The Big Pharma Lobby: Part 2

Further Elaboration on Lobbying and Public Health Implications

Lobbying Power Demonstrated

I want to start this section by providing an example of how Big Pharma has impacted governmental policies. Big Pharma’s influence in Washington is best exemplified by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Drutman). Specifically, Medicare Part D, a key part of the act, moved millions of patients from Medicaid to Medicare. Big Pharma encouraged this shift since Medicare receives lower drug prices compared to Medicaid (NCPSSM). The act also banned Medicare, America’s largest provider of medications, from negotiating drug prices with drug companies (NCPSSM).

In turn, Medicare is forced to over-pay for drugs. Since the enactment of Medicare part D, the government is said to spend about $80 billion a year on prescription medications (NCPSSM). All the while, the pharmaceutical industry has experienced an estimated $205 billion increase in revenue in the 10 years since the act’s implementation (Drutman).

No Price Caps

The United States does not place price caps on prescription drugs. Insurance companies and government sponsored social programs typically cover the costs with a high copayments (Paris).

The pharmaceutical companies defend this lack of regulation by attesting that higher prices are necessary because it funds their research and development of new medication (Lllamas). According to PhRMA, FDA-approved drugs are expensive to produce. They argue that other countries benefit from America’s price burden through cheaper prices.

Studies have refuted this defense. It’s difficult to identify the exact cost of research and development but its safe to say that the industries’ high profits and tax breaks would cover the expenses (Llamas). Additionally, research and development is only costly when initially trying to develop a drug. Eventual modifications of the drug are relatively inexpensive in comparison (Llamas).

Martin-Shkreli.jpg
Martin Shkreli, an American entrepreneur and  pharmaceutical executive,  legally hiked the price of Daraprim by more than 5,000% overnight in September 2015.

 

Effects on Public health

  • Poorer patients are vulnerable to the ever-rising costs of drugs. They maybe unable to shoulder the costs of medications or afford the higher co pay thus making the patient less likely to fill prescriptions (Ham).
  • Skipping prescriptions has numerous health implications on society. There is an inevitable uptick in the amount of emergency room visits due to an increase in health ailments such as heart and asthma attacks. Also, its reasonable to assume an increase in deaths will ensue (Ham).

Government Sponsored Monopoly

The US law governing the pharmaceutical industry grants pharmaceutical products long term immunity from outside competition (Engelberg). Federal law bans the FDA from approving a generic alternative for at least 7-12 years (Engelberg).

Pharmaceutical companies are legally allowed to maintain monopolies on drugs for years before generics or other cheaper version may enter the marketplace. These extra options drive down prices and give more bargaining power to insurers (Ludwig).

The absence of competing products keep prices artificially high. Drug companies also have less of an incentive to create new and improved drugs (Engelberg). Why would drug companies feel compelled to develop an enhanced a version of their current product when they already control the market and price (Engelberg)? It is more economically advantageous to wait out their monopoly period.

Effects on Public health

  • Insurers, social programs and patients are forced to pay premium prices for prescriptions for longer amounts of time. Higher prices for an extensive amount of years contributes to the same public health consequences previously outlined.
  • Pharmaceutical companies will be less inclined to develop more advance versions of their product. This may equate to a decline in the medication’s overall effectiveness. The prescription will work on a majority of individuals but modifications may be needed to benefit other potential patients.

Work Cited

Drutman, Lee. “How Corporate Lobbyist Conquered American Democracy.” The Atlantic, 20 Apr. 2015. Web 10 Dec. 2015.

Engelberg, Alfred. “How Government Policy Promotes High Drug Prices” Health Affairs Blog, 29 Oct. 2015. Web. 10 Dec. 2015

Ham, Becky. “Coping With the High Costs of Prescriptions.” Prepared patient Article. Center For Advancing Health (CFAH), ND. Web. 11 Dec. 2015.

Llamas, Michelle. “Big Pharma Cashes in on Americans Paying (Higher) Prices for Prescription Drugs.” Drug & Device Manufacturers. DrugWacth, 15 Oct. 2014. Web. Dec. 11 2015.

Ludwig, Mike. “How Much of Big Pharma’s Massive Profits Are Used to Influence Politicians?” Truthout, 30 Sept. 2015. Web. 11 Dec. 2015.

“Negotiating for Lower Drug Costs in Medicare Part D.” Entitled to Know. National Committee to Preserve: Social Security & Medicare (NCPSSM), n.d. Web. 12 Dec. 2015.

Paris, Valerie. “Why do Americans spend so much on pharmaceuticals.” Health. PBS NEWSHOURS, 7 Feb. 2014. Web. 11 Dec. 2015.

Hyperlinks

Pollack, Andrew. “Drug Goes From $13.50 a tablet to $750, Overnight.” Business Day. The New York Times, 20 Sept. 2015. Web. 13 Dec. 2015.

Pharma: Research, Progress, Hope. N.d. Web. 14 Dec. 2015.

 

 

 

The Big Pharma Lobby: Part 1

Laying the Foundations

Our country has had lobbying as long as we have had politics. Even in the 1950s and 1960s, political lobbying was balanced among labor unions and other public-interest groups (Drutman). The key difference between then and now is that then, very few companies arranged for lobbying on their behalf in Washington. Lobbyists believed that their ability to be politically influential and guide votes was greatly inhibited by their lack of clients and contributors (Drutman).

The relationship between the government and corporations has shifted over the years to that of partners. Corporations discovered that they could invest in politics and oversee policies through involvement on The Hill. In turn, since the early 2000s, corporations have spent about $2.6 billion a year on lobbying expenditures among the House and Senate (Drutman).

What industry spends the most on lobbying? Is it the oil and gas lobby with its big name members like Exxon Mobile, Koch Industries and BP (OpenSecrets)? Or perhaps the securities and investment lobby which caters to the interests of hedge funds and private investment firms (OpenSecrets)?

It’s actually neither. The biggest spender is the pharmaceuticals and health product industry, also known as Big Pharma.

A Closer Look at Big Pharma’s Political Investments

From 1998 to 2014, it is estimated that Big Pharma spent a colossal $2.9 billion on lobbying expenses.   In 2012 alone, the companies spent a collective $51 million in  federal elections, the majority of which was funneled to republicans (Ludwig). Before continuing, it’s important to note that these companies comprise some of the most profitable businesses in the world. The top 15 pharmaceutical companies garnered sales of $527 billion in 2014.

Considering the evidence above, do you think it’s a coincidence that drug prices are left to the impulses of the market place? Or that some cancer medications are 600 times more expensive in the United States than other developed countries (Ludwig)? I would venture that it is not. I would even go as far to say that Big Pharma’s funneling of billions into Washington has allowed them to maneuver votes and regulations in their favor.

The following is a variety of policies that have been pushed and lobbied for by Big Pharma to maintain or increase their profits.

  1. Big Pharma lobbied for loopholes in the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (Ludwig). Specifically:
  • Prevents Medicare from negotiating drug prices with drug companies
  • Medicare “Part D” of the legislation has increased industry profits
  1. The US government places no caps on drug prices unlike other developed countries
  2. The US government protects companies from market competition via strict patent and trademark laws

In Post 2, I will elaborate on the regulations above and discuss how items 2 and 3 affects our nation’s public health.

Work Cited

Drutman, Lee. “How Corporate Lobbyist Conquered American Democracy.” The Atlantic, 20 Apr. 2015. Web 10 Dec. 2015.

Ludwig, Mike. “How Much of Big Pharma’s Massive Profits Are Used to Influence Politicians?” Truthout, 30 Sept, 2015. Web. 11 Dec. 2015.

“Pharmaceuticals/Health Products.” Influence and Lobbying. OpenSecrets, 16 Oct. 2015. Web. 11 Dec. 2015.

Hyperlinks

“Big Pharma.” DrugWatch, n.d. Web. 11 Dec. 2015

Staton, Tracy. “The top 15 pharma companies by 2014 revenue.” Financials. Fierce Pharma18 Mar. 2015. Web. 13 Dec. 2015.