You Need this New Prescription Drug

The big four “broadcast” networks (ABC, CBS, NBC and Fox) average demographics over 60 years of age. Fox News caters heavily to older viewers. The deluge of pharmaceutical ads, with some of the worst names imaginable, flood through these telecasters and social media providers as to any content that remotely reaches those older segments of society, the people who consume the greatest numbers of prescription drugs. A tsunami is more like it.

What’s worse, when the Affordable Care Act was passed in 2010, in order to muster sufficient Congressional approval from folks receiving massive campaign support from this market sector, the law clearly took away the right of massive new healthcare exchanges to use their obvious bargaining leverage to negotiate substantial reductions in prescription drugs. The exchanges (and the participating private insurance carriers) pretty much had to pay full retail. Everyone, from both sides of the aisle, knew that was hardly in the best interests of the American people… but that’s politics. Money talks.

Pharmas have also created a mythology that the high cost of research and development justify the absurd prices they charge to American consumers – and Americans pay a whole lot more for the same drugs than do Canadians and Europeans in state-managed healthcare systems!

Following up on a pointed presentation from TV comic-seer, John Oliver, the Washington Post (2/11/15) nailed the problem: “Prescription drugs are a massive market: Americans spent $329.2 billion on prescription drugs in 2013. That works out to about $1,000 per person in the U.S., as John Oliver pointed out in his show on Sunday night.” Since then, the numbers have only skyrocketed.

Looking at the above chart presented by the Post, “Oliver also mentioned that nine out of 10 big pharmaceutical companies spend more on marketing than on research. León Markovitz of Dadaviz found and graphed those figures from healthcare research firm GlobalData in the graphic [above]. The amounts spent on sales and marketing are shown in orange, while the amounts spent on research and development are in blue.”

Not to mention that, according to Yahoo! Finance, pharma companies average in excess of three times the level of profitability of the average U.S. corporations that report profits. Cries of poverty and high risk notwithstanding, these drug behemoths many tons and tons of money. Their primary obligation is to make money for shareholders, and the national interest is rather completely absent from these pricing decisions.

For example, one of so many, is the highly effective Hepatitis C remedy, Harvoni, manufactured by Gilead. You may have seen the ads, and there are certainly a lot of them. The October 26th Los Angeles Times (Michael Hiltzik) drills into the ugly details, a story that is constantly repeated: “Gilead’s Harvoni was introduced in 2016 at a price close to $100,000 for a full treatment. The company didn’t seem concerned about a backlash over its pricing… Gilead’s executive chairman, John C. Martin, says drugmakers need big profits so they can ‘innovate.’

“With high drug prices still in the political crosshairs on Capitol Hill, pharmaceutical industry bosses are at pains to explain why a cure for hepatitis C has to cost a budget-busting $1,000 per pill, or a promising cancer treatment should carry a list price of $373,000.

“That duty most recently fell to John C. Martin, the executive chairman of Gilead Sciences, which happens to be the owner of both of those stratospherically priced drugs. In an interview published… in the Wall Street Journal, Martin listed a few reasons for the controversial pricing. One is that average Americans overstate how much drug prices contribute to overall healthcare costs and how much drug manufacturers themselves pocket from list prices. Another is that drugmakers need big profits so they can ‘continue to innovate.’

“Martin didn’t get much pushback in print from the interviewer, Tunku Varadarajan, a former Journal writer and editor who is a fellow at the conservative Hoover Institution at Stanford University. So we’ll unpack these representations instead.

“To begin with, the evidence that Gilead itself uses its profits to ‘innovate’ is thin at best. In 2016, the company reported profit of $13.5 billion. It spent $11 billion to repurchase its own shares, and about $2.5 billion on stock dividends. So the buybacks and dividends together came to $13.5 billion, in effect consuming 100% of the company’s profit.

All that spending benefits shareholders — the repurchases prop up the value of their shares and enhance their gains when they sell, and dividends are, of course, a direct payout. Innovation? Gilead spent $5 billion on research and development, according to its annual report.

“In 2015, a similar phenomenon reigned. Gilead recorded $18.1 billion in profit, and spent $10 billion of it on buybacks and $1.87 billion on dividends. R&D cost $3 billion. Since 2011, the Gilead board has authorized stock repurchases totaling $37 billion, of which $9 billion was still unspent as of the end of 2016. Gilead declined to comment for this column.

“Gilead doesn’t do much research and development itself. Instead, it has acquired firms that have done the heavy lifting and market their successes. It acquired its blockbuster hepatitis C drug, Sovaldi, by paying $11 billion for the drug’s developer, Pharmasset, in 2011. Its promising new lymphoma treatment, which will be branded Yescarta, came via a $12-billion acquisition of that drug’s developer, Kite Pharmaceuticals , announced in August.

“Martin’s general theme is often heard from Big Pharma. ‘The approval of a drug,’ he told Varadarajan, ‘is the culmination of many years of hard work by dozens, sometimes hundreds, of scientists, with at least as many dead ends as new insights, supported throughout by major investments with no guarantee of return.’…

“[Effectiveness of the drug was so phenomenal that] Demand was torrential, with much of the cost burden falling on public programs such as Medicaid and Medicare. In 2014, Medicare actuaries pegged the one-year leap in prescription drug costs for the program at 12.6%, almost all of which was due to Sovaldi…

“Evidence produced in 2015 by the Senate Finance Committee showed that Gilead executives didn’t spend much time on the consequences for patients deprived of the cure by budgetary pressures. Instead, they calculated how high they could set the price of Sovaldi without shrinking its potential market so much that total profits would fall. The executives concluded that Gilead could make a profit by charging $55,000 per 12-week treatment. But the company decided to charge $84,000, which would deliver higher profits, albeit from fewer patients. A follow-on drug known as Harvoni, which incorporates Sovaldi, was introduced in 2016 at a price close to $100,000 for a full treatment.

“Gilead at first refused to offer anything but minimal discounts to big insurers and Medicaid programs, even though they acknowledged that thousands of patients might have to go without the treatments. The company didn’t seem concerned about a public backlash over its pricing, figuring that complaints from patient advocates wouldn’t lead to problems with regulators or legislators. ‘Let’s not fold to advocacy pressure … whatever the headlines,’ one top executive counseled his colleagues.”

Oh, and there is even a much darker side to “marketing” prescription drugs, one where doctors and effectively bribed to tout a product. Take a good hard look at the opioid epidemic that has been declared a national emergency (without any new allocated funding). “John Kapoor, a billionaire whose company developed a liquid version of the opioid painkiller fentanyl [often used as a heroin substitute even though fentanyl is so much stronger], was arrested in Phoenix on Thursday [10/26] on charges that he spearheaded a scheme to bribe doctors and pharmacists across the nation to boost sales — largely to patients who did not need the medication.

“The scheme was first described in December in an indictment against six executives at the company, Insys Therapeutics in Chandler, Ariz. The new indictment, unsealed Thursday [10/26] in Boston, adds Kapoor, the 74-year-old founder who stepped down as chief executive in January, to the list of those accused… His arrest highlights the role manufacturers and distributors of prescription painkillers play in the nation’s opioid crisis, which is killing more than 140 people each day…

“Unhappy with sales, Kapoor and other executives embarked on the bribery scheme, which went on for more than three years, court documents say… Doctors were encouraged to prescribe the medication more frequently and at higher dosages, the indictment says. In 2013, about 1,900 medical practitioners wrote 90% of all the company’s product prescriptions.

“Though the bribes, which included speaker fees, food, entertainment and administrative support to medical practitioners across the country, helped increase the company’s revenue, the court documents say, insurance agencies were reluctant to approve payment for the drug when it was prescribed to patients without cancer… To get around this roadblock, Kapoor allegedly told employees to misrepresent the type of patients using the drug…. Most prescriptions were given to people not diagnosed with cancer, according to the indictment.” Los Angeles Times, October 27th. Once hooked… Indictments like this are exceptionally rare. “Bribing” doctors, on the other hand, is not.

Bottom line: We cannot live like this. The playing field has so tilted away from reasonable profits and acceptable patient-care expectations to out-and-out greed, unscrupulous practices and unconscionable national priorities. While Donald Trump acknowledges that prescription costs are way out of control, nothing he or his administration supports or has proposed does a darned thing to confront the issue, even as those who suffer the most are those working class Americans who comprise his base. Fund your declared “national opioid emergency.” Fix this pricing anomaly. Fix the Affordable Care Act. Bring the United States into line with the rest of the developed world!

I’m Peter Dekom, if you are as outraged as I am about all this, please write your House Representative and both your state’s U.S. Senators and say so!!!!