The Big Pharma rip-off




Executive Director, District Council 37, AFSCME, AFL-CIO

Americans don’t like Big Pharma. And there’s a good reason for that.

Earlier this year, a Kaiser Family Foundation poll found that 70 percent of Americans believe prescription drug prices are excessive. We also feel that way at the union, where the DC 37 Health and Security Plan has struggled to maintain our popular prescription drug benefit in the face of skyrocketing costs.

Big Pharma suffered a public relations blow in September, when the CEO of Turing Pharmaceuticals announced a 5,000 percent price hike of Daraprim, a drug used to treat a parasitic infection affecting people with AIDS and some cancers.

The tone-deaf CEO of Turing, Martin Shkreli, a former hedge fund manager, said he would cancel the increase after a consumer backlash. But so far the company has only announced it has set up a savings program for “qualified” patients. Shkreli didn’t help his case when he said Turing needs to make a “small profit” and described the price hike as “reasonable.” The increase raised the cost of one pill of Daraprim from $13.50 to $750.

The Daraprim controversy ensured drug prices will be an issue in the presidential race. And it has reinforced our determination to do what we can to control prices.

The drug industry takes in $300 billion a year, according to the World Health Organization. Drugs accounted for 10 percent of the $2.9 trillion the United States spent on health care in 2013.

Prescription drug prices in the United States are generally significantly higher than elsewhere in the world. For instance, prescription drug managers pay $215 a month for Nexium, a drug used to treat acid reflux, whereas the price is about one-tenth lower, or $23, in the Netherlands. We typically pay two to six times what the rest of the world pays for brand-name drugs, according to the International Federation of Health Plans.

Basically, the pharmaceutical industry’s high drug prices and excessive profits reflect a free market run amuck.

Unlike other countries, the U.S. lacks government control over pricing. In fact, the government was actually prohibited from negotiating prices for Medicare under the legislation that created the Medicare Part D prescription drug benefit during President George W. Bush’s administration.

Years ago, the pharmaceutical industry wasn’t allowed to advertise, but the drug lobby pressured the government to drop that restriction. With its 1,244 lobbyists, the pharmaceutical and health products sector spent $3.1 billion on lobbying from 1998 to 2015, according to the Center for Responsive Politics. Drug companies account for more than half of that spending.

Pernicious political influence

So far, in the 2016 election cycle, pharmaceuticals have made $5.4 million in political contributions, 64 percent to Republicans. Since 1998, it has doled out $183 million in campaign contributions. With its political influence, the industry carved out provisions in the Affordable Care Act that would have helped consumers save on prescriptions.

The drug industry — among the most profitable in the economy — insists it needs to charge high prices because of research and development costs. But that’s a dubious argument since 9 out of 10 large pharmaceutical firms spend more on marketing than on research and development, according to the health-care research firm Global Data.

Proposed legislation in Washington, the Prescription Affordability Act of 2015, would help curb price gouging. Our health and security plan will continue to use the courts to hold the industry accountable.

Meanwhile, I suggest that you turn your next visit to your pharmacy into a learning experience. When you pay for your prescription, ask the pharmacist the true cost of your medication. That will give you a clear picture of the high profits of the industry, as well as the pocketbook protection that your prescription drug benefit gives you.

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