Disgusted With Sky-High Drug Prices, California Voters Take On Big Pharma

by Fran Quigley, Truthout | News Analysis –


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Enormous public frustration with the skyrocketing prices of essential medicines in the US has not yet led to any meaningful reform. But a historic initiative on the November ballot in California, championed by health care and consumer advocates and fiercely opposed by multinational drug corporations, may finally rein in Big Pharma.

It is hard to overstate the level of dysfunction in the US medicines system. The headline-producing greed of “pharma bro” Martin Shkreli was just the most dramatic example of a pharmaceutical industry whose patent monopolies grant it immunity from market forces while its political clout shields it from government regulation. Taking full advantage of taxpayer-funded research, drug corporations make record profits, even by Fortune 500 standards, and pay their CEOs as much as $180 million a year. Those corporations spend far more on incessant marketing to consumers and physicians than they do on research — part of the reason they have largely failed to develop new medicines that address the most deadly illnesses and diseases.

As for the patients who rely on those medicines, pharma lobbying has ensured that the US Medicare program is alone among industrialized nations’ government health plans in not negotiating down the price it pays for medicines, causing US patients to pay far and away the highest global price for necessary drugs. One in every five US cancer patients can’t afford to fill their prescriptions, and many seniors on Medicare are forced to cut their pills in half to stretch their supply.

None of this dysfunction has escaped the notice of those patients and taxpayers. An AARP survey taken earlier this year showed that 81 percent of respondents aged 50-plus think drug prices are too high, and over 90 percent want politicians to take action about it. Those AARP results were consistent with other polling across a broader age spectrum. Such responses are not at all surprising, since the same AARP survey revealed that many of the organization’s members do not fill some prescriptions due to cost. Earlier this year, an emergency room physician wrote about Big Pharma in The Salt Lake Tribune: “Evil in medicine is often linked with the past practices of blood-letting, lobotomies and arsenic treatments. Now we can add to these atrocities another evil, that of killing people by preventing their needed, life-sustaining treatments.”

This kind of populist anger has caused both Hillary Clinton and Donald Trump to vow to reverse the ban on Medicare drug price negotiation. But President Obama has pursued the same goal for years, only to find it a non-starter in Congress. Even modest reform proposals for Medicare drug reimbursement, designed to stop incentivizing physicians to prescribe the highest cost medicines, have triggered determined bipartisan Congressional opposition. Not that the Obama administration has always been a champion of medicine access: the Affordable Care Act enshrined a huge guaranteed market for pharmaceutical companies, and the National Institutes of Health (NIH) recently flat-out refused to exercise its legal right to address huge corporate mark-ups on cancer medicines the NIH helped develop.

Why the dissonance between the popular thirst for reform and government lethargy? The answer can be found in the annual reports by the Center for Responsive Politics, which reliably list the pharmaceutical industry as the world’s top spender on both lobbying and campaign contributions. Pharma knows its financial windfalls are the very opposite of a free-market success story. The industry depends not just on government-supplied research and government-supplied patent monopolies, but also on massive, undiscounted government purchases of its products. So it invests accordingly.

The industry’s US trade organization, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, has an annual budget exceeding $200 million, which it directs to the promotion of the image and interests of its 57 member companies. The industry’s US lobbying expenses for 2015 were $238 million, and its campaign contributions have reached as high as $50.7 million in a year. That money has been well-spent. This year, Rep. Jan Schakowsky (D-IL) complained that every aspect of the US health care system is being reformed except for pharmaceuticals. Matt Salo, executive director of the National Association of Medicaid Directors (NAMD), says he knows the reason why:”The pharmaceutical industry is the third rail of politics, and if you go against them they will cut you off at the knees.”

Reform Moves to the State Level

With drug pricing reform thoroughly stymied on Capitol Hill, state governments are starting to step in. In June, Vermont passed the country’s first law requiring drug manufacturers to justify some price increases. Proposals demanding transparency in drug pricing have been made in at least 10 states, including Virginia, Oregon, Pennsylvania, Texas, North Carolina and Massachusetts. New York governor Andrew Cuomo has suggested capping the prices his state’s Medicaid program pays for some medicines. But the most sweeping state-level reform proposal comes from the country’s most populous state, and is the only one that tries to bypass the outsize influence Big Pharma has on elected officials: a California ballot initiative called the Drug Price Relief Act.

The initiative, recently certified by the California Secretary of State as Proposition 61, calls for state agencies to be blocked from paying more for a prescription drug than the price paid by the US Department of Veterans Affairs. Unlike the Medicare program, the VA is free to negotiate the price it pays for drugs and as a result, pays as much as 42 percent less than Medicare and usually significantly lower than state Medicaid programs. The primary force behind the ballot measure, the AIDS Healthcare Foundation, says the law could save Californians hundreds of millions of dollars a year in lower government costs and lower individual co-payments. The California Legislative Analyst Office says it cannot provide an accurate estimate of the savings, concluding that it is impossible to predict how pharmaceutical companies would react to this first-ever restriction on state drug spending.

Along with the AIDS Healthcare Foundation and the California AARP, endorsers of the California initiative include the Los Angeles Urban League, multiple county Democrat Party organizations, and progressive figures like Sen. Bernie Sanders and former US Secretary of Labor Robert Reich. Deborah Burger, president of the California Nurses Association (CNA), says her organization supports the initiative because its members witness first-hand the impact of unrestrained drug pricing, including cancer medicines that now average over $100,000 per year.

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Reprinted with permission from Truthout