Written: October 12, 2017
Edited: September 30, 2021
At a political rally in Kentucky in 2017, President Donald Trump said drug prices were “outrageous”. The next day, according to Kaiser Health News, the pharmaceutical industry donated more money to political campaigns than any other day of the year. Eight pharma political action committees made 137 contributions to 77 politicians totaling nearly $280,000. Both Republicans and Democrats were beneficiaries. This is nothing compared to the total campaign donations made by big pharma.
According to the Washington Post, there are currently 1,270 registered lobbyists for pharmaceuticals and health products, more than two lobbyists for every member of Congress. A research study which analyzed publicly available data on campaign contributions and lobbying in the U.S. from 1999 to 2018, found the pharmaceutical and health product industry spent $4.7 billion, an average of $233 million per year lobbying the U.S. federal government, $414 million on direct contributions to presidential and congressional electoral candidates, and national party committees. They spent $877 million on contributions to state candidates and committees. Big pharma writes thousands of checks targeting senior legislators in Congress who are involved in drafting health care laws and state committees which opposed or supported key referenda on drug pricing and regulation.
The drug price issue is high on everyone’s radar. I have been writing about it since 2015. Politicians on both sides of the aisle have been outspoken about it. People go bankrupt or die because of the high cost of drugs. Quick fixes are obvious to everyone except our political leaders who receive millions of dollars every year from big pharma. Congress forbids Medicare from negotiating the cost of drugs. The government negotiates the price of just about everything they buy, except drugs. By simply eliminating the restriction, amazing things could begin to happen.
Consider blood thinners for prevention of stroke for example. Millions of people on Medicare with atrial fibrillation take thinners. There are three leading drugs for this purpose: Eliquis, Xarelto, and Pradaxa. The average retail price for a monthly supply of the thinners is approximately $550. The fact the prices are all about the same shows there is no competition. If Congress lifted the restriction, Medicare could put out an RFP. It would say Dear Pharma, we have X millions of Medicare beneficiaries in need of a blood thinner. Please give us your best price for a half-billion pills. No doubt, the price would be much lower.
The effect of competition is significant. Every industry faces competition, except big pharma. A proof of the effect of competition can be seen at Amazon Pharmacy. The most heavily prescribed medication in the United States is levothyroxine. Levothyroxine is a medicine used to treat an underactive thyroid gland (hypothyroidism). The thyroid gland makes thyroid hormone which helps to control energy levels. Levothyroxine is taken to replace the missing thyroid hormone. If you have prescription drug insurance such as AARP PreferredRX, the price at Amazon Pharmacy is $14.88. If instead you select the Amazon Pharmacy price for Prime members is $3.80. This simple real example shows how bad our current system is. How can the price with insurance be four times the price without insurance? There are two reasons. First, using your insurance brings in a lot of overhead and middlemen. The second reason is Amazon probably went to Abbott Laboratories, the company which makes levothyroxine, and asked for their best price for X millions of pills. Negotiating drug prices can work, and it is criminal the Congress, under influence from the big pharma lobby, has resisted the idea. They have put campaign donations ahead of consumers. Both parties agree but continue to do nothing about it. Lobbyists have convinced politicians if Medicare can negotiate prices, the pharma industry will have to cut research and development. I don’t believe it.
Big pharma spends millions to influence politicians. The top recipients have been mostly Republicans but the flood of cash in the last couple of years has been bipartisan. Senator Bernie Sanders, after attacking Joe Biden over taking pharma money in 2019, received just under $1.1 million from the industry himself. Sen. Elizabeth Warren, who also decried the industry during a 2019 presidential debate, received about $615,000 from pharma.
Other than New Zealand, the United States is the only country which allows direct-to-consumer TV advertising. Big pharma creates demand for their most profitable products by inundating consumers with advertisements convincing them they need treatment. They use actors, actresses, and scenes fine-tuned to look like you. On television, 187 commercials for about 70 prescription medications have collectively aired almost half a million times since the start of 2018. The cost of the ads was nearly three billion dollars. I appeared on Fox Business a few years ago and discussed healthcare technology. I hoped to get into a discussion of pharma advertising. No chance of that. Fox Business was sponsored by Viagra, a top money maker for Pfizer Inc., among the top spenders on lobbying. Lobbyists convinced politicians TV advertising direct to consumers is needed so they can learn about great new drugs. I suggest anyone with a smartphone or computer can find everything there is to know about any medical condition they may have. They do not need to be carpet bombed on TV.
I may sound negative about big pharma. I am not. I am negative about Congress putting their re-election campaigns ahead of consumers. Pharmaceutical innovation is responsible for 35% of the increase in life expectancy from 1990 to 2015. Their drugs save many lives and enhance quality of life for millions. The industry deserves to be profitable. Not to worry. From 2000 to 2018, 35 large pharmaceutical companies reported cumulative revenue of $11.5 trillion with a gross profit of $8.6 trillion. There is plenty of room to operate very profitably without cutting research and development.