[Ip-health] New York Times Editorial Board: It’s Time for Pharmaceutical Companies to Have Their Tobacco Moment

Thiru Balasubramaniam thiru at keionline.org
Mon Feb 25 03:03:15 PST 2019



It’s Time for Pharmaceutical Companies to Have Their Tobacco Moment

Elected officials have made a lot of noise about the cost of prescription
drugs. Now they must demand answers from pharmaceutical companies.

By The Editorial Board

The editorial board represents the opinions of the board, its editor and
the publisher. It is separate from the newsroom and the Op-Ed section.

Feb. 24, 2019

Twenty-five years ago, Congress hauled before it the top executives of the
nation’s seven largest tobacco companies and forced them to make a number
of long-overdue admissions about cigarettes — including that they might
cause cancer and heart disease and that the executives had suppressed
evidence of their addictive potential. In one dramatic exchange, when
pressed by Representatives Henry Waxman and Ron Wyden, the executives
denied that their products were addictive but admitted that they would not
want their own children to use them.

The hearing ushered in a public health victory for the ages. In its wake,
lawmakers and health officials enacted measures that would ultimately bring
smoking rates in the United States to an all-time low.

With seven pharmaceutical executives set to testify before the Senate
Finance Committee on Tuesday, one can only hope for a similarly pivotal
moment for prescription drug prices. Like their predecessors in the tobacco
industry, the drug makers will testify at a time of near-universal anger
over industry antics.

Drug prices are soaring in a way that defies reason. A vial of insulin that
cost less than $200 a decade ago now sells for closer to $1,500. Actimmune,
a drug that treats malignant osteoporosis and sells for less than $350 for
a one-month supply in Britain, costs $26,000 for a one-month supply in the
United States. And the prices of many drugs — that treat cancers, high
blood pressure, allergies and more — have risen so much that average
consumers are rationing them, at grave peril. Not even experts seem to know
how those prices are set or why they keep rising.

The industry’s own explanations — that other entities in America’s
byzantine health care system are to blame for most price increases, and
that its products are expensive and risky to make — are tough to swallow,
given drug companies’ conspicuous profit margins. Its response to the
crisis of soaring drug prices has been meager at best — and duplicitous at
worst. Last year, several companies agreed to hold off on planned price
increases, but only for six months, and only after President Trump
chastised them on Twitter. Those same companies have aggressively resisted
both state and federal efforts to enact formal changes to drug pricing

Mr. Trump has not kept his campaign promise to “negotiate like crazy” with
drug makers to lower the cost of their products, and his statementlast May
that the industry would soon announce “voluntary, massive” price cuts came
to naught. But his bluster on the issue, along with his blueprint for
resolving it, have at least helped to keep a spotlight on the
pharmaceutical industry and its questionable practices.

If the members of the Senate Finance Committee want to make use of that
spotlight, here’s what to ask executives on Tuesday:

How do you determine list prices for drugs? Who decides the factors that go
into the companies’ drug-pricing formulas, and why can’t those formulas be
made public? Senators should also ask Olivier Brandicourt, the chief
executive of Sanofi — the only major insulin maker scheduled to participate
in the hearing — why the cost of insulin continues to rise year after year,
given that the drug has been available for roughly a century, and in many
cases still enjoys patent protection. On Friday, Senator Chuck Grassley and
now-Senator Wyden, the ranking members on the Finance Committee, opened an
investigation into insulin prices.

What’s a fair profit margin for lifesaving products? A common lament among
pharmaceutical executives has been that without enough profit from one
drug, companies can’t afford to make the next one. That’s a fair point.
Still, many leading companies enjoy billions of dollars a year in pure
profit, even as lives are put at risk for want of basic medications.
Insurers are subject to a 15 to 20 percent cap on profits and
administrative expenses. Congress should consider a similar requirement for
certain prescription drugs.

How much do you spend on research and development, and where do those
dollars go? Pharmaceutical companies routinely argue that drug prices are
high because research and development is expensive and because any
successful drug is preceded by many failures. Industry critics, however,
note that a good deal of basic research is funded by the federal
government, through the National Institutes of Health, and not by the drug
makers. Many leading drug makers spend most of their research dollars
looking for new uses of existing drugs, not on risky innovations. And
independent studies show that research and development costs for drug
companies are not large enough to explain high drug prices.

Why would any drug need more than 100 patents? Patent protection enables
drug makers to recoup the money they spend developing and marketing a new
product. But most experts agree that leading drug makers have gamed this
system: By applying for dozens of patents for minor technical tweaks that
provide little clinical benefit, they stave off competition for decades.

Take Humira, which treats inflammatory disorders like arthritis and Crohn’s
disease, and is the best-selling prescription drug in the world. In the two
decades since the drug came on the market, its maker has applied for 247
patents, according the Initiative for Medicines, Access and Knowledge; it
is currently protected from competition by more than 100 such patents.
Richard Gonzalez, the C.E.O. of AbbVie, the company that makes Humira, will
appear at Tuesday’s hearing. Can he justify that practice?

What will you change? The senators must not allow drug makers to point the
finger elsewhere on Tuesday. Yes, insurance companies and other entities
play a role in the drug cost crisis. But this hearing is not about them.
It’s about the pharmaceutical companies. And those companies need to take
meaningful steps toward lowering drug prices. If the Finance Committee
members come prepared on Tuesday, they could finally force the industry to
help relieve the strain.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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