Americans Are Being Screwed by Drug Companies

by on March 3, 2016 · 0 comments

in Economy, Health, History, Politics

drugs prescript money… and It’s Not Obamacare’s Fault

By John Lawrence

You can blame lobbyists from the health insurance and pharmaceutical industry in conjunction with Republican lawmakers who lobbied the Affordable Care Act to death making it in the long run unaffordable and probably untenable. Why? Because there are no cost containment features in the Act. None. Nada. Zippo.

What that means is that the drug companies can raise the prices of drugs 5000% like Martin Shkreli of Turing Pharmaceuticals did for Daraprim without breaking the law. Shkreli’s arrogance, the latest example of which is calling the Congressmen who interrogated him “imbeciles”, has gotten him into much trouble but not for raising the price of a life-saving drug 5000%.

drug industryYou see in America, my friends, screwing unfortunates with heart disease and cancer is not a crime but defrauding investors out of their money is. Your Republican controlled government is not looking out for the little guy. Lobbyists are running the lawmakers. Oh, you don’t have a lobbyist working for you? Then you’re shit out of luck. With the exception of a few good Democrats like Elizabeth Warren and Bernie Sanders, your interests are not only being ignored. You’re being considered as sheep to be led to slaughter.

ShkreliRepublican gerrymandering, voter suppression, and the filibuster have guaranteed that only Republican laws will be put into effect, and that means that corporations have the right to screw you but the investor class will be protected. In fact, after the 2008 Wall Street-caused financial meltdown, investors were paid back 100 cents on the dollar (there were no haircuts), and the only rule applying to the little guy was that he had to pay his debts 100 cents on the dollar (there were no writedowns for underwater mortgages).

But I digress. The company leading the pack in drug price increases is Canada-based Valeant, which lifted list prices by at least 20% some 122 times since the beginning of 2011. Isuprel and Nitropress, the heart drugs Valeant bought from another company, have been staples of medical care for decades. Doctors use Isuprel during procedures in treating heart-rhythm problems, and give Nitropress to emergency patients whose blood pressure has risen to life-threatening levels. Doctors say there are few good alternatives.

Valeant Pharmaceuticals Schemed Carefully

valeant-400x300Valeant Pharmaceuticals has also been in the business of making life-saving drugs for heart disease, AIDS, and cancer unaffordable. Evidence has been brought to light that Valeant Pharmaceuticals carefully pondered how much it could raise the price of heart drugs Isuprel and Nitropress before buying them and then raised the prices overnight by 525% and 212% respectively.

Profit was the only consideration. Blame the lobbyists who cut cost containment out of Obamacare, not Obama.“Our duty is to our shareholders and to maximize the value” of the products that Valeant sells, said Laurie Little, a company spokeswoman.

Ascension health system, which operates 131 hospitals across the country, estimates the increases will triple its spending on the drugs this year to $8 million. Ever wonder why health care premiums are so high? Richard Fogel, a heart doctor at Ascension’s St. Vincent Heart Center in Indianapolis, said the lack of good alternatives in certain clinical situations leaves him little choice but to keep using the pair.

Cleveland Clinic says the price hikes for the two Valeant drugs is unexpectedly adding $8.6 million, or 7%, to this year’s budget of roughly $122 million for medicines administered at its hospitals. Like its peers, Cleveland Clinic generally pays for drugs it administers, then hopes the reimbursement it receives for patient care will cover the expense.

Companies are buying established drugs from other companies and then jacking up the prices. Early last year, Mallinckrodt PLC paid $1.4 billion for Cadence Pharmaceuticals, though the Ofirmev pain injections that were the crown jewel of the deal were projected to have just $110.5 million in revenue for 2013, according to a Mallinckrodt conference call with analysts discussing the deal. However, Mallinckrodt had a better idea with regard to pricing.

Three months later, the list price for a package of 24 Ofirmev vials jumped almost 2½ times to $1,019.52. “It seemed like highway robbery,” said Erin Fox, who directs the drug information service at University of Utah Health Care.

These price increases can be very lucrative; that, not patient care, is the whole idea. Horizon Pharma PLC upped the price of Vimovo pain tablets after buying the rights from AstraZeneca in late 2013. On Jan. 1, 2014, its first day selling Vimovo, Horizon raised the list price for 60 tablets to $959.04, a 597% increase. Horizon raised the price again onJan. 1 this year to $1,678.32 for the tablets.

Prices were hiked dramatically on a drug used for “swimmer’s ear” – Cortisporin-TC Otic Suspension. Cortisporin was originally developed by Glaxon Wellcome and approved by the Food and Drug Administration (FDA) in 1975. Glaxo sold the rights to the drug to Monarch Pharmaceuticals in 1997. Ten years later it was sold to JHP Pharmaceuticals which was acquired by Par Pharmaceuticals in 2014 which was acquired by Endo International for $8 billion.

A vial used to cost $6. A few years ago Cortosporin was selling for $10. Last year it went for $100. and now it’s $200. This is a product that helps kids recover from ear infections. Heather Lubeski, Endo’s senior director of corporate affairs, said the company is “committed to providing top quality products to patients to improve lives.” She believes the product’s pricing is “rational and appropriate.”

After Price Gouging, Tax Avoidance

Endo moved to Ireland to avoid paying millions of dollars in US business taxes. Endo’s moving to Ireland is part of one of the biggest trends in global mergers and acquisitions. It’s called tax inversion. By moving their headquarters to another country, US companies are able to slash taxes.

Now Pfizer, maker of Viagra and Celebrex, wants to pull the same crap: first price gouge, then move to Ireland to avoid US taxes. Pfizer intends to save $35 billion in taxes by merging with Allergan. A group called Americans for Tax Fairness (ATF) is urging the US government to block the merger which would let Pfizer do a “tax inversion” but keep its offices in New York City where they are now. The group also accuses Pfizer of gouging Americans with frequent and excessive price hikes while benefiting from multiple loopholes and deductions which effectively reduce its global tax rate to 6.4%.

“This is theft, what Pfizer is doing,” said Frank Clemente of ATF. “This is a company that is extremely profitable. It’s ripping us off in two ways. It’s dodging taxes and jacking up prices.”

Pfizer has raised prices on multiple drugs including Viagra, Celebrex, Lyrica and Zyvox by over 39% from 2013 to 2015 – 23 times the rate of inflation! This year it’s already raised prices on 60 drugs by more than 10%. Like Shkreli of Turing Pharmaceuticals, Pfizer is pleasing its Wall Street overlords and masters by squeezing as much profit as possible out of its products. That’s their only consideration.

Shkreli gloated to investors about all the money he and they were going to make on Daraprim while any compassion for the unfortunate people, for whom Daraprim was a life-saving drug, went totally out the window. Here’s what he told his investors: “So 5000 paying bottles at the new price is $375,000,000 – almost all of it is profit, and I think we will get three years of that or more. Should be a very handsome investment for all of us. Let’s all cross our fingers that the estimates are accurate.” The unmitigated greed is appalling. Some patients were left with co-pays of $16,000!

drugs money powerCredit Democrat Elijah Cummings for using his position as head of the House Committee on Oversight and Government Reform to bring thousands of pages of documents to light that made it clear that Valeant’s and Turing’s only concerns were how much profit they could make by buying drugs and raising their prices exorbitantly.

Before buying Isuprel and Nitropress, Valeant hired a consultant to determine by how much the prices for the two drugs could be raised. It was determined that there was “ample room” to price gouge unfortunates because previous large increases had not “dampened use.” Lambs being led to slaughter? You bet.

Imagine the Powerpoint presentation as the pricing consultant presented to Valeant executives the information that thegoal for 2015 was for $279.3 million in revenue for Isuprel up from $54.5 million in 2014. Similarly, the goal for Nitropress was $245.5 million up from $98.7 million in 2014. The executives probably were immensely satisfied as they high fived each other over “aggressive pricing through consultant recommendation.” That quote was actually taken from one of the documents that Cummings was able to obtain.

The Truth About the Drug Companies

Way back in 2004 Dr. Marcia Angell published a book, The Truth About the Drug Companies – How they Deceive Us and What to Do About It. During her two decades at The New England Journal of Medicine, Dr. Marcia Angell had a front-row seat on the appalling spectacle of the pharmaceutical industry. She watched drug companies stray from their original mission of discovering and manufacturing useful drugs and instead become vast marketing machines with unprecedented control over their own fortunes.

Instead of doing research like they say they need their vast profits for, they lobby Congress, produce drugs of dubious value and pay their executives obscene sums. They use TV advertising to convince the American people they need their drugs – even those that will ultimately cause them harm. They pay competitors not to produce cheap generic drugs. They pay doctors to prescribe their drugs.

It’s all about the free enterprise system, folks, conceived and dedicated to keeping Americans free to charge you outrageous prices especially if your life depends on their products. They have no mercy whatsoever or concern for their fellow human beings. It’s all about making as much money as possible. As one of the 1% class said, “You only have to make a fortune once.” Short term profits are what it’s all about, folks.

This is from the New England Journal of Medicine:

By Angell’s account, the current slide toward the commercialization and corruption of clinical research coincided with the election of President Ronald Reagan in 1980 and the passage of the Bayh–Dole Act, a new set of laws that permitted and encouraged universities and small businesses to patent discoveries from research sponsored by the National Institutes of Health (NIH). Research paid for by the public to serve the public instantly became a private, and salable, good, one that is producing drug sales of more than $200 billion a year.

The same companies also spend heavily to lobby governments. According to Angell, Pharmaceutical Research and Manufacturers of America, the pharmaceutical industry’s U.S. trade association, has “the largest lobby in Washington,” which in 2002 employed 675 lobbyists (including 26 former members of Congress) at a cost of more than $91 million. [In 2014 the pharmaceutical industry spent $229 million lobbying.] The result has been above-average growth in corporate profits during both Republican and Democratic administrations.

The most recent and (at least to observers outside the United States) perplexing lobbying effort caused Congress explicitly to prohibit Medicare from using its huge purchasing power to get lower prices for drugs, thus opening up a dollar pipeline, in the form of higher drug prices, directly from taxpayers to corporate coffers. These changes, along with the cave-in by the Food and Drug Administration (FDA) in 1997 that permitted direct-to-consumer advertising to bypass mention in their ads of all but the most serious side effects, have further augmented profits. The overall effect has been a corruption not only of science but also of the dissemination of science.

That was in 2004. It’s even worse today. The bottom line is that the American public is being screwed by Big Pharma in conjunction with Republican lawmakers. It’s not Obama’s fault. He did the best he could. Unfortunately, Obamacare is flawed not due to Obama but due to the fact that he had to make concessions to lobbyists for the pharmaceutical industry to get the ACA legislation passed at all. Bernie Sanders wants to take it to the next level – Medicare for all. Just the elimination of all the paperwork involved in today’s medical industry will save billions of dollars as will the proscription of the legislative provisions which disallow Medicare from negotiating drug prices.

Big Pharma Raised Prices Again in January

Drugmakers didn’t let up on price increases with the start of the new year, demonstrating the industry’s pricing power in the face of mounting criticisms of prescription costs in the U.S. Pfizer, Amgen, Allergan, Horizon Pharma and others have raised U.S. prices for dozens of branded drugs as of January 2016, with many of the increases between 9% and 10%. Some of the increases add thousands of dollars to the cost of already expensive drugs, and come on top of repeated price hikes in recent years.

Vanda Pharmaceuticals on Jan 1 raised the price of its new drug Hetlioz, which treats a sleep disorder in blind people, by 10%, to $148,000 a year, a spokeswoman said. Piper Jaffray analysts say the price of the once-daily capsule is now 76% higher than when it was introduced in 2014.

Since New Year’s Day, Pfizer has raised list prices an average of 10.6% for more than 60 branded products with annual U.S. sales of at least $10 million, according to Deutsche Bank. Prices for eight of the products went up at least 20%.

Amgen raised the price of the anti-inflammatory drug Enbrel by 8% in late December following an 8% increase in September and a 10% increase last May. Enbrel costs about $704 a week for the typical dosing for treatment of rheumatoid arthritis or more than $36,600 a year.

Acorda Therapeutics raised the price of its drug Ampyra, which is used to help multiple-sclerosis patients improve walking, by 11% on Jan. 1, to an annual cost of more than $23,650 a patient. The company has raised the price several times since the drug was approved in 2010. The drug’s new cost is about four times its cost at launch in the 1990s, said Raymond James analyst Christopher Raymond. The price hikes for Enbrel and other drugs “seem to have increased in magnitude and frequency,” he said.

not cures customersImagine having an insurance card where you can walk into any doctor’s office, show your card and never have to pay a bill. That’s the way it is in Canada and most other advanced countries. The cost savings resulting from simplification of paperwork alone makes Medicare for All worthwhile. Bernie Sanders’ message is very simple – Medicare for All will not only save money, it will provide superior health care for everybody the way it does in the rest of the world. But in America freedom implies that the owner of a life saving product can gouge its victims as much as possible in order to make profits for shareholders and investors. Wall Street frowns if the price gouging isn’t to the max. To paraphrase Janis Joplin, “Freedom’s just another word for the ability to price gouge.”

When Elijah Cummings was grilling a smirking Shkreli in front of the House Oversight and Government Reform Committee, Cummings said to him, “It’s not funny Mr. Shkreli. People are dying.” But all that Shkreli and the others are interested in is maximizing growth potential and creating value for shareholders. I guess they are the only ones who count in this world. Money talks and shit walks. Then Shkreli called the lawmakers “imbeciles” for not knowing that in a capitalist economy that’s par for the course.

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