“Our Sick Drug Business”: Congress Writes Laws To Enrich Drug Companies At The Expense Of American Consumers
Sometimes the road to hell is paved with bad intentions. A company adopts a business model so twisted that justice must come clanking down on its executives and bankrollers. Justice is now being served on Valeant Pharmaceuticals International. Evil this blatant is headed for the full Hollywood treatment.
Valeant preys on sick people by acquiring essential drugs and then multiplying their price for a fast profit. Example: Upon buying the maker of Cuprimine, a 53-year-old drug that treats a rare genetic disorder, the Canadian company hiked its price 5,787 percent. Example: After obtaining the rights to two heart drugs, Isuprel and Nitropress, Valeant jacked up their prices by 525 percent and 212 percent, respectively.
Charlie Munger, the vice chairman of Warren Buffett’s Berkshire Hathaway, called Valeant a “sewer” at the conglomerate’s recent annual meeting. If the burning fires of hell are not available, a sewer will do.
Get this: Valeant charges Americans almost 100 times more for flucytosine than it does Britons. Used to treat cryptococcal meningitis, flucytosine costs $2,000 a day in the United States, versus $22 a day in Britain.
How could this be? Ask your Congress.
From the Medicare drug benefit on up, it has written laws to enrich drug companies at the expense of American consumers and taxpayers. Valeant’s going down not because it was greedy but because it was insanely greedy.
Calling Valeant a “drug company” is problematic because it’s not much into researching and developing new medications. “Bet on management, not on science,” its outgoing CEO, J. Michael Pearson, was fond of saying.
It takes some doing to provoke the U.S. Senate to hold a hearing on a drug company’s pricing. In this, Valeant (and previously Martin Shkreli’s Turing Pharmaceuticals) succeeded.
Under the harsh lights, Pearson conceded that his company made “mistakes.” His big mistake was not recognizing that even the most pliable champions of America’s medical-industrial complex have their limits.
Pearson’s description of Valeant’s program offering price breaks for hospitals that use some of its drugs didn’t glow for long. Hospitals responded that when they tried to obtain those alleged discounts, they got nowhere. Valeant didn’t answer their emails. It didn’t answer the phone.
What else made Valeant think it could get away with such anti-social behavior? No doubt Wall Street’s willingness to invest in its money-raking scheme contributed. Hedge fund giant William Ackman was Valeant’s leading pitchman, enticing other big funds to join in the pillage.
Valeant has problems in addition to a business model so repugnant it couldn’t be allowed to live. Among them is a high pile of debt. And its accounting practices aren’t so hot, either.
Thus, it’s no huge surprise that Valeant’s stock price has collapsed 85 percent since last summer. Ackman’s Pershing Square Capital Management and other hedge fund participants have lost billions.
Ackman told the hearing that his fund was not entirely aware of Valeant’s drug pricing policy. He was a “passive” investor, he said. Somehow the truth would have seemed less damning. Are we to believe that Pershing Square poured $4 billion into a company without inquiring as to how it made money?
In an almost comical exchange with the senators, Ackman said: “I totally get it. We’re going to come up with an appropriate (drug) price based on an appropriate rationale.”
All is not forgiven. Investors lost billions, but patients may have lost far more.
One hopes that spotlighting this egregious gouging on drug prices won’t deter attention from the lower-level daily gouging that our laws enable. The only remedy for that, frankly, is new lawmakers.
By: Froma Harrop, The National Memo, May 3, 2016
“Drugmakers Add Insult To Injury”: They Know How To Make Government Work For Them
It’s one thing for Pfizer to renounce its U.S. citizenship, moving its official residence to Dublin, Ireland, as a tax dodge — all the while continuing to run the business in the United States. That disgusting tactic happens to be disgustingly legal, thanks to our indolent Congress and its failure to fix the corporate tax laws.
It’s quite another to insult the public with blatant phoniness that avoiding billions in U.S. taxes gives the company “the strength to research, discover and deliver more medicines and therapies to more people around the world.” Those are the words of Pfizer’s chief executive, Ian Read, an accountant by training.
The Pfizer deal involves a merger with a much smaller Allergan, an Ireland-based company that happens to do its business in New Jersey. Wall Street analysts scoffed at the notion that the deal had any purpose other than to let the company avoid billions in U.S. taxes — billions that other American taxpayers will have to replace.
Since Read took the helm in 2010, Pfizer has slashed its research and development budget.
We assume the company will expect the United States to continue subsidizing research through the taxpayer-supported National Institutes of Health. We assume it wants the U.S. government to continue defending its intellectual property rights.
Pfizer made headlines more than a decade ago when it persuaded the city of New London, Connecticut, to use eminent domain to seize a working-class neighborhood around its shiny new headquarters — and replace it with an upscale shopping, hotel and office complex more to the company’s liking. Actually, it was a condition of its move to the city, according to The Day in New London.
The Supreme Court gave the controversial plan a green light in 2005. Four years later, Pfizer abandoned New London.
Yes, the drugmakers know how to make government work for them. Their lobbying group, the Pharmaceutical Research and Manufacturers of America, leads efforts to ensure that Americans pay far more for their products than citizens of other countries.
The drugmakers’ crowning achievement was getting a Republican-controlled Congress to write a Medicare drug benefit law to their specifications. While funneling billions in taxpayer subsidies toward helping the elderly buy drugs, it forbade the U.S. government to negotiate the prices on behalf of said taxpayers.
No other Western country lets drug companies charge whatever they think they can get away with. This is why the government of Norway pays about $460 for an injection of the asthma drug Xolair and our Medicare pays about $860.
(Pfizer also lobbied against proposals to let Americans buy their drugs from other countries at these lower prices.)
These conversations always circle back to the drugmakers’ argument that Americans must pay their price to cover the high expense of developing wonderful life-enhancing products.
We can close that circle by asking: To the extent that high U.S. drug prices support research and development benefiting the world, why are Americans the only ones footing the bills?
The drugmakers don’t talk much about that publicly for a very simple reason. It is not in the interests of their executives and investors to stop Americans from playing the chump. If they can get the job done by writing checks to obedient U.S. politicians and the chumps keep re-electing them, why make trouble for themselves?
In a recent annual report, Read told shareholders of Pfizer’s desire to earn “greater respect from the public,” which entails “acting as a respectable corporate citizen.”
Read may have reason to take the American public for easily deceived children. Basic decency, however, demands that he limit such thoughts to private dinner parties.
By: Froma Harrop, The National Memo, December 3, 2015
“Stupid Pills”: The Politics of Fraudulent Dietary Supplements
One pill makes you smarter. One pill makes you thin. One pill makes you happy. Another keeps you energized. And so what if tests conducted by scientists in New York and Canada have found that the substances behind these miracle enhancements may contain nothing more than powdered rice or houseplants. If enough people believe they’ll be healthier, well, it’s a nice racket.
Nice, to the tune of $13 billion a year in sales. And here in Utah, which is to the dietary supplement business what Northern California is to marijuana, a huge industry has taken hold, complete with a network of doctors making unproven claims, well-connected lobbyists and entrenched politicians who keep regulators at bay.
If you want to know how we came to be a nation where everyone is a doctor, sound science is vilified and seemingly smart people distrust vaccinations, come to Utah — whose state flower should be St. John’s wort. Here, the nexus of quack pharma and industry-owned politicians has produced quite a windfall: nearly one in four dollars in the supplement market passes though this state.
We’re not talking drugs, or even, in many cases, food here. Drugs have to undergo rigorous testing and review by the federal government. Dietary supplements do not. Drugs have to prove to be effective. Dietary supplements do not.
These are the Frankenstein remedies — botanicals, herbs, minerals, enzymes, amino acids, dried stuff. They’re “natural.” They’re not cheap. And Americans pop them like Skittles, despite recent studies showing that nearly a third of all herbal supplements on the market may be outright frauds.
The labels say Ginkgo biloba, or ginseng, or St. John’s wort. But testing announced by the state of New York this week found that the Ginkgo biloba sold by Walmart, for example, contained no Ginkgo biloba DNA — it was a mixture of rice, mustard, wheat and radish.
Some of the country’s largest retailers are selling junk in a pill, a step removed from sawdust. Counting on the stupidity of consumers, the big chains don’t seem to care. As of Thursday, four days after Eric T. Schneiderman, the New York State attorney general, asked retailers to pull the tested products from their shelves in his state, you could still go to Walmart online and buy the allegedly fraudulent products.
So, there is Spring Valley echinacea — with a bold label reading: Immune Health — selling for $8.98 a bottle on Walmart’s website. It comes with a handy “customer review,” touting an “Excellent quality product!” This about a substance that contained no echinacea, according to the attorney general.
Too bad it takes Canada, or the maverick work of someone like the New York attorney general, to get at the truth of this industry, because it is so well-insulated from federal government oversight. Schneiderman’s investigation was prompted by an article in The New York Times Science section, reporting on Canadian findings that some of the most popular supplements were nothing but cheap fillers.
To understand how we got here, you have to go back to 1994, when Senator Orrin G. Hatch of Utah midwifed through Congress a new industry protected from all but minimal regulation. It is also an industry that would make many of his closest associates and family members rich. In turn, they’ve rewarded him with sizable campaign contributions.
Even though serious illnesses, and some deaths are on the rise from misuse of these supplements, Hatch is determined to keep regulators at bay. “I am committed to protect this industry and the integrity of its products,” he told a gathering of potency pill-pushers and the like in Utah last fall.
In the past, Hatch has been remarkably blunt about helping his family and friends in the fake drug trade. “I do whatever they ask me to do many times because they’ve never asked me to do anything that is improper,” Hatch said in 2011. He was referring to the firm of his son, Scott Hatch, a longtime lobbyist for the supplement industry.
That’s the political side, an all-too-familiar story of mutual beneficiaries born in the halls of Congress. But what about the medical implications? These pills and powders can’t, by law, make specific claims to cure anything. So they claim to make you healthier. The consumer is left playing doctor, reading questionable assertions that course through the unfiltered garbage of the Internet.
“There’s a lot of wrong information out there,” warns the American Cancer Society, in its tutorial on these products. “Even for those who are usually well informed, it can be hard to find reliable information about the safe use and potential risks of dietary supplements.”
And there was this finding reported in the authoritative Annals of Internal Medicine: “Enough is enough: Stop wasting money on vitamin and mineral supplements.” Oh, those elites at the American College of Physicians, what do they know?
So, the industry keeps growing, with 65,000 dietary supplements now on the market, consumed by nearly half of all Americans. The larger issue is mistrust of authority, a willful ignorance that knows no political side. Thus, right-wing libertarians promote a freewheeling market of quack products, while left-wing conspiracy theorists disdain modern medicine in favor of anything sold as “natural” or vaguely countercultural. These are some of the same people who will not vaccinate their children.
Everyone wants to live longer, to be happier, to have better sex. And, if you think you can do it without exercise, or eating enough vegetables, or getting regular sleep, there are a thousand pills for you, sold not far from the candy counter. It’s all based on the honor system. If you trust them, go buy some possibly Ginkgo biloba-free Ginkgo biloba, and thank Orrin Hatch for the unfettered right to be a sucker.
By: Timothy Egan, Contributing Op-Ed Writer, The New York Times, February 6, 2014
“From The Roberts Fab Five”: With No Accountability Or Liability, Generic Drug Companies Get Even More Immunity
Monday’s U.S. Supreme Court ruling immunizing drug companies from lawsuit for egregious injuries wasn’t terribly surprising for those who have been following along. Two years ago, in a case called PLIVA v. Mensing, the U.S. Supreme Court held that generic drug companies were largely immune from lawsuits alleging their failure to warn of harmful consequences. On Monday, in a 5-4 ruling along ideological lines, the court extended this holding to apply to other types of claims against generic drug manufacturers, and held that a federal statute precluded suit by a woman who incurred burns on 60 percent of her body and was rendered legally blind by an alleged drug defect.
This ruling was a predictable addition to the line of cases immunizing big business from liability, but it was not an inevitable follow-up to PLIVA. In conjunction with two other rulings Monday that stomped on workplace protections for minorities and women, this decision brings the top corporate lobby’s win rate before the U.S. Supreme Court term to 13-3. With one case remaining in which the Chamber of Commerce weighed in, it is clear that however that final case is decided, big business won very big at the expense of the little guy.
As has been a frequent practice by the Roberts Court, the five-justice majority found that federal law trumped state law protecting patients, over protestations from the four dissenting justices that both federal and state law could co-exist. Interpreting a federal law requirement that generic drug companies simply follow the warnings and design of the brand name drug, the court held that generic companies cannot be held liable for its flaws. This means that a generic company that distributes a dangerous product has no obligation to simply stop selling that drug, and can go on dispensing the potentially dangerous substance with immunity. As Justice Sonia Sotomayor wrote in dissent, the court justified its holding through “an implicit and undefended assumption that federal law gives pharmaceutical companies a right to sell a federally approved drug free from common-law liability.”
The majority holding in this case overturned a $21 million verdict — upheld by the appeals court — for the plaintiff’s alleged injuries. Now, the company owes nothing. With 80 percent of U.S. prescriptions filled by generics, this ruling not only wipes away generic manufacturers’ responsibility to halt the sale of dangerous products; it also impacts safety for the great majority of consumers.
According to a Public Citizen report released Monday, much of the safety information about a drug emerges after FDA approval, once the drug enters the market. And it is often not the case that the FDA revisits approval. As Justice Stephen Breyer explains in his dissent, it is “far more common for a manufacturer to stop selling its product voluntarily after the FDA advises the manufacturer that the drug is unsafe and that its risk-benefit profile cannot be adequately addressed through labeling changes or other measures” than for the FDA to formally withdraw approval based on new information.
In the wake of the PLIVA decision, members of Congress had asked FDA to revise its regulations in ways that will now be doubly essential to consumer safety. In the absence of clarity from Congress or the FDA, today’s decision paves the way for a whole lot of malfeasance.
By: Nicole Flatow, Think Progress, June 24, 2013
“How Safe Are Pharmaceutical Supply Chains?”: An Organizational Mindset Is Necessary, Even If Costly In The Short-Term
GlaxoSmithKline announced this week that it is recalling some of its asthma drug Ventolin. The reason: its contract manufacturer said that the syrup bottles might have been contaminated with glass particles.
Last fall, in what 60 Minutes described as “the worst pharmaceutical disaster in decades,” 48 people died in a meningitis outbreak that was traced back to contaminated production in a compounding pharmacy in Massachusetts. The New York Times reported that the U.S. is suffering from a shortage of injectable drugs caused by quality failures at large manufacturers such as Hospira.
As a result of these and other stories, the quality of our medicines, or more precisely the failure in quality, has gained widespread attention.
Many believe the solution is to increase business investment in capital equipment. Hospira announced last year that it would spend hundreds of millions of dollars on a new state-of-the-art plant and quality and operations specialists. David Gaugh, vice president for the Generic Pharmaceutical Association, said that the perception that injectable drugs are produced in run-down facilities was “absolutely not true” and compared them to well-maintained vintage cars. This focus on technology might appear reasonable; but it is not sufficient.
The only way to guarantee that no defective drugs are ever produced is to never produce any drugs. None of us wants a world without medicine, and thus, we must live with some risk of quality failures in our drug supply chains. Because testing pharmaceuticals for every theoretically-possible contaminant or process deviation is prohibitively expensive if not impossible, drug quality must be built into the product through well-designed production processes, the use of quality ingredients and the consistent adherence to quality control procedures.
Aware of this, regulators long ago established “Good Manufacturing Practices,” known as GMPs, in the pharmaceutical industry. Operating in full compliance with these legally-required GMPs greatly reduces the risk of contaminated or misformulated product reaching the market. It seems that many of the plants highlighted in recent reports were not adhering to GMPs.
To address the problem, it is necessary that executives develop a quality-oriented mindset across the entire supply chain. For example, are employees empowered and encouraged to report deviations from GMPs, even if doing so is costly in the short term? Are deviations investigated and corrective actions put in place, even if doing so requires failing to meet promised delivery dates? Absent such an organizational mindset, quality failures will occur even with the best technology.
This soft side of quality management does not come easily. It often takes years of time to embed in a company, and even a longer time to regenerate if the culture has been undermined. Our research (with co-authors) has found that is difficult for companies to prevent a “decay” in GMP adherence even in their own factories.
When production is outsourced, ensuring adherence is more challenging. Recognizing this, the Food and Drug Administration is currently seeking comment on a “Guidance for Industry” document on quality agreements in contract manufacturing. The document focuses on clarifying responsibilities. Most companies engage in some form of certification, facility audits and product inspections with their contract manufacturers. While clear responsibilities and such actions can help to ensure quality at contractors, they do not guarantee consistent day-to-day adherence to good manufacturing practices.
Using FDA inspection data, we (and co-authors) have studied quality risk in the pharmaceutical industry. In one set of studies, we found that plants in a location with a different primary language than the firm’s headquarters operate with less GMP compliance than those with no language difference. Regarding outsourcing, we did not find an overall difference in quality risk between company-owned plants and contract manufacturer plants.
However, we did find a higher quality risk for small contract manufacturers and those subject to less regulation. Given this, we were not altogether surprised that these lightly regulated, small compounding companies like NECC were found to operate with high quality risk.
Taken together, our research provides empirical evidence that drug manufacturers are hard-pressed to consistently maintain high quality operations even in their own domestic facilities. This challenge is magnified when production is performed in offshore and outsourced plants. Our study and related studies reinforce the recent call to increase FDA regulatory scrutiny of compounders; this is clearly necessary and will help prevent future tragedies such as the recent meningitis outbreak.
However, regulatory and technical solutions alone are not adequate—an organizational mindset of compliance with GMPs is necessary throughout a drug’s supply chain, even if developing and maintaining this mindset is costly in the short-term.
By: John Gray, Aleda Roth & Brian Tomlin, U. S. News and World Report, June 21, 2013
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