The Bitter Pill

It is almost universally assumed that it was a piece of legislation that catered only to America’s left wing. People still believe that corporate America uniformly opposed the bill. But in the end, some of the most effective, cost-controlling aspects of the pre-passage aspects of this controversial seminal statute were purged in favor of powerful corporate interests with well-funded lobbyists and campaign contribution machines. The legislation, of course, was The Affordable Care Act of 2010 (which conservatives always call “Obamacare”).

Healthcare insurance companies defeated an attempt to expand Medicare to provide a governmental alternative to individual-policy-choices, mandating that only private, for-profit companies, were to provide the funded portion of required coverage. The Medicaid elements were left to individual states to expand, and most conservative states opted out of this aspect of the bill. And so, when you choose between silver, gold and platinum policies, implementation will always be through a private company. Insurance companies picked up millions of new policy-holders.

The other corporate interests who shaped the bill to their profit goals were the huge pharmaceutical companies. They lent their support to the Act in exchange for a continuation of their crushing any hope of containing the cost of prescription drugs. Not only are Americans prevented from buying drugs in very trustworthy countries (like Canada, Germany, UK, France, Switzerland, etc. where many of these drugs are actually made!!!) under the guise of “we can’t be sure of quality in foreign venues” logic, but the healthcare exchanges cannot even use the volume of the covered clients to negotiate with these pharmas to reduce costs. As a result, the United States has the highest cost of prescription drugs in the developed world. By far!!!

So it has become a new trend among private equity firms/hedge funds, to buy niched pharmaceutical manufacturers with specialized products, jack up the cost of their core products astronomically, and then tell the world how much additional research is going to be funded as a result. Meanwhile, a cheap corporate acquisition becomes an instantaneous major profit center for the new investors.

The screaming canary in the price gouging mine was unleashed in September 20, New York Times article: “Specialists in infectious disease are protesting a gigantic overnight increase in the price of a 62-year-old drug that is the standard of care for treating a life-threatening parasitic infection… The drug, called Daraprim, was acquired in August by Turing Pharmaceuticals, a start-up run by a former hedge fund manager. Turing immediately raised the price to $750 a tablet from $13.50, bringing the annual cost of treatment for some patients to hundreds of thousands of dollars.”

Presidential candidate, Democrat Hillary Clinton immediately tweeted: “Price gouging like this in the specialty drug market is outrageous.” Followed up with: “[Clinton’s specific] proposal aims to cap monthly and annual out-of-pocket costs for prescription drugs to help patients with chronic or serious health conditions. It would also deny tax breaks for televised direct-to-consumer advertising and require drug companies that receive taxpayers' support to invest in research and development.

“‘We will start by capping how much you have to pay out of pocket for prescription drugs each month. And we're going to hold drug companies accountable as we work to drive down prices,’ Clinton said [September 21^st] at a campaign event in Louisiana…

“Her plan also seeks to increase competition for traditional generic versions of specialty drugs to drive down prices and offer more choices to consumers… Clinton aides said a central component of the proposal would require health insurance plans to place a monthly limit of $250 on covered out-of-pocket prescription drug costs for individuals. The campaign estimated up to 1 million Americans could benefit from the proposal annually.” AOL.com, September 22^nd.

Fellow Democrat candidate, Senator Bernie Sanders, quickly noted that he has been pressing the Congress to investigate such price gouging practices and why The Affordable Care denies massive healthcare exchanges from using their power to negotiate prices down. See below.

The argument from the pharmas is always the same: medical research is very expensive, and charging what you can is simply a way of funding that research. Right. Stretch that logic to the credibility breaking point. Many pharmas, but not all, have programs for those who cannot afford the new prices. Nice guys. As government research budgets and support of university research continue to contract or simply die, the shift to privately-funded research has been significant. But there is a very big moral question as to why customers of these medications have to subsidize people with differing ailments. Why is it that foreign buyers of the same drugs get the benefits their government negotiators can secure, when there are no such negotiators permitted in the United States? Is our funding structure for such medicines completely unsustainable?

If the manufacturers of Daraprim found that $13.50 or less a pill was sufficient for decades, what is the remotest justification for a 574% increase? Just because a group of investors want more money?! Clearly, that is the only real reason for the shameful price increase. But it happens all the time. “Turing’s price increase is not an isolated example. While most of the attention on pharmaceutical prices has been on new drugs for diseases like cancer, hepatitis C and high cholesterol, there is also growing concern about huge price increases on older drugs, some of them generic, that have long been mainstays of treatment…

“Cycloserine, a drug used to treat dangerous multidrug-resistant tuberculosis, was just increased in price to $10,800 for 30 pills from $500 after its acquisition by Rodelis Therapeutics. Scott Spencer, general manager of Rodelis, said the company needed to invest to make sure the supply of the drug remained reliable. He said the company provided the drug free to certain needy patients.

“In August, two members of Congress investigating generic drug price increases wrote to Valeant Pharmaceuticals after that company acquired two heart drugs, Isuprel and Nitropress, from Marathon Pharmaceuticals and promptly raised their prices by 525 percent and 212 percent respectively. Marathon had acquired the drugs from another company in 2013 and had quintupled their prices, according to the lawmakers, Senator Bernie Sanders, the Vermont independent who is seeking the Democratic nomination for president, and Representative Elijah E. Cummings, Democrat of Maryland… Doxycycline, an antibiotic, went from $20 a bottle in October 2013 to $1,849 by April 2014, according to the two lawmakers.

“The Infectious Diseases Society of America and the HIV Medicine Association sent a joint letter to Turing earlier this month calling the price increase for Daraprim ‘unjustifiable for the medically vulnerable patient population’ and ‘unsustainable for the health care system.’ An organization representing the directors of state AIDS programs has also been looking into the price increase, according to doctors and patient advocates.” NY Times.

Public shaming helps. “Cycloserine was acquired [in August] by Rodelis Therapeutics, which promptly raised the price to $10,800 for 30 capsules, from $500. But the company agreed to return the drug to its former owner, a nonprofit organization affiliated with Purdue University, the organization said on [September 21^st].” NY Times, September 21^st. The price dropped back to normal. Turing was unmoved, however. Daraprim remained absurdly expensive.

Do we live in a cruel society where the profit motive trumps medical suffering, allows financial mega-players to take what they want with little or no concern for the impact on society and allows corporations to decimate the environment and not pay a dime to the society for the damage they have inflicted? Can we, as human beings, continue to turn a blind eye to the ruthless pursuit of profits with little or no care for the impact of such efforts? Are we okay with providing tax benefits and regulatory loopholes to corporate America that they actually use to harm the rest of us?

I’m Peter Dekom, and as times change and benefits reallocate, there has to be time for a ground-up review of our priorities and what really should be permissible and encouraged without making decisions based on “slogans and labels.”