SINGLE PAYER LINKS #365

11 OCT 2024

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This week’s focus is on pharmaceuticals. I’ve pulled out of the saved-for-later file some background on Pharma revenues and pricing, Medicare drug negotiations, the FTC lawsuit against PBMs, and the steady march of concentration all over the healthcare universe (PBMs being the worst example). Additional notes on the noises from Harris & Co. on whether she’ll back up/reappoint Lina Khan at the FTC (probably not—although agitation from us might affect that). —Tim

Listen here:  https://www.podbean.com/eas/pb-icqxg-1702dfb

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Matt Stoller, “Inside the mafia of Pharma pricing,” BIG, Jul 15, 2024 https://bit.ly/4dCbse4

“The whole system is insane.” A good starting point! Stoller provides extensive background on the PBM scam and how it developed, i.e., through concentration as the big PBMs rolled up competitors and then merged with insurance companies. Some of the details are mind-boggling: one drug, wrote an industry insider, costs $97 at Costco, $9,000 at Walgreens (which the plan recommended, of course), and if delivered by the PBM’s own mail order pharmacy, $19,200. Sounds pretty nuts to me. Key insight: a major culprit is the legalization of price discrimination, i.e., charging different people different prices for the same product. That enabled PBMs to develop their Byzantine pricing schemes and generate revenues “larger than what France spends on its entire healthcare system.” One place to start: states dumping PBMs entirely, like Kentucky, which saved a quarter of its state spending on meds.

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Julia Rock, “How Big Pharma actually spends its massive profits,” The Lever, Jan 6, 2023 https://bit.ly/4fjcAVl

A reminder that the standard whine about how Pharma needs all that loot to keep researching new drugs is a big fat lie: In the decade 2012–2021, Pharma stock buybacks and dividends totaled a mind-blowing $747 billion. The industry spent $660 billion on R&D over the same period, ergo, over half its profits go into their own pockets, not research. Oh, and this: “Between 2010 and 2019, every single new drug approved by the Food and Drug Administration relied at least in part on publicly funded science.”

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Megan Henney, “Prescription drug prices have surged almost 40% over the past decade,” FOX Business, Jul 2, 2024 https://fxn.ws/3SszUXz

Prescription drugs cost us 37% more in the last 10 years, and our average deductible for them has nearly doubled from $917 to $1,644.

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Reed Abelson & Rebecca Robbins, “FTC slams middlemen for high drug prices, reversing hands-off approach,” New York Times, Jul 9, 2024 https://nyti.ms/4d378oK

The Federal Trade Commission first issued a staff report on the PBMs, paving the way for the lawsuit that followed. It called PBMs “powerful middlemen . . . profiting by inflating drug costs and squeezing Main Street pharmacies.” The PBMs and their affiliated insurance companies now own their own pharmacies and mail-order operations to further concentrate profits all along the drug pipeline. “Benefit managers often paid their own pharmacies much more than it would cost to buy those drugs from a wholesaler.” Even one of the two Republican FTC members voted in favor, and the lone holdout got an earful on Capitol Hill—from Republicans.

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Juliana Kim & Sydney Lupkin, “FTC sues insulin middlemen, saying they pocket billions while patients face high costs,” NPR, Sep 22, 2024 https://n.pr/4eWfLC0

Lina Khan’s FTC continues to show the rest of the government how it’s done. Her agency sued the three PBM oligopolists for manipulating the insulin market to extract huge fees while 1 out of 4 diabetics in the U.S. couldn’t afford their life-saving meds. In the suit, the FTC pointed out that the PBMs get paid based on a percentage of a drug’s price, meaning that if the product is more expensive, they’re happier. The PBMs “systemically excluded” cheaper insulin, said the Feds, while costs shot up 600%. This is how government should work to protect us; naturally, the knives are out for Khan and her team.

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Rebecca Robbins & Reed Abelson, “The opaque industry secretly inflating prices for prescription drugs,” New York Times, Jun 21, 2024 https://nyti.ms/3ylmaak

A line-up of Godzillas: “If they were stand-alone companies, the three biggest PBMs would each rank among the top 40 U.S. companies by revenue. The largest, Caremark, generates more revenue than Ford or Home Depot.” Includes a detailed account of how AbbVie colluded with the PBMs to maintain its stranglehold over the arthritis drug market, worth billions for both.

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Lecia Bushak, “City of Baltimore sues Biogen over allegedly paying PBMs to stave off Tecfidera generic competition,” Medical Marketing & Media, Sep 25, 2024 https://bit.ly/3NGAqyx

FTC action opened the floodgates. Now the city of Baltimore has slapped a lawsuit on a Pharma company for scheming with a PBM to block generic competition of a best-selling treatment for MS. Under the illicit agreement, says Baltimore, “Biogen paid the PBMs to avoid placing the MS generics on their formularies.” The company says they were “fees or rebates,” not kickbacks.

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FTC report on PBMs: https://www.ftc.gov/reports/pharmacy-benefit-managers-report Executive summary worth a read. The PBMs are refusing to give the agency the information it needs for further study; FTC may sue them for it.

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Noah Tong, “Texas sues PBMs, manufacturers over insulin ‘conspiracy,’” Fierce Healthcare, Oct 3, 2024 https://bit.ly/4eGurpg

Any time Texas shows hostility to big business, the abuse must be epic. “Texas alleged drug manufacturers Eli Lilly, Novo Nordisk, and Sanofi raise the price of insulin and then pay an undisclosed amount back to PBMs through a quid pro quo agreement.” The lawsuit said insulin “costs $2 to produce and could be purchased for $20 in the 1990s but now costs up to $700.”

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Stephen Kent, “Harris promised to be ‘pragmatic’—that means dropping Lina Khan at the FTC,” The Hill, Oct 6, 2024 https://bit.ly/485JtSN

Khan’s term expired in September, so Harris as president could either back her or dump her. The signals during the campaign aren’t good: Harris “vowed in front of the Economic Club of Pittsburgh last week to be ‘pragmatic’ if elected and not be ‘constrained by ideology’ in how she governs. Given this noble pledge, she must show Khan the door.” Microsoft, Meta, Google, and Amazon must be rubbing their corporate hands in glee.

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Matt Stoller, “Monopoly round-up: The 2024 CNBC shadow campaign to fire Lina Khan,” BIG, Aug 12, 2024 https://bit.ly/4f0JHg7

“Lina Khan is the symbol of a new way relationship between the public and big business. On CNBC, she’s the most important candidate on the ticket.” The financiers want her gone, and they may get their wish no matter who wins. Democrats make no secret of their cozy ties with the plutocrats.

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Ken Alltucker, “Senate panel questions Novo Nordisk CEO over decision to discontinue this popular insulin,” USA Today, Sep 25, 2024 https://bit.ly/3Bz3WTO

How do companies respond to losing their price-gouging opportunities? They quit making the product. Novo Nordisk (now minting cash with its fat shots) discontinued the long-acting insulin Levemir after PBMs cut the cheaper drug out of its formularies. “Before the price cut, Jørgensen said 90% of insurance plans covered their insulin product. After the price cut, just 35% of insurers covered the drug.” Novo’s CEO said, “The market is disappearing for Levemir.” People need a drug; a company makes it, but the “market” for it is disappearing. What is wrong with this picture? (Hint: healthcare is not like a lawn mower.)

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Robert King, David Lim & Lauren Gardner, “In a first, Medicare has set prices for 10 drugs, saving billions,” Politico, Aug 15, 2024 https://politi.co/3BEMKMV

The White House touted $6 billion in savings starting in 2026, but that includes considerable massaging of the numbers. They calculated the discounts off list prices, which no one pays. Pharma squealed bloody murder but privately took the news in stride, and their stock prices didn’t budge. Nonetheless, the Feds (or states) finally using their massive market share as a purchaser sets an important precedent. One salient fact: the PBMs maintain such a complex and opaque pricing system that nobody really knows what gets paid by whom. As a result, said one expert, “You are negotiating around a number that nobody publicly can see.” So, did the Feds score big savings for the public purse? Maybe, maybe not.

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Nathaniel Weixel & Joseph Choi, “5 takeaways from first Medicare drug price negotiations,” The Hill, Aug 16, 2024 https://bit.ly/3YlnkNf

A good precedent: Drugmakers denounced the process but all agreed to participate (or risk losing Medicare business entirely). Also good: 15 more drugs will be subject to negotiations next year. Not so good: Pharma shrugged off the financial impact, suggesting that they didn’t feel much pain. Bad: Republicans don’t believe the government should have the power to negotiate, just pay up.

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Deena Beasley, “US will still pay at least twice as much after negotiating drug prices,” Reuters, Sep 3, 2024 https://reut.rs/3YhFXl0

The new prices agreed to “are still on average more than double, and in some cases five times, what drugmakers have agreed to in four other high-income countries.”

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Mark Siedner & Rochelle Walensky, “Tested in Africa, used in America: How can we end the practice of HIV wonder drug experimentation in Africa?” STAT, Sep 18, 2024 https://bit.ly/4gZI4kU

Thousands of young women and girls in Africa lent their bodies to Gilead for testing the hot new HIV prevention product—which works marvelously. It’s not a vaccine but almost as good. Guess who won’t be benefiting from it for many years, if ever? Young women in Africa. The drug (lenacapavir) costs about $40 per year to produce, but “is currently licensed as an HIV treatment for more than $42,000 per year in the United States.” The 3,000 women who acquire HIV infection per week in Africa won’t be seeing it for a long, long time. This is an old story—because African women have crazy high rates of HIV incidence, it’s cheaper to test there, then sell the products in the wealthy West. The authors propose that no further trials proceed in Africa unless fair access is guaranteed before drugs are tested. No brainer. Probably won’t happen.

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Judy George, “If Alzheimer’s drug ads had more data, here’s what might happen,” MedPage Today, Aug 30, 2024 https://bit.ly/47Yuhad

A new study demonstrates what we could easily surmise: All those happy-time TV ads promoting drugs wouldn’t work nearly as well if they presented facts about side effects as prominently as Mom’s yoga class and Grandpa romping with little kids. A study showed that if the adverse effects of a drug are given equal time, people would be more cautious about demanding it. One quoted expert called it a “gee-whiz study” because the conclusions are obvious—but necessary to keep repeating. Drug ads work, and Pharma knows exactly how to shape them. (P.S. Why are they on TV in the first place?)

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Shalina Chatlani, “To lower prescription drug costs, states head to the courthouse,” Stateline, Aug 15, 2024 https://bit.ly/4dJQMAX

States are trying to get prescription drug prices down but are up against insanely wealthy corporations who have a “scorched-earth policy” toward any legislative or regulatory changes. A week after the FTC report came out, Vermont sued the PBMs; other states followed. Oklahoma has the toughest new regs, and 32 state A-Gs joined a supportive lawsuit. But they face a problem: “A federal law [ERISA] prevents them from helping the two-thirds of Americans who get their health coverage through their employers.”

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Anna Claire Volleres, “Angry patients spur new state watchdogs to bring down drug prices,” Stateline, Jul 16, 2024 https://bit.ly/3YohFWU

States are trying to curb spiraling prescription drug costs through pharmaceutical pricing boards. But they face multiple obstacles. Eleven mostly blue states have created the panels, and lawmakers in 14 more states are proposing to do the same. “In February, Colorado’s board became the first in the nation to officially declare a drug unaffordable,” starting a process to bring down the price of rheumatoid arthritis drug Enbrel, now costing $47,000 a year. Manufacturer Amgen, which sold $3.65 billion worth of Enbrel last year, promptly sued.

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Grace Hills, “Kansas AG Kris Kobach accuses Pfizer of misleading vaccine marketing in lawsuit,” Kansas Reflector, Jun 17, 2024 https://bit.ly/4dIwKGM

“Pfizer urged Americans to get vaccinated in order to protect their loved ones, clearly indicating a claim that Pfizer’s COVID-19 vaccination stopped transmission,” Kobach said. “Pfizer later admitted that they’ve never even studied transmission after the recipients receive the vaccine.” Kobach is a nutjob, but he’s right on this one.

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Jakob Emerson, “27 health systems dropping Medicare Advantage plans,” Becker’s Hospital CFO Report, Oct 1, 2024 https://bit.ly/4eWgenK

More hospitals and health systems are cutting out MA plans over “excessive prior authorization denial rates and slow payments.” Reporters surveyed over 100 hospital CFOs and found that nearly half are considering ending their relationship with MA insurance; 62% of them find collecting from MA is “significantly more difficult” in the last two years. Greed killed the golden goose.

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D. Lipschutz, “Medicare Advantage industry blames 2025 service cut-backs on policy changes that hold them more accountable,” Center for Medicare Advocacy, Oct 3, 2024 https://bit.ly/3U3fcOT

Insurers are cutting back from the MA marketplace. What was once a “lucrative and fast-growing business” isn’t so attractive as the Feds tighten the reimbursement gravy train and curb prior authorization abuse. Result: plan closures, higher out-of-pocket costs, and fewer supplemental benefits. 

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Heather Landi, “AHA calls on feds to boost supply of IV solutions as some hospitals cancel elective procedures to conserve stock,” Fierce Healthcare, Oct 8, 2024 https://bit.ly/3Yi70Nh

Here’s a good illustration of why marketplace concentration is bad: Hurricane Helene has interrupted the supply of IV solution. “Baxter International, the top supplier of hospital IV fluids and peritoneal dialysis solutions, said that it would temporarily shut down production as its [North Carolina] plant was “significantly impacted by the rain and storm surge.” 

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Maggie Fick, “New Alzheimer’s drug deemed too costly for UK’s state-run health service,” Reuters, Aug 22, 2024 https://reut.rs/4h0iSdW

Pricey new drugs for Alzheimer’s patients of questionable utility and that carry dangers of serious side effects are not a good deal for Britain’s state-run health service. The drug is approved for use, but the UK government won’t pay for it. A regulatory board said it “cannot be considered good value for the taxpayer.” Our FDA isn’t allowed to include that criterion in its decisions.

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Melissa Barber, Joseph S. Ross, and Reshma Ramachandran, “One way to pay for weight loss drugs: CMS could buy Novo Nordisk,” STAT, Jul 23, 2024 https://bit.ly/3yafFHk

I think this is satire, but it’s paywalled. The authors pretend to argue that fat shots are potentially so expensive and such a burden on the Federal budget that it would be cheaper to just buy out the company. Wouldn’t that be socialism?

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Oliver Whang, “In states that won’t pay for obesity drugs, ‘They may as well have never been created,’” New York Times, Jun 25, 2024 https://nyti.ms/46uA5Hq

Articles like these are accurate as far as they go: people who want to get the fat shots and aren’t adequately insured lose out. But the narrative dovetails nicely with Pharma propaganda about how everyone should get slim through Ozempic, never mind the cost to the public purse. North Carolina gave up after spending $100 million on weight-loss drugs, equal to 10% of its total spending on pharmaceuticals. West Virginia would have spent 40% on the fat shots for its state employees; it canceled a pilot program. Blue Cross Blue Shield of Michigan paid a fifth of its prescription drug spending on them; it’s dropping the meds from most of its commercial plans.

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Dan Diamond, “FTC opens investigation into Teva, escalating patent fight with Pharma industry,” Washington Post, Jul 1, 2024 https://wapo.st/3LKQcY1

The FTC says Teva Pharmaceuticals abuses the patent system, tweaking their asthma inhalers in minor ways to refresh their exclusive marketing rights. The agency asked Teva and nine other companies a year ago to “voluntarily” take down 100 patents and added another 200 this past spring.

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Charles Piller, “All the Alzheimer’s research we didn’t do,” New York Times, Jul 7, 2024 https://nyti.ms/3YjFGhY

Alzheimer’s research is stuck in the amyloid paradigm and has been for years as scientists either suffer from confirmation bias or can’t get their non-amyloid studies past grant reviewers. “Unconventional ideas that do not offer fealty to the amyloid hypothesis often find themselves starved for funds and scientific mind share.” Promising alternative lines of research aren’t getting a hearing. The 2006 “breakthrough” finding that seemed to confirm the amyloid link was based on falsified data, exposed just in 2022. The article suggests this bottleneck might finally be weakening: NIH funding for different approaches jumped from virtually nothing to $250 million in 2023.

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Juliet Ferguson, Eurydice Bersi & Maxence Peigné, “How Big Pharma preys on poor countries—and patients pay the price,” Open Democracy, Jul 17, 2024 https://bit.ly/4f1pG9i

Because of confidentiality agreements, European governments have no idea of what each other is paying for a drug. As a result, wealthy countries get better deals and pay less. “A treatment that costs around 71,000 euros per year per patient in France will cost 175,000 euros in Lithuania.”

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Jamie Godwin, Zachary Levinson & Tricia Neuman, “One or two health systems controlled the entire market for inpatient hospital care in nearly half of metropolitan areas in 2022,” KFF, Oct 1, 2024 https://bit.ly/4dGNnmg

Ongoing consolidation in the hospital sector: “In more than four of five metropolitan areas (82%), one or two health systems controlled more than 75% of the market.”

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See the full archive at: www.nypan.org/single-payer-news-archive