Tag: pharmaceutical industry
Who Will Benefit From The Latest Version Of Trump RX? Not Most Consumers

Who Will Benefit From The Latest Version Of Trump RX? Not Most Consumers

I’m a relatively healthy 75-year-old man who takes one prescription drug, a generic statin to keep my cholesterol count below the level recommended for preventing heart attacks and strokes. Those levels were recently lowered by the American College of Cardiology and the American Heart Association, which will likely lead many more Americans to be eligible for taking the pills.

Both those facts piqued my curiosity about the announcement made Monday by Donald Trump with Mark Cuban, who runs Cost Plus Drugs, at his side. They were touting adding 602 generic drugs, including statins and blood pressure control meds, to TrumpRx, the government website that directs consumers looking for lower cost drugs to Cuban’s company GoodRx and Amazon Pharmacy.

Who will actually benefit from TrumpRx, I wondered, which is touting mostly generic drugs? And how much will they actually save?

First, I looked up what I could save by buying my generic statin from Cost Plus. Under my Medicare supplemental plan, which comes through my retired wife’s former employer (a public school system), CVS Caremark manages the pharmacy benefit. The PBM requires I pay a $20 co-pay at the pharmacy counter to obtain a 90-day supply of 20-milligram rosuvastatin, the generic name for Crestor.

Cuban’s Cost Plus mail-order website says it would charge me $7.85 for a 90-day supply plus a $5 shipping fee, thus saving me $7.15 for each refill or $28.60 a year. However, Cost Plus also tacks on a $5 pharmacy handling fee. It was unclear from the website if that was part of the $7.85. If not, adding that $20-a-year into the total cost would wipe out most of any savings for me.

I then called CVS Caremark to inquire about their savings should I decide to jump off their plan for those meager savings. I use the phrase “their savings” cautiously. I have no idea if my wife’s former employer or its plan’s medical insurer hires the nation’s second largest PBM, or how much either pays to CVS Caremark. Moreover, how much the PBM profits from the ultimate payer — the taxpayers behind the public employee retirement system — is unknown. So is the price it pays the generic manufacturer and any other middlemen that may have stuck their hands into the honey pot.

In any case, the call center operator told me the total cost to the PBM was $60.86 every 90 days. But that was before I paid $20 every three months at the pharmacy, so the cost reduction for everyone else would be about $164 a year, at least six times more than me. As noted above, how those savings would be divvied up between the PBM, the medical insurer and the employer-payer is safely contained in someone’s black box.

Will it benefit the uninsured?

How about the alleged major beneficiaries of TrumpRx — the uninsured who have to pay for any health care out of their own pockets? Their ranks are growing daily due to this year’s massive increase in rates for Affordable Care Act plans triggered by the regime’s handmaidens in the Republican-run Congress, who allowed the Biden-era increase in plan subsidies to expire.

When ACA-insured, the people dropping plans paid nothing for their cholesterol and blood pressure control medications, even if their plan had deductibles. All preventive services rated “A” or “B” by the U.S. Preventive Services Task Force must be offered free of charge under the ACA. Statins are rated “B.”

But under TrumpRx, those dropping coverage (or those that never had a plan in the first place) will have to pay the full cost. If they turn to Cost Plus Drugs, that would be at least $52 a year with maybe an additional $20 for the pharmacy fee.

Of course, both groups could run into trouble when renewing their prescriptions if they no longer have or never had a primary care physician. When signing up for Cost Plus Drugs, which I did today, I had to provide the name and contact information for my prescribing physician.

Even if they can get past that hurdle, people who are uninsured are usually pinching pennies. They no longer have a primary care physician. They don’t go in for routine checkups, which might identify when they have high blood pressure or dangerously elevated cholesterol. They are less likely to adhere to diets with less salt and less processed foods, which promote better heart health.

The ACA had it right. Drugs that have been proven to prevent serious diseases should be entirely free of charge to the consumer/patient. They are a wise investment that pays off in reduced hospitalizations and reduced complications from chronic diseases, which in turn reduces long-term health care costs. Plans like my supplemental should eliminate their co-pays entirely for such drugs, especially when they are generics like most statins and blood pressure meds.

TrumpRx sets up a financial barrier to access. It will decrease the population taking these important interventions. It is a public relations stunt designed to look like the regime is doing something about the high cost of drugs, which is entirely driven by the cost of new drugs coming to market and the high prices on those that remain on patent, not the extra fees PBMs tack onto prices.

Paying for value

One final thought: The regime is stepping up its pressure on European countries to raise their drug prices, which are substantially less than what is paid in the U.S. Why? Other advanced industrial countries are effective drug price negotiators. They refuse to pay more than the carefully calculated medical value of a prescription.

The U.S., on the other hand, insists that foreigners pay their “fair share” for innovation instead of using the same negotiating and value measurement tactics. Big Pharma’s argument — that the high cost of drugs is driven by the high cost of research and development — never held much water and has grown increasingly shallow given how much innovation has moved to China in the wake of the regime’s immigration policies and gutting of National Institutes of Health funding.

This Trump regime’s attempt to impose so-called reference pricing is, in essence, a strategy to maintain as much revenue as possible flowing to Big Pharma. It provides no long-term brake on rising costs. The U.S. would pay slightly less; other industrialized countries would pay slightly more; less developed countries would continue to go without the latest therapeutics; and the drug industry would maintain the status quo on profitability.

Merrill Goozner, the former editor of Modern Healthcare, writes about health care and politics at GoozNews.substack.com, where this column first appeared. Please consider subscribing to support his work.

Reprinted with permission from Gooz News


There's A Profound Lesson In Purdue Pharma's Implosion, But Will We Learn?

There's A Profound Lesson In Purdue Pharma's Implosion, But Will We Learn?

Suppose there was an explosion at an oil refinery that killed hundreds of people. Presumably, there would be a major investigation to determine what went wrong and how to prevent a similar accident in the future.

But it’s different with the pharmaceutical industry. Purdue Pharma, one of the drug companies at the center of the opioid crisis, was finally put to death as the result of lawsuits over its pushing of OxyContin. The allegation is that the company misrepresented the addictiveness of the drug in order to have it promoted more widely.

The money paid to the families of victims cannot compensate for the deaths of loved ones, but the other part of the story is that no one is asking how to make sure this sort of disaster does not happen again. And unlike the example I gave of an exploding oil refinery, we are talking about the death of hundreds of thousands, not hundreds.

The key issue is the incentives the government gave to Purdue Pharma and the other opioid manufacturers. It gave them patent monopolies that allowed them to markup the price of their drugs by several thousand percent, selling them at prices that were twenty or thirty times what they would sell for in a free market.

This sort of extraordinary profit gives drug companies an incentive to lie about the safety and effectiveness of their drugs, which they do routinely. The consequences generally are not as disastrous as with the opioid crisis, but patients often end up taking drugs that are not best for them because drug companies misrepresented their products to researchers, doctors, and the public at large.

To be clear, companies always have incentive to sell their products widely. That’s the point of advertising. But they won’t go to the same length to sell a plastic cup or shovel, where they expect a profit of a dollar or two, as they will in selling a prescription on a patent-protected drug, where the profits can be hundreds or even thousands of dollars.

Patent monopolies are also the reason for high drug prices. Drugs are almost always cheap to manufacture and distribute; the reason they are expensive is the monopolies the government gives the drug companies.

This is the whole story of people struggling to raise the thousands or tens of thousands needed to pay for drugs to treat cancer or other serious illnesses. If these drugs were sold in a free market, paying twenty or thirty dollars for a prescription would not be a big deal, except for low-income people. And the government could afford to pick up the tab for them.

And patent monopolies are a big part of the story in redistributing income upward. While this is true in many areas, it is very striking in the case of pharmaceuticals. We will pay around $750 billion this year for drugs that would cost in the range of $150 billion in a free market. The savings of $600 billion comes to almost $5,000 per household.

That $600 billion is money that goes to drug companies and their shareholders. It has created many billionaires. In the case of the Covid vaccine alone, we created 5 Moderna billionaires.

Patent monopolies do provide an incentive for developing new drugs, but there are other ways to provide this incentive, most obviously paying people. If that sounds bizarre, the government already spends around $50 billion a year supporting biomedical research through the National Institutes of Health and other government agencies. We would have to triple or quadruple this sum to replace the patent-supported research, but we would still come out way ahead and wouldn’t have to worry about drug companies lying to us to push their drugs.

It is more than a bit bizarre that we have a large contingent of progressives focused on ways to tax back the wealth of the very rich, but who have no interest in restructuring the system in ways that don’t make them so rich in the first place. Just as a refinery explosion would be expected to lead to a renewed focus on industry safety, we might have expected the opioid crisis to lead to new thinking on the way we finance the development of drugs. But that has not been the case.

There is a bill put forward by Michigan Democratic Rep. Rashida Tlaib that would be a big step in this direction, but unfortunately it has gotten little attention to date. It would be great if something positive could come out of the opioid crisis, but that can’t happen until people at least can see the issue clearly. For whatever reason, that has not yet happened.

Dean Baker is a senior economist at the Center for Economic and Policy Research and the author of the 2016 book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer. Please consider subscribing to his Substack.

At 'Washington Post,' Bezos' Bozos Struggle To Justify High Drug Prices

At 'Washington Post,' Bezos' Bozos Struggle To Justify High Drug Prices

I am tempted just to ignore the Washington Trump-Post after Jeff Bezos’ purge, but perhaps there is some ridicule value that can be exploited for the purpose of educating the public. The Post ran an editorial complaining that people looking to lower drug prices in the United States were being short-sighted because it just means that we will see fewer new drugs in the future. It said the real problem is that Europe doesn’t pay enough for drugs because they don’t give drug companies unfettered government-granted patent monopolies, but instead limit prices based on a drug’s usefulness.

Two simple numbers show how ridiculous the Post’s argument is. Last year we spent over $720 billion on drugs and other pharmaceutical products. The industry spent around $150 billion on research. That means patients in the United States paid almost five times as much for drugs as what the industry spent on research.

It likely costs around $150 billion to manufacture and distribute the drugs. (We know this based on the price that generic drugs sell for.) That leaves the industry with $570 billion to cover $150 billion in research. The rest goes to profits, advertising, high pay for CEOs and other top executives, and payoffs to politicians, doctors, and media outlets.

Fans of arithmetic, which I guess excludes the Washington Post editors and other Trumpers, would know that Europe would be paying plenty to cover research costs, even if its prices were 40 percent of U.S. prices. The only thing that would be accomplished by raising the price of drugs in Europe is that Jeff Bezos’ rich friends would become even richer.

If we want to talk seriously about lowering drug prices, we would be looking to change the way we support research. Instead of relying on government-granted patent monopolies, we could just pay for the research upfront, say by vastly increasing the $50 billion we now spend funding research through the National Institutes of Health. Then all the research could be fully open source, with all patents in the public domain.

Not only would this mean that new drugs could be sold as cheap generics from the day they are approved by the FDA, but research would likely advance more quickly since new findings would quickly be made freely available. This would allow researchers all over the world to follow promising leads and avoid proven dead ends.

This way of financing research would also remove the enormous incentive the industry now has to lie about the safety and effectiveness of new drugs. We saw this problem most clearly with the opioid crisis where the industry misled doctors about the addictiveness of the new generation of opioid drugs, but the issue of misrepresenting research comes up all the time. It is exactly what economic theory predicts happens when a government monopoly allows companies to sell products at prices that are thousands of percent above production costs.

I have been screaming about the corruption of the pharmaceutical industry for a long time and pushing direct upfront funding as an alternative. I am happy to see a new paper from Dana Brown at the Vanderbilt Policy Accelerator making the same argument.

There’s an old saying that intellectuals have a hard time dealing with new ideas, and direct upfront funding of pharmaceutical research is certainly a new idea to people who can’t imagine an alternative to patent monopolies. Also, since the major media outlets are controlled by rich people like Jeff Bezos, they aren’t anxious to publicize policies that could cost their rich friends hundreds of billions of dollars.

But at least folks who read my stuff can know. The Washington Post is lying to you. There are more efficient mechanisms to finance biomedical research which can give us both lower drug prices and better medicine. Drugs can and should be cheap, we don’t have to make them expensive with patent monopolies. Maybe one day we will be able to have a serious discussion about alternatives to patents to finance the development of new drugs.

Jeff Bezos

The Free Market Op-Ed That Bezos' Washington Post Rejected

The Jeff Bezos-owned Washington Post recently changed its policies on its op-ed page. It replaced most of its former editorial staff and announced a commitment to promoting the free market and free expression.

Many of us have laughed at these ostensible commitments. The Trump administration is probably the most anti-free market presidency this country has ever seen. A president constantly demanding shows of loyalty from private companies is antithetical to free market capitalism. The commitment to free expression also seems dubious in a country where talking honestly about this country’s past or present can be the basis for firing or even criminal charges.

Anyhow, I have often pointed out that many people who ostensibly believe in the free market are just fine with government-granted patent and copyright monopolies, government interventions that transfer trillions of dollars from the rest of us to those in a position to benefit from these monopolies. I joked that the Washington Post op-ed page probably would not be interested in a piece that argued for a free market, as opposed to these government monopolies.

A friend suggested that I write a piece along these lines and see if the Post would take it. I did and they didn’t:

Time for a Free Market in Prescription Drugs

Advocates of “free markets” usually focus on tariffs and government regulations, but they almost never look at the most costly regulations, patents and copyrights. Incredibly, most discussions turn reality on its head and treat these government-granted monopolies as being part of the free market. Powerful interests benefit from these monopolies, but political power does not change reality; patents and copyrights are massive government interventions into the free market.

These monopolies cause problems everywhere, but nowhere is the harm greater than with prescription drugs. The problem of high-priced prescription drugs is entirely an issue of patent monopolies. Drugs are almost always cheap to manufacture and distribute, the reason why some drugs sell for hundreds or even thousands of dollars per prescription, is that the government has granted a patent monopoly.

The patentholder can go to court to stop any competitors from producing the same drug. If their competitor persists, they will face huge penalties, possibly including jail time.

There is an enormous amount of money at stake with prescription drugs. We will spend over $700 billion this year on prescription drugs and other pharmaceutical products. If these drugs were all sold in a free market, without patent monopolies or related protections, they would likely cost less than one-fifth as much.

The difference of $560 billion comes to $4,400 per household annually. It’s more than the cost of the “Big Beautiful Bill.” It’s even more money than President Trump hopes to raise from his tariffs. It is real money by any standard.

But the money at stake is only part of the story. The huge profits drug companies can make from selling drugs at prices in the hundreds or thousands of dollars per prescription, that cost them $10 or $20 to produce, gives them enormous incentive to mislead doctors and the public about their safety and effectiveness.

The most extreme case of dishonest drug pushing was the opioid crisis. The major manufacturers paid out huge settlements over allegations that they deliberately provided misleading information about the addictiveness of the new generation of opioids.

While opioids are an extreme case, the problem of drug companies providing misleading information about their products is well known. Medical journals have long had to contend with ghost-authored articles, where doctors lend their names to pieces written by a person paid by a pharmaceutical company. Similarly, doctors have often taken payments to give talks at medical conferences praising a company’s drugs. With so much money at stake, there is no easy way around this problem.

Also, drug companies routinely game the system to find ways to extend their monopolies and keep out generic competition. And they spend hundreds of millions on campaign contributions and lobbying Congress to make their patents longer and stronger.

Patent monopolies do serve an obvious purpose. They give drug companies an incentive to conduct research and develop new drugs.

This would be a powerful argument for patents if they were the only way to provide this incentive. However, there are alternatives, most obviously just paying for the research upfront.

We already did this to a large extent. Before the cuts put in place by the Trump administration we were spending over $50 billion a year on biomedical research through the National Institutes of Health and other government agencies. Almost everyone familiar with the research considered this to be money very well spent.

While most of this funding went to support basic research, there is no reason that we could not triple or quadruple the funding to include downstream research. It could pay for the development and testing of new drugs, with all new drugs available to be produced as generics in a free market from the day they are approved by the Food and Drug Administration.

This would end the problem of high-priced drugs and also eliminate most of the incentive to mislead the public about the safety and effectiveness of drugs. This risk could be further reduced by requiring that all research be fully open source, with all new findings and test results available on the Internet as quickly as practical.

This sort of system of publicly supported research can be sliced and diced in a thousand different ways. Rather than having a single government agency dishing out the funds, there could be private companies, like our current drug companies, that would compete for long-term contracts (e.g. 10-20 years) to undertake research in different areas.

Dean Baker is an economist, author, and co-founder of the Center for Economic Policy and Research. His writing has appeared in many major publications, including The Atlantic, The Washington Post, and The Financial Times.

Reprinted with permission from Substack.

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