There are many wonderful things about living in America. For over 200 years, our nation has been a bastion of liberty and democracy, individual rights and free markets. But there is one area in which our nation has failed miserably: healthcare.
Prescription drugs in the US cost over 4 times more than anywhere else in the world. In fact, a 2019 study by researchers at the Johns Hopkins Bloomberg School of Public Health and published in Health Affairs found that US brand-name drugs are “the highest in the world.”
Even worse, the study found that the longer a brand-name prescription drug was on the market, the greater the price differential. The problem is not that these drugs cost more to make – drugs manufactured in the US are sold as much as 73.4% lower in other countries than they are here at home.
Fortunately, President Trump is fighting back against what he refers to as “rich enemies” who don’t want to see the cash cow of prescription price-gouging in the US dismantled. And researchers agree. “Every year we pay more for brand-name drugs and other countries pay less for the same drugs,” said Gerard Anderson, PhD, professor in the Bloomberg School’s Department of Health Policy and Management and the study’s senior author.
The President signed a total of 4 executive orders.
1 | Trump said the first order “will require federal community health centers to pass the giant discounts they receive from drug companies on insulin and EpiPens directly to their patients.” Although many health providers receive discounts and rebates for prescription drugs, those discounts hardly ever make it to the consumer. Instead, they line the pockets of companies and administrators. Just like the manufacturers intended.
2 | The second order allows some drug importation from other countries. The absolute lack of competition is arguably the biggest obstacle to competitive drug prices. By allowing American citizens and health providers to buy drugs from other nations, manufacturers will be forced to bring their prices down to a competitive level. It’s the American way.
3 | The third executive order will take discounts away from middlemen such as pharmacy benefits managers and give them to patients. We’ll talk further on in this article about the insane amount of money that the pharmaceutical industry spends on marketing – specifically to doctors and healthcare managers. President Trump wants to stop the practice of legal bribery and pass those savings on to the people.
4 | The fourth executive order will require that Medicare purchase drugs at the same price that foreign countries pay. Trump said that it “will end global freeloading on the backs of American patients and American seniors.” And he’s right. These companies charge Americans more because they CAN. If we force government-funded programs to purchase drugs at the same prices as our international counterparts, corrupt companies will no longer be able to gouge American taxpayers to fatten an already obese industry.
For perspective, the United States accounts for over 33% of worldwide pharmaceutical revenue. American citizens account for about 4% of the world’s population.
Prescription Drug Prices Are A National Emergency
Americans will spend over $500 billion on prescription drugs in 2020 (more than 2.2 percent of gross domestic product). The basic research underlying these drugs is almost always carried out with taxpayer dollars at university or government research labs, mostly through the National Institutes of Health. From 1960 to 1984, prescription drug spending accounted for about 0.4% of GDP. That’s a 550% increase over the last 40 years!
The research findings used to stay in the public domain, available to any company that wanted to use them. In 1980, the bipartisan Bayh-Dole Act made a watershed change: it allowed for the rights to be turned over to private parties.
While the point of Bayh-Dole was to hasten the harnessing of basic research, it also sent the price of drugs soaring. Spending on prescription drugs had been largely stable at around 0.4 percent of GDP from 1960 to 1980. In the decade after Bayh-Dole it had doubled to 0.8 percent and it doubled again in the next decade.
In a recent speech, the President was extremely clear about his intentions:
“Under the last administration alone, drug prices rose a staggering 55 percent. Thanks to my administration’s aggressive actions since taking office, we have successfully lowered drug prices for the first time in 51 years. But this reduction is still not close to what I want, what I expect. And I’m looking for help for our great seniors especially, in particular. And that’s what we’re doing today. You’ll hear something which will be very shocking because we’re doing things that nobody thought could be done. And it’s going to have an incredible impact.
Unfortunately, we’ve been waiting for Congress to take action for many decades to reduce drug prices for more than — more than just a small handful of people. But even the small handful of people never got price reductions — and I’m unwilling to wait any longer.”
Click here to watch the full video.
The problem is twofold: Unchecked marketing and corporate bribery and restrictive patents that allow manufacturers to set their own prices for prescription drugs. Let’s look at these issues:
Advertising and Pharma
The US is one of only two countries in the entire world that allows pharmaceutical advertising. How have life-altering discussions that should only be happening in a doctor’s office moved their way into peoples’ living rooms? Direct to Consumer Advertising (DTCA). DCTA for pharmaceuticals was legalized in 1997. Despite its relatively short 22-year existence, it has heavily impacted the advertising landscape for U.S. healthcare and stands in stark contrast to forms of legal advertising for drugs in other countries around the world.
While DTCA has some positive effects, these commercials tend to mislead patients and can result in the breakdown of the doctor-patient relationship. Between 1983 to 2013, a span of 30 years, 449 articles about DTC prescription drug ads were published. According to an FDA survey, 65% of physicians said that DTCA for drugs sent confusing messages to the patients, and 8% claimed that they felt pressured to prescribe brand-name drugs after patients cited a DTC drug ad.
According to the Journal of the American Medical Association (JAMA), there has been a drastic increase in DTC prescription drug marketing budgets, jumping from $1.3 billion in 1997 to more than $6 billion in 2016: a 361% increase. These companies use DTCA to promote prescription drugs because it increases the volume of drugs sold. A 2008 House Commerce Committee found that for every $1,000 spent on prescription drug ads, 24 new patients were added for the pharma industry. Additionally, a 2003 research report found that rates for prescription drugs with ads were almost seven times greater than for those without ads.
From 2015 to 2018, there were 96 price increases for every price cut on prescription drugs, according to the Associated Press. But drug prices are much more convoluted than you might think. The list prices are often high, but pharma representatives usually negotiate rebates or discounts with benefits managers.
This leads to preferential treatment by insurance providers, and more business for manufacturers. But for those without insurance (or high deductibles), the inflated drug prices make most medicine completely unaffordable.
These drugs include everything from insulin to OxyContin, which increased by 9.5% last year. Purdue Pharmaceuticals, the makers of OxyContin, have been under heavy criticism for their sketchy marketing practices and are facing several lawsuits. The drug is one of the most addictive on the market, and recent statistics from the National safety council show that the chances of dying from an opioid overdose are higher than the chances of dying in a car wreck.
Many of these drugs have not changed over the past several years, and yet the average price increase is nearly 3 times greater than inflation. And this is largely due to increased marketing and lobbying efforts.
Lobbying group Pharmaceutical Research & Manufacturers of America (PhRMA) spent a record $27.5 million on lobbying efforts in 2018. PhRMA represents most of the country’s largest drug companies, including Merck, Sanofi, and Johnson & Johnson.
In addition to that amount, CNN reported that individual companies within the pharmaceuticals and health products sector spent $194.3 million on lobbying as of October 24, 2018. Another reason could be one as old as time: greed. While companies continue to log record profits and executives take home massive salaries and bonuses, the American people bear the cost.
Researchers crunched the numbers for the top 10 pharmaceutical companies based on 2013 data. The results are shocking. Here are some numbers for you:In 2013, the top 10 pharmaceutical companies spent a combined $98.3 BILLION on marketing.
That number represents 150% of the money those same companies spent on research and development.
In 2018, a study published in JAMA found that pharmaceutical companies spend about 68% of their marketing budget persuading doctors and other medical professionals to push their drugs.
That would translate to about $60 BILLION DOLLARS spent on bribing doctors – and that’s just the top 10 companies for one year.
In 1997, that number was even higher, with 88% of medical marketing going to doctors and other medical professionals.
Since 1980, GDP spending on prescription drugs has doubled each decade, surpassing inflation several times over. The results are shocking. Here are some numbers for you:
- In 2013, the top 10 pharmaceutical companies spent a combined $98.3 BILLION on marketing.
- That number represents 150% of the money those same companies spent on research and development.
- In 2018, a study published in JAMA found that pharmaceutical companies spend about 68% of their marketing budget persuading doctors and other medical professionals to push their drugs.
- That would translate to about $60 BILLION DOLLARS spent on bribing doctors – and that’s just the top 10 companies for one year.
- In 1997, that number was even higher, with 88% of medical marketing going to doctors and other medical professionals.
- Since 1980, GDP spending on prescription drugs has doubled each decade, surpassing inflation several times over.
But there’s a second issue: Unchecked patents and corporate greed.
Why Americans Pay 4 Times More for Drugs Made in America
We could probably just write the word “GREED” here and conclude this section. But let’s look a little closer. Ever since the Bayh-Dole Act was passed, we’ve lived under the assumption that drug companies need to have patent monopolies in order to develop life-saving drugs. But where has that landed us?
These patents allow manufacturers to set their own prices, free from the market competition responsible for the greatest economy the world has ever seen. And the more our government subsidizes national healthcare initiatives (which are funded by YOUR tax dollars), the more these companies can get away with price-gouging US citizens… who have no other options when it comes to their medicine.
And these patents can last quite a long time. Thanks to a loophole in pharmaceutical patent laws, companies routinely file multiple patents for the same product in hopes of extending exclusivity. As one patent is set to expire, a new patent is filed on a slight variation of the product and the clock resets.
Even when the patents end, the nightmare continues, thanks to the pharmaceutical industry’s “pay to delay” scheme. Companies with profitable, name-brand drugs often pay to keep generic versions off the market.
This gives them a veritable monopoly on their product long after the patent has expired. That artificially inflated cost is passed on to consumers while executives and stockholders get richer. California State Attorney General Xavier Becerra said that patients could be paying “as much as 90% more for drugs shielded from competition.”
Trump’s War with Big Pharma
During his remarks, the President made mention of “very, very rich enemies” who are not happy with what he’s been doing. Among them is the industry trade group PhRMA (Pharmaceutical Research and Manufacturers of America), who called the executive orders a “reckless distraction” to the Covid-19 pandemic.
Let’s look at that group more closely.
PhRMA, is a lobbying group that represents some of the biggest players in the pharmaceutical industry. Here are just a few of their members:
- Bristol-Myers Squibb
- Eli Lilly
- Johnson & Johnson
The company generates billions in lobbying efforts and has been one of the most influential forces in our government. PhRMA is known for being sneaky, working with outside firms to push their agendas. Groups like the United Seniors Association and lobbying firms like the DCI group have both been paid to do PhrMA’s bidding.
And their relationship with the government is… cozy.
The group has been led by CEOs and Chairs that include congressmen and pharmaceutical pros alike. Their chairmen and board of directors include:
- Giovanni Caforio, Chairman and CEO of Bristol Myers Squibb
- David Ricks, Chairman and CEO of Eli Lilly (Chairman-elect for PhRMA)
- Ramona Sequeira, President of Takeda Pharmaceuticals
- Albert Bourla, Charman and CEO of Pfizer
- Robert Bradway, Chairman and CEO of Amgen
- Joaquin Duato, Vice Chairman of the Executive Committee for Johnson & Johnson
- Ken Frazier, Chairman and CEO of Merck
- Paul Hudson, CEO of Sanofi
- Vas Narasimhan, CEO of Novartis
- Dan O’Day, Chairman and CEO of Gilead
- Stefan Oelrich, President of the Pharmaceuticals Division at Bayer
- Brendan O’Grady, Executive Vice President at Teva
- Pascal Soriot, CEO and Executive Director of AstraZenica
- Jeffrey Stewart, President of US Commercial Operations at AbbVie
- Michel Vounatsos, CEO of Biogen
- Emma Walmsley, CEO of GlaxoSmithKline
Note that this is only a list of current board members, and is not exhaustive.
Groups like PhRMA are the terrorists fighting to keep American citizens crippled by artificially inflated drug prices. And if you don’t think that President Trump is facing an uphill battle, consider this:
Just this year, the industry has pressured senators to block a bill that would limit intellectual property rights. They also blocked a rule that would require them to disclose prices in television ads, and watered down several bills to the point that they may as well not have been passed at all.
And it isn’t just about keeping prices up. Lobbyists also want to remove regulation, write their own studies, and hide any harmful side effects. They do this by targeting key officials with outside pressure or bribes. And it seems that the industry has discovered that you can catch more flies with honey than with vinegar.
Executives from many of the aforementioned pharmaceutical companies joined lobbyists to donate hundreds of thousands to specific politicians just a few months ago. North Carolina Senator Thom Tillis received maximum amount donations from the CEO of Pfizer. The CEO, Albert Bourla (who sits on the PhRMA board), also donated at least $10,000 to Texan Senator John Cornyn. These elected officials have accepted hundreds of thousands of dollars from executives representing Merck, Bristol Myers-Squibb, Eli Lilly, Sanofi, and Amgen, just to name a few.
(Again, these companies are well-represented on the PhRMA board.)
In 2018, drug industry PACs donated over $10 million to various candidates. Just before the influx of donations, Senator Cornyn sat on the Senate Finance Committee and lambasted AbbVie CEO Richard Gonzalez on the company’s practice of patent-thickening. He championed legislation to end patent-thickening once and for all, taking a hardline stance against Big Pharma.
Then came the money.
Senator Tillis joined in the effort alongside Cornyn and, by the time the dust had settled, the once-promising bill had been reduced to an empty shell. The existing bill simply limits the number of patents a company can assert in a lawsuit, doing virtually nothing to solve the problem of thickening.
This happens all the time in Washington. Illinois Senator Dick Durbin, who recently saw a patent bill killed off by the drug lobby, says they may be the biggest player on the Hill.
Big Pharma has replaced Big Tobacco as the most powerful brute in the ranks of Washington power brokers,” he said. “Pharma’s billions allow them to continue to rip off American families and taxpayers.”
A Slippery Slope
There’s an important distinction to make here, and that’s the difference between free market healthcare and socialized medicine. Any time the federal government gets involved in our medicine (or virtually any aspect of our personal lives, for that matter) it’s important to take a close look at what’s really happening.
In this case, it is abundantly clear that President Trump is taking steps to protect taxpayers and patients from the price-gouging of Big Pharma. Requiring tax-funded medical programs to pay what other countries pay stops greedy corporations from taking advantage of the program. But getting too involved in our healthcare and the dealings of private business is a slippery slope.
Here’s the difference…
With socialized medicine, the government holds all the power and makes all the decisions. All healthcare is provided through government programs (paid for with your tax dollars) and all healthcare workers, medicine, and supplies are negotiated with government officials. And while universal healthcare may SOUND nice, it absolutely isn’t.
This cuts patients out of the process entirely. Companies will negotiate their prices with a select group of people instead of patients. The unavoidable outcome is that the bottomless coffers of the American taxpayer will be exploited. Innovation will suffer. Medical choice will become nonexistent. And if you still think socialized medicine is the way to go, consider what we’ve seen since COVID-19 first arrived.
Some hospitals have been stretched pretty thin with the influx of COVID patients. But if we had Medicare-for-all, our hospital capacity would have been even less. According to a study by Charles Blahous of the Mercatus Center, Medicare-for-all would cut payments to physicians and hospitals by 40%.
Guess what happens when you cut payments by 40%. You get fewer doctors and hospital beds.
Contrast the incredible job our private healthcare system is doing today with the utter incompetence of the federal government in preparing for today’s pandemic. The current (ineffective) lockdown might have been avoided if the government had been able to rapidly deploy mass testing to isolate infected persons while allowing healthy people to go about their lives. But the United States lost six crucial weeks in ramping up testing — forcing our country to adopt population-based mitigation — thanks to bureaucratic incompetence.
The FDA, in its self-proclaimed wisdom, refused to allow private labs to develop tests and issued only a single emergency authorization to the Centers for Disease Control and Prevention, whose test then failed. Terribly. The restrictions were not lifted until March. Once they were, a private company, Abbott Labs, took only weeks to come up with a coronavirus test that can give positive results in as little as five minutes. Today, 85% of all coronavirus tests are being conducted by private labs.
No system, not even the free economy, can give everyone everything they want at once. It’s dangerous to allow or encourage any government to substitute its judgement for that of its citizens. It strips you of your freedom. It opens the door for fraud. It is unequivocal tyranny.
Free Market Healthcare
With free market healthcare, companies compete for our business without getting stuck in the federal “pay-to-play” racket. Without endless patents and the crony capitalism rampant within the FDA, these companies will be able to develop medicine and other treatments more quickly and more efficiently.
And this is good for 3 reasons:
1 | One company will not have a monopoly on certain drugs. Companies who make dangerous or ineffective products (Johnson & Johnson, Arena Pharmaceuticals, Sanofi, Merk, Bayer…) will have to compete with other companies, resulting in more accountability for manufacturers and more choice for patients. When consumers are allowed to choose their products and services directly instead of through third-party programs, everyone wins.
Except maybe the Pharma executives.
2 | Prices will go WAY down. Right now, there are just a handful of corrupt corporations controlling the vast majority of widely-used, live-saving medicine… and they’ve made them prohibitively expensive for Americans. With free market medicine, companies will have to compete for our business with competitive prices (rather than the built-in market provided by medicare and other healthcare groups).
Insulin costs between 2 and 4 dollars to manufacture per vial. A year’s supply could be provided to patients for around $75. But the manufacturers, through their cozy relationship with benefits managers, have been selling this life-saving medicine for around $100 per vial. A year’s supply of insulin can easily cost patients over $12,000!
3 | Minimizing the role of federal government and regulation drastically reduces the opportunity for corruption. As it currently stands, a few politicians hold all the power when it comes to FDA appointments, regulatory approvals, and patent laws. And as we mentioned earlier, these politicians often work for the highest bidder.
That’s why these companies spend tens of millions of dollars in “campaign donations.” When there are only a few people in charge (and when those people can create monopolies in the pharmaceutical industry), it’s easy for mega corporations to bribe them. Your health is between you and your doctor. NOT the government.
What YOU Can Do
Take a look outside. Do you see the address on your mailbox? THAT is where this war will truly be fought. WE are the people whose lives will be ruined by the escalating cost of medicine in the US. Everyday Americans routinely ration life-saving insulin and rely on EpiPens that expired During the Bush Administration while our international counterparts pay a fraction of the price.
President Trump has laid down the gauntlet. Now it’s time we help.
As easy as it is to blame the corrupt corporations and the greedy politicians and the industry-friendly regulators, the first place to look is within. The world has never seen more democracy or freedom. EVER. Even in the face of censorship, bias, and evil, we have a voice.
We vote for these politicians. They put the regulators in place. It’s on us to vote them in and vote them out. When was the last time you called or wrote to your congressman? How about attending a city council meeting? These things are important if we want to truly make a difference.
We also vote with our dollars. These companies only make the money (to bribe the officials, to make more money) because we keep buying their stuff. 80% of the antibiotics used in the U.S. are injected into our livestock, but only because we keep buying it. Bayer keeps spraying poison on our food because we aren’t always willing to shop organic. Merck keeps hurting children because we’re too afraid to question vaccine safety standards.
We need to make our voices heard, it’s true. Talking to your friends and neighbors, writing your representatives, sharing articles like these… they’re all important. But actions speak louder than words.
Let’s stop talking. Let’s stop being victims. Let’s take ACTION.
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