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.
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.
- 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.
- 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.
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.
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.
- 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