Tag Archives: Big Pharma

Research & Development

Let’s talk about drug prices.

Years ago, I was persuaded by arguments from friends who worked at Eli Lilly, Indianapolis’ own “big Pharma” company, who explained the considerable expense entailed by the development of new drugs–including losses incurred when, after the expenditure of millions of dollars, efforts to produce a new medication failed–the drug ended up being shelved. If the government imposed caps on what could be charged for the medications that did emerge, there would be little incentive to spend the zillions necessary, and we would all suffer.

That seemed reasonable, because I didn’t understand how the production of these medications actually worked, and what profits were actually incentivizing.

What initially triggered my deeper investigation was the overwhelming amount of advertising by big Pharma. (Take the purple pill!!) Companies were spending enormous amounts to “incentivize” patients to demand prescriptions from their doctors. (I don’t know about other doctors, but mine absolutely hated these ads, which required him to explain to his patients why pill X or elixir Y was inappropriate for them.)

My preliminary research (granted, a few years ago) revealed that big Pharma was spending more on advertising than on research and development.

Then there was the data showing how much those companies spent on lobbying…

Then there were the reports showing that efforts to produce new medications seldom if ever addressed so-called “orphan” maladies–that is, severe illnesses from which relatively few people suffer–since the markets weren’t attractive. They did spend generously, however, to produce slightly different versions of already-successful products.

But the most revelatory information came when I joined academia and kibitzed with colleagues on the medical faculty. Until then, I hadn’t realized how much pharmaceutical research and development is funded by government. Taxpayers pay, and drug companies profit.

A recent report from Inequality.org highlighted an example from the recent COVID pandemic.

Moderna, the world’s hottest new Big Pharma giant, now has four of its top players sitting on the annual Forbes list of America’s 400 richest. In early 2020, Moderna had none.

Moderna’s Forbes 400 billionaire quartet owes its current good fortune completely to the company’s Covid-19 vaccine. And who made that vaccine possible? U.S. taxpayers. Moderna’s Covid vaccine, as Public Citizen research director Zain Rivzi puts it, “would not exist without the massive contribution of the federal government at every step of the way.”

The Biden administration’s chief science officer for the Covid response, David Kessler, calculates that the federal tax dollars handed to Moderna for vaccine development, testing, and initial manufacture total about $10 billion. And that figure doesn’t include the brainpower of the scientists at the U.S. National Institutes of Health who spent four years actively collaborating with Moderna’s researchers.

Moderna has now filed for a patent on the key vaccine breakthrough these scientists helped produce. The company’s patent application makes no mention of the NIH scientists, a snub that could, notes a Wired analysis, have “major ramifications.”

What are those ramifications? Well, evidently, if a patent gives federal scientists the credit they deserve, the government can license the technology for Moderna’s vaccine to developing countries where vaccination rates remain low.

But if Moderna gets its way — gets approval for a crucial patent that denies credit to federal NIH scientists — the company’s billionaires would have “sole control” over the Covid vaccine technology that U.S. scientists and tax dollars did so much to create. That control would enable Moderna to continue placing profits ahead of people. Way ahead of people.

Over the course of this year’s first six months alone, Michael Hiltzik of the Los Angeles Times points out, Moderna “pocketed $4 billion in profits on $5.9 billion in revenue, almost entirely from its Covid vaccine, its only product.”

Meanwhile, according to the Mayo Clinic, the most commonly used forms of insulin cost 10 times more in the United States than in any other developed country. Other medications Americans rely upon to survive are also disproportionately expensive here.

According to the Commonwealth Fund

Drug spending in the United States is at an all-time high and still rising. Studies have repeatedly shown that the U.S. pays far more for the same prescription drugs than other high- and middle-income countries. Patients in the U.S. are more likely to report that they can’t afford their medications; half of all of adults with lower incomes go without care because of cost.

Commonwealth also debunks that argument that once seemed reasonable, opining that it “is an overreaction to say that any efforts to address drug pricing will stifle innovation,” since–among other things–the pharmaceutical industry has the largest profit margins of any sector among publicly traded companies.

And since U.S. taxpayers will continue to bear a substantial portion of R & D costs.

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People Will Die..

How many ways can this administration kill people?

Scientists tell us that changes to environmental protection laws will lead to at least 80,000 additional deaths each decade.

The announcement that acceptance of refugees fleeing war and persecution will be capped at 30,000 per year–the lowest number ever–has been condemned by Amnesty International, The International Rescue Committee and Human Rights First.  What those organizations labeled a “shameful abdication of our humanity” will result in untold numbers of deaths.

The GOP’s solicitude for the “rights” of the NRA continues to facilitate more than thirty thousand gun deaths each year.

Those are all fairly high-profile issues, and at least they’ve generated public debate.

Unfortunately, there has been much less publicity about the government’s ongoing refusal to impose rational regulations on Big Pharma. (Here in Indianapolis, our pathetic excuse for a newspaper simply ignored a recent demonstration protesting Eli Lilly’s pricing of insulin– instead, it ran a front-page “warm and fuzzy” article about the company’s new migraine drug). That failure, too, continues to kill.

If you wonder why single-payer healthcare has become such an overriding political issue, the case of insulin pricing may provide a clue.

Diabetes is one of the most common diseases in the U.S. Its incidence continues to climb, and huge numbers of diabetics are insulin-dependent.

According to information provided by an organization called “Insulin4All”

  • the price of insulin has increased 1123% since 1996. This isn’t because of new discoveries–prices have increased on medications that have been around for decades.
  • More than 7 million Americans are insulin dependent. More than 25% of those Americans  have had to ration their insulin due to cost.
  • Over 6,000 GoFundMe pages are asking for money to purchase insulin. (Shane Patrick Boyle, an artist who had moved to Arizona to take care of his mother and was in between health insurance plans, died from diabetic ketoacidosis. He was $50 short in his Go Fund Me for insulin.)
  • Some people are paying $1400 a month for their insulin.

The Insulin4All organization is asking two things. First, it wants pharmaceutical companies to disclose their manufacturing costs and profits, along with their marketing expenditures. Second–and incredibly important for all health care, not just diabetes treatment–they want the government to allow Medicare and Medicaid to negotiate drug prices, like other countries’ governments do.

In all fairness, this isn’t the first administration and congress to place the bottom line of drug manufacturers above the needs of sick people needing medicines. It has to stop.

Big Pharma will claim that R & D costs a lot of money, and that those costs justify high prices for their products. It is absolutely true that research and development is costly–but it is also true that a significant percentage of those costs are covered by taxpayers who also deserve a return on their investment.

Since the election, the federal government has cut back on support for basic research (an enormously self-defeating, “penny-wise, pound foolish” policy). Data from the National Science Foundation shows that, since those cutbacks, federal agencies provided “only” 44% of the $86 billion spent on basic research. Before that, however, the federal share of all research routinely topped 70%, and it was 61% as recently as 2004.

In addition, foundations, state and local governments, voluntary health associations and professional societies support drug research and development.

No one is suggesting that Big Pharma forgo a reasonable profit. What is reasonable, however, cannot be determined without increased transparency about actual costs, and the share of those costs coming out of the taxpayers’ pockets.

People who need insulin are dying because they cannot afford it. A lot of people.

Maybe the drug companies could run fewer television ads prompting people to ask their doctors for Purple Pills and the like, and use those savings to bring down the cost of lifesaving medications.

And maybe an administration and a Congress less beholden to corporate interests and big money would consider policies less likely to kill people.

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The Deepening Divide

America is reaching historic levels of inequality. We are likely to surpass the divide between rich and poor that characterized the Gilded Age, and what is worse, lawmakers are doubling down on policies that eviscerate the middle class and further enrich the wealthy.

We are getting used to seeing articles that tell us how much someone has to make in order to afford basic housing. The bottom line: there is not a single place in the United States of America where someone working a full-time minimum wage job can afford to rent a two-bedroom apartment.

What about a one-bedroom unit?

You would have to earn $17.14 an hour, on average, to be able to afford a modest one-bedroom apartment without having to spend more than 30 percent of your income on housing, a common budgeting standard. Make that $21.21 for a two-bedroom home — nearly three times the federal minimum wage of $7.25.

Forget compassion (the GOP certainly has.) Lawmakers with even a cursory understanding of economics ought to look at that mismatch between the minimum wage and a worker’s ability to afford a roof over his head and realize that people making that wage–people who are spending every cent they have on life’s necessities– have no disposable income to spend in the marketplace.

It is demand that drives our economy and creates jobs; if fewer people can afford my consumer goods, I buy less from my suppliers, who then buy less raw material. I need fewer salespeople, and my suppliers need fewer people on the factory floor.

If we needed evidence that today’s Republicans dismiss both arguments– compassionate and economic–Karen Handel recently reminded us. Handel is running against Jon Ossoff  in Georgia, in a special election to fill a Congressional seat recently vacated by Tom Price. During a debate, Ossoff was asked about the wage issue, and strongly endorsed raising the minimum wage. Handel responded to the same question by saying, “No, I don’t support a livable wage. I’m a Republican.”

While Handel didn’t have to take a hard line on a “livable wage,” her views are not out of the mainstream for Republicans in a place like Georgia, where opposition to any minimum wage is common. The Republican who held the district for a dozen years before becoming HHS secretary, Tom Price, voted against the increase that raised the minimum wage to where it is today.

If America had an adequate social safety net, the wage issue might be ameliorated somewhat, but very few of the working poor qualify for any sort of benefit. The most glaring omission from that safety net, of course, is healthcare. The Affordable Care Act (aka “Obamacare”) is imperfect, but it was a step in the right direction. Most other industrialized countries have some version of national healthcare, or single-payer; such systems not only improve health outcomes significantly, they make an enormous difference to low-wage workers.

When a broken leg can mean the difference between an uninsured person paying the rent or being evicted, the Republicans’ current mean-spirited effort to deprive twenty-three million people of health insurance is incomprehensible.

Equally incomprehensible is Congress’ steadfast refusal to allow government agencies to negotiate prices with Big Pharma, or to allow Americans to purchase drugs manufactured in America from countries that have negotiated for–and achieved–lower prices.

If you are poor in the United States, a broken leg or extended bout of influenza is bad enough, but treatment of a serious illness like cancer is simply unaffordable. Doctors are desperately trying to find ways to keep cancer patients alive without bankrupting even those with better-than modest resources.

A group of prominent cancer doctors is planning a novel assault on high drug costs, using clinical trials to show that many oncology medications could be taken at lower doses or for shorter periods without hurting their effectiveness….

The initiative is the latest response to rising concerns over “financial toxicity,” the economic devastation that can be wrought by the high cost of cancer care. With new oncology therapies routinely debuting at more than $100,000 a year, “lots of people are worried about developing drugs that people can’t get,” said Leonard Saltz of Memorial Sloan Kettering Cancer Center in New York, who helped organize the new group.

Our lawmakers are very good at protecting the profits of drug companies. They are also good at figuring out how to fund tax cuts for the wealthy–just decimate Medicaid and stop subsidizing health insurance for poor Americans.

What they aren’t so good at is recognizing the human, social and economic consequences of continuing to expand the abyss between the rich and the rest.

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About That Opioid Epidemic

Credit where credit is due: Medical science and pharmacology have been nothing short of miraculous over the past century. People live longer and healthier lives as a result of breakthroughs in our understanding of how the body works, and how it responds to medications.

But we are also beginning to see some troubling consequences of our reliance on “miracle” drugs. Scientists warn of an emerging resistance to penicillin and other antibiotics, and blame their overuse. And then there is the opioid epidemic, which is yet another example of the problems that emerge when drug use and policy are dictated by the profit motive rather than by medical science and the Hippocratic Oath’s dictum “First, Do No Harm.”

AP and the Center for Public Integrity recently released a study detailing the effects of Big Pharma lobbying on opioid use and abuse. It should give us pause.

Key findings from the reporting:

 Drug companies and allied advocates spent more than $880 million on lobbying and political contributions at the state and federal level over the past decade; by comparison, a handful of groups advocating for opioid limits spent $4 million. The money covered a range of political activities important to the drug industry, including legislation and regulations related to opioids.

The opioid industry and its allies contributed to roughly 7,100 candidates for state-level offices, with the largest amounts going to governors and the lawmakers who control legislative agendas, such as house speakers, senate presidents and health committee chairs.

The drug companies and allied groups have an army of lobbyists averaging 1,350 per year, covering all 50 state capitals.

The opioid lobby’s political spending adds up to more than eight times what the formidable gun lobby recorded for political activities during the same period.

There’s much more.

I know I’m beating a dead horse (what, no medical interventions for the horse?), but there are economic arenas where markets work beautifully, and there are arenas where they don’t. Health care falls in the latter category. “Buying” health care is not equivalent to buying a car or a stove or other consumer good. The parties to the transaction do not possess equivalent information, and the “buyer” needing immediate care is rarely in any shape to go comparison shopping in any event.

The opioid epidemic is just one more example (in a very long list) of what happens when we insist on maintaining markets and encouraging the profit motive in a sector where informational and power asymmetries make genuine competition impossible.

Perhaps–if this election gives us a sane President and legislature–we can begin to correct the situation, by revisiting both the prohibition on government’s ability to negotiate drug prices, and the inclusion of a public option in the Affordable Care Act.

And someday–no doubt after I’m long dead–we might stop letting lobbyists make health policy, get Medicare for All or its equivalent, and join the majority of countries that have recognized that access to health care and lifesaving drugs should not be treated as  profit-generating consumer commodities.

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A Different Drug War

A recent post at Daily Kos considered a different and less recognized “drug war.”

Let’s talk about the other drug war: The one being waged against the American consumer by the pharmaceutical companies who benefit from our tax dollars that fund basic scientific research and make up the difference in the tax relief they receive for their own research and development.

The post was prompted by the recent steep increase in the price of the Epi-Pen. Among other disclosures, it turns out that the company that manufactures the pen had moved its headquarters to the Netherlands in 2014, a move that allowed its tax rate to fall from 14 percent to its current 7 percent.

The fact that the company and its well-connected management are making out like bandits by stiffing those who need the devices is bad enough, but as the post points out, it isn’t even recovering its own costs of research and development.

The mechanical device in the EpiPen to deliver epinephrine was developed in the 1970s by a NASA engineer. It was designed for the rapid self-injection of antidotes to chemical warfare agents in battle, and in 1987 it was approved by the FDA for use with epinephrine. Epinephrine itself is a human hormone, first isolated by Japanese scientists in 1901. So the drug couldn’t be patented, although the device itself, the same one created by a government employee, was. The logical assumption, of course, is that a technology developed by a NASA engineer would be owned by all Americans. But it is not.

This is an excellent example of the Achilles heel of arguments advanced by drug companies defending exorbitant prices.

Big Pharma makes the case–correct as far as it goes–that the development of new therapies is expensive. Many promising avenues of research fail to pan out; testing and the regulatory process for vetting drugs is expensive and time consuming. If companies are to continue to sink money into the development of life-saving drugs, they need a financial incentive to do so–a promise that they will recoup their costs and make a reasonable profit.

What they don’t mention is that significant percentages of drug development costs are paid for by government grants–by the many millions of taxpayer dollars that support medical research. (They also don’t mention that, by some calculations, Big Pharma spends more on those interminable television ads than on research. Purple pill, anyone?)

It is especially galling that American consumers are charged more for drugs developed with substantial taxpayer support than consumers of those same drugs in other countries. It would be one thing if our tax dollars subsidized the cost of medications across the board, but it is really unconscionable that the same people whose taxes helped pay for the development of medications are also being charged more for those medications.

Lobbyists for the drug companies have managed to get laws passed that prohibit U.S. government agencies from negotiating drug prices as other countries do. At a bare minimum, those laws need to be repealed.

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