americans that have Hep. C, an infectious disease that can lead to cirrhosis, cancer and liver failure.

Forbes estimates that Gilead could make $227 billion, if it just treated all the US cases of Hep.C.

Other examples include Vertex’s new drug, Kaydeco for cystic fibrosis costs $300,000 a year and Cegene’s drug for multiple myleoma costs $150,000 a year.

Impact of High US Pharmaceutical Prices on Patients, Taxpayers, Employers and Governments.

According to the Health Research Institute (HRI), only 4% of patients currently use specialty drugs, but those drugs account for 25% of total US drug spending.

The impact of the unregulated, US pharmaceutical industry’s pricing is increasing taxes and adding consumer and government debt as spending for drugs has gone through the roof.

To illustrate, the number of people in the US with prescription drug expenses greater than $100,000 a year has tripled in 2014 according to Express Scripts.

The dramatic increase in budget-busting government spending for prescription drugs is reflected in financial reports of the US Departments of Veterans Affairs and Defense; Cities, Counties, States; prisons and jails; Medicaid, Medicare; and public and private employers.

When spending for drugs becomes so inflated, individuals, employers and governments spend disproportionately more for health care and drugs, and have to cut back on spending for other sectors of the US economy as well as go into debt.

These enormous expenses have also resulted in insurance companies and employers cutting back/eliminating/shifting health insurance expenses to their subscribers, employees and government to pay. Some private insurance companies and the VA have also had complaints filed against them for rationing and denying the use of expensive drugs.

According to Kaiser Health News, over 70% of Americans say “the costs of prescription drugs are unreasonable”. And, about 25% report that they or their family members ‘have not filled prescriptions in the past year and/or have skipped or cut pills in half because of these high costs.’

These high costs have also resulted in substantially higher insurance premiums with higher subscriber deductibles/co-pays and growing rates of unpaid health care expenses and personal bankruptcies.

Summary

Taxpayers and the US economy are being badly hurt by Congress’s irresponsible actions and preferential treatment of Big Pharma over patients, taxpayers, employers and other stakeholders.

This situation is very damaging to Americans and has grown to crises proportions. Congress needs to begin acting in the public interest like other governments in Canada and Europe.

A future blog will highlight some the promising actions underway aimed at reducing the these problems.

I look forward to your comments.