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Little-Known Facts About Big Pharma

CARTOON: Tarbell.org

The grand debates on healthcare are much like the grand debates on border security. They’re both rife with opportunities for virtue-signaling and moral imperatives, both involve big bucks and bloated bureaucracy, and both are solvable issues that are never truly solved because they provide a polarizing political wedge each election cycle.

Both offer ample evidence of broken systems. The U.S. is home to more illegal aliens than any country in the world. Yet, the U.S. has the most advanced military, security and surveillance in the world. The U.S. routinely boasts some of the world’s greatest advancements in medical science, it’s home to the world’s top medical specialists, and it spends exponentially more on healthcare than any other nation. Yet, even with nearly universal public and private insurance options, one in four Americans say they cannot afford to see a doctor, nearly 30 percent say they cannot afford their prescription medication, and the U.S. ranks 26th in life expectancy.

This post isn’t about border security, however. It’s about health care — or more specifically, big pharma. Have you ever bought prescription medication outside of the United States? If so, you’ve probably noticed dramatically lower prices. I certainly have. Price disparity is something I noticed 20 years ago, and the gap has widened dramatically over time.

I personally know of at least three medications that are significantly cheaper in Europe and Central and South America. A 30-day supply of generic thyroid medication in Mexico, for example, is about $4; in Europe, it’s about $7; and in the U.S., it’s $16. The brand-name migraine medication I use is about $35 for four pills in Europe and $180 in the U.S. The antibiotic Zithromax in the U.S. is about $48 at our local pharmacy; in Brazil, it’s about $8.

It wasn’t until I covered Obamacare as a business reporter that I began to peel back the complex layers of bullshit that comprises the U.S. healthcare system. I still don’t fully understand it, but I can tell you this simple fact: Whenever private sectors receive public funds — unless price controls are implemented — there will be massive inflation in looting.

Obamacare legislation covered matters of insurance, but it didn’t appear to offer a clear prescription policy. So it was with morbid curiosity that I tuned in to CSPAN to watch the U.S. Senate Finance Committee hearing on pharma pricing.

In the hot seats providing testimony were big pharma executives from seven domestic and international companies (in order with the image below): AbbVie Chairman and CEO Richard Gonzalez, Astra Zeneca CEO Pascal Soriot, Bristol-Myers Squibb CEO Giovanni Caforio, Johnson & Johnson Pharmaceuticals Vice President and Chair Jennifer Taubert, Merck Chair and CEO Kenneth Frazier, Pfizer CEO Albert Bourla and Sanofi CEO Olivier Brandicourt.

Panel prepares to testify before the Senate Finance Committee hearing on drug prices, Tuesday, Feb. 26, 2019, on Capitol Hill in Washington. PHOTO: KTUL/AP/Pablo Martinez Monsivais

If you like to nerd out from time to time like I do, you can watch the 3-hour hearing here. I recommend skipping past the first hour, which was just a lot of salutations and introductions.

Before hitting on some of the key takeaways from the hearing, here are some key facts to help gauge the scale of the problem.

  • The federal government pays more than 40 percent of all Americans’ prescription costs.
  • Drug prices in the U.S. are, on average, 40 percent higher than the rest of the world.
  • A third of all Americans receive some form of government health insurance, including around 59 million Americans are on Medicare and 75 million on Medicaid.
  • In 2016, Medicare and Medicaid alone spent $174 billion on prescriptions drugs, which represented 23 percent of the entire fiscal year budget.
  • The U.S. government spends more on health care than on any other single segment of the federal budget, including defense or Social Security.
  • The pharmaceutical industry spends around $2.3 billion annually on lobbying Washington, D.C., which is more than any other industry.
  • Congress barred Medicare from negotiating drug prices.

Torchy’s Takeaways from the Hearing

Please not that these takeaways are by no means comprehensive.

  • Taxpayers subsidize pharma companies both domestically and internationally through tax credits — though it’s mainly domestic companies that benefit from the breaks. They received an additional 1.5 percent tax break via Trump’s recently implemented corporate tax holiday. U.S. companies used the tax break for stock buybacks and investment rather than pass savings along to consumers.
  • The average cost per Medicare patient is $25,000 per year (not $11,000). This figure was repeated multiple times by multiple senators.
  • U.S. taxpayers and U.S. pharma consumers are financing pharma research for the world.
  • The seven CEOs confirmed their companies spend more on marketing and advertising their drugs to U.S. consumers than they do on research and development. Pharma companies also receive a tax break for marketing direct to consumers. Countries outside of the U.S. have made it illegal to directly advertise to consumers.
  • Pharma companies license their drug formulas to manufacturers of generics.
  • Senators claimed that when they tried to address price gouging by generic drug manufacturers, the lobbyists for big pharma came after them and blocked their attempts. The CEOs seemed surprised by this and promised the senators that they would “look into it.”
  • There are countless drugs that are not patent-protected but are manufactured by only one company. In such instances, that manufacturer has a monopoly, and they will often price gouge heavily. There may be as many as 300 manufacturers with monopoly price positioning. Often times, they’re firms that are not tied to or run by the medical community. They could be manufacturing widgets and insulin. The FCC/U.S. Justice Department has done nothing to tackle these monopolies.
  • Pharma companies not only patent molecules, they can patent a treatment. (Example not related to the hearing: Bimatoprost is a generic ophthalmic solution that has been used for decades to treat glaucoma. Oddly, it was discovered that the bimatoprost solution caused users’ eyelashes to grow long and thick. So a decade or so ago, pharma company Allergan patented its use as cosmetic treatment to enhance eyelashes and called it Latisse. A decade ago, a 3 ml bottle of bimatoprost for glaucoma would cost about $15. Today, it costs about $45. But that same exact solution in the same exact bottle sold in a fancy box with a Latisse label is $180.)
  • Before watching the hearing, I learned that the primary reason drugs are cheaper abroad is that every country except the U.S. has price controls on medication. So when watching the hearing, it was both comical and disgusting to watch both senators and CEOs deliberately and awkwardly dance around the topic of international pricing disparity without uttering the words “price controls.” It was clear that nearly every argument made in the hearing was intended to steer away from trigger phrase.

Questions Not Asked During the Hearing

  • How much does your company spend each year on lobbying state and federal government?
  • How much does your company spend each year on state and federal political donations?
  • Has your company made political donations to any of the senators on the finance committee?
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10 Comments on Little-Known Facts About Big Pharma

    • Yep….since I could no longer get my triptan (migraine med) from Canada, I had to look elsewhere so some UNLICENSED pharmacy I found about on a leftist website (Counterpunch, before it went “woke”) called ProgressiveRX sold cheap generics from India or Malaysia or Singapore, so I kept getting from them until July 2018 when the FDA at O’Hare airport detained my package, because the pharmacy was UNLICENSED (located in Vancouver Washinton). So I cna no longer get the med from ProgressiveRX.

  1. Another little-known fact about Big Pharma – essentially a twin head on the “medical” pseudoscience of psychiatric genetics which overtook the German people in the first part of the 20th century – is that half the German population in university were medical students. Under the tutelage of Ernst Rudin, the spearhead for it all. Most of the Nazi movement was in the medical community. This was when genetic star chambers were set up in Germany and hundreds of thousands of citizens – a great number were children – were marched into local crematoriums for such terminal defects as being the child of an alcoholic, manic depressive, etc. Here’s a link: https://www.cchr.org/documentaries/age-of-fear/creating-the-holocaust.html.

  2. Patent and Licensing is profit protection for those that can afford it. Get rid of the government aspect and the market will deliver the cheaper goods you desire.

  3. A very timely thread, that even though it was written a bit earlier, still has relevance today and especially now. At the moment, the United States of America is giving away a seemingly “free shot” at taxpayer expense. Yet, I would opine that the longer term thinking and sell of the lobbyists is that this is a “free taste” (just like any other narcotics dealer in the world), with a payoff to follow.

    We may wish to ask ourselves, what would be the actual cost to a patient should the shot and its booster be sold directly to an individual. I have seen projections ranging form $2,500.00 to $ 10,000.00 per dose. Now what if that shot and its booster were not covered “for free” and either had to come from insurance and / or (assuming a co-payment) from the individual? Then, what if we set the stage (please recall that all of this is theater) for the government (at the federal level) not mandating the shot for private citizens, but setting a precedent that permits all sorts of businesses to mandate this alleged remedy as a part of OSHA guidelines.

    So los federales mandate it for the limited number of government employees it can and a certain number of contractors, but then either more members of federal branches and the largest private companies in the nation (almost all military industrial contractors of some form or fashion) now mandate a shot and its booster for employment, but now the individual needs to pay the dealer. Add those numbers (never mind the whole health aspect, just stick to the dollars) to the family budget and watch it crush folks even harder.

    Now there are two parts of this thread that I would like to suggest we also mull over as an expansion to Torchy’s work here:

    Obamacare was not actually an individual piece of legislation,

    (Just like the USA Patriot Act can trace its roots back to a Reagan crime bill, sponsored by? You guessed it Uncle Joe Biden.)

    but was rather an extenuation of plans that were proposed, partially ratified and then eventually passed starting with the administration of Lyndon B. and moving right through the DUBYA prescription legislation. If you go back to old, I like to entertain lady reporters in the White House pool, while I swim naked, Johnson, you will actually see ideas mapped out by the Executive Branch that were (in essence) the basics of Obamacare. Then just follow the breadcrumbs through the administrations that come after that inception point.

    and anyone who tells you that old Lyndon was a socialist is not being truthful, Lyndon was a liar and a fascist to the core. Just look up the records on the, now defunct, Bell Helicopter and you will se a truly unholy marriage between the state and a “private” enterprise.

    On this part:

    “The U.S. is home to more illegal aliens than any country in the world. Yet, the U.S. has the most advanced military, security and surveillance in the world. The U.S. routinely boasts some of the world’s greatest advancements in medical science, it’s home to the world’s top medical specialists, and it spends exponentially more on healthcare than any other nation.”

    Oh yeah, Torcy is quite correct, but lets bring it one further.

    The United States of America is has the largest incarcerated population in the history of the planet (just like we are #1 for debt at this point). Now we could get into the defacto slave camps (thank FDR and his “New Deal”), known as prisons, which permit labor to U.S. companies for pennies on the dollar, and then permit those organizations to stamp the old MADE IN THE U.S.A. on the packaging, but we will skip that one for now (think CISCO hardware – they used a whole lot of prison labor).

    Instead, we will go with who supplies those “GENERIC” drugs to the prison population? Oh yeah, BIG PHARMA. Then we can also talk about the inmates who “VOLUNTEER” for drug trials in order to get “BENEFITS” during their stay, assuming they survive the trials at all. If you think that the private sector is lucrative for the name brands, then please consider the back end for the domestic generics in prisons and the military.

    The whole system is a mess.

    Best,
    SC

  4. Torchy, you mentioned “brand name migraine medication”–“…The brand-name migraine medication I use is about $35 for four pills in Europe and $180 in the U.S….” I myself get migraines (due to moon phases, changes in atmospheric pressure, and female hormones such as FSH which one secretes until one dies! menopause won’t cut it!), and when the FDA detained my cheap Imitrex from Singapore three years ago I had to look for an “FDA approved” source of Imitrex (actually, the generic sumatriptan). HealthWarehouse in Kentucky sells sumatriptan for about $4 a pill (which is even cheaper than the ones I got from Singapore through ProgressiveRX, which is NOT a licensed pharmacy so the FDA detained by package, but later mailed it to me because I badly needed it). The thing is, it is not brand name but generic, which is why it’s so cheap. I hope this info helps you because I know what it’s like to get migraines (and it’s the only med I use, I’m fine otherwise). And the sumatriptan works well for me, 200 mg.

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