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Pharma’s Failed Blame Game on Drugs
Townhall.com ^ | Dec 15, 2017 | Mytheos Holt

Posted on 12/14/2017 11:58:07 PM PST by Oshkalaboomboom

One of the most notable political eyesores of recent years has been the issue of high drug prices. Since 2015, the public has been hungry for a solution to this problem. Indeed, even in 2015, there was a level of bipartisan agreement that drug prices were too high that today would be seen as shocking. According to a December 2015 poll from the Harvard T.H. Chan School of Public Health, 80 percent of Democrats and 70 percent of Republicans agreed on this issue. Moreover, more than 90 percent of all voters saw pharmaceutical companies’ pricing decisions as unreasonable.

Given that numbers like this existed before most of the reporting on the opioid crisis and its pharma-driven origins, or the multiple pricing scandals that rocked companies the world over, it’s no surprise that pharmaceutical companies want to get out of the way of this boiling public outrage over the issue. In fact, recently, they have made every attempt to lay blame at the feet of other actors in the healthcare sector, from hospitals to health insurers.

One can’t blame them. No one wants to be at the center of a crisis. But understanding why an industry is pushing an argument, and accepting that argument as true, are completely different things. And make no mistake, conservatives are in a unique position to understand why Pharma’s attempt at self-exculpation should not be accepted: because it has tried to kill the very policies that would lower prices by cracking down on corporate welfare or promoting market forces in America’s health sector.

So if Pharma wants to stop being blamed for high drug prices, I have a couple of suggestions for where it might change its policy focus.

Firstly, it should stop trying to kill the Inter Partes Review process for patents – that is, the process by which the US Patent and Trademark Office’s (USPTO) Patent Trial and Appeal Board (PTAB) decides whether patents have been incorrectly granted, or incorrectly had their lifespan extended. This process, which looks increasingly likely to be upheld by the Supreme Court as constitutional, has been in Pharma’s crosshairs for some time, even though it has done nothing to hurt Pharma’s ability to develop new, life-saving drugs. What it has done is occasionally put the brakes on Pharma’s ability to engage in evergreening – ie, extending patents indefinitely on extremely flimsy pretexts in order to be able to continue pricing their drugs at monopoly levels. Not coincidentally, evergreening is a major driver of high drug prices.

Secondly, once pharmaceutical industry patents do actually run out, the industry should stop trying to preserve its ability to halt generic drug companies from producing generic versions of their brand name products on bogus pretexts. According to a Kaiser Health Tracking poll, 87 percent of Americans favor making it easier for generic drug companies to bring their own drugs to market as competition for Big Pharma. Legislation like the CREATES Act of 2017 is designed to promote this common sense approach, while balancing it with the demands of public health. Pharma should get out of the way of such measures.

Thirdly, the industry needs to quit acting as if it is entitled to taxpayer money with no strings attached. 92 percent of Americans favor letting the federal government negotiate drug prices with Pharma directly through Medicare, and President Trump even made similar noises. Yet Pharma tries to kill not only this admittedly interventionist idea, but even much more light touch, voluntary programs like the 340B drug pricing program, which only requires them to offer drugs at a cheaper price to certain public health clinics and safety net hospitals in exchange for access to the massive pot of taxpayer money that is used for Medicare Part B. This is an easy trade for any rational economic actor to accept, but Pharma apparently wants to get all the corporate welfare with none of the responsibility, and has tried to stack even the Trump White House with people who agree. They can’t keep lobbying for it to be easy for them to charge higher prices, and then complain when people blame them for those prices.

Pharma’s unwillingness to cooperate with all three of these good faith measures, each of which is aimed at either introducing market forces into healthcare, or at setting conditions on their feeding at the public trough, puts the lie to their attempt to claim that high drug prices are not their fault. When you lobby for the right to impose something unpopular without consequences every day, you cannot then claim no culpability when the consequences arrive. One only hopes that the President and GOP Congress will hold the industry’s feet to the fire in the coming year.


TOPICS: Business/Economy; Culture/Society; Miscellaneous; News/Current Events
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I worked for the largest pharmaceutical company in the world by sales and a good part of our day was spent on compliance. We had to document and crosscheck everything. People have to sign off on each other's work and if anything goes wrong they have a paper trail for every step of the process and will spend millions on investigations. All of those records have to be stored, organized and kept. There is an army of people who do nothing but go through paperwork to see if everything is signed off properly. I've been called in, with pay, on vacation days just to explain why initial X was on a form instead of initial Y, because an entire shipment would be put in quarantine until they knew the answer. I doubt that the Chinese have to jump through as many hoops when they counterfeit American drugs.
1 posted on 12/14/2017 11:58:08 PM PST by Oshkalaboomboom
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To: Oshkalaboomboom

Your description is why it has been an amazing industry and why it costs so much to develop drugs. They work, they are safe.

People take it for granted.


2 posted on 12/15/2017 1:19:13 AM PST by ifinnegan (Democrats kill babies and harvest their organs to sell)
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To: Oshkalaboomboom

2015? Part D by Bush was supposed to fix the problem. How quickly we forget.

The solution to a failed government program is to double down ?


3 posted on 12/15/2017 4:35:37 AM PST by spintreebob
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To: Oshkalaboomboom
I also worked (for 35 years) for one of the largest pharmaceutical companies in the world (probably not the same one you did).

Everything you say is absolutely correct.

The overall profitability of the pharmaceutical industry is about 15%, which I think is reasonable considering the risk involved.

Correct me if I'm wrong, but as I remember it only about one in a thousand potential drugs (New Chemical Entities, i.e., drugs that look like they might work) ever makes it to market.

4 posted on 12/15/2017 5:20:54 AM PST by sima_yi ( Reporting live from the far North)
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To: sima_yi

another exec here . 30 years in pharma / med devices.....couldnt agree more. in addition to the compliance regulations, the product liability environment is a strong contributor to costs......


5 posted on 12/15/2017 5:36:35 AM PST by GotMojo
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To: Oshkalaboomboom

Good suggestions for helping to lower drug prices, but they will not make the political problems go away. Americans need to be clearly reminded that patents, and the resulting high prices until they expire, are necessary for drug development, and that price controls will destroy the value of the patents. Government can help consumers to afford drugs until patents expire, but Americans should not be fooled into thinking that drug development is a free lunch.


6 posted on 12/15/2017 5:47:53 AM PST by Socon-Econ
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To: Oshkalaboomboom
Pharma’s unwillingness to cooperate with all three of these good faith measures, each of which is aimed at either introducing market forces into healthcare, or at setting conditions on their feeding at the public trough, puts the lie to their attempt to claim that high drug prices are not their fault.

These "good faith measures" are based on faulty premises.

First of all, patents in the US are usually good for 20 years from their time of filing. This does not mean that pharmaceutical companies are granted 20 years to solely reap profits on a launched product. It often takes 10-12 years to develop and launch a new drug, which eats greatly into the life of the patent. As others have suggested, risk is great in drug development, and a 20-year patent life is purely arbitrary.

The third "measure," from above is a straw man. Government's involvement in healthcare only muddies the market--it's pseudo free, and government contracts are nice, but they prevent a true market price from being realized. You can bet that pharma has their eye on the bigger picture, and they know that giving into such a measure would mean even bigger concession.

Do not forget, every generic drug on the market was once a marketed product. You don't get innovative marketed products without research and development; and you don't get research and development without some profitability. R&D costs in the pharma industry are some of the highest, 15-25% of profits.

7 posted on 12/15/2017 7:06:21 AM PST by Lou L (Health "insurance" is NOT the same as health "care")
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To: Oshkalaboomboom

I’ve never worked for big pharma, so it’s hard for me to be sympathetic to the arguments put forth here. All I know is how I am forced to pay for prescription drug coverage, but cannot afford to purchase my life-saving drugs through that insurance because of the high cost. I am insulin dependent diabetic. Insurance requires me to pay $350 before I receive a nickel of benefits. Then, I have to make a $150 per month co-pay for about 5 months, when I fall into the “donut hole.” At the point, I have to pay $500 per month (if I want to live) until I’ve spent $5000 out of pocket. If there’s any month’s left in the coverage year, I will be able to get my insulin for something like $8 per month. I say “something like” because I’ve never met that threshold. How do I manage this and still manage to eat and keep a roof over my head? I buy my insulin in Canada where I’m not required to have a prescription and pay $96 cash for a month’s supply. The premiums I pay for U.S. drug coverage (extortion) are just pissed into the wind, since I make no benefit claims. Multiply my experience by tens of thousands like me who travel to Canada or Mexico for our drugs in order to survive. Pardon me, if I am unsympathetic to the argument about narrow profit margins at big pharma.


8 posted on 12/15/2017 7:40:50 AM PST by torqemada (Those who know, don't say. Those who say, don't know.)
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To: Oshkalaboomboom
I worked for a pharmaceutical company in Baltimore in the early 2000’s. I was in the finance department, I managed the payroll and accounts payable departments but was also a staff accountant and part of my job, not only to pay employees and vendors, was tracking projects as to completion as to track “project costing” and associated journal entries and also provide financial information that needed to be included in our SEC reporting as we were a publically traded company.

When I went to work there, they had been in business just shy of 10 years and only FDA approved drug they had was a chemotherapy wafer used to treat glioblastoma brain tumors. They did have many other in various stages in the R&D pipeline.

What amazed me and what gave me a completely different perspective as to drug costs, was the amount of money involved in taking a drug from conception, the in house testing, the FDA required outsourced trials, the required animal trials, clinical trials, the cost of the equipment, the supplies…I laughed one day when I got an invoice for several hundreds of dollars for an item called a “small mouse head impactor”, and I asked one of the Ph.D. scientists who I had become friend with what that was and how it was used…I was on one hand sorry I asked but on the other, wanted to see it in action.

We were a small pharma with only about 300 people on our payroll but my semi-monthly payroll was near a million dollars each pay, because the Ph.D. level scientists all the way down to the manufacturing technicians, none of these jobs were any were near minimum wage, required a high level of skill and experience. Then there was the cost of manufacturing.

And it wasn’t unusual for my weekly AP check runs to be in the 1 -5-million-dollar range.

But what I learned, among many of the things I learned while I was there, was that for every new idea, new drug, very few ever came close to getting FDA approval and make it to market but the costs are huge. Sometimes a drug was dropped and sometimes went back for more research and another try.

I also learned that even with the one drug we had gotten FDA approval for, the costs for monitoring it for any potential side effects was huge. I learned that our R&D costs would not come anywhere near being recouped for at least 10-15 years, and probably more in the case of such a specialized drug like the glioblastoma brain tumor wafer, it’s not like we could run ads on TV saying “Have a glioblastoma tumor – ask your doctor about x”

9 posted on 12/15/2017 8:22:48 AM PST by MD Expat in PA
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To: ifinnegan

They are also generally far cheaper than what they replace.


10 posted on 12/15/2017 11:58:18 AM PST by lepton ("It is useless to attempt to reason a man out of a thing he was never reasoned into"--Jonathan Swift)
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