A Bitter Pill to Swallow: Drug Lobbyists Fight to Keep Prices High

It’s no secret that the pharmaceutical industry hasn’t seemed to slow down. Despite lawsuits, fines, and new legislation, it seems like the influence of Big Pharma keeps expanding. In this news segment, we’re going to cover a few things that have happened recently. And while these stories may not be all that substantial on their own, they paint a much larger picture.

Story #1. Big Pharma is All About the Money

First, we head to Washington, D.C., where drug lobbyists stormed the White House to fight against the American people. Pharmaceutical Research and Manufacturers of America, or PhRMA, is a lobbying group that represents some of the biggest players in the pharmaceutical industry. Here are just a few of their members:

• Bayer
• Bristol-Myers Squibb
• AbbVie
• GlaxoSmithKline
• Eli Lilly
• Johnson & Johnson
• Merck
• Pfizer
• Purdue
• Sanofi
• AstraZeneca
• Teva

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 (Joaquin Duato, chairman of Johnson & Johnson’s pharmaceutical division, is chairman-elect). What’s important about this particular story is what it proves: THE MEDICAL INDUSTRY DOES NOT CARE ABOUT PATIENTS.

It only cares about money.

So, what caused such a powerful group to “scramble the jets” and head to the capital? A bipartisan bill in the Senate designed to lower prescription drug prices. In a time when our politicians are more divided than ever (or at least since the Civil War), members of both parties in congress have come together – backed by the White House – to lower drug costs.

This is a major issue that affects nearly every facet of our society. Any move by our elected officials to hold the pharmaceutical industry accountable for its greed is a good one. The bill is designed to lower drug prices by forcing pharmaceutical companies to pay rebates if they raise their prices faster than inflation. It also caps out-of-pocket costs for some drugs covered by Medicare.

And congress is not alone; the president, Department of Health and Human Services (HHS), and Food and Drug Administration (FDA) have also tried to make headway. Reuters reported last week that the president was considering an executive order that would cut the prices of all branded prescription drugs sold to the government. Just days ago, HHS and FDA said it would pursue rules to allow prescription drugs to be imported from Canada.

If you need a sign that Big Pharma has too much say in our government, look no further than that. Our own agencies are considering programs to import drugs from other countries as a way to keep prices down. PhRMA representatives cried like children, saying in a statement that “we’re getting killed!”

But if the pharmaceutical industry is dying, you can be sure it will be buried under piles of money. 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, also donated at least $10,000 to Texan Senator John Cornyn. These elected officials have accepted hundred of thousands from executives representing Merck, Bristol Myers-Squibb, Eli Lilly, Sanofi, and Amgen, just to name a few.

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. (Note: patent-thickening is the practice of filing multiple patents for the same product in hopes of extending exclusivity). For AbbVie’s Drug Humira, over 100 patents had been filed.

He then 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.”

But our representatives don’t ALWAYS lose, right? Surely, we’re seeing promising steps forward as pharmaceutical companies face fines and lawsuits? Well, let’s see.

Story #2. Pharmaceutical Companies Are Not Facing True Justice

Next, we head to California, where several drug companies are facing fines totaling nearly $70 million. Their crime? Colluding to delay the release of cheaper, generic drugs. This “pay for delay” scheme is not uncommon in the pharmaceutical industry. 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. State Attorney General Xavier Becerra said that patients could be paying “as much as 90% more for drugs shielded from competition.” And although $70 million may seem like a big win, it isn’t.

Three companies – Teva, Endo Pharmaceuticals, and Teikoku – were named in the nearly $70 million settlement, but the settlements are not divided evenly. Teva will have to pay $69 million to the state, while Endo will pay just $760,000.

Teikoku, along with Teva, received an injunction prohibiting them from engaging in additional pay-for-delay schemes.

Let’s look at the real cost of these fines…

For starters, the injunctions (10 years for Teva and 20 years for Teikoku) shouldn’t be a punishment; they should be a standard. Medicine is meant to heal, not drive stock prices. And yet a temporary injunction is considered justice.

According to Attorney General Becerra, “These dark, illegal, collusive agreements that drug companies devise not only choke off price competition but burden our families and patients—they force every Californian to shoulder higher prices for life-saving medication. It’s nothing less than playing with people’s lives.”

Dark. Illegal. Collusive.

How is this justice?

Let’s take a look at the financial settlements. Surely $70 million is nothing to scoff at, right? Well, not necessarily. First, the real amount is $69,760,000. Second, $69 million is being paid by Teva, and the rest by Endo. Third, this fine is a drop in the bucket compared to the profits these companies made. It’s like punishing someone who robs an ice cream shop by telling them they can’t have any sprinkles.

And the math isn’t really that hard. During the 6 years that Teva was blocking generic narcolepsy drugs that would compete with their product, Provigil, the company gained billions in market capitalization. The cost today of a single tablet of Provigil is $39.04. According to the State Attorney General, drugs shielded from competition could cost as much as 90% more. That would bring the average price to $74.18 per pill.

The pill is prescribed for daily use, so each patient would take 365 a year, costing about $27,075.70. Factor that over the 6 years that they illegally blocked competition, and you end up with $162,454.20. At that rate, you’d need only 425 patients to cover the $69 million fine.

In 2016, it was the 284th most commonly prescribed drug, with 1,452,935 prescriptions in the U.S. alone. Sales of this drug were in the hundreds of millions of dollars while the competition was delayed. $69 million is little more than a slap on the wrist.

If that isn’t enough to make your blood boil, consider this: the $69 million will come from a 2015 settlement reached between the FTC and Teva. You read that right: Teva isn’t actually paying any extra money. And yet, it is the largest pay-for-delay settlement reached by any state.

Do you know what actually punishes these companies? Public opinion. Consumer boycotts. Lost investors.

Look at Bayer, who paid $63 million to acquire Monsanto last year and is now worth less than $60 billion (almost a $50 billion-dollar loss since the acquisition). They’ve got the head of the EPA on their side, and still the world is turning on them.

Or Johnson & Johnson, who are facing public outrage over their asbestos-laced baby powder, cancer-causing implants, and kingpin role in the nation’s worst drug crisis. Each scandal, once revealed to the public, costs them billions. But they respond by fast-tracking some new drug (through shady backroom deals) and make it all back.

That’s why it’s important to look at one more place.

Story #3. Battle on the Home Front

For this last section, I need you to check outside. What’s the address on the mailbox? That’s where this last story takes place. 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, and 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.