Big Pharma: Choosing Profits Over Life Because They Can

The case for regulation of an industry run amok

Welcome back Chaise Lounge readers and a special welcome to new subscribers! This week we will dive into the insanity that is our pharmaceutical pricing system in the United States. I am sure that each of you knows someone with a chronic illness that requires medication that is out of reach for many Americans. CL takes a look at what needs to happen to overhaul our system to put people above profits. But first, let’s take a peek at some promising news.

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Big Pharma: Choosing Profits Over Life Because They Can

Recently, my friend’s elementary-aged son was diagnosed with Type 1 diabetes. His parents sought counsel from my husband and me because my husband also has Type 1 diabetes. We were able to help them understand quite a bit about what to expect in terms of the disease and how it is managed and that felt good. 

A few days later I realized that I needed to have a different conversation with his mother. You see, we have an adult child with a different chronic illness with medications that are exorbitantly expensive even with insurance. We took a walk, and I had to break the news that unless our healthcare system changes drastically as her child grows up, they need to plan in their will for his medical costs if they can. If at any time he is unemployed, he may not be able to afford his insulin.

“I am one job loss away from financial ruin.” Matt Dinger.

Astronomical increases in drug prices have been a problem in the United States for decades now. If we just look at insulin, we can see that price gouging has been at work for decades. Three companies control 90% of insulin worldwide and almost 100% in the United States: Eli Lilly, NovoNordisk, and Sanofi. There is evidence that they may be colluding to raise the price of insulin. In fact, Mexico has already fined the companies for collusion. In 1996, Eli Lilly sold Humalog insulin for $21/vial. Now the price is $275/vial, an over 500% increase. The companies frequently increase prices within 24 hours of one another. These price increases lead patients to ration their insulin leading to amputations, blindness, kidney failure, and death. As Matt Dinger, board member of T1 International says, “I am one job loss away from financial ruin.” More than thirteen people have been documented as dying from insulin rationing and there may be more. 

In a 2016 letter to Attorney General Loretta Lynch and the Federal Trade Commission, Senator Bernie Sanders and Representative Elijah Cummings requested an investigation into the drug companies for collusion and price-fixing. But so far, there have been no changes or charges brought forward. 

According to a new report by Rep. Katie Porter (CA-45) entitled “Killer Profits: How Big Pharma Takeovers Destroy Innovation and Harm Patients,” the innovation in drug development happens before big pharmaceutical companies get involved. Academic centers and small pharmaceutical companies complete the research and development getting the product ready for clinical testing. This research is funded by $33 billion in NIH grants and other governmental bodies, meaning that you, the taxpayer, are paying for the research that the pharmaceutical companies are using to make a profit.  

While the big pharma companies do invest in clinical trials (which are very expensive) to obtain FDA funding, they only provide 20% of the total research and development costs. This lack of investment leads to a lack of innovation by big pharma. In fact, in 2018, small pharmaceutical companies discovered 64% of drugs launched.

Big pharma swoops in and buys out the small companies and obtains the patents allowing them to maintain high prices. They make small tweaks to drugs regularly to extend the patents. So, where is the money going? Instead of returning profits back into research and development, much of the money is going to stock buybacks, shareholders, and executive salaries. In the meantime, patients with chronic illnesses like diabetes are rationing life-saving medications. Additionally, when companies are allowed to raise prices at will, it costs us all in significant increases in the cost of Medicare and Medicaid.

This is a morally repugnant model that must change.

Back in December of 2019, the House passed HR 3, the Lowering Drug Costs Now Act introduced by the late Rep. Elijah Cummings (GA). While the bill died in the Senate, the Washington Post reports that the Biden administration is drawing measures from the bill to include a large reconciliation bill. If successful, the Department of Health and Human Services would force pharmaceutical manufacturers to negotiate prices of 50-250 branded drugs. Prices would be capped at 120% of the average price of the drug in Australia, Canada, France, Germany, the UK, and Japan. If successful, drug prices would decrease by 55% the first year, then 40% and 50% in the years following.

While I don’t know if the White House will be successful in getting these measures through Congress, what I do know is that all Americans should be furious with our current system.  We are each investing in the drug development process through taxation and deserve to reap the benefits through affordable drug pricing. The entire system must be overhauled through FTC regulation so that pharmaceutical companies are not incentivized to price gouge. 

Let me break it down. Drug companies use the rules as they currently exist to make as much profit as possible regardless of their effect on patients’ lives. They use our taxpayer-funded research to do so. I don’t know about you, but I am not satisfied to be complicit in the price-gouging of people with chronic illness. We need new rules so that this monstrous practice can no longer exist. Rep. Porter’s report provides an excellent road map of ways the FTC can use its regulatory power to fix many of these issues. I encourage everyone to read it. 

If you agree that change is essential, one place to start is by signing the petition from asking the FTC to investigate the drug companies making insulin for price-fixing and collusion. You can also let your Congressional representatives know your feelings on the issue. This is literally a life or death issue for many diabetics. 

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