A Good Start?

This started out to be a short response to a Facebook Post proclaiming that we need to immediately institute single payer healthcare. As usual, as I wrote, the scope widened.

        XXXX, I agree, but short of armed revolution, there is so much opposition at so many levels that gradual change is the only sane approach. Single payer is the real ultimate logical answer. Unfortunately, those who oppose it cite costs to the government without also citing the accompanying offset of savings to employers and individuals. A great place to start this process and immediately decrease Medicare/Medicad expenditures (which use all our tax dollars) as well as those of the insured majority of Americans, would be to address the real “Monster in the room”, Big Pharma.

        As long as the drug companies are free to raise prices at will and continue producing 25 to 30% net profits annually, (an average "good" year in most sectors is 5-8% net profit) the opposition and lobbying efforts will stall any shift. The best way to approach this, in my estimation is to publicly have a frank discussion about several things.

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        First, is the fact that drug companies typically raise prices over their 20 years of patent protection by far, far, in excess of the CPI increase. In some cases (Epi-Pen) the drug involved has been off patent for decades, but the patented $5.50 (yes, five dollars and fifty cents) delivery system and trademark were still proprietary. While the CPI was very low year to year, the drug pricing was arbitrarily increased by the new purchaser of the trademark, Mylan Pharma. Mylan purchased the rights to EpiPen in 2007 and gradually raised the list price from about $50 per auto-injector to slightly over $600 for a two-pack (a 1200% increase for the math challenged).

        If Mylan was competing in a market economy this probably wouldn't not have worked, but since Medicare cannot, by law, negotiate drug prices, all Medicare and Medicaid prescriptions are billed to us taxpayers at the high end price, while those with private insurance pay less and even get to use the "coupons" which Mylan issued after the shitstorm of public outrage over the initial increase.

        It is important to understand that we already have a single payer system - Medicare. It just doesn't cover everyone. Unfortunately, it has its hands tied by Part D legislation, which mandates that Medicare/Medicaid will never negotiate drug costs. Allowing Medicare to tell Pharma what they will pay for a drug rather than being Pharma's bitch would be a good start great beginning to reducing curbing health care costs borne by the public. Another would be to have a frank discussion with the company every time a new drug is approved and make the company show all cost data. Allow a reasonable profit on the drug and then disallow any price increases that exceed the CPI increase over the life of the patent. This would eliminate the "mysterious" 300- 400% price increases we see now, as drugs get close to end of patent.

       Remember, once upon a time drug companies justified high drug pricing by citing Research and Development costs. 30 years ago, R&D costs were the largest single line item in the balance sheet of most drug companies. As any TV watcher can tell you, that isn’t true anymore. There are three reasons.

        First, a lot of what used to be “in house” development of new drugs is done in separate research labs. The big Pharma company simply buys the patent and goes to market, not having spent money on the development.

        Second, while we are sometimes asked to “pay through the nose” for these new drugs, we have already, in many cases, paid for their development with tax dollars. Twenty percent plus of new drugs developed since 2005 have been developed by researchers using National Institute of Health (NIH) grants. In fact, more than 20 percent of NIH spending is spent on such grants. Of those 210 drugs, 84 were "first-in-class" drugs, meaning they treat disease through novel mechanisms or molecular targets. These breakthrough medications were paid for by, you guessed it - us! More than $64 billion in NIH funding was poured into research that ultimately contributed to the development of those drugs.

        A prime example of how twisted this can get is Harvoni, a potent Hep-C drug. The researcher at Emory University who developed it and did initial testing did so with our money in the form of an NIH grant. So, why doesn’t the NIH own the patent? Welcome to America, where private profit “Trumps” reason. (see what I did there?).

        The researcher was allowed, by law, to patent his discovery which he then sold to Gilead Pharma for $4 million. Not a bad payday for a professor, huh? Gilead then put Harvoni on the market, pricing the treatment initially at $1000 per pill, making the total cost of the treatment $84,000. Gilead then combined sofosbuvir (the originally patented compound) with a new drug, ledipasvir, to create the even more effective combination treatment, Harvoni. Harvoni's total initial "retail" treatment cost is $94,500 (!!) for a 12-week regimen.

         Remember, this price can be negotiated downward by insurers, but should a Medicare of Medicaid patient be prescribed Harvoni for Hepatitis C (a life-threatening disease) the Government is obligated to pay full price, (and the user a proportionately higher co-pay) no questions asked! There are an estimated 3.5 million US Hep C patients. Those with insurance are offered coupons and lower prices, but not Medicare or Medicaid!

       By comparison. Mexicans pay about 30% of US prices for the same branded drug, Canadians pay about 60%, and in India where an equally effective generic, made by Gilead, is available, the cost per pill is $4. Gilead’s US asking price is $1000! “Drug tourism” to India is on the rise!

        Finally, it is worth mentioning that only two nations in the world even allow “direct to customer” (DTC) drug advertising - New Zealand and the US. Creating demand is the goal of the ad business and Big Pharma has mastered it. Accordingly, R&D costs are no longer atop the line item list on balance sheets and haven’t been for decades. That spot has been, by a considerable margin, taken over by advertising expenditure, principally DTC on TV and in other media, but also by “incentivizing” (read “bribing”) health care providers to prescribe these “new and effective” (don’t read the small print side effects!) wonder drugs.  

       So, a great way to start the revolution in health care would be for legislators to get Big Pharma’s hands out of their (and our) pockets, stop listening to lobbyists, and pass reasonable legislation comparable to the pre-Trump Consumer Protection Act. It amazes me that, while Congress will act to protect “pay-day loan” borrowers, the rest of us are, apparently, fair game