How Pharma is So Successful in Keeping US Drug Prices Extraordinary High?

USvs.WorldDrugPrices

The simple answer is: Pharma is a trillion dollar industry that uses their enormous power and profits (that are made on the backs of very serious & chronically ill patients) to buy loyal support and kill their opposition with the aid and assistance of lawmakers and regulators.

Who else is affected by the collateral damage from the US having the highest drug costs in the world? The answer is the vast majority of people including the primary payers of insurance such as public and private employers and employees (who are burdened with high drug costs via insurance premiums, co-pays, and deductibles); federal, state and local governments that pay for drugs via Medicaid, Medicare, VA, and federal, state and local: hospitals, nursing homes, schools, jails and prisons.

Who pays the most for the high cost of drugs? ….Everyone who pays local, state and federal taxes.

While pharma companies receive the biggest financial reward for their lucrative business model, there are other groups that also receive significant benefits from the high cost of drugs. These include insurance companies, their executives, and employees, Pharmacy Benefit Management (PBM) companies, who make money from deals arranged for insurance companies with pharmaceutical companies and pharmacies, hospitals that receive high profit margins on drugs that they administer, and the advertising and media industry that sells non-stop ads that bombards consumers with TV, radio and print drugs ads every 24 hours. In 2015, pharma spent a record $5.4 billion on direct advertising to consumers, primarily through television.

DrugSalesv.RD

Big Pharma tries to justify the high cost of new drugs due to the high cost of research and development. However, their claims are not supported by the facts. Big Pharma spends 170% more on marketing and sales of their drugs than research and development. Secondly, the same drugs that are available throughout the world, cost up to 300% more in the US. Why….because elected federal and state officials have sold out the American people to Big Pharma. Politicians accept millions of dollars in drug money and in exchange, let Big Pharma do whatever they want without any ethical or moral boundaries.

A number of well-documented articles in Kaiser Health News and other sources have described some of the very effective strategies that Big Pharma and their $270 million trade organization (PhRMA) use to buy loyal support from US elected officials, healthcare practitioners, and patient groups.

Common strategies include:

  • Eliminate product and price competition by successfully having federal and state elected and appointed officials ban re-importation of the brand name prescription drugs from Canada, Europe, and other counties at substantially lower costs to US consumers.
  • Restrict drug competition with lengthy drug patent protection, the extension of patents, allowing pharma to legally “pay to play” to influence FDA new drug guidelines/regulations and for pharma’s  “pay to delay” the release of generics by other companies resulting in substantially higher costs to consumers.

MostAdvertised-Drugs2015

  • Marketing their newest and most expensive brand name products, Big Pharma spent $5.4 billion in 2016 to market their drugs directly to consumers using TV, radio and print media. They focus on describing symptoms to create increased patient demand and encouraging individuals to talk to their doctor about prescribing their specific brand name prescriptions. By comparison, this sales practice is prohibited in the vast majority of other developed countries in the world and is opposed by the American Medical Association.
  • Pharma also tries to lure patients to use their expensive new drugs with coupons and low-cost trial offerings of their drugs.
  • Pharma has established a proliferation of complicated Patient Assistance Programs that are aimed at increasing demand for their individual drugs while deflecting criticism of their high cost. However, as patients explore these programs, they realize that the drug companies control access to these drugs with personal, financial and insurance eligibility hurdles. For example, they exclude almost half the population that receives Medicare or Medicaid.

DrugMoney

  • In 2016, Pharma spent over $57 million in contributions to the state, congressional and presidential candidates and office-holders. When members of Congress, especially in leadership positions, receive millions of dollars in drug money, do you really think they are going to bite the hand that feeds them?
  • Pharma also spent more than $2 million in donations to various non-profit organizations that provide education, support, and direct services to individuals/families (current & potential customers) that are afflicted with serious and chronic diseases that align with their pharma products. Some of the major groups that have received over $100,000 in 2016 include the American Autoimmune & Related Disease Association, the Lupus Foundation, the Juvenile Diabetes Research Foundation and the American Lung Association.
  • Individual pharma companies and the PhPMA trade organization also employ doctors and nurses to build relationships and “educate” other practitioners on the specific pharma products that they represent. Relationship building with prescribing practitioners is also pursued by funding “medical education” lunches/dinners, sponsoring conferences and providing honorariums to individuals for providing “medical education” and sharing their client user data.
  • Pharma has launched a new $7 million pharma campaign (Go Boldly) that is designed to shape a positive public opinion of the pharma industry.
  • PhRMA and individual pharma companies have spent over  $175 million to defeat a California proposal that would have required California agencies to pay no more for drugs than does the federal Department of Veterans Affairs.
  • In Louisiana, where policymakers were considering proposals to make drug prices clearer to consumers, PhRMA gave more than $600,000 in campaign contributions directly to scores of state and local legislators last year and were successful in defeating the legislation.
  • PhRMA also gave hundreds of thousands of dollars to help defeat a ballot proposal for single-payer health care in Colorado.
  • PhRMA also aimed significant spending in other states including Arizona, Connecticut, Ohio, Michigan, Maryland, Massachusettes, New York, New Jersy, New Mexico, Oregon and Washington where legislators are considering pharma-related regulations that propose drug price limits and greater price transparency.
  • Pharma has established a very effective job training and recruitment program in which they financially invest in politicians and their staff;  evaluate their performance and loyalty in carrying out pharma priorities, and after they have proven themselves (at taxpayers expense), they hire a select group, at lucrative salaries to work as lobbyists for the pharma industry. These former elected officials and staff members come with a network of government insider relationships and intelligence which pharma exploits to their advantage.
  • Pharma and other industries have also been very effective in placing their loyal people in strategic federal governmental departments at executive levels often serving as senior policy advisors, where they develop budgets, write legislation and develop policies and procedures that favor pharma while dismantling other laws, regulations and procedures that pharma doesn’t like. Recently, pharma employees and lobbyist have been appointed by the Trump administration into  leadership positions in key federal agencies including the Food & Drug Administration, Department of Health & Human Services and the Drug Enforcement Administration
  • Big Pharma has effectively restricted competition with the assistance of elected and appointed officials and dismisses federal and state penalties and lawsuits for violations of laws and regulations including fraud and marketing unauthorized uses of medication as insignificant compared to the revenue that their actions generate. Ultimately, these financial penalties are viewed as the “cost of doing business” that is passed on to patients, taxpayers and employers and has little impact on their profits, sales, reputation and investor interest.
  • Pharma has also been routinely criticized for their brazen price-gouging of generic and life-threating treatment and maintenance drugs, needed by both acutely and chronically ill patients without any change in their behavior. Pharma continues to be very lucrative with minimal regulation, competition, oversight and the absence of ethical standards.

Trump’s Commitment to Drain the Swamp and Lower Drug Prices

Although Republican presidential candidate Donald Trump has boasted that he could save $300 billion in lowering drug costs, two years later, Trump has not taken any executive or legislative action to lower the costs of prescription drugs that continues to personally bankrupt many Americans and substantially adds to the accumulated debt of states and the federal government.

However, in his State of the Union speech on January 30, 2018, Trump once again stated that he will dramatically lower the high cost of prescription drugs for the American people under the leadership of newly appointed Alex Azar, Secretary of the US Department of Health and Human Services.

trump&azar

Azar replaced Tom Price MD, former Georgia Congressman and previous Trump HHS Secretary, who resigned in disgrace after only 7 months of repeated issues of unethical behavior.

It should be noted that Mr. Azar is very familiar with Big Pharma and the high cost of prescription drugs. Mr. Azar has served on the board of Biotechnology Innovation Organization, a pharma lobby and was the hired by Eli Lilly as its top lobbyist in 2007. Azar continued to advance within Lilly and in 2012, became President of Lilly USA.

LillyInsulinPrices

During Azar’s tenure at Lilly, their drug prices rose substantially, especially for insulin which is necessary to sustain life. Insulin was discovered, as a life-sustaining treatment of Type 1 diabetes, by two Canadian research physicians who were awarded a Noble Peace Prize over 90 years ago. Ninety years later, the US consumer cost and drug company profits derived from insulin in the continues to rise dramatically, while millions of people with diabetes, in the world, needlessly suffer and die as a result of not having access to affordable insulin.

In 2009, Lilly pleaded guilty and paid a record settlement of $1.4 billion for criminal and civil charges for marketing the unapproved uses of Zyprexa, a powerful antipsychotic Lilly drug. Zyprexa was heavily marketed by Lilly during the period of 1999-2003 to seniors and their families, nursing homes and healthcare professionals for the treatment of Alzheimer’s and other symptoms. However, Lilly never requested nor received the required FDA approvals for these expanded uses.

 

So, time will tell how committed and effective Trump and Azar in actually lowering the cost of prescription drugs to tens of millions of Americans. We are in the second year of Trump’s term and waiting to see if his actions will match his words.

References:

  • Drug Watch
  • Kaiser Health News
  • Kantar Media Intelligence
  • Open Secrets
  • Public Citizen’s Health Research Group
  • Stat News
  • The Washington Post
  • The New York Times
  • US Department of Justice
  • World Health Organization

 

 

 

updated 2.3.18

 

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.

unknown-1

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.

unknown-1

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.