Drug and device makers: Obscene profits and kickback -- a big part of why our "healthcare" costs so much

 

Drug companies are greedy parasites. This is well-known to everyone. Even the shock troops of the Republican right know about and decry it.

The drug companies start with the capitalist model – sell something at a profit – and take to an extreme: make as much profit  as possible no matter who it hurts (as long as it doesn’t hurt them).

They have a great business plan: people need their medicine, they (or mostly their insurance companies, including government insurers Medicare and Medicaid) are willing to pay for it, even if truculently, and they’ll pay whatever is asked.

While we are all shocked periodically by stories of individual dramatic greed, such as Mylan and its CEO Heather Bresch jacking up the price of EpiPen® to over $600 (Epi-Pen® and Predatory Pricing: You thought our health system was designed for people’s health?, Sept 3, 2016) or Martin Shkreli and his company Turing brazenly raising the price of Daraprim® from $13.50 to $750 (Drug prices and corporate greed: there may be limits to our gullibility, Sept 27, 2015), the fact is that this is the standard business model of pharmaceutical companies. Think of colchicine, an anti-gout drug first used by ancient Egyptians at least since 1500BC, having its price jacked up from $4/mo to $5/pill (VISA and colchicine: maybe the banks and Pharma really ARE in it for the money!). 

Or, to get to one of the biggest scandals of all, the price of insulin!  Should there be anyone who does not know, insulin was one of the most important drugs ever discovered. Unlike the newest drugs that I have recently discussed, which sell for thousands (or tens of thousands) of dollars a month, insulin is not for a niche market. It is for diabetes, one of the most common diseases. For people with Type 1 diabetes, who produce no insulin of their own, it is simply an absolute requirement for life. For the larger group of people with Type 2 diabetes, it is often a critical part of controlling their disease. It was discovered by Canadians Banting and Best in the 1920s, who sold the patent to Eli Lilly and Co. for -- $1! (Not sure if that was a US or Canadian dollar.) This drug – the impact of which is HUGE – now is over $100/month for the cheapest generic forms if you have a coupon, and, depending upon the formulation, can be hundreds!

So, we have predatory pricing on products people absolutely need for their lives. Check.

We have outrage among millions of people of all political stripes. Check.

We have the ability to control these prices, starting with the largest payer in the US, Medicare. Check.

We have done what we can, as a government and a society, to address this issue. Um, uncheck. Nope.

In fact when Congress passed the Medicare Drug Plan, (MMA, Part “D”) in 2003, it specifically forbade Medicare from negotiating drug prices. Good deal for the drug companies! Guaranteed payment and no ability for the purchaser to negotiate the price! Where can you or I get that deal? Nowhere, of course. We do not have huge piles of $$ for paying Congressmen. Every time the drug manufacturers suggest that they need their profit to pay for Research and Development (R&D), we need to note how much MORE they spend on Marketing (including lobbying and contributions). It is also worth noting that contrary to their propaganda, MOST drugs are not developed in the US. It is the large plurality, but Japan and Western Europe also contribute a lot. (see, e.g., Light and Lexchin Pharmaceuticals as a market for “lemons”: Theory and practice and Pharmaceutical research and development: what do we get for all that money?, also for another take US Pharmaceutical Innovation in an International Context) More important, perhaps, is that most of the basic (high-cost, high-risk) research is funded by you, the taxpayer, through National Institute of Health (NIH) grants; drug companies most often buy the patents only after the original research shows promise.

Of course, in recent years, there has been a change. In labeling. Some expenditures that used to be included as marketing are now included as R&D. Not that the amount that they spend on lobbying, political contributions, marketing to physicians, and direct marketing to consumers has changed. And of course we have the FDA approving incredibly expensive and profitable drugs against the recommendations of their scientific panels (FDA approves Alzheimer's drug against the recommendation of its scientific panel. Be very concerned, June 21, 2021). This is corruption, this is your government selling you down the river to increase the profits of an industry that everyone, justifiably, hates.

And then, of course, we need to consider the device makers. You know, the companies that make stuff that is stuck into your bodies by surgeons, from artificial hips to cardiac defibrillators. Just to make sure that they do not continue to fly under the radar, getting cover from the excesses of the drug manufacturers. This is important; unlike drugs, if it turns out that your  implant  is not the best choice, or is not working well, or is really inferior, or is harming you, it is not as easy to just stop and put a new one in. That artificial hip? They opened you up, cut out the top part of your thigh bone (femur), and part of where it inserts into the pelvis (ilium) and put in this new hardware. Replacing it is a big deal. So getting the best one available is important. Usually, this decision is left up to the surgeon. So how do you get surgeons to use your device if you are a device manufacturer? Marketing! Telling them how great it is! Showing them testimonials from other surgeons!  Oh, yes, and, of course good old kickbacks, paying them for using your product! This is reported on in a recent piece in Medscape, “Device Makers Have Funneled Billions to Orthopedic Surgeons Who Use Their Products”, June 17, 2021. That is how you wanted your surgeon to choose the new part that is going to replace part of your hip, or spine, or knee, right? Bribery?

Of course, it is not listed as bribery on the companies’ balance sheets, and I’m sure that the individual surgeons do not report it on their income tax under “kickbacks”. Back in 2012, surgeon and writer Atul Gawande, in an article in the New Yorker called “Big Med” (discussed by me in Quality and price for everyone: Bigger may be better in some ways, but not all, Aug 24, 2012) reported on an effort in a Harvard-affiliated hospital to standardize the hardware used by orthopedic surgeons. Rather than having each surgeon pick their own favorite and having the hospital have to stock several – or sometimes more than 10 – versions of, say, an artificial hip, a committee researched the quality and the hospital stocked 1 or 2 of the best, and each surgeon had to use them. This improved outcomes. There was no suggestion that the surgeons were, at that time, getting kickbacks, but it is certain that the manufacturers whose products were not chosen were not happy about it.

It is not hard to see why the American people distrust the healthcare system, and the hugely profitable drug and device industries that supply it, and the healthcare “providers” – hospitals – that deliver it, and, sadly with news like these kickbacks, even the doctors and other clinicians caring for them. And I haven’t even gotten into  (today) the insurance companies! As in so much else, it often appears that both our major political parties are the parties of Corporate America, although one is at least making some efforts to limit those corporations. The other is, like the drug companies, totally shameless.

It is not hard, but it is sad. And worse, destructive to our health, as individuals and as a society.