Asserting “disgust” with politics, Jerry Kremer considers the pharmaceutical industry — which leads him (and us) to greater disgust. My stalwart Republican dad used to say, “It’s human to complain. It’s patriotic to act. Think about the Founding Fathers.” We need frank discussion around American healthcare. Think Nov. 6.
Kremer bemoans too many drug ads — 771,368 in 2016, up 65 percent from 2012. Unbelievably, U.S. drug marketing exceeds the total cost of U.S. medical education.
Big Pharma averages 23 percent profit margins. The Fortune 500 averages 7 percent. Of the 15 companies with the greatest dollar profits, 12 are drug companies.
Why so high? Monopolistic pricing. With as many as 3,300 lobbyists spending $1.2 million per day on our 535 members of Congress, our patent laws now protect “me-too” drugs and devices — e.g., re-patented minor changes to asthma injectors raised prices from $15 to $400.
Generics are also being monopolized: Martin Shkreli (in prison for defrauding hedgefund shareholders, not patients) raised the price of Daraprim (for deadly parasite infections) from $13.50 to $750 per tablet (5,500 percent). Shkreli is hardly alone: just last month, Nirmal Mulye defended raising the price of nitrofurantoin (a WHO “essential” antibiotic) 400 percent because of his “moral requirement” to shareholders “to sell the product at the highest price.”
Why such demand for over-priced drugs? Some save lives. Others explain those annoying TV ads. Marketing works — and constitutes 30 percent of pharmaceutical spending.
But, but… innovation? Drug companies spend far less on R&D than marketing — and prioritize “me-too” re-patents. Breakthrough medications depend on your and my tax dollars. Every single FDA-approved new drug since 2010 came from NIH-supported research. Of the $100B spent by the NIH (2010-2016), $64B helped develop 84 first-in-class drugs. Taxes save lives. Who knew?
In 1980 the Baye-Dole Act allowed universities and non-profits to patent medications and devices developed with federal funding — and to sell them to drug companies. Baye-Dole includes a government “march-in” right should public access be constrained, perhaps by price-gouging. But “marching in” has never happened — even when Abbot Labs raised the price of Norvir (for AIDS) 400 percent for Americans but not foreign countries.
Recently, 10 pharmaceuticals spent $9B commercializing cancer drugs, for which they’ve reaped $67B in monopoly profits within the U.S. The low prices they charge across the rest of the world are gravy.
Last spring, a widely quoted Goldman Sachs analyst asked, “Is curing patients a sustainable business model?” His answer: “No!” He cited Gilead’s breakthrough drug for Hepatitis C (a 90 percent cure rate for the previously incurable, at $95K per treatment); 2015 sales of $12.5B plummeted to $4B in 2018. Profits require “sustainable” markets, he explained: on-going treatments, not cures.
We desperately need new antibiotics to combat resistance — but, because new antibiotics will be used sparingly to maintain their potency, self-respecting drug companies with “moral obligations” to shareholders ignore our need. Ditto for ballyhooed “customized” cancer treatments — how do you sustain even 23 percent average profit in genetically tiny markets achieving cures?
“Opportunity cost” means hundreds of essential medications are no longer produced or are perilously unavailable — 90 percent of emergency room physicians describe patients suffering from 2018 shortages. The FDA’s response: a taskforce.
More promising is Civica Rx, a just-founded, non-profit drug manufacturer. Citing danger to patients from 183 active-drug shortages, its large-hospital founders plan priced-at-cost diabetic supplies, asthma medications, and other essential generics in 2019.
What can we do to break coercive monopolies that assert the “morality” of extorting abusive profits? We could “march in,” perhaps for a percentage of profits. More easily, like every other developed nation, we can allow our most-trusted health agency (Medicare) to negotiate drug prices. We pay 160 percent to 250 percent more than other wealthy countries do — for the same drugs, from the same factories.
Americans funded the research for these drugs. We should pay less, not twice as much.
Medicare is projected to spend $1.5T on prescription drugs over the next decade. Imagine saving $750B? While that’s unlikely in D.C. anytime soon, New Yorkers have options.
Ask your New York Senate candidates whether they support New York Health. Like Medicare, but offering better benefits and covering everyone, the bill will use the clout of 20 million New Yorkers to extract volume discounts from Big Pharma. The VA, negotiating for 20 million veterans, saves 40 percent. The Rand Corporation recently concluded that New York Health would save New York money, stimulate our economy, create 180,000 new jobs — and save lives.
Greed is disgusting. In healthcare, it’s deadly. Vote on Nov. 6, as if your life depends on it — others’ lives will.
Judith B. Esterquest
Manhasset
