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Pharmaceutical Mafias:

Bribery, Fraud, & Extortion

The Rich Bribing Congress

Kyle Willis, an unemployed father with no health insurance, couldn’t afford to pay a dentist to pull out a painful wisdom tooth.

  • He eventually went to the emergency room with a swollen face.
  • The doctor prescribed antibiotics and pain medicine.

  • He couldn’t afford both, so he chose the pain medicine.
  • The infection spread and he died.

Almost 1 in 5 Americans report not filling a prescription because of the cost.

Bribery & Corruption Made Our Medicines Expensive

Americans pay the highest drug prices in the world by far.  Most people in other countries pay only a fraction of what we pay.

  • Americans spent $535 billion on prescription medicines in 2018.

Our government buys more medicines than any other entity in the world.

But unlike every other country in the world, the US does not negotiate or regulate drug prices.

Drug company lobbyists wrote a 1,000-page bill outlawing Medicare from negotiating better bulk drug prices.

  • Drug companies spent $116 million on the bill.
  • They flooded Congress with twice as many lobbyists as there are members of Congress.
  • They filled legislators’ bank accounts with campaign contributions.
  • Members of Congress received the 1,000-page bill less than 24 hours before the scheduled vote.
  • Congressman Billy Tauzin helped push the bill through at 3 am to avoid public scrutiny.
  • Tauzin later became president and CEO of the leading pharmaceutical industry trade group.

Experts believe simply negotiating prices like other countries do would save $150 billion each year.

In the last 20 years, pharmaceutical companies spent $4.2 billion lobbying, compared to $1 billion for defense and aerospace contractors.

Pharmaceutical Fraud Kills Many Tens of Thousands

Between 1991 and 2017, there were 412 criminal and civil cases of medical fraud settled for over $1 million each, totaling $38.6 billion.

Many of the largest drug companies have paid billions of dollars in fines.

The most common fraud was overcharging the government for medicines, but many lawsuits involve hiding deadly side effects.

Drug companies often kill people when they hide deadly side effects.

  • When Merck hid evidence of heart problems from Vioxx, our government estimated it caused between 88,000 to 140,000 serious cases of heart disease. Experts believe around 50,000 people died from it.
  • When GlaxoSmithKline hid evidence of cardiovascular problems with the diabetes drug Avandia, our government estimated it caused 83,000 extra heart attacks. Experts believe about 36,520 died from it.
  • Researchers studied just 5 medicines our government found fraudulently marketed and estimated the cost of illness and death from them to be over $382 billion.

Drug companies also seek government approval for drugs for one specific, narrow use, hiding dangerous side effects in other populations or for other uses.

After getting approval, they illegally but aggressively promote the drug for the other off-label uses.

Drug company fraud has killed far more than 100,000 people, likely over 200,000.

Yet the criminal fines on drug companies are tiny compared to their profits.

  • Drug companies view the $38.6 billion in fines from 1991 to 2017 as just a cost of doing business.

In 2017 alone, 23 pharmaceutical companies reported total combined revenues over $712 billion!

We should punish drug companies for fraud in the manufacture or sale of a medicine by:

  • taking away their patent to that medicine
  • jailing executives for fraud
  • and/or kicking them out of Medicare or Medicaid programs

Greedy Pharmaceutical Extortion

Some AIDS patients and transplant patients desperately need the anti-parasitic drug Daraprim.

  • Before 2010, it cost only $1 a pill.
  • It still costs $1 or $2 a pill abroad.
  • In just one month, Turing Pharmaceuticals raised the price of Daraprim from $13.50 per pill to $750 each.
  • Desperately ill patients need 2 or 3 pills a day for weeks or months.

In 2015, Valeant bought the rights to the heart drug Isuprel and raised the price of one vial from $440 to $2,700.

Acthar is an old drug developed in the 1950s used to treat 19 different conditions, including lupus, multiple sclerosis, and very dangerous seizures in infants.

  • Its price skyrocketed from $40 a vial up to $40,600 over the last 18 years.

Insulin has been available for almost a century, yet its price has skyrocketed from $30 a vial over the last 20 years to $280.

  • In other countries, it still costs between $16 and $30.
  • Many diabetics in America, even with insurance, can’t afford the many vials they need each month.
  • In one study, 1 in 4 diabetics ration their insulin, which can lead to death within hours or days.
  • In the long run, rationing insulin can cause far more costly blindness, kidney failure, amputation, heart disease, or stroke.

Some cancer drugs cost $400,000 a year.  Some gene therapies cost $2 million.

One medicine for Duchenne muscular dystrophy, a rare and often fatal childhood disease, costs $1 million.  After 3 years on the market, we still don’t know if it improves or extends lives.

In just one year, the average price of over 1,200 brand name medicines jumped to 5 times their previous cost.

Even the cost of many old, generic medicines have been skyrocketing.

  • For example, 500 tablets of the antibiotic doxycycline hyclate went from $20 to $1,849 in just 6 months!

Patients used to get the medicine that became Firdapse for free under our government’s compassionate use program.

  • When our Food and Drug Administration (FDA) approved Catalyst Pharmaceuticals to sell it as Firdapse, they charged $375,000 for one year’s treatment.

There is no reason for the vicious greed of pharmaceutical companies.  They are the most profitable companies in the world.

  • Drug companies consistently show far greater net profits after taxes than all other Fortune 500 companies.
  • For example, in 2018, Gilead Sciences had a 44% profit margin and Pfizer had a 37% profit margin.

The greed of our drug companies is simply extortion.

  • People without insurance (or with poor quality insurance) who can’t afford expensive treatments like cancer medicines simply die.
  • Over ¼ of cancer patients cut back on treatment because of its cost.
  • Some of them stop treatment in order to save their families from poverty.
  • Drug companies extort many of these patients of nearly every penny they have.
  • Over 40% of Americans who get cancer lose their entire life savings within 2 years.

We Pay to Develop Medicines, Then Drug Companies Screw Us

We spend $30.9 billion of our taxpayer dollars on biomedical research every year and much of it benefits drug companies.

  • Over 80% of all funds for basic research to discover new drugs and vaccines come from public sources.
  • US taxpayers paid over $100 billion for research to help develop ALL 210 of the new medicines our FDA approved between 2010 and 2016

Israel and Finland both keep equity in companies that profit from government research.

But after paying for all the basic research, we hand them over to pharmaceutical companies that royally screw us.

For example, Sovaldi treats hepatitis C, which causes serious liver damage and even liver cancer.

  • Without Sovaldi, you can die a horrible death extremely weak and tired, very confused, itchy, malnourished, with no appetite and an extremely bloated belly, perhaps vomiting blood.
  • Researchers at Emory University spent ten years discovering, developing, and testing Sovaldi using mostly government funding.
  • A small biotech company bought it first, then got bought out by Gilead, which only paid for the very last phase of testing it.
  • The two private companies spent no more than $200 million developing it.
  • It only costs a few pennies a pill to make Sovaldi.
  • India sells the full 12-week course of Sovaldi for just $500 and Egypt makes it for $330, giving it free to sick Egyptians.
  • Gilead charges Americans $1,000 a pill for Sovaldi, making a full 12-week course $84,000.
  • Most Americans who need Sovaldi can’t afford it.
  • In just one year, Medicare and Medicaid (us taxpayers) paid Gilead $6 billion for Sovaldi.
  • By the end of 2017, Gilead made over $50 billion on Sovaldi.
  • Gilead counts its profits in Ireland to avoid US taxes, even though no drug development takes place there.
  • Gilead’s CEO is now a billionaire.
  • Some insurance companies refuse to pay for Sovaldi.
  • Most insurance companies refuse to pay for it until your liver has cirrhosis.
  • Using Sovaldi to cure hepatitis C after you already have cirrhosis makes it very likely you will eventually die of cirrhosis, with or without liver cancer.

This is insane.  Our government should have just finished the testing of Sovaldi, then sold it at the cost of production.

This would have saved tens of millions of people from liver cirrhosis, cancer, and death.

Another example is the cancer drug Taxol.

  • Our taxpayer money developed Taxol right through clinical trials.
  • Then our government gave it away to Bristol-Myers Squibb.
  • Now it costs up to $20,000 a week and Medicaid (us taxpayers) often pays for it.

The skyrocketing price of a two-pack of EpiPens, the shots for life-threatening allergy attacks, is a very similar story.

  • This 100-year old medicine may only cost a dollar.
  • Our Defense Department developed the injector technology 40 years ago for quick antidotes.
  • Mylan bought the rights to EpiPen, then kept raising the price for a two-pack from $50 to $600.
  • The pay of Mylan’s CEO skyrocketed by $17 million.
  • And Mylan moved its headquarters offshore to avoid US taxes.

Our foolish rules force Medicare to pay for almost every approved cancer treatment, no matter what the company decides to charge.

Studies show 71 of the most expensive new cancer medicines only prolong a patient’s life for 2.1 months.

Drug Companies Waste Money & Cheat Us In Other Ways

In 2015, the top 100 pharmaceutical companies, on average, spent only 8.32% of their revenues on research.

Instead, 27 of them spent over 10 times as much on marketing and sales as on research.

Drug companies now spend $30 billion a year on marketing.

  • About $20 billion of this goes to target doctors and other medical professionals with 50,000 sales reps to manipulate them into prescribing the more expensive medicines.
  • They often spend tens of millions of dollars to promote just one medicine.
  • In 2015 alone, AbbVie spent $357 million on advertising Humira to consumers.

In the last 10 years, pharmaceutical companies spent over $2.3 billion on lobbying.

  • Their lobbyists bypass the $2800 per candidate limits on fundraising by hosting fundraising events and bundling contributions.

Clearly, these companies force sick people to pay for their enormous marketing, advertising, and lobbying campaigns.

They also waste money in many other ways.

  • They spent over $62 million on the 2016 Congressional elections alone.
  • When Trump’s tax bill saved pharmaceutical companies $76 billion, they spent $45 billion of it on stock buybacks to enrich their CEOs and shareholders.
  • Since 2006, drug companies listed in the S&P 500 have spend more money on stock buybacks and dividends than they have on research and development.

And they manipulate our patent system to cheat us.

  • They constantly sue each other to establish or invalidate patents.
  • Brand name companies often pay generic companies to delay cheaper medicines, an illegal tactic in Europe. These deals cost American consumers at least $3.5 billion each year.
  • For example, Gilead sued every generic company that tried to compete with their HIV prevention medicine Truvada, settling with each for likely millions of dollars in “pay for delay” deals.
  • In Australia, Truvada costs $8. In South Africa, it costs $6.  In America, it costs $1780.
  • They often buy out competitors to ensure market monopolies and high prices.
  • They waste research time tweaking old drugs to create new copycat medicines with no real benefits except to maintain obscene profits when a patent is about to expire.
  • For example, they might change its chemical composition slightly, change a medicine from twice a day to a once a day version, create an extended-release version, or just add a stripe to the pill to create a new 20-year patent.
  • A 2018 study found 78% of new drug patents in the last 10 years went to old medicines with small tweaks.
  • Of almost 100 best selling drugs, 78% extended their patents more than once.
  • They file “citizen petitions” with the FDA to raise concerns and question the medicines of competing companies.
  • They limit distribution of their medicines so other companies can’t get enough to prove their medicines are equivalent.

Because of all this waste, most new medicine patents involve no real breakthroughs over existing drugs.

  • For example, the cholesterol drug Vytorin works no better than older medicines, yet it costs 20 times as much.

A study of new medicines approved in Europe, too, found no real breakthroughs between 2000 and 2014.

Generic companies have merged, so that one company now makes 40% of all generic medicines and most medicines are made by only one or two companies.

This leads to both skyrocketing prices and also shortages during production problems.

  • For example, 44 states have sued 20 major generic drug manufacturers for manipulating and inflating prices of hundreds of drugs, including cancer, HIV, diabetes, epilepsy, and depression medicines.
  • The total cost of these artificially skyrocketing prices came to billions of dollars.
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