High Prescription Prices Won’t Drop Soon
One reason: lobbying. A second: corruption. No wonder we're sick.
Would you like a little lobbying with your Lipitor? A little corruption with your Crestor?
Critics of the American health care system for years have pointed out we pay more for health care than most other developed countries, on a per-person basis. Defenders say we get a lot for that extra money — like better long-term survival rates for cancer or heart disease.
But there’s one thing we simply pay more for, even though we get exactly the same thing as everyone else because it is a commodity: prescription drugs.
Americans spend almost $270 billion each year on prescription drugs — or close to $1,000 for every man, woman and child. A new book asserts that corrupt lobbyists, campaign consultants, and politicians are in large part to blame.
In “Nation on the Take: How Big Money Corrupts Our Democracy and What We Can Do About It,” authors Wendell Potter and Nick Penniman claim a big part of the problem is lobbying, campaign contributions, and other forms of legalized or soft corruption among government policy makers and politicians, which controls the prices we pay for drugs.
Americans pay more for drugs than citizens of other countries do for the same drugs. Why?
The authors focus on Billy Tauzin, a former congressman from Lafourche Parish, Louisiana. He spent 25 years in the House — first as a Democrat, then as a Republican — before he left Congress in 2005 to run the major lobbying arm of the drug industry. The authors claim that PhRMA, short for the Pharmaceutical Research and Manufacturers of America, has been central to undermining recent efforts to control drug prices.
Tauzin was part of the congressional leadership in 2003 when the bill came up to expand Medicare to cover drugs — a huge benefit for seniors but also a huge opportunity for graft. The book contains excruciating detail about how the bill was passed, including how lobbyists were even allowed access to the floor of the House of Representatives around the time of the vote after they essentially wrote the legislative language.
Ultimately, the bill forbade importation of drugs from low-cost areas such as Canada, and barred Medicare from negotiating drug prices. The die was cast for uncontrolled drug prices in the years to come. Shortly thereafter, Tauzin left Congress for a lucrative job at PhRMA.
Three years later, after Democrats had regained control of both houses of Congress in the 2006-midterm elections, bills to control the cost of prescription medicines were introduced in both chambers. The House passed a bill that would have permitted the importation of cheaper drugs. But in the Senate, PhRMA, led by Tauzin, killed not only the importation bill but also a measure that would have given Medicare the ability to negotiate with drug companies.
The industry’s massive lobbying effort and its generous campaign contributions to senators on both sides of the political aisle had paid off.
Advocates of drug importation policies last saw an opening in 2009 as lawmakers helped shape an enormous package of health bills under Obamacare. During his campaign the year before, President Obama voiced strong support for a change in drug policy. In 2008, he said all Americans should be able to import medicines “if the drugs are safe and prices are lower outside the U.S.”
Sadly, Obama backed off that position to win support from the pharmaceutical industry. In exchange for early support for its reform agenda, the White House agreed to limit how many price concessions (drug price negotiations and industry rebates) Big Pharma would have to make, in exchange for massive new sales, since the taxpayers were now paying for health insurance coverage for many more Americans.
As drug industry profits soar, millions of people — including most elected officials — continue to accept as gospel Big Pharma’s talking points that any constraint on pharmaceutical companies’ ability to gouge us would “stifle” or “have a chilling effect” on innovation. Simply not true.
Americans are paying more for drugs — as a result of concessions granted on Capitol Hill — than citizens of other countries do for the same drugs. Think about why that is. Are we simply bad negotiators? Or have our congressmen and congresswomen sold us out? Medicare is forbidden by law from even getting to the negotiating table.
Unfortunately, this new book suggests the bureaucracy is so compromised that even negotiations won’t help. We need a simple, drastic, and essentially mechanical solution to remove the price issue from the hands of those who are already corrupt or too easily corruptible.
Americans must demand, by law, the same price — or a lower price if possible due to our large market — as the lowest price paid by any other “developed” country in the OECD.
Prices will drop as other countries begin to pay their fair share of the cost of drug research and development, by paying the same price as Americans do. In trade negotiations, they call that being a “most favored nation.”
Pharmaceuticals have truly performed miracles in improving our health and longevity. But American taxpayers pay a disproportionate amount of the research and development for all drugs. It’s time for the rest of the world to pay the same price.
Dr. Ramin Oskoui, a cardiologist in the Washington, D.C., area, is CEO of Foxhall Cardiology PC.