JustCare

Tag: Pharmaceutical companies

  • One billionaire’s influence over lowering drug prices

    One billionaire’s influence over lowering drug prices

    Rose Adams writes for The American Prospect about one billionaire’s influence over lowering drug prices. John Arnold, a former senior executive at Enron–remember Enron, the company that effectively blew itself up?–has been dedicating a significant amount of his wealth towards initiatives that lower drug prices. The sad reality is that the hundred million he has invested over the last decade has barely moved the needle.

    Pharma and the pharmaceutical companies have been investing a hundred million dollars a year or more to make sure Congress does not lower drug prices. Some of that money goes to members of Congress, like Kyrsten Sinema, to stand firm against any legislation that would bring down drug prices. Some of that money goes to advertisements designed to mislead Americans about the consequences of lower drug prices.

    Lower drug prices could easily mean smarter research and innovation, rather than many invested to create new versions of the same old drugs–me-too drugs–so that pharmaceutical companies can charge more for them.

    Some Pharma money goes to patient advocacy groups to serve as Pharma shills and to disease groups to remain silent on the issue of drug price affordability. Disease groups rarely if ever advocate on behalf of their members who struggle to afford or, worse still, forgo life-saving drugs because of their cost. Biogen, for example, has managed to ensure that the Alzheimer’s Association is mum on the issue of Aduhelm’s $56,000 a year pricetag and its potentially serious side effects.

    What’s so troubling is that Pharma continues to have the upper hand in the debate over drug prices, even though lowering drug prices is Americans’ number one policy priority and citizens of every other deeloped country typically pay less than half of what Americans do for their drugs. Without fair drug prices, tens of thousands of Americans will continue to die each year because they cannot afford their life-saving medications.

    Arnold and his foundation, Arnold Ventures, fund many groups to fight the good fight. Yet, if we’re lucky, at best we will see in the Build Back Better Act lower drug prices for 60 drugs over the next several years. That’s what’s in the legislation the House just passed. And, it’s not clear yet whether only people with Medicare would benefit from these lower prices or working people would also benefit. For sure, the uninsured will not benefit.

    Looking on the bright side, negotiated drug prices for 60 drugs, even if only for some of the population–if the Senate passes this provision in Build Back Better–is a foot in the door to lower drug prices on all drugs for everyone. Looking on the dark side, everyone thought that Medicare’s enactment 56 years ago was a foot in the door to guaranteed health care for all.

    Here’s more from Just Care:

  • US is a goldmine for pharmaceutical companies

    US is a goldmine for pharmaceutical companies

    Public Citizen released a report illustrating how the US is a goldmine for pharmaceutical companies. Pharmaceutical companies earn more from Americans who buy 20 best-selling prescription drugs than they do from everyone else in the world combined. No wonder that a new Politico-Harvard poll shows that drug price negotiation is Americans’ top policy priority for Congress right now.

    Public Citizen analyzed the financial filings of the pharmaceutical companies manufacturing 20 blockbuster drugs to arrive at its findings. It made clear that higher revenues in the US has nothing to do with the number of prescription drugs we take because we don’t take more drugs than people in other countries. It’s all about drug prices in the US.

    Public Citizen’s findings speak volumes as to why Pharma is so opposed to Medicare drug price negotiation.  We’re talking $158 billion in total revenue for just 20 drugs, nearly two-thirds (64 percent) of which comes from Americans. To date, Congress has expressly forbidden Medicare from negotiating drug prices, driving up drug costs.

    Pharmaceutical company profits would fall tens of billions of dollars a year if Americans paid prices comparable to people in other wealthy countries. That’s looking less and less likely as the Democrats try to pass legislation around drug prices. Perhaps, members will agree to some Medicare drug price negotiation and drug price increases capped at inflation but that’s not at all a done deal.

    In the meantime, Americans are forced to pay too high prices for our drugs relative to people in every other country or go without them. Pharmaceutical companies profit handsomely from their monopoly pricing power for brand-name drugs. Insurers and pharmacy benefit managers also make a lot of money off of high drug prices, but pharmaceutical companies earn more.

    Here’s more from Just Care:

  • Merck charged with blocking generic competition

    Merck charged with blocking generic competition

    Paige Minemeyer reports for FierceHealthcare on a lawsuit filed by two insurers against Merck for using its power to block generic competition to its cholesterol drugs, Zetia and Vytorin. A third insurer filed a separate lawsuit alleging the same. Until Congress steps in to negotiate drug prices, pharmaceutical companies will game the system every which way they can to protect and increase their profits.

    What is the allegation against Merck? After many years of marketing a drug without competitors, Merck lost its exclusivity for Zetia, a cholesterol-lowering drug. As a result, Merck should have lost its monopoly pricing power for Zetia since generic drugs could be sold that worked as well as Zetia. But, to keep its monopoly pricing power and its enormous profits, the plaintiff insurers claim that Merck paid a generic competitor not to sell a generic version of Zetia for five years. This practice of pharmaceutical companies is called “pay for delay.”

    The insurers argue that, as a result of Merck’s pay-for-delay agreement with the generic competitor, the insurers overpaid hundreds of millions of dollars for their enrollees’ cholesterol-lowering drugs.  They further argue that Merck profited from its wrongful behavior to the tune of billions of dollars.

    The generic drug manufacturer also reaped significant revenue for delaying production of a generic drug like Zetia.  Merck paid it handsomely to hold off. But, the insurers and their enrollees paid big time.

    What is to be done? The way to fix this pay-for-delay problem and all the other gaming that the pharmaceutical corporations engage in to maximize profits is for the government to regulate drug prices. Regulating drug prices would also save tens of thousands of lives a year, enabling people who currently go without lifesaving medicines because they can’t afford them to fill their prescriptions.

    At this moment, the Democrats in Congress are trying to find a way to bring down drug prices. But, so many Democrats, along with Republicans, are in the pockets of the pharmaceutical companies. It’s still not clear what they will be able to accomplish.

    Here’s more from Just Care:

  • No link between lower drug prices and innovation

    No link between lower drug prices and innovation

    If Dems in Congress pass legislation to lower drug prices, it’s likely to help their chances of reelection. There appears to be far less downside than Pharma would like people to believe. A new report by Gregory Vaughan and Fred Ledley of Bentley University on the effects of legislation that would lower drug prices concludes that there is no necessary link between lower drug prices and drug innovation. Based on the data, it argues that Congress should feel free to make prescription drugs affordable without worry about any effects on innovation.

    Yes, it is true that there is a statistical link between revenue of large pharmaceutical companies and the amount they invest in research and development. But, if they wanted to, they could better manage their revenue and expenses to offset the effect of drug price reductions on their profits.

    Further, this new analysis looks at the role played by small biopharmaceutical companies in the development of new drugs. It finds that companies with a small amount of revenue generate 40 percent of the new drugs on the market.

    The researchers find that the smaller pharmaceutical companies, with a market capitalization of $7 billion or less, invest in research and development independent of their revenue. To put it differently, the researchers did not see a meaningful link between reductions in these pharmaceutical companies’ earnings and their expenses for research and development. If drug prices were to come down, there’s no evidence to suggest that it would effect their research and development activities or reduce their research and development spending.

    Moreover, it could be the case the large pharmaceutical companies might not choose to spend less on research and development if their revenue were reduced. They have very large returns on invested capital, larger than companies in other sectors. One 2019 West Health Policy Center and Johns Hopkins Bloomberg School of Public Health paper concluded that even with a large reduction in revenue stemming from drug price negotiation legislation, the pharmaceutical companies would still return more than any other market sector if they continued to invest in research and development at the same level they do today. And, research and development would be a better investment than other possible capital investments.

    Biopharmaceutical companies with market capitalizations under $7 billion are undertaking the majority of clinical trials today.  About six in ten clinical trials for new drugs were sponsored by these smaller companies. And, they are responsible for seven in ten products in phase 3 trials.

    The researchers conclude that policymakers will not be harming innovation if they reduce drug prices to ensure people can afford them. Their finding is in sync with the Congressional Budget Office, which recently projected at most a small decrease in innovation from lower drug prices.

    Here’s more from Just Care:

  • Senate Dems’ budget package would improve Medicare

    Senate Dems’ budget package would improve Medicare

    The Senate Democrats have a $3.5 trillion budget package that would improve and expand Medicare. It assumes large savings from Medicare drug price negotiation that can be spent on these improvements. The plan is to pass legislation with a 51 vote majority through the budget reconciliation process.

    Republicans have become completely unwilling to agree to important health care reforms, including reforms to reduce prescription drug prices. So, Democrats have no ability to pass bi-partisan legislation.

    The budget package includes a plan to bring down drug prices and add dental, vision and hearing benefits to Medicare. There is no mention of an out-of-pocket cap in traditional Medicare, although that would help make Medicare benefits more affordable to everyone and level the playing field with Medicare Advantage–coverage offered through private insurers–which has an out-of-pocket cap. Advocates, including staff at Social Security Works, Public Citizen and Just Care, are socializing the need for this reform with Senate Finance staff and others with the hope that it gets incorporated into the final legislation.

    The budget package also includes benefits that would cover home and community-based care for people who would prefer to age in place over going to a nursing home.

    Success at lowering prescription drug prices is key, as it could bring as much as $500 billion in savings to cover the cost of additional Medicare benefits. But, some Democratic Senators are pushing  back on legislation that would ensure prices in the US were at about the same level as prices in other wealthy nations. If so, prices would come down 75 percent for some brand-name drugs.

    It is not yet clear whether these Dems will defer to Pharma or put the health and lives of their constituents first through significantly lower drug prices. New data show that thousands of people with Medicare die every year because they cannot afford drug copays and so stop taking life-saving medicines.

    Meanwhile, the big pharmaceutical companies are targeting moderate Democrats with money to push back on drug price regulation. Rachel Cohrs reports for Stat that CEOs at Pfizer, Merck, Eli Lilly and Bristol Meyers Squibb just sent California Dem, Scott Peters, thousands in campaign contributions. Peters has rejected House Speaker Pelosi’s drug pricing legislation, H.R. 3, which would lower prices dramatically on 250 of the most commonly used brand-name prescription drugs.

    Senator Ron Wyden, Chair, Senate Finance Committee, and the Finance Committee are working through ways to lower drug prices. They have set forth a series of principles, including ensuring that everyone benefits from lower drug prices, that are heartening. The question remains as to whether their proposed legislation ends up delivering lower drug costs. Currently, wealthier Americans can benefit from lower drug costs through importing drugs from abroad–albeit technically illegally. Everyone should benefit from those lower prices.

    Dental, vision and hearing benefits are critical. However, if they are less than comprehensive, it is not clear how many people with Medicare will be able to access these benefits. Right now, the data show that people in Medicare Advantage with one or more of these benefits tend not to access them because out-of-pocket costs are so high that they create a financial barrier to care.

    If these Medicare improvements make it through the reconciliation process, Democrats will need to work hard to ensure they last over time. As a general rule, benefits achieved through reconciliation are of limited duration.

    Here’s more from Just Care:

  • Biden steps in on drug prices

    Biden steps in on drug prices

    David Dayen reports in the American Prospect on new developments at the White House regarding legislation that would lower prescription drug prices. President Joe Biden’s executive order on economic competition takes (baby) steps towards the federal government removing patents on excessively priced brand-name drugs so that other companies could manufacture them at lower cost. This threat to pharmaceutical company patents, in turn, could move Congress to take bold action on drug prices.

    The potential for executive action on drug prices derives from legislation that gives the government “march-in rights,” to seize drug patents when drugs are developed with government funding and the drugs are not publicly available on “reasonable terms.” There has been a long debate over the meaning of “reasonable terms,” with the sponsors of the Bayh-Dole Act of 1980 and others claiming that it somehow excludes excessive pricing. But, Kamala Harris in her campaign platform supported its use for this purpose.

    Before Trump left office, his administration tried to kill any further discussion on the use of march-in rights to address high-priced drugs through NIST, the National Institute of Standards and Technology. Now, President Biden is asking NIST not to finalize Trump’s proposed new rule.

    Right now, there is a request pending for the government to march-in and break the patent on the prostate cancer drug, Xtandi. Its price in the US is $150,000 for a year’s treatment and, with insurance, copays can easily be $10,000. Other wealthy countries sell it for as low as $30,000.

    To date, the Department of Defense has not acted on the march-in request for Xtandi. President Biden’s intervention on the NIST rule might change that. Let us see.

    In addition to requesting that NIST not finalize the Trump rule on march-in rights, President Biden’s executive order seeks:

    1. The FTC to end pay-for-delay, which permits pharmaceutical companies holding patents on brand-name drugs to pay generic manufacturers to delay bringing competitor generic drugs to market.
    2. Opens the door to drug imports from Canada. This sounds good, but, people can import drugs from Canada today without worry about FDA action. Americans should be able to import drugs from any country, not just Canada.
    3. Directs Secretary Xavier Becerra at the Department of Health and Human Services to recommend how the US should proceed on drug prices. Becerra could support march-in rights as well as compulsory licensing. He could also propose that drugs for people with Medicare cost no more than they do in any other wealthy nation.

    One thing’s clear: If Democrats want to keep control of the House in 2022, it would help a lot if they passed legislation to lower drug prices. The overwhelming majority of Americans support this report. If drug prices remain high, the odds of their winning will likely come way down.

    Here’s more from Just Care:

  • Pharma spends more on stock buybacks than research

    Pharma spends more on stock buybacks than research

    A new House Oversight Committee report finds that the biggest pharmaceutical companies spend more on stock buybacks than on research. They have spent more each year for the last five years. Lowering drug prices will have little bearing on Pharma’s research, which tends to focus on new versions of drugs that generate high profits and keeping generics and biosimilars off the market.

    House staff analyzed financial data and business practices of the 14 largest drug companies. They assessed how much these pharmaceutical companies spend on executive salaries and stock buybacks, as well as how much they spend on research. They find that not only is more money spent enriching pharmaceutical company executives and investors than on research, but that regulating prescription drug prices should not affect the innovation we need.

    Pharmaceutical companies drive up drug prices in the United States, where they can do so easily, and reduce their drug prices in other countries. Because Congress forbids Medicare from negotiating drug prices, it is easy for pharmaceutical companies to raise their prices. Not surprisingly, Medicare would save close to $500 billion over ten years if it paid prices in line with other wealthy nations.

    Even with drug prices in the US at the same level as other wealthy countries, pharmaceutical companies could invest more in innovation than they do today and still make a handsome profit. They would simply need to spend less on stock buybacks and dividends.

    Pharmaceutical companies spend hundreds of billions of dollars on stock buybacks and dividends. The 14 companies analyzed spent $577 billion between 2016 and 2020. Their investment in research was $21 billion less than that during the same period. Amgen spent six times more on buybacks, dividends and executive pay than on research in 2018.

    Total compensation for the 14 company CEOs for the four years was $3.2 billion. That works out to each pharmaceutical company CEO earning over $57 million a year, on average.

    Several pharmaceutical companies that invested in research, invested in ways to keep generics and biosimilars from entering the market and competing with their brand-name drugs. That’s the kind of research that leads to higher drug prices not to breakthroughs.

    Here’s more from Just Care:

  • Drug ads drive up drug spending

    Drug ads drive up drug spending

    A new Government Accountability Office analysis suggests that pharmaceutical companies benefit handsomely from advertising brand-name drugs on television and in other media. People look at the loving couple promoting a drug and then appear to want it for themselves. Of course, when people with Medicare use more drugs, Medicare spends more.Stat News reports that between 2016 and 2018, total Medicare drug spending was $560 billion. Of that money, $324 billion covered the cost of drugs that were advertised. Most of the drugs that were advertised, 463 of 553 were for drugs covered under Medicare Part D.

    Pharmaceutical companies spent about $18 billion on advertising during those three years, an average of $32 million for each drug. The vast majority of that spending was on expensive, brand-name drugs. About $12 billion was directed toward 39 prescription drugs, 19 of which were new to the market.

    Advertising is just one of several tools that the pharmaceutical industry deploys to drive up drug spending. Pharmaceutical companies also raise prices on their drugs, enlist doctors to prescribe their drugs and offer promotions for use of their drugs.

    Senate Judiciary Committee members were incensed by the GAO report’s findings. Republican Charles Grassley of Iowa and Democrat Dick Durban of Illinois both believe that these ads drive up Medicare’s costs. They are not about appropriately educating the public or there would be a lot more generic drug ads. But, Congress has done nothing to prevent prescription drug advertising to consumers, which was against the law 25 years ago.

    To be clear, even the incensed lawmakers have no intention of making drug advertising illegal. Their solution is for pharmaceutical companies to list the price of the drugs they advertise, a Trump administration proposal that seems senseless. There is no set price for a drug in the US. And, most people don’t pay the list price, just the copay.

    New Zealand is the only other nation that permits drug advertising. Every other country bans advertising and for good reason. Drug ads lead people to ask their doctors for drugs that are of no benefit to them. Of course, doctors have the power to say no when asked, but they don’t generally exercise it. That’s a whole other issue.

    Here’s more from Just Care:

  • Retail prices for brand name drugs rise at more than twice rate of inflation

    Retail prices for brand name drugs rise at more than twice rate of inflation

    Leigh Purvis and Dr. Stephen W. Schondelmeyer’s 2021 Rx Price Watch report finds that retail price increases for brand-name drugs have been rising year-over-year at more than twice the rate of inflation since 2006. Of course they have. Pharmaceutical companies generally have the monopoly power to set their prices since Congress does not regulate drug prices, and there is little competition that drives down prices in the brand prescription drug market.

    Purvis and Schondelmeyer looked at 260 of the most popular prescription drugs taken by older adults. They found that pharmaceutical companies increased their prices 2.9 percent on average each year. The annual inflation rate averaged 1.3 percent.

    Of course, a pharmaceutical company’s drug price increase is based on the launch price, which is generally set several times higher than the price of the same drug in other wealthy countries. On average, a brand name drug taken for a chronic condition cost $6,604 in 2020. Five years earlier, it cost around $5,100.

    Older adults in the US typically use about $31,000 worth of prescription drugs each year. That figure is based on the fact that, on average, they take 4.7 prescription drugs each month. The $31,000 annual cost is more than 3.5 times higher than the cost in 2005. It is higher than the annual income of most people with Medicare, which is $29,650.

    Senators Ron Wyden and Chuck Grassley have proposed limiting price increases on prescription drugs to the rate of inflation. It’s hard to know if that will work, as drugmakers might be able to change the formulation of a drug–the way it looks or is administered–and change the price accordingly. With any luck, Congress will regulate drug prices

    But, had drug price increases been limited to the rate of inflation since 2006, a drug that cost $2,911 in 2006 would have cost $3,700 in 2020. Instead, it costs $6,604, $2,904 more.

    People with prescription drug coverage still bear a lot of the cost of drugs in deductibles and copays. And, Medicare Part D, which covers retail prescription drugs, does not have an out-of-pocket cap on prescription drug costs. Moreover, Medicare premiums rise as prescription drug costs rise.

    What’s most concerning is that millions of people with Medicare cannot afford the deductibles and copays on their drugs. They choose not to fill their prescriptions. As a result, they often die prematurely.

    Here’s more from Just Care:

  • Will Congressional Democrats agree on a way to lower drug prices?

    Will Congressional Democrats agree on a way to lower drug prices?

    The Wall Street Journal reports that Congressional Democrats are trying to find a path to lowering drug prices. But, will they agree on a policy that delivers lower drug prices?  Or, will they defer to the pharmaceutical industry and let prices continue to mount, even though such an outcome will be mean the needless death of tens of thousands of Americans each year.

    President Biden, for his part, has been relatively quiet on this issue. He has said that he supports lower drug prices. But, he did not include it in any of his reform proposals this year. Notwithstanding, many Democrats in Congress recognize that delivering lower drug prices in the US will help to keep the Democrats in power in 2022.

    Senator Wyden and his team on the Senate Finance Committee are focused like a laser on this issue. Reports are that the Senator would like to marry the Wyden-Grassley prescription drug bill with Speaker Pelosi’s bill in the House. The House bill goes a lot farther than the Senate bill; it is not finalized but, in 2019, it called for setting drug prices for 250 drugs at not higher than 120 percent of what other wealthy countries pay.

    The Senate bill is also not finalized, but it aims to keep drug prices from rising more than inflation, which rewards all the drugmakers with the most inflated drug prices today. We do not yet know whether it will do anything to reduce the cost of life-saving drugs. In its last iteration, it  also reduced out-of-pocket prescription drug costs for people with Medicare, but that’s simply squeezing a balloon. Most likely, premiums and other costs would rise.

    A recent Government Accountability Office report found that brand drug prices in the US are three to four times higher than they are in France and other Western European countries.

    Bringing down drug prices in the US for everyone is far more complicated than you might imagine. Congress does not have clear authority over corporate health insurers or over the price retail pharmacies charge for drugs. So, while the House bill will have Medicare negotiate drug prices and allow corporate health insurers to benefit from those prices, it’s not entirely clear how. The House bill does not cover the uninsured.

    The easiest way to extend regulated drug prices to everyone is for Medicare to negotiate lower prices and for Congress to extend Medicare to everyone free of charge exclusively for the purpose of benefiting from these lower prices at the pharmacy. That is not likely. Alternatively, Congress could make drugs at low prices available to everyone through Federally Qualified Health Centers. At the moment, it does not appear that Congress is looking at this option either.

    Congress could also lift the ban on prescription drug importation. Corporate health insurers, in turn, could then perhaps be required to cover drugs at those imported prices. The problem, of course, is there are many lifesaving drugs that cannot be imported. And, it can sometimes take months to receive drugs that are ordered from abroad.

    Republicans now say that they are against Medicare-negotiated drug prices. But, Republican members of the Senate Armed Services Committee just a few years ago supported international reference pricing–pricing drugs at a level comparable to other wealthy countries–by unanimous vote.

    Innovation would benefit significantly from negotiated drug prices. Congress could allocate some of the hundreds of billions of dollars saved each year towards research and development of new drug therapies. Right now, Pharma invests little in research and tends to invest primarily in new versions of drugs already available on the market–“me-too” drugs–rather than drugs that are truly breakthrough.

    Democrats do not need a super majority to pass drug price legislation. They can pass it by simple majority through the budget reconciliation process. But, they will need Joe Manchin and Kirsten Sinema and Bob Menendez to vote with them. And, they are not yet guaranteed to do so.

    Here’s more from Just Care: