Who Knew "Greed is Good" was a Pharmaceutical Term

Who Knew “Greed is Good” was a Pharmaceutical Term

“Creeping Socialism” vs an “Unsustainable” Healthcare System

StatHealth.com asked this question two years ago: “How is it possible to have a prescription drug price crisis when 90% of prescriptions are filled with generic drugs that cost, on average, $1 a day? The answer: The remaining 10% of prescriptions have an average cost of $20 a day and account for 80% of all prescription drug spending [two years ago!].

“High prices for branded medicines are one consequence of the Drug Price Competition and Patent Term Restoration Act of 1984, better known as the Hatch-Waxman Act, the same law that made low-cost generic drugs widely available. To pass that law, Congress yielded to demands from the powerful pharma lobby for longer and stronger monopolies for new drugs. This payoff to an already highly profitable industry has wiped out the savings that the widespread use of generic drugs should have produced.”

Well, Hatch-Waxman celebrated its 40th anniversary this past September, and while that law has saved consumers billions, maybe even trillions, on 90% facilitating generic and biosimilar prescription drugs - streamlining the FDA approval process on generics and knocking down some serious monopolist practices – somehow, the aggregate costs of drugs to consumers have actually risen. The flies in the ointment come from several directions on that other 10% and the cheating that is rampant in pharma-world.

There are so many ways to cheat, like this: Combine specific middlemen, employed by healthcare systems to increase the efficiency of patient coverage and access to fairly priced prescription drugs (called “Pharmacy Benefits Managers” (PBMs) with unscrupulous drugmakers who find ways to extend the expiration date on the patents by adding new “patent” improvements, keeping the “generic” prices pretty much the same. That the “improvement” generating a new long patent is often nothing more than a revised bottlecap is never revealed! The middlemen profit by directing patients to that “new” prescription… except only the bottle cap is new.

To some, it’s really hard to compete in the level generic playing field, if you don’t cheat. “One after another, generic-drug makers have gone bankrupt or moved their operations overseas or cut the number of products they offer. The number of facilities making generic drugs in their final form in the U.S. has dropped by roughly 20% since 2018, to 243, according to federal data.

“Drug shortages have become common. Today, 300 medicines are in short supply, according to the American Society of Health-System Pharmacists. Regularly now, hospitals and patients must scramble to find doses of the drugs they need if there is one hiccup in a pinched supply chain or a quality problem shuts down a manufacturing line.” Wall Street Journal, July 26th. But as new wonder pharmaceuticals come out, like the new generation of diabetes/weight loss drugs, demand soars… and the prices on successful new drugs more than cover the expiration of earlier drug patents. So ,the profits on that 10% of drug sales is the explosive statistic.

Back in 2010, when the Affordable Care Act was passed, the Obama administration got pharma support by including a provision that the new resulting healthcare exchanges would not be allowed to use their bargaining power to reduce the price pharmas charged on prescription drugs. Now, using other back doors (like under the federally controlled Medicare and Medicaid systems), costs for drugs like insulin and certain blood thinners, lifesavers for those who need them, are beginning to come down. Republicans in Congress assert that this is nothing more than “creeping socialism” that will destroy the quality of our healthcare system. Huh?

First, we are the only developed nation without universal healthcare. Hard to think of Germany and Switzerland as socialist – meaning that governments all the wealth, land and businesses – and, second, as I pointed out in my October 4th We Have the Best Healthcare in the World, if You are Rich, if You are Rich blog, we actually have the worst healthcare system in that universe. We pay double per capita over what even the other most expensive systems cost, and our prescription drugs can cost multiples of what the citizens of other nations pay for the same products.

For those diehards of private capitalism without restrictions, you may have noticed how private equity firms have bought up small rural hospitals or the emergency services in these hospitals, aggregated them, reduced inventories of medicine required on an emergency basis to save lives, cut medical staffing to the bone (like doctors, technicians, nurses, etc.)… all to increase the profits on the backs of Americans who have no other choice… competing facilities may be hours and hours away.

But there are other segments of the healthcare system that are in a death spiral, especially national pharmacy chains. Alana Semuels, writing for the October 14th Time Magazine tells us: “Pharmacies are struggling partly because of changes to consumer behavior. After the pandemic drove more shoppers online, customers bought less and less from brick-and-mortar stores like pharmacies. Although in-person shopping has resumed in many other types of stores, pharmacies have not seen the same boost, says Brittain Ladd, a retail and logistics analyst. ‘Even if they come in to have a prescription filled, consumers are rarely buying anything in the store because they know they can buy it cheaper online,’ he says. Pharmacies have reacted by cutting prices, which then puts them even more in the red, Ladd says. This then leads to more cost cutting…

“Rite Aid said on Sept. 3 that it had emerged from bankruptcy protection after closing about a quarter of its stores.. CVS closed 900 stores over three years, citing changes in consumer buying patterns, while Walgreens is planning to close about a quarter of its 8,600 stores because ‘the current pharmacy model is not sustainable,’ CEO Tim Wentworth said in a June earnings call. Chain stores also say they’ve been plagued by shoplifting, which has motivated them to lock up many products behind plastic shields, a practice that has backfired by driving away even more customers…

“But there’s a bigger and more complicated reason that pharmacies are struggling right now. It has to do with how pharmacies are compensated for the medications they dispense. Most patients are covered by insurance, and insurers use [PBMs], to manage their prescription drug benefits. PBMs are essentially middlemen, but they have a huge amount of power because they determine how much pharmacies get compensated for each drug they dispense. Every year, pharmacists say, PBMs are offering less and less to pharmacies for the drugs they sell, sometimes forcing them to operate at a loss on popular drugs like Ozempic.”

Virtually all of these issues, including the number of fully insured Americans who still struggle with co-pays, premiums and deductibles, can be fixed (and costs contained) with an American national healthcare system. To the extent that we can ferret out what the Trump healthcare concepts are, and he has no real healthcare plan, the MAGA solution is to have those are insured get priced based on what is not covered… like preexisting conditions which afflict 40% of adult Americans. So younger folks would pay less… until they have a chronic condition… and those with any prior issues may well be priced out of affordable coverage at all. In the end, as I have blogged many times before, having viable access to healthcare while still preserving the big profit centers does not work and has not and will not work… it is unraveling and only get worse.

I’m Peter Dekom, and if you have tried for decades to make our profit-driven healthcare system work… and it has become the worst in the developed world… maybe you need to choose between two dramatically mutually exclusive choices: quality healthcare for all at a reasonable price vs making sure the big incumbent healthcare powerhouses remain wildly profitable.