James Madison penned in the Federalist Papers “You must first enable the government to control the governed; and in the next place, oblige it to control itself.” In these 232 years later, like many people, I’m wondering what happened to the government that was once able to “control itself” and is now riddled with controversy and corruption. While there are many issues of contention, let’s discuss just one for today: mega corporations and how they influence political decisions. Actually, let’s take it one step further… Big Pharma and the high price of medications.
Big Pharma Spends Big Money for Political Gain
On February 26, top executives from seven major pharmaceutical companies testified before the Senate to discuss the high price of prescription medications and what can be done about it. From those watching on the outside looking in, it appeared to be a pretty good show as the members of the Senate Finance Committee grilled these captains of industry and raised their voices in outrage and disgust. However, there was some critical background information that was conveniently kept quiet during the process. As Forbes poignantly revealed, “the seven companies set to appear before the Senate Finance Committee have contributed some $1.6 million to the campaign committees of 27 out of 28 current members of the Finance Committee.”
Equally disconcerting is that while high pharmaceutical prices has become a bipartisan issue, Big Pharma giving is also bipartisan. “In 2017 and 2018 alone, Pfizer contributed over $2 million to federal election campaigns–Merck and Abbvie both spent nearly $1.2 million,” reports Forbes. “Beyond the company PACs, a few of the CEOs testifying Tuesday have made individual contributions to some of the senators who sit on the finance committee. Merck CEO Ken Frazier has spent some $90,000 on federal election campaign contributions in the last decade, $40,000 of which has gone toward current members of the finance committee.”
The Blame Game
With pharmaceutical prices frequently being in the spotlight, politicians are finding themselves being pulled by the purse strings of wealthy pharmaceutical execs who spent $28 million in 2018 lobbying and millions of voters who are angrily voicing their opinions on social media and in the poll booths.
So how did the pharma execs respond to the outcries of their astronomical prices? Not surprisingly, they passed the buck. NBC News shared that, “The drug companies argued that rebates, usually geared to financially benefit the third-party pharmacy benefit manager who manage the negotiation of drug prices, actually drive up costs for consumers.” They also blamed insurance companies for taking a high cut of the profit.
Medicare was also tossed into the ring since this agency involved some of the largest price inflated drugs occurring over a five-year period. Price negotiations, drug imports from other countries, and allowing the federal government to offer non-exclusive licenses could be viable options to lower these high Medicare costs.
When asked if the government should regulate prices, expectedly, the answer was a firm no from the industry panel. Giovanni Caforio, CEO of Bristol-Myers Squibb, said that, if anything, lawmakers should get behind drug companies’ efforts to help those in need of medical solutions.“American research-based companies are leading the next wave of biomedical innovation to help patients whose diseases cannot be adequately treated with today’s medicines. We should work to ensure policies that support and reward these investments.”
Is Marketing Contributing to High Drug Costs?
Of course pharmaceutical companies need to recoup the funds that they invest into research and development, FDA approval applications, and more, but there’s a difference between making a profit and ripping off the American people. In 2015, the big story that came out was that nine out of 10 major pharmaceutical companies spent more on sales marketing than researching new drugs; many of these companies – including Johnson & Johnson, Pfizer, and GlaxoSmithKline – spent almost double on their marketing than on R&D.
Fortune Magazine even states that, “Between 1997 and 2016, industry spending on marketing grew from $17.7 billion to $29.9 billion, largely owing to direct-to-consumer ads and marketing to health professionals to promote medicines.” Watch television for any length of time and you’ll find this to be true with the influx of ads from meds to help your bowel disorders to those promising to ease your arthritis pain.
Results of Big Pharma Hearing
So how should high drug prices be regulated by Big Pharma and politicians?
“The system itself is complex and it is interdependent, and no one company could unilaterally lower list prices without running into financial and operating disadvantages,” Kenneth Frazier, chairman and chief executive officer of Merck, said. “But if we all bring parties together around the table with the goal of doing what’s best for the patient, I think we can come up with a system that works for all Americans.”
Did you find the answer? Me neither.
Apparently the solution is to have more meetings. But it’s not time to get discouraged, yet. These conversations are strikingly similar to issues of the past including the infamous tobacco hearings and confronting Wall Street banks. While undoubtedly these industries contributed big bucks to politics, the voice of the people was louder. We may not be able to stop political donations, but many believe that change is on the horizon to regulate inflated drug prices.