Access to Affordable Medicine

pharmastory

Caught in the Crosshairs of Corporate Power. Part 4: Prescription Drug Price Spikes

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This is part four of a five part series.

When political candidates spend their time begging for cash from wealthy interests and legislating to prioritize private profits over the public good, regular people lose out. The corporations and superrich donors that dominate our elections have an outsized influence over who wins, what gets discussed in campaigns and what legislative ideas receive serious consideration.

The sweeping legislative package known as the For the People Act (H.R. 1) contains ethics, campaign finance and voting rights reforms that are essential to make our government work effectively and fairly.

To illustrate the need for reforms that reduce corporate influence and redistribute power to the people, Public Citizen compiled stories of five regular Americans whose lives have been impacted by corporate political power.

Corporate Power Spotlight: Prescription Drug Prices

“I have all these intentions of fighting pharma and getting these laws changed. But I’m up against billionaires.”

Nicole Smith-Holt, 48, Richfield, Minnesota

Nicole Smith-Holt’s son Alec was about to turn 24 when he was first diagnosed with Type 1 diabetes. At the time, Alec was covered by his mother’s insurance plan.

“Even with insurance, he was spending upwards of $200-$300 a month to cover his insulin and diabetic supplies,” Smith-Holt said. “At times, that was even a struggle.”

In 2016, Alec was promoted to be manager at the small, family-owned restaurant where he worked. He was eager for experience that could lead to a better job. But because the restaurant did not offer insurance coverage to employee, he and his mother were anxious.

Nevertheless, he took the job. The 2010 Affordable Care Act meant Alec could stay on his mother’s insurance for the first six months of his job, until he turned 26.

When time came for Alec to leave his mother’s plan for a plan offered through the state insurance exchange created by the Affordable Care Act, Smith-Holt and her son experienced intense sticker shock. “The premiums were so high and the deductibles were crazy ridiculous,” she said.

Despite Alec’s managerial salary, the cost of insurance and insulin plus expenses like rent and utilities proved to be too much. Even with insurance, he would have needed to pay thousands of dollars toward his deductible before coverage began. Instead, he opted to not buy insurance and pay for his medicine out of pocket.

One month after his 26th birthday, Alec went to the pharmacy to refill his prescriptions. The bill: $1,300. “By what I could later see from his bank account, he had only about $1,000 in the bank,” said Smith-Holt. “So he left the pharmacy. He did not call and ask for any help.”

“He didn’t ask anyone for a loan,” Smith-Holt continued. “He didn’t ask anybody for anything. Alec was the type of person who was fiercely independent. He didn’t want to rely upon anybody for anything. I think he felt like it wasn’t his place to reach out and ask for help.”

One Sunday, Alec and his girlfriend went out to eat but wasn’t able to eat his food. “He started complaining about abdominal pains.” Smith-Holt said. “He had ordered a beer and he wasn’t able to drink it. He just wasn’t feeling right. He wanted to sleep. That’s all he wanted to do. So they went back to his place. She left, and he was left there alone.”

The next day was Monday. He called in to his job and said he didn’t feel well enough to come in ..

“That phone call to his job on Monday was the last phone call he made,” said Smith-Holt.

On Tuesday his girlfriend visited his apartment to check on him. His car was in the parking lot, but he wasn’t answering his phone or his door. She climbed in a window and found him unresponsive on the floor. According to a medical examiner, he’d actually passed away on Monday. He had no insulin in his apartment.

“I feel like Alec slipped through the cracks of our health care system. The Affordable Care Act, the health care plans that are offered on there, it’s a joke,” said Smith-Holt. “Not only are the premiums high, but those deductibles are crazy. People are wiping out their savings to get through the first few months of insurance, paying out those high deductibles. People are maxing out their credit cards. They’re cashing out college savings accounts. They’re mortgaging their homes. They’re filing for bankruptcy. They’re setting up all these GoFundMe accounts. It’s crazy. GoFundMe shouldn’t be our healthcare system.”

Today Smith-Holt advocates for reducing drug prices and supports a Medicare-for-All healthcare system that provides universal coverage. But fighting for this cause, Smith-Holt knows, is a struggle.

“I have all these intentions of fighting pharma and getting these laws changed,” she said. “But I’m up against billionaires, people who have just millions to throw around. I don’t have that money.”

CORPORATE INFLUENCE AT WORK

The pharmaceutical industry uses its political influence to block even the most modest reforms to rein in prescription drug prices and to undermine regulations that protect the public from unsafe medicines.

In 2003, President George W. Bush signed the Medicare Modernization Act, which expanded Medicare to cover prescription drugs but prohibited the government from using its bulk purchasing power to negotiate prices.

Legislation to end the prohibition has been introduced, but has not advanced. Other major drug price reforms, such as bipartisan legislation barring the industry from blocking the introduction of price-lowering generic medicines, have faced fierce industry opposition. Similarly, anti-price-gouging legislation introduced in response to the industry’s price-hike scandals, has stalled despite overwhelming public support.

Meanwhile, the for-profit health insurance industry – a dominant force in the U.S. health care system – has used its political power to entrench itself. Top Democrats in 2009 refused to consider creating a single-payer, Medicare-for-All healthcare system, eliminating the need for a private, for-profit health insurance industry. The industry mobilized to blunt the policies that would become the Affordable Care Act, ultimately defeating a public insurance option and ensuring that reforms prioritized protecting private profits. Nevertheless, the insurance industry, with other health sector interests, fought the reforms to the bitter end, spending upwards of $380 million on lobbying – paying for six lobbyists for every member of Congress – in the months before the bill’s passage.

A Public Citizen analysis recently found that in 2017, there were 1,490 federal lobbyists just for the pharmaceutical industry alone. Taken together, the pharmaceutical, insurance and hospital industries, all likely foes of Medicare-for-All, spent $623 million on lobbying. In addition, a network of right-wing organizations backed by the billionaire industrialist brothers Charles and David Koch campaigned to repeal the Affordable Care Act, spending more than $120 million since 2008 to influence congressional elections, almost entirely to elect Republicans and defeat Democrats. Since the bill’s passage, congressional Republicans have voted more than 50 times to repeal or amend the law.

KEY FACTS:

The pharmaceutical industry has:

  • Spent more than $2.7 billion on lobbying in Washington since 2008.
  • Contributed more than $225 million in campaign money to Congress over the past 30 years.
  • Contributed 44 percent to Congressional Republicans and 56 percent to Congressional Democrats.

The health insurers and HMOs have:

  • Spent more than $758 million on lobbying in Washington since 2008.
  • Contributed $152 million in campaign money over the past 30 years.
  • Contributed 55 percent to Democrats and 45 percent to Republicans.

SOURCE: Center for Responsive Politics.

LOBBYING AND CAMPAIGN CONTRIBUTIONS:

Former Rep. Billy Tauzin (R-La.), then-chair of the House Energy and Commerce committee, is credited with authoring the prohibition against Medicare negotiating drug prices. At the time of his retirement in 2005, Tauzin had received nearly $1 million in contributions from the pharmaceutical industry – and he immediately took a job as PhRMA’s CEO and top lobbyist, for which he received a salary of $2 million.

Sen. Max Baucus (D-Mt.), then-chair of the Senate Committee on Finance, led the legislative effort to pass the 2009 Affordable Care Act. In the five years preceding the bill’s introduction, Baucus received more than $3.4 million – about a quarter of his total contributions – from pharmaceutical and health insurance companies and other health sector businesses. Sen. Joe Lieberman (I-Conn.), who opposed the public option and other reforms opposed by industry and whose vote was needed for Senate Democrats to achieve a filibuster-proof majority, received more than $2.1 million from the insurance industry and its allies in the health sector over his career.

A top recipient of pharmaceutical industry funding is the recently retired Sen. Orrin Hatch (R-Utah), who over the course of his career received more than $2.7 million from the industry. Noting Hatch’s record as an ally of the industry, a John Hopkins professor referred to Hatch as “PhRMA’s man on the Hill” (referring to Pharmaceutical Research and Manufacturers of America, the industry’s chief lobbying group). Rep. Anna Eshoo (D-Calif.), chairwoman of the House Energy and Commerce Subcommittee on Health, also is a top recipient of pharma funding, having received more than $1.6 million from the industry over the course of her career.

Eleventh Hour TPP Deal on Biotech Drugs Still Harms Access to Medications, May Increase Ire Over TPP in Congress

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peter-maybarduk-public-citizenStatement of Peter Maybarduk, Director, Public Citizen’s Access to Medicines Program

The deal brokered today by the U.S. Trade Representative (USTR) and the Australian government on biotech drugs, which supposedly paved the way for an overall “deal in principle” for the Trans-Pacific Partnership (TPP), fell short of Big Pharma’s most extreme demands but will contribute to preventable suffering and death. The final deal as reported does not seem to adhere to the “May 10th 2007 Agreement” standard on access to affordable medicines and could complicate any eventual final TPP deal’s prospects in the U.S. Congress. In biologics and other areas, TPP rules would expand monopoly protections for the pharmaceutical industry at the expense of people’s access to affordable medicines. (The May 10th Agreement was brokered in 2007 between Democratic congressional leadership and the Bush administration to begin to reduce the negative consequences of U.S.-negotiated trade agreements, for health, the environment and labor.)

In recent days, monopoly periods for biologics, which are medical products derived from living organisms and include many new and forthcoming cancer treatments, became the most controversial issue in the attempt to conclude a TPP. The highly technical and confusing biologics deal appears to not guarantee Big Pharma the minimum eight-year automatic monopolies that industry has taken for granted as an eventual TPP outcome. According to informed sources, countries could limit automatic biologics exclusivity to not more than five years, at which point affordable biosimilars could enter the market. (Biologics exclusivity is separate from and independent of patent protection, though the protections may overlap.) Yet the deal also includes mechanisms that would help the USTR browbeat countries, now and in the future, to get what Big Pharma wants, and pull countries toward longer monopoly periods.

This week, U.S. Rep. Sander Levin made clear that May 10 agreement limits exclusivity to five years, with a “concurrent period” mechanism to ensure faster access that is not present in the TPP biologics deal. Several other TPP rules, including those relating to patent term extensions, linkage and evergreening, go beyond the limits of the May 10th Agreement. In late July, 11 of the 28 Democrats who voted for Fast Track legislation warned in a letter that the TPP could fail in Congress if it did not adhere to the May 10 standard with respect to access to medicines.

With respect to other issues in the TPP’s Intellectual Property Chapter, the transition periods before developing countries must meet all of the TPP’s protections for pharmaceutical corporations and possible exceptions to those rules are not sufficient to protect access to medicines. Transition periods will be very short and apply to only a few of the most harmful rules. Exceptions will be limited to very few rules or countries. Within a few years, most, if not all, harmful TPP rules will apply to all countries.

Controversies over pharmaceuticals and intellectual property, including frequently unanimous resistance from negotiating countries, have held up the TPP for years. Many courageous negotiators and others from developing countries stood up to industry and USTR pressure, consistently, to protect their people’s health. A number of harmful rules were eliminated from TPP proposals as a result of this work.

Yet the Obama administration showed itself willing to risk its entire trade agenda to satisfy the avarice of the pharmaceutical lobby. In that respect, people everywhere trying to understand why medicine prices are so high find a disheartening answer in the TPP negotiations: The pharmaceutical industry has purchased tremendous influence with political leaders.

California Legislature Should Pass Bill Requiring Greater Transparency From Pharmaceutical Companies

Statement of Robert Weissman, President, Public Citizen

Note: This week, the California Legislature is expected to mark up Assembly Bill 463, the “Pharmaceutical Cost Transparency Act of 2015.” AB 463 would require drug manufacturers to file a report with the state of California documenting total costs of research and development, marketing and advertising, and materials and manufacturing for medications with a wholesale cost of more than $10,000 a year, as well as profits attributable to qualifying drugs, among other information.

pills-pour-hand-bigOur country sorely needs policies to rein in out-of-control pharmaceutical costs.

Pharmaceutical companies take advantage of the monopoly power provided them through government-granted patents and other exclusivities, and of public subsidies including tax breaks and research funding. Profit margins in the brand-name pharmaceutical industry currently average more than 16 percent. Yet the industry reveals little about what medications actually cost to develop.

The U.S. spends more per capita on pharmaceuticals than any other country in the world – 29 percent more, according to 2011 data from the Organization of Economic Cooperation and Development, the latest year for which such information is available.

Exorbitantly priced pharmaceuticals are straining health budgets and leading to treatment rationing, and data from a recently released IMS Health study show that the problem is only getting worse. The study shows that U.S. per capita medicine costs reached $995 in 2014, up from $832 per capita only a decade ago (both in 2005 dollars).

The new generation of Hepatitis C medicines is leading this spending surge. The U.S. spent $12.3 billion last year to treat 161,000 people in a patient population estimated to be more than five million. To keep down costs, public and private payors are granting access only to patients showing the most advanced stages of liver damage, despite the health benefits of earlier treatment.

AB 463 would mark an important step toward bringing transparency to an opaque research and development system, as well as to other costs used by multinational pharmaceutical firms to justify extortionate pricing of medicines. Passing this bill would help push back against Big Pharma’s price-gouging.