PHARMA Greed, Lies and the Poisoning of America By Gerald Posner  

PHARMA

GREED, LIES AND THE POISONING OF AMERICA

Gerald Posner

2020 Avid Reader Press,  ISBN 978-1-5011-5189-7

            If anyone wants to know why prescription drugs in America cost on average twice as much as the same drugs do in Europe,  Mr. Posner explains it well in Pharma using as a thread a history of the Sackler Family--founders of a small Pharma Empire centered in Purdue Pharmaceuticals. 

Meticulously footnoted and engrossing (as all of Mr. Posner’s books are) the primary source of his findings is the voluminous discovery resulting from decades of state and federal litigation against pharmaceutical companies including Purdue—a mass marketer and seller of OxyCodin.

            According to Pharma, the three primary contributors to the highest average drug prices in the world are: (1) non-regulation of drug prices, (2) special federal legislation and regulation favoring Pharma (or the absence or insufficiency of such—e.g. the FDA has only 39 employees to review the veracity of 35,000 drug ads per year); and (3) the unregulated “middlemen” of American drug sales and distribution: Pharmacy Benefit Managers.

            The U.S. is the only one of the industrialized nations that permit drug manufacturers and distributors to set their own prices for their drug products without any price caps or indirect price controls.   This, Mr. Posner points out, in conjunction with the legislative price monopolies, results in a manufacturer of the EpiPen charging $608 for one in the U.S. and $100-150 in Europe (and its CEO being unapologetic to Congress for doing so.)

            And not only has Congress left Pharma free to set their own prices, through patent laws and special legislation, they have also given Pharma price monopoly.

            Mr. Posner points out that only 27 of 77 countries even allow any drug to be patented, and those that do grant drug patents do so for much shorter periods (5-7 years) than the U.S. (up to 17 to 20 years).  Switzerland and Germany Mr. Posner notes do not permit drugs to be patented at all—only the process of manufacturing them.

            Congress has also afforded Pharma monopoly pricing through special legislation.

            One of those special legislative acts Mr. Posner discusses at length in Pharma is the Orphan Drug Act “ODA”)—designed to encourage Pharma to do R&D and manufacture drugs for rare diseases that “market capitalism” does not offer the financial incentives to research and manufacture.  This includes an exclusive right by the patent holder to set prices for “orphan drugs” for seven years.

            The result is that Pharma has used the ODA to price any new “orphan” drug regardless of the cost of manufacturing that drug.  One example cited by Mr. Posner is Truvada, an anti-viral developed to fight AIDS under the ODA, which in 2000 cost its manufacturer Gilead $6.00 to manufacture a monthly dose; but for which Gilead charged $1,600-2000 dollars for—a 25,000% mark up.

            Mr. Posner also explains how the the third primary contributor to the world’s highest drug prices are Pharmacy Benefit Managers (“PBMs”).

            Originally PBMs were created as small “niche” companies to permit insurers to outsource and centralize the processing and paying insurance drug benefit claims presumably to lower the overall price of U.S. drugs.

            But Pharma executives and shareholders quickly saw the additional profit making potential of owning and controlling “these drug middlemen. Beginning in 2000 Pharma and Pharma owners and executives (such as the Sacklers) either created new or purchased and expanded existing PBMs until by 2019 over 95% of America’s insurable beneficiaries would have their drug benefits processed by PBMs (about 250 million Americans).

            And by 2019 PBMs not only billed for almost all of the prescriptions filled for insurance beneficiaries, they also determine how much is paid to the pharmacy that supplies them to the beneficiary--consequently controlling the “spread” between the price charged the patient and insurance company and the amount actually paid to the pharmacy.

            The ultimate result—the PBMs originally intended to reduce the price of drugs now are a major contributor to the overall high price of drugs for Americans.

An example cited by Mr. Posner is a Bloomberg Study conducted in 2017 that revealed that PBMs kept 1.3 Billion Dollars out of the 4.2 Billion that Medicaid paid for drugs sold to Medicaid beneficiaries.

            Overall Mr. Posner estimates that PBMs alone increase the price of the average drug sold in the U.S. by at least 30%.  (The nation’s largest PBM, Express Scripts, increased its “spread” of drug sales profits over a five year period from $3.87 per drug sale processed to $5.16.)

            And, again thanks to Congress, PBMs are under no federal regulation or even oversight.

            Mr. Posner concludes that the cumulative effect of non-regulation of drug prices, federal patent and special legislation and PBMs resulted in an increase in brand name drugs over a five year period of 127% while the inflation rate for the same period for common household goods was 11%.

            “The Lies” of Pharma also take up a good portion of Mr. Posner’s book such as Pharma funding and/or subsidizing the same “consumer agencies” that promoted the safety and pricing of their products.  (In one of many examples, in  2012 Mr. Posner notes that the Senate Finance Committee discovered that “The American Pain Foundation” received 90% of its funding from Pharma.)

                        Perhaps the biggest “Lie” pedaled by Pharma is that their R&D costs are so much higher than drug manufacturers face in Europe.

            Nonsense points out Mr. Posner.  Much of new drug research is actually funded by the federal government in the form of research grants and special legislation.  For example, by using the grants and tax credits afforded by the ODA, up to 70% of a new orphan drug’s R&D is paid for by the government.

            While Mr. Posner’s emphasis on the need for vastly more government regulation and oversight of Pharma is a sensible start, the definitive solution is obviously major federal campaign finance reform.

            Only when corporations and “PACs” are prohibited from contributing to federal election campaigns and federal campaign contributions are restricted to  individuals and capped will Congress be free to legislate only in the public interest, and Americans finally be free of the greed and lies of Pharma.