Admittedly, there’s not a sentient being who doesn’t know how U.S. taxpayers are being cheated by the drug industry. (For a different take on the rape of Americans by the drug industry, check out SA’s previous article — How $6.13 Billion is Turning Healthy Americans into Patients While Drug Companies are Rolling in Dough). What drives the disproportionate amount Americans throw at drug companies every year? To be sure there are a lot of flies in this particular ointment. The first and arguably biggest emerged as the sausage making accompanying Obama’s signature healthcare bill, the Affordable Care Act (ACA), resulted in a big win for the drug industry. Unlike virtually every other country in the world, the U.S. promised not to interfere with big PhRMA’s (the drug industry’s lobbying group) business model: profit at any cost. No federal oversight, no negotiating drug prices, the government closed its eyes and whistled Dixie. Of course, that wasn’t the rosy picture Obama painted when he strong-armed Democratic lawmakers into passing the ACA. He promised that the ACA “would save lives, prevent financial misery, and ultimately set this country we love on a better, healthier course.
Turns out he’s a serial liar. Let me count the ways. Based in part (large part) on the government’s refusal to rein in drug company prices and practices, “saving lives” has become the impossible dream as U.S. life expectancy dropped for the past two years. What about “preventing financial misery?” Surely we’ve made some progress there. Depends on what you mean by progress. In a 2017 report, the Kaiser Family Foundation revealed that one-quarter of U.S. adults, many of them with insurance coverage, have trouble paying their medical bills. Medical debt is the leading cause of personal bankruptcy in the U.S. and has been for years —both before and after the ACA. Millions more (1 in 5) are being hounded by collection agencies for unpaid medical bills. Now about that better, healthier course thing. Actually, that’s a hard case to make when you consider the U.S. spends more than $9,000 per person on healthcare, higher than any other country as befits an exceptional nation and still manages to rank dead last in life expectancy out of the 12 wealthiest industrialized countries in the world. In case you’re wondering how close the ACA came to the health care gold standard of universal health care—in 2017, over thirty million Americans still had no health insurance.
Surprise, surprise wildly irrational and escalating drug prices are a big cost driver in the exceptional nation’s health care spending which is —well —exceptional. The U.S. spends $4,197 per person on public health care programs like Medicare and Medicaid yet manages to cover only 34% of residents. In the U.K. (and virtually every other country in the world) the government spends less than $3,000 per person to cover 100% of the population. Think about it —public spending on healthcare in the U.S. reaches one-third of the people covered by the rest of the world’s public health programs and spends one-third more to do it. What’s wrong with this picture?
Now we get to the elephant — some might say gorilla — in the room. As healthcare costs spiral out of the stratosphere, the drug industry is off to the races. Talk about price hikes. How’s this for drug inflation? From 2014-2016, the prices of twenty brand name drugs quadrupled. Participating in the great American stick-up, another sixty doubled in price. These raises might seem like chicken feed compared to the price hikes drug maker Valeant slapped on two medications that have been around for twenty years or more —an old-time blood pressure drug skyrocketed 212% and a drug for irregular heartbeat an outrageous 525%.
Beyond obscene are the cute tricks thieving drug companies are adept at, like hiking prices on medications vital to save lives, particularly for those overdosing on opioids. Ironic, an industry that should be indicted for the murder of 72,000 Americans dying from drugs they sold (in this case opioids) is instead raising the prices on medications to prevent drug users dying from their killer potions. If we accept that the primary reason for drug companies to exist is to amass oodles of shekels for the offshore bank accounts of executives and shareholders, the $4,000 price tag (up from $290 in 2014) for the dispenser that delivers the life- saving antidote Naxalone, can be chalked up to the cost of doing business (the people’ cost, drug companies business). Even the price of generic Naxalone, on the market since 1971 and not requiring any fancy dispensers, has more than doubled in the past few years. Although most experts agree that these prices in no way reflect production costs, private and public insurance continue to pay them.
Not that anyone is really demanding an answer, no organized protests, sit-ins or demonstrations, but still the drug behemoths feel enough heat to come up with some ingenious excuses. The one that usually gets the biggest laugh is the solemn assurance that most price hikes don’t fatten drug executives’ or shareholders’ wallets but are funneled into R&D (Research and Development) for new life-saving drugs. If there’s any hard-pressed consumer paying out hundreds or thousands per month in drug co-pays who believes that fairy tale, they need a brain scan immediately. Facts matter: 9 out of 10 of the largest drug companies spend more on advertising that R&D.
Next stop on this train to nowhere is the depressing inside info on how drug companies spend a portion of the money (the part that isn’t going into executive and shareholder pockets) consumers shell out every month —advertising their expensive poisons It’s an awesome task finding new customers and re-hooking old ones. Taking advantage of an unlimited budget, ads for the latest (and most expensive) drugs for every malady from cancer to toe-nail fungus are pitched on CBS, NBC, ABC (especially evening news and the few soaps still airing), the biggest cable channels (MSNBC, CNN, Fox) and even during NFL games (average cost $500,000 for a 30-second spot). An all hands-on-deck effort to screw the last dime out of the American public cost the industry $6.3 billion of your money in 2017, a 64% increase since 2012. It’s worth it. There are lots of blockbuster drugs whose profits warrant outsize spending. In 2016, each one of sixteen drugs racked up $100 million+ in advertising costs. The top three drugs with the biggest advertising budgets —Humira at an astonishing $357 million was the leader of the pack with Lyrica at $313 million a close second and Eliquis bringing up the rear at a measly $180 million.
Where does it all go? Most to television, in a scam called DTC (direct to consumer advertising). Is it working? You decide. The last time the GAO (Government Accountability Office) looked, drug company revenues rose to three-quarters of a trillion dollars in 2015. To no one’s surprise, the amount of money Americans spend on prescription drugs has doubled since 1990. Simply stated, the empire has become a nation of drug addicts —70% of Americans take one drug every day, 50% take two or more and in an environment of corporate doctoring, 64% of doctors end a patient visit, averaging 13-16 minutes, (not counting the hour or so spent cooling your heels in the waiting room) by grabbing the prescription pad.
Is it wrong for drug companies to advertise their concoctions directly to the patient? PhRMA claims criticisms are: “…driven by the false notion that DTC plays a direct role in the cost of new medications and ignores the positive impact of health care communications (euphemism for over-the-top-advertising) … [drug ads] provide scientifically accurate information to help patients better understand their…treatment options.” It certainly would be good news that pure capitalist greed isn’t driving the train in drug land. However, a few inconvenient facts cut to the heart of this bold-faced lie. How about the fact (one well known to drug companies) that DTC advertising encourages patients (or their caregivers or children of elderly patients) to demand expensive, often useless, sometimes life-threatening drugs—
She was concerned about the diabetic nerve pain that was keeping her mother from enjoying life. Then she saw an ad on television promoting a prescription drug that promised to “give her back her life again.” After a consultation with her mom’s doctor who never saw a drug he couldn’t recommend, mom became another profit opportunity for the drug maker. At $400 for 60 pills (just shy of $7.00/pill), this was one DTC ad worth its weight in gold. (It is virtually certain that no medical professional warned this woman or her mother that in elderly patients, the drug would almost certainly cause one or more side effects — dizziness, blurred vision, confusion, or age-relate kidney problems.)
Consider doctors unindicted co-conspirators in this larceny. According to a Medscape survey, 62% of doctors reported that they would prescribe what they considered to be a harmless drug to a patient who didn’t need it but demanded it.
The AMA (American Medical Association) finally stepped up to the plate in 2015 and called for a ban on DTC advertising: “[DTC advertising] inflates demand for new and more expensive drugs even when these drugs may not be appropriate” Right on brother. But until a reluctant congress (90% of the House and 97 senators take bribes —uh, make that contributions — from the drug fairy) can be dragged kicking and screaming to the altar of sanity, how about telling your members Just say no to those useless and potentially harmful drugs a gullible public has been deluded into believing will help them live forever.
Two countries in the world allow DTC advertising: New Zealand and the world’s sole super power. Call it the wages of sin but these are the only two countries whose people take more than two drugs daily. “[Drug makers don’t care] whether it’s a rare, expensive drug or a popular cheap drug…A small number of customers spending a lot or a big number spending a little.” (Amanda Starc, Northwestern University’s Kellogg School of Management)
Can anything be done to stop the bleeding? There’s good news and bad on that front. A bill has been kicking around Congress since 2009, “Protecting Americans from Drug Marketing Act” which would prevent drug companies from writing off the money they spend on advertising as a tax deduction. Unfortunately, the bill has never gotten a fair hearing and one of its chief sponsors, Al Franken, is no longer in the Senate. Prospects for its passage: on the cusp of absolute zero.
Having gotten away with one scam, the criminal cabal that is today’s drug industry is up to their hard hearts in another. According to a new report from Oxfam, four drug companies —Pfizer, Merck, Johnson & Johnson and Abbott —park their profits overseas thereby dodging $2.3 billion annually in taxes that belong in U.S coffers. To put the icing on the cake, in June a Reuter’s investigation found that another drug company, AbbVie projects an astonishingly low 9% tax rate for 2018 in spite of the fact that its blockbuster drug, Humira, reported record sales of $12 billion in the U.S. (average annual cost to treat each patient $20,000)) On the scale of crimes against humanity this scam represents a perfect 10.
If you’re a real glutton for punishment, read on. In 2016, Americans for Tax Fairness reported that “Gilead [major drug company] is making a fortune selling essential drugs to the very government and taxpayers that helped pay to develop them then dodging taxes on the resulting profits.” In this case, its blockbuster Hepatitis C drug brought in profits of $28.5 billion which Gilead recorded as overseas income although the majority of sales were in the U.S (full treatment cost per patient $95,000). Feeble government regulatory agencies caved and Gilead avoided a $10 billion U.S. tax bill. Guess who picked up the tab instead?
Profits above peoples’ lives. Big bonuses outweighing corporate responsibility. An exceptional nation that spends $3.5 trillion on healthcare, more than any other country while the American people remain behind the eight ball spending an average of $1,112 of their hard-earned dollars on prescription drugs and falling further and further behind the rest of the world when it comes to health outcomes like the prevalence of chronic conditions. What do you do when you live in a pill popping country where 43% of people have a hard, often impossible time paying their health care deductibles and twenty-five million skip doses of their medicines. Advice from a former law maker: “Don’t get sick and if you do, die quickly.”
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