Thursday, December 24, 2015

Bernie Sanders' War on Big Pharma, Hillary gives Lip Service

According to government data released this week, significantly higher drug prices contributed to higher Medicare spending in 2014. At least five drugs covered under Medicare Part D had increases of 100% or more. A report based on a new online database released by the Center for Medicare Services (CMS) this week showed that one of the most egregious examples is the pain reliever Vimovo. Its price increased more than 500 percent after it was sold by AstraZeneca to another company (Pfizer attempted to by out AstraZeneca last year).

The 2014 drug-price information was part of a new online database called the Medicare Drug Spending Dashboard, which details 80 drugs that ranked the highest by total Medicare spending. CMS said the drugs account for 33% of all Medicare Part D spending, and 71% of all spending on prescriptions by Medicare Part B, which covers drugs administered in doctor’s offices and outpatient clinics.

Robert Roach, President of the Alliance for Retired Americans, said "More than 35 million people didn’t fill a prescription last year because they could not afford to." The Alliance is closely tracking what the candidates for President and Congress are pledging to do about prescription drug prices — and are pressing policymakers for change.

Last September Senator Bernie Sanders introduced legislationThe Prescription Drug Affordability Act of 2015 — to stop soaring increases in pharmaceutical prices. He and Hillary Clinton are both running for the Democratic nomination to be President in 2016; and both offer up their own plan for controlling the high cost of rising prescription drug prices on their websites.

However, Hillary has received more campaign cash from drug companies than any other candidate — in either party — even as she proudly declares the industry is one of her biggest enemies. In stark contrast Bernie, received zero contributions from drug companies, and received most of his campaign financing from individual donors and labor unions. So which candidate will launch the most genuine war on Big Pharma?

Last year from Bloomberg on May 14, 2014:

As evidenced by Pfizer’s proposed $100 billion-plus [hostile] takeover of AstraZeneca, Big Pharma is in the throes of the greatest period of consolidation in a decade. One reality remains unchanged, however: Drug prices keep defying the law of gravity. Since October 2007 the cost of brand-name medicines has soared, with prices doubling for dozens of established drugs that target everything from multiple sclerosis to cancer, blood pressure, and even erectile dysfunction ... While the consumer price index rose just 12 percent during the period, one diabetes drug quadrupled in price and another rose 160 percent.

Obscene drug prices

Desperation is also propelling the increases, with drugmakers raising prices on products that remain under patent to offset sales declines from blockbusters that have lost such protection. And companies with older drugs boost prices when rivals show up, either to match the price of the newer drug or to make up for prescriptions lost to the competitor. While generic drugs pushed by insurers and the government now make up 86 percent of all medicines used in the U.S., that hasn’t reduced total spending on prescription drugs.

“We have been consistently noticing that as manufacturers near the end of their product’s life cycle, they are seeking larger price hikes than they previously did,” says Sharon Frazee, vice president for research at Express Scripts Holding.

According to a leaked draft copy obtained by Politico last May, the recent TPP trade agreement that Congress just gave Obama fast-track for "would give US pharmaceutical firms unprecedented protections against competition from cheaper generic drugs, possibly transcending the patent protections in US law [and additionally] those provisions could also help block copycats from selling cheaper versions of the expensive cutting-edge drugs known as biologics inside the U.S., restricting treatment for American patients while jacking up Medicare and Medicaid costs for American taxpayers."

Robert E. Scott, the director of trade and manufacturing policy research at the Economic Policy Institute, noted: "By extending US copyright and patent protections to consumers in the rest of the TPP, which will dramatically increase the prices of prescription drugs, the treaty will shift billions in profits to big pharmaceutical companies while denying access to life-saving medicines to countless poor consumers."

A year later after Pfizer’s attempted takeover was thwarted by AstraZeneca, in May 2015 the Fiscal Times wrote that the takeover of AstraZeneca would have solved some of Pfizer’s biggest problems:

The stock markets have been hitting all-time record highs, as corporate profits have also been hitting all-time record highs — $1.8 trillion after-taxes last year — which was also the best year for mergers and acquisitions since before the financial crisis. The global deal volume topped $3 trillion — a more than 50% increase from 2013. The U.S. M&A market saw the number of deals worth at least $1 billion rise 43% year-over-year. And last year they were poised to spend about 95 percent of their earnings (almost $1 trillion) on stock buybacks (Venture capitalist Nick Hanauer tells us how stock buybacks hurt average working Americans.)

The Fiscal Times goes on to say:

After the Astra rejection, Pfizer CEO Ian Read switched back to his “Plan A” by returning $12 billion to shareholders in share buybacks last year. The $17 billion acquisition of Hospira was welcomed by Pfizer investors, but it will do little to address Pfizer’s three big problems: the higher tax rate, unrepatriated cash profits and patchy pipeline ... Following a US Treasury crackdown on inversions, which allow companies to slash their tax rate by taking over a rival in a lower-tax country and moving its headquarters there, Pfizer’s options are limited. To realize the main benefits of an inversion, its shareholders would have to own no more than 60 per cent of any combined company. That would make AstraZeneca too small, leading some to suggest Pfizer should shift its sights to another, bigger UK group ... One contender could be Ireland-based Actavis. Its effective tax rate was just 4.8 per cent last year, and its limited roots in the Emerald Isle mean there would be no political outcry. Some even suggest that Brent Saunders [not Bernie Sanders] the CEO of Actavis, could take the top job at Pfizer..."

Obscene greed

Which brings us to a recent post by Robert Reich:

Of Rotten Apples and Rotten Systems (December 21, 2015) Martin Shkreli [pictured above], the former hedge-fund manager turned pharmaceutical CEO who was arrested last week, has been described as a sociopath and worse. In reality, he’s a brasher and larger version of what others in finance and corporate suites do all the time.

Federal prosecutors are charging him with conning wealthy investors. Lying to investors is illegal, of course, but it’s perfectly normal to use hype to lure rich investors into hedge funds. And the line between the two isn’t always distinct. Hedge funds are lightly regulated on the assumption that investors are sophisticated and can take care of themselves.

Perhaps prosecutors went after Shkreli because they couldn’t nail him for his escapades as a pharmaceutical executive, which were completely legal – although vile. Shkreli took over a company with the rights to a 62-year-old drug used to treat toxoplasmosis, a devastating parasitic infection that can cause brain damage in babies and people with AIDS. He then promptly raised its price from $13.50 to $750 a pill.

When the media and politicians went after him, Shkreli was defiant, saying: "Our shareholders expect us to make as much as money as possible.” He said he wished he had raised the price even higher. That was too much even for the Pharmaceutical Research and Manufacturers of America, Big Pharma’s trade group, which complained indignantly that Shkreli’s company was just "an investment vehicle masquerading as a pharmaceutical company".

Maybe Big Pharma doesn’t want to admit most pharmaceutical companies have become investment vehicles. If they didn’t deliver for their investors they’d be taken over by "activist" investors and private-equity partners who would. The hypocrisy is stunning. Just three years ago, Forbes Magazine praised Shkreli as one of its 30 under 30 in Finance who was "battling billionaires and entrenched drug industry executives."

Last month, Shkreli got control of a company with rights to a cheap drug used for decades to treat Chagas’ disease in Latin America. His aim was to get the drug approved in the United States and charge tens of thousands of dollars for a course of treatment. Investors who backed Shkreli in this venture did well. The company’s share price initially shot up from under $2 to more than $40. While other pharmaceutical companies don’t usually raise their drug prices fifty-fold in one fell swoop, as did Shkreli, they would if they thought it would lead to fat profits.

[Martin Shkreli’s arrest gives drug makers cover] Most have been increasing their prices more than 10 percent a year – still far faster than inflation – on drugs used on common diseases like cancer, high cholesterol and diabetes. This has imposed a far bigger burden on health spending than Shkreli’s escapades, making it much harder for Americans to pay for drugs they need. Even if they’re insured, most people are paying out big sums in co-payments and deductibles. Not to mention the impact on private insurers, Medicare, State Medicaid programs, our prisons and the Veterans Health Administration.

And the prices of new drugs are sky-high. Pfizer’s new one to treat advanced breast cancer costs $9,850 a month. According to an analysis by the Wall Street Journal, that price isn’t based on manufacturing or research costs. Instead, Pfizer set the price as high as possible without pushing doctors and insurers toward alternative drugs. But don’t all profit-maximizing firms set prices as high as they can without pushing customers toward alternatives?

Unlike most other countries, the United States doesn’t control drug prices. It leaves pricing up to the market. Which enables drug companies to charge as much as the market will bear. So what exactly did Martin Shkreli do wrong — by the standards of today’s capitalism? He played the same game many others are playing on Wall Street and in corporate suites. He was just more audacious about it.

It’s easy to go after bad guys, much harder to go after bad systems. Hedge fund managers, for example, make big gains from trading on insider information. That robs small investors who aren’t privy to the information. But it’s not illegal unless a trader knows the leaker was compensated — a looser standard than in any other advanced country.

Meanwhile, the pharmaceutical industry is making a fortune off average Americans, who are paying more for the drugs they need than the citizens of any other advanced country. That’s largely because Big Pharma has wielded its political influence to avoid cost controls, to ban Medicare from using its bargaining clout to negotiate lower prices, and to allow drug companies to pay the makers of generic drugs to delay their cheaper versions.

Shkreli may be a rotten apple. But hedge funds and the pharmaceutical industry are two rotten systems that are costing Americans a bundle.

On June 25, 2009, as a member of the Senate health committee, Senator Bernie Sanders said that real health care reform must address the billions of dollars in fraud and abuse that comes from the major corporations in the health care industry. The senator said Health and Human Services Department investigators found this year that 80 percent of insurance companies participating in the Medicare prescription drug benefit overcharged subscribers and taxpayers — and that Medicare and Medicaid fraud totals some $60 billion a year.

  • PolitiFact (November 2, 2012) Republicans Mitt Romney and Rick Scott both have Medicare fraud in their background (Mostly True)
  • PolitiFact: (March 3, 2014) Florida Governor Rick Scott oversaw the largest Medicare fraud in the nation’s history (Mostly True)
  • The Fiscal Times (December 2015) Billions in Medicare Fraud Still Rampant, Despite Federal Crackdown

Which bring us back to a newsletter from Bernie Sanders that I received yesterday:

I want to talk with you about one of the very real differences between Secretary Clinton and me that surfaced during last weekend's debate, and that is our approach to health care in this country.

I was, and all progressives should be, deeply disappointed in some of her attacks on a Medicare-for-all, single-payer health care system. The health insurance lobbyists and big pharmaceutical companies try to make "national health care" sound scary. It is not.

In fact, a large single-payer system already exists in the United States. It's called Medicare and the people enrolled give it high marks. More importantly, it has succeeded in providing near-universal coverage to Americans over age 65 in a very cost-effective manner.

So I want to go over some facts with you and ask that you take action on this important issue:

Right now, because of the gains made under the Affordable Care Act, 17 million people have health care who did not before the law was passed. This is a good start, and something we should be proud of. But we can do better.

The truth is, it is a national disgrace that the United States is the only major country that does not guarantee health care to all people as a right. Today, 29 million of our sisters and brothers are without care. Not only are deductibles rising, but the cost of prescription drugs is skyrocketing as well. There is a major crisis in primary health care in the United States.

So I start my approach to health care from two very simple premises:

  1. Health care must be recognized as a right, not a privilege -- every man, woman and child in our country should be able to access quality care regardless of their income.
  2. We must create a national system to provide care for every single American in the most cost-effective way possible.

I expected to take some heat on these fundamental beliefs during a general election, but since it is already happening in the Democratic primary, I want to address some of the critiques made by Secretary Clinton and Rupert Murdoch's Wall Street Journal directly:

Under my plan, we will lower the cost of health care for the average family making $50,000 a year by nearly $5,000 a year. It is unfair to say simply how much more a program will cost without letting people know we are doing away with the cost of private insurance and that the middle class will be paying substantially less for health care under a single-payer system than Hillary Clinton's program. Attacking the cost of the plan without acknowledging the bottom-line savings is the way Republicans have attacked this idea for decades. Taking that approach in a Democratic Primary undermines the hard work of so many who have fought to guarantee health care as a right in this country, and it hurts our prospects for achieving that goal in the near future. I hope that it stops.

[Editor's Note: Hillary Clinton said she won't raise taxes on the middle-class (To her, that means anyone making up to $250,000 a year) to pay for such as program as Bernie proposes. First of all, $250,000 a year is not a "middle-class" wage — per Social Security wage data, that's in the top 1%. Secondly, Bernie proposes a 2.2% across-the-board tax increase for EVERYONE, and it pays for "Medicare for All" — and therefore, eliminates the mandate to purchase an Obamcare healthcare plan. Upper income earners will pay proportionately higher taxes, but lower income earners will get the same quality healthcare. Besides just healthcare and lower prescription drug prices, workers will also get paid family and medical leave — which is not automatically included in Obamacare. (Now back to Bernie's newsletter...)

Let me also be clear that a Medicare-for-all, single-payer health care system will expand employment by lifting a major financial weight off of the businesses burdened by employee health expenses. And for the millions of Americans who are currently in jobs they don't like but must stay put because of health care access, they would be free to explore more productive opportunities as they desire.

So, what is stopping us from guaranteeing free, quality health care as a basic fundamental right for all Americans? I believe the answer ties into campaign finance reform. The truth is, the insurance companies and the drug companies are bribing the United States Congress.

I want to make health care a right for every American. The health care industry doesn't like that very much, so they're flooding my opponents with cash. Fight back against those who want to stop a Medicare-for-all, single-payer system with a $3 contribution to our campaign.

Now, I don't go around asking millionaires and billionaires for money. You know that. I don't think I'm going to get a whole lot of contributions from the health care and pharmaceutical industries. I don't like to kick a man when he is down, but when some bad actors have tried to contribute to our campaign, like the pharmaceutical CEO Martin Shkreli who jacked up the price of a life saving drug for AIDS patients, I donated his contribution to an AIDS clinic in Washington, D.C.

Secretary Clinton, on the other hand, has received millions of dollars from the health care and pharmaceutical industries, a number that is sure to rise as time goes on. Since 1998, there are no industries that have spent more money to influence legislators than these two. Billions of dollars! An absolutely obscene amount of money. And in this election cycle alone, Secretary Clinton has raised more money from the health care industry than did the top 3 Republicans -- combined.

Now, and let's not be naive about this, maybe they are dumb and don't know what they are going to get? But I don't think that's the case, and I don't believe you do either.

So, what can we do about it?

Changing the health care laws in this country in such a way that guarantees health care as a right and not a privilege will require nothing short of a political revolution. That's what this campaign is about and it is work we must continue long after I am elected the next President of the United States.

And because of the success we have enjoyed so far, I am more convinced today than ever before that universal quality health care as a right for all Americans will eventually become the law of the land.

It is the only way forward.

Make a $3 contribution to our campaign as a way of saying you have had ENOUGH of the health care and pharmaceutical lobby buying our candidates and elected officials.

Thank you for standing with me on this important issue.

In solidarity,

Bernie Sanders is a "Man of the People"


  1. Robert Reich:

    Medicare faces financial problems in future years because of two underlying trends that will affect all health care in coming years, regardless of what happens to Medicare:

    The first is that healthcare costs are rising overall - not as fast as they were rising before the Affordable Care Act went into effect, but still rising too quickly.

    The second is that the giant post­war baby boom is heading toward retirement and older age. Which means more elderly people will need more health care, adding to the rising costs.

    So how should we deal with these two costly trends? By making Medicare available to all Americans, not just the elderly.

    Remember, Medicare is more efficient than private health insurers ­­ whose administrative costs and advertising and marketing expenses are eating up billions of dollars each year.

    If more Americans were allowed to join Medicare, it could become more efficient by using its growing bargaining power to get lower drug prices, lower hospital bills, and healthier people.

  2. When Congress was debating Obamacare in 2009, Sanders proposed an amendment to create what he called a Medicare-for-all-type-single-payer system.

    Two years later (Tuesday, May 10, 2011) Sen. Bernie Sanders (I-Vt.) announced that he introduced legislation to provide health care for every American through a Medicare-for-all type single-payer system.

    Sanders re-introduced his single-payer bill again in 2013. It never went to a vote. Warren Gunnels, Sanders’s senior policy adviser, said “The 2013 plan would expand on current Medicare coverage, fully covering such expenses as prescription drugs, eyeglasses and hearing aids, and eliminating the need for supplemental coverage such as Medigap plans.”

    In his major speech on democratic socialism, Sanders described his Medicare-for-all proposal: “Health care should be a right of all people, not a privilege. This is not a radical idea. That is why I believe in a Medicare-for-all, single-payer health-care system. Yes. The Affordable Care Act, which I helped write and voted for, is a step forward for this country. But we must build on it and go further. Medicare for all would not only guarantee health care for all people, not only save middle-class families and our entire nation significant sums of money, it would radically improve the lives of all Americans and bring about significant improvements in our economy. People who get sick will not have to worry about paying a deductible or making a co-payment. They could go to the doctor when they should, and not end up in the emergency room. Business owners will not have to spend enormous amounts of time worrying about how they are going to provide health care for their employees. Workers will not have to be trapped in jobs they do not like simply because their employers are offering them decent health insurance plans. Instead, they will be able to pursue the jobs and work they love, which could be an enormous boon for the economy. And, by the way, moving to a Medicare-for-all program will end the disgrace of Americans paying, by far, the highest prices in the world for prescription drugs.”

  3. Wall Street Journal (December 20, 2015)

    A skirmish broke out recently between Hillary Clinton and Bernie Sanders about the merits of single-payer health care, an idea that Mr. Sanders has long advocated. The candidates jousted about the financing of single-payer health care during the Democratic debate Saturday night. The differences between the two candidates on single-payer health care paint Mrs. Clinton as more moderate and Mr. Sanders as more liberal (no surprise there) ... Single-payer health care and the Medicare-for-all variant of the idea has generally been popular among the left ... Most Democrats either strongly favor (52%) or somewhat favor (24%) the general idea of Medicare for all.

  4. Letter to the Editor:

    Medicare would establish comprehensive coverage that is non-profit, but insurance companies would still be allowed to sell additional riders for extra services and expanded benefits. It would set fixed cost for the Medicare program (global budgeting) by assigning set amount of payment per patient and eliminating cost overruns through the fee for service system in traditional Medicare. Cost adjustments between advantage programs for basic coverage would eliminate adverse selection (one company having too many sick people).

  5. TIME:

    Hillary Clinton has already promised not to raise taxes on families earning under $250,000 a year. She and her aides have slammed Sanders for not making the same pledge. In the debate on Saturday night, Sanders lashed back with a defense of certain taxes increases.

    "When Secretary Clinton says, ‘I’m not going raise taxes on the middle class,’ let me tell you what she is saying,” Sanders said. “She is disagreeing with FDR on Social Security, LBJ on Medicare and with the vast majority of progressive Democrats in the House and the Senate, who today are fighting to end the disgrace of the United States being the only major country on Earth that doesn’t provide paid family and medical leave.”

    Campaign manager Jeff Weaver called Clinton’s no-tax pledge and proposed tax credits a Republican approach. “Why do you have a candidate who claims to be a progressive that is essentially laying out an approach to problems that is a Republican approach? It’s an instinctive move back to the corporate centrism that the Democratic rank and file has disavowed.”

    And Sanders has long favored a middle-class income tax hike to pay for his most ambitious program, Medicare-for-all, which he introduced as a bill in the Senate in 2013. The plan, which his campaign has been touting for months, was to be paid for by a 2.2% tax increase, as well as a 6.7% tax on wages paid by employers — that Clinton aides say would result in a total 9% tax increase, because employers pass taxes on to their workers in the form of wage cuts. [A wild claim, since many employers would no longer feel obligated to provide thier own healthcare polices, maybe allowing for higher wages.]

    And Bernie's aides now say that Sanders’ Medicare-for-all can be paid for without the 2.2% tax increase on employees. His policy team is working out a new plan. “We are still developing a Medicare-for-all plan,” said Sanders senior policy advisor Warren Gunnels. “This plan will save middle class families thousands of dollars a year because they will no longer be paying premiums or deductibles to private health insurance companies.”

  6. Poll (December 2015)

    A new Kaiser Poll shows 58 percent of the public are in favor of Medicare for All, including 81 percent of Democrats” — showing that it's even more popular than Obamacare.

    1. Huffington Post:

      The monthly survey conducted by the Kaiser Family Foundation finds 43 percent of Americans reporting a favorable opinion on the "health reform bill signed into law in 2010." Forty-two percent reported having an unfavorable opinion, and 14 percent said they were unsure.

  7. (December 6, 2013) It's Time to Ask: Why not Medicare for All?

  8. Dean Baker, Center for Economic Research and Policy (December 28, 2015) If Patent Monopolies Bias Cancer Research, Why Not Have Publicly Funded Trials?

  9. Bernie Sanders has an ad that features a nurse who is talking about the high cost of health care and what she says is Sanders’ understanding of the problem. “Bernie Sanders understands how pharmaceutical companies and major medical companies are ripping us off,” she says. “Bernie tells the truth and he’s been consistent.” Sanders supports moving to a single-payer system.

  10. UPDATE: A must read for all who are interested...

    The Sanders-Clinton Spat Over Middle-Class Taxes Is About A Lot More Than Money ... Just ask FDR (12/28/2015 by Daniel Marans)

  11. Why Preventing Cancer Is Not the Priority in Drug Development (DEC. 28, 2015)

  12. UPDATE

    Center for Economic Policy and Research (by Dean Baker December 28, 2015) If Patent Monopolies Bias Cancer Research, Why Not Have Publicly Funded Trials?

  13. UPDATE:

    After firing Martin Shkreli, pharmaceutical company officially files for bankruptcy

  14. Bernie Sanders was asked in a live appearance on Fusion for the 2016 Brown & Black Democratic Presidential Forum:

    "How much do you have to earn to be rich?"

    It took Sanders only a few seconds to answer the question:

    "I would say that people who make $250,000 a year are doing pretty well."