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!!!!

Fraudster, Huckster or Savvy Populist President

Donald Trump is touted as a smart businessman, one who grew his real-estate-driven financial empire by shrewd strategies, careful design, catchy branding, and clever financial structures. Donald’s father, Fred Trump, built a sizeable fortune – estimated at over $300 million at his death in 1999. The elder Trump had already supported his son with loans and investments by the time of his death, and while the Trump family has never made public the amount of Donald’s inheritance, experts suggest that the number could have been as much as $200 million. Popular mythology tells us how the Donald managed to leverage that inheritance and some underlying real estate holdings to a current estimated net worth of over $4 billion, a lot of money by anyone’s standards.

Because of his “billionaire” status, his base passionately believes he is a very smart, self-made businessman. They gloss over one of the largest collection of lawsuits by and against an American businessman and his privately-held companies. But as the August 20, 2015 Fortune Magazine states: “Trump’s net worth has grown about 300% to an estimated $4 billion since 1987, according to a report by the Associated Press. But the real estate mogul would have made even more money if he had just invested in index funds. The AP says that, if Trump had invested in an index fund in 1988, his net worth would be as much as $13 billion… The S&P 500 has grown 1,336% since 1988.”

Trump brags about how he put one over on a consortium of Hong Kong financiers, a group of high rollers he spent years courting. “‘I beat China all the time,’ Mr. Trump declared in a speech the day he announced his candidacy. ‘I own a big chunk of the Bank of America building at 1290 Avenue of the Americas that I got from China in a war. Very valuable.’” New York Times, 5/30/16. A little digging, and what is claimed as a major victory over these Chinese investors turns out to be a settlement that Trump was forced to accept when he lost a lawsuit he filed against these self-same investors, when he claimed they sold a massive parcel of Manhattan real estate out from under him without his consent at below market. The investors denied that he was not completely aware of the transaction, and the court sided with that Hong Kong group.

“[When] his Hong Kong partners sold the property without his support, Mr. Trump waged a bitter, long-shot legal battle against them. And far from winning his share of the Bank of America building, according to court documents, he had to settle for it after losing in court. In the end, Mr. Trump’s alliance and eventual rivalry with some of Hong Kong’s richest men proved to be a tale of Mr. Trump at the extremes. It showcased his unflagging confidence in his ability to turn a bad financial situation around. But it also underscored his willingness to destroy a fruitful relationship with aggressive litigation.

“Their partnership began in 1994, after the collapse of the real estate market left Mr. Trump deeply in debt. He could not afford to make the bank payments on a 77-acre swath of land near Lincoln Center known as Riverside South, let alone to develop the property…

“The judge ruled against him. Instead of receiving the cash he wanted, Mr. Trump had to accept a 30 percent share in the profits from the two Bank of America buildings, tied up in a partnership that is slated to last until 2044. But today, Mr. Trump counts that legal defeat as a victory.” NY Times.

I suspect a large number of Americans who bought real estate in the 1990s and held it for ten years or more made a lot of money. Almost any real estate. Buy low, sell high. Donald’s returns on investment were pretty modest when compared with other “self-made” entrepreneurs during the same period (since 1987): “Other billionaires’ net worths have beaten the stock market’s growth in that time. Bill Gates, for example, saw his grow increase 7,173% since 1988 to $80 billion. Warren Buffet’s wealth grew 2,612% in the same time period, to $67.8 billion.” Fortune. Donald made less. But as the lawsuit with his Hong Kong partners illustrates, Trump needed someone to blame for his obvious failure… his struggles to stave off bankruptcy in the early 1990s. Blame, an essential ingredient in the way The Donald has conducted his entire life.

Trump’s business failures are substantial. Trump dabbled in the short-haul airline business with the East Coast corridor Trump Shuttle (above right). According to the October 11, 2016 Time Magazine, “The high debt forced Trump to default on his loans, and ownership of the company was turned over to creditors. The Trump Shuttle ceased to exist in 1992 when it was merged into a new corporation, Shuttle Inc.”

Trump Vodka (above middle) and Trump Mortgage did no better, notwithstanding the Donald’s usual braggadocio. Despite his ownership of 28% of the relevant stock, as his Atlantic City casinos began to tank, eventually winding up in bankruptcy, the Donald distanced himself and claimed his only connection was the license to use his name on those businesses. Trump Magazine, founded in 2007, died a year and half later.

“In 2005, Trump opened the non-accredited, for-profit Trump University. [above left] In 2010, four students sued the university for ‘offering classes that amounted to extended ‘infomercials.’’ Following the suit, the ‘university’ changed its name to ‘The Trump Entrepreneur Initiative,’ before ending operations one year later. In 2013, the New York Attorney General sued Trump and the ‘university’ for $40 million for allegedly defrauding students.” Time Magazine. Trump claimed again that this was simply a licensing of his name and some of his materials, but his endorsements and “slogans” were all over that fake educational endeavor. Trump’s organization eventually settled with the plaintiffs, purportedly for a $25 million sum.

So it seems that Trump is not a particularly good businessman and given his disdain for reading books and sophisticated academic materials, he does not seem prepared for the complexities of governance. He certainly did not make a particularly good impression on his undergraduate faculty (Wharton at the University of Pennsylvania). As Donald Trump gained media notoriety, his marketing Professor William T. Kelley, who passed away in 1982, repeated to his friends and acquaintances that not only did young Trump think he knew it all without studying, but the Donald “was the dumbest goddamned student I ever had.”

Donald’s attraction to gimmicky solutions, often those most vulnerable to fraud (like Trump University), continues even as to his suggestions for healthcare reform. Take for example his notion of special healthcare “associations,” medical programs with limited benefits that were considered too bare to qualify under the Affordable Care Act (Obamacare), often sold (before the ACA) to small businesses to provide minimal employee coverage.

Touting these programs as able to provide “great, great healthcare,” the President signed an executive order, effectively unilaterally amending the ACA to allow such programs to exist, exempting them from the minimum requirements otherwise imposed by the ACA. He didn’t mention the tendency of such programs to result in high default rates and out-and-out fraud. “In the executive order, issued on Oct. 12, Mr. Trump directed the Labor Department to expand access to the plans by making it easier for small businesses to band together and insure themselves or buy insurance as a large group.

“Large group plans and self-insured plans are subject to fewer federal and state requirements than individual or small group insurance. They are, for example, not required to provide ‘essential health benefits’ like mental health care and prescription drugs.

“But Mila Kofman, a former insurance superintendent in Maine who has done extensive research on association health plans, said they also often falsely claimed to be exempt from state insurance laws, as a way to explain how they could offer premiums lower than those charged by licensed insurance companies…

“But these health plans, created for small businesses, have a darker side: They have a long history of fraud and abuse that have left employers and employees with hundreds of millions of dollars in unpaid medical bills… The problems are described in dozens of court cases and enforcement actions taken over more than a decade by federal and state officials who regulate the type of plans Mr. Trump is encouraging, known as association health plans… In many cases, the Labor Department said, it has targeted ‘unscrupulous promoters who sell the promise of inexpensive health benefit insurance, but default on their obligations.’ In several cases, it has found that people managing these health plans diverted premiums to their personal use.

“The department filed suit this year against an association health plan for 300 small employers in Washington State, asserting that its officers had mismanaged the plan’s assets and charged employers more than $3 million in excessive ‘administrative fees.’ Operators of the health plan violated their fiduciary duty by using its assets ‘in their own interest,’ rather than for the benefit of workers, the government said.

“Marc I. Machiz, who investigated insurance fraud as a Labor Department lawyer for more than 20 years, said the executive order was ‘summoning back demons from the deep… Fraudulent association health plans have left hundreds of thousands of people with unpaid claims… They operate in a regulatory never-never land between the Department of Labor and state insurance regulators.’” New York Times, October 21st.

So we are left with the question of “who is Donald Trump and why is his base so fiercely loyal?” He’s certainly not a good businessman, as his ample track record of failure and underperformance illustrates. He’s not big on the details of domestic and foreign policy, stuff he would have to spend some serious time hitting the books, which, by his only admission, he just plain does not do. Pretty simple answer it seems: Narcissistic Donald is a super-salesman, less concerned with what he is selling that the act of selling. More able to campaign for office than run the country.

Truth is expendable in Trump’s own words. In his 1987 book, The Art of the Deal, he wrote: “"A little hyperbole never hurts… People want to believe that something is the biggest and the greatest and the most spectacular ... It's an innocent form of exaggeration - and a very effective form of promotion." So, I get it. The Donald really is good at that singular quality: hucksterism.

Trump’s base, those Middle Americans slammed by changing times and decreasing values for blue collar skills, are likely to be his biggest victims. If he has his way, they will suffer lost healthcare and government services/protections in order fund lower taxes for corporations and the wealthy. But like most victims of snake oil salesmen, they are loath to admit that they were suckered into a dumb deal, clinging to the belief that his impossible slogans to bring back their once lucrative past are implementable, and if they are not, it is because of the Great Washington Swamp conspiring against them… not their beloved super-salesman.

And if you think that the Republican Party is going to contain this misdirection, think again. As Arizona GOP Senator Jeff Flake chooses not to run in 2018 adds one more name of Republicans choosing to opt out of political office, Donald Trump is slowly reconfiguring the entire GOP to reflect his angry populism: “Despite the fervor of President Trump’s Republican opponents, the president’s brand of hard-edge nationalism — with its gut-level cultural appeals and hard lines on trade and immigration — is taking root within his adopted party, and those uneasy with grievance politics are either giving in or giving up the fight…  The Grand Old Party risks a longer-term transformation into the Party of Trump.

“‘There is zero appetite for the ‘Never Trump’ movement in the Republican Party of today,’ said Andy Surabian, an adviser to Great America Alliance, the ‘super PAC’ that is aiding primary races against Republican incumbents. ‘This party is now defined by President Trump and his movement.’” New York Times, October 25th. The Democrats face their own split between progressives and traditionalists. What a mess!

But with nuclear war hovering, nations stepping into to snap up economic and political opportunities as Donald Trump pulls the United States in a different direction, the consequences (near and long-term) are devastating, as ex-presidents from both sides of the aisle are making clear. Republicans are only beginning to admit that Trump is an embarrassment to the GOP; Democrats are required to do so. Notwithstanding a flying-high stock market, the chickens will come home to roost… and when they do…

I’m Peter Dekom, and this Emperor definitely is stark naked!