Thursday, July 15, 2021

No, Drug Companies Do Not Need Higher Prices For "Innovation"

SHORT TAKES: Teachers On Frontlines of Critical Race Theory; Infrastructure v. Pentagon; Bangladeshis Die For Profits; Marty's Bid To Help Uyghurs; Amazon's Panopticon; Amazon Death Star Lobbies EU;

Jonathan Tasini

Jul 15

[Editorial Alert: Please don’t weep…Next week the newsletter will not appear in your inbox—it’s hard to do from a remote campsite with only a wisp of the Internet tubes!]

LONG TAKE

Here, apparently, is the equation for plenty of politicians: the money that drug companies pay politicians—that would be the money that flows as part of the legal bribery of campaign donations—is more sacred than making sure millions of people get life-saving drugs without going bankrupt. And that sacred pursuit of money is so important it’s okay to mouth really stupid, factually wrong, things.

The evidence? Here you go [I added the bold]:

Rep. Scott Peters (D-Calif.), an ally of the pharmaceutical industry, which employs many of his constituents, has voiced concerns about letting Medicare use its leverage to lower the cost of prescription drugs.
Peters joined nine other moderate Democrats in May in writing a letter to Speaker Nancy Pelosi (D-Calif.) warning that Congress should “preserve our invaluable innovation ecosystem,” arguing that cost controls could dampen the development of new drugs.

To remind folks why this is even an issue: there are various proposals to allow Medicare leaders to negotiate drug prices—other than feeding the profit margins for Big PHARMA, there is zero reason to bar Medicare from doing so (a ban that has been in place since the creation of the Part D prescription drug benefit in 2006). Instead, *insurance* companies negotiate the prices—and insurance companies don’t care how high drug prices are because they just pass on the costs to Medicare recipients, and taxpayers.

The package of bills introduced earlier this year by a group of Democrats in the House and Senate [including Sen. Bernie Sanders and Reps. Ro Khanna, Lloyd Doggett, Peter Welch, and Cori Bush] include: The Prescription Drug Price Relief Act which pegs the price of prescription drugs in the United States to the median price in Canada, the United Kingdom, France, Germany and Japan; The Medicare Drug Price Negotiation Act which directs the Secretary of Health and Human Services to negotiate lower prices for prescription drugs under Medicare Part D; and The Affordable and Safe Prescription Drug Importation Act which would allow patients, pharmacists and wholesalers to import safe, affordable medicine from Canada and other major countries. Some of the provisions of the three bills may survive in the just-released Democratic $3.5 trillion infrastructure bill.

What a novel idea!!! Drug prices here shouldn’t be exponentially higher than every other advanced economy in the world just to pay for bloated CEO salaries (more on that robbery in a moment). What a concept!

The folks pushing this suite of bills point out:

From 2007 to 2018, the prices of brand name drugs have risen three times faster than inflation, and prescription drug spending reached $369.7 billion in 2019. In 2018, the average annual cost of therapy for widely used specialty drugs was about $79,000. This is more than twice the median income for people on Medicare and more than three and half times the average Social Security retirement benefit.

Here is what is so warped about the system—and speaks to Scott Peters nonsense, and his transparent defense of his campaign donors: The government already negotiates drug prices…for veterans through the Veterans Administration. And VA drug prices are 35 percent lower than what Medicare beneficiaries face. When you read about the Medicare trust fund shrinking, always remember that its the greed of Big PHARMA, not seniors receiving Medicare benefits, that plays the major role in the rising costs to the Medicare system.

This, my friends, is stupidity and corruption rolled into one because:

…The federal government could save between $15.2 and $16 billion a year if Medicare Part D paid the same prices as Medicaid or VA…
High drug prices continue to stress the federal budget, particularly within Medicare. Since 2006, government programs have paid for approximately 40% of the retail prescription drug expenditures in the United States. Medicare paid for 29% of retail drug costs in 2016. In large part as a result of skyrocketing drug prices, total annual spending on Medicare Part D is projected to drastically increase in coming years, from $116 billion in 2021 to $190 billion in 2029.

Wait, I’m cupping my ear and straining really hard to hear the deficit Cassandras—Joe Manchin et. al.—chirp loudly about such an easy way to save taxpayer money. Nothing. Crickets.

Now, let me circle back to the main point of the headline: the entire Peters et al. view that high drug prices are needed to continue innovation is just Big PHARMA propaganda.

IT. ISN’T. TRUE.

Keeping up innovation has nothing to do with allowing Big PHARMA to continue to charge outrageous drug prices.

You don’t have to look further than the recent development of the COVID-19 vaccines. The Oxford-AstraZeneca COVID-19 vaccine, for example, was paid for almost entirely via public funds. BioNTech and CureVac were on the government dole as well, pocketing $745 million to help fund its vaccine work.

To be sure, the pandemic was a moment of emergency.

But, the truth is a huge amount of research and innovation, especially core research, is underwritten with government money, not Big PHARMA cash.

Big PHARMA raking in huge, undeserved profits has nothing to do with covering the cost of innovation—profits that are simply a result of a patent system that costs us hundreds of billions of dollars, a system that gives Big PHARMA control over drugs and their pricing.

Dean Baker, senior economist at the Center for Economic and Policy Research, has made undoing the patent system—which leads to these outrageous drug prices—his personal mission, arguing that it would be more efficient and bring huge savings to have government funding be even more central to future drug development, and get rid of the patent system and replace it with an open source regime (meaning, any drug invention would have its data and architecture posted publicly) or, at worst, have a very limited, short-term patent after which the drug’s components are available to any entity to replicate. He has written:

We will spend over $500 billion in 2020 for drugs that would almost certainly cost us less than $100 billion in a free market without patent monopolies or other forms of exclusivity. It is rare that drugs are actually expensive to manufacture and distribute. The drugs that sell for tens of or even hundreds of thousands of dollars for a year’s treatment would typically sell for just a few hundred dollars if they were sold in a free market without patents or related protections. The potential savings of $400 billion a year come to more than $3000 per household.

And:

In exchange for this $400 billion in higher drug prices, we get around $90 billion in research spending by the industry.

And:

There are actually good reasons for thinking that on a per-dollar basis government funding would be more efficient. First and foremost, the government could make it a condition of funding that all results are posted on the Internet as quickly as practical. This would allow researchers to quickly learn from each other’s work, building on successes and not wasting effort pursuing dead ends. This was the practice with the Bermuda Principles in the Human Genome Project. This sort of open-research in the early days after the coronavirus was first discovered led to much more rapid progress than would ordinarily be the case.
The other major reason why publicly funded, open-source, research is likely to be more efficient on a per-dollar basis is that there would be no incentive to develop copycat drugs as a way of sharing patent rents. While it is often desirable to have more than one drug to treat a specific condition since some patients may respond poorly to an initial drug or it could have harmful side effects, trying to engineer around a patent will generally not be a productive use of resources from a social standpoint. If research funding was being paid upfront, with no patent rents to compete over, there would be no incentive to develop a duplicative drug, except where there was a medical reason.
This raises another reason for believing that direct funding of research will lead to better health outcomes than our current system of patent monopoly financing. When drug companies can sell their drugs at patent monopoly prices they have an enormous incentive to promote their drug even in circumstances where it may not be the best treatment for a specific medical condition. This means that they have a reason to conceal evidence that their drugs may not be as effective as claimed or could even be harmful.

And:

There is one additional source of waste that would be eliminated if we directly funded the research and allowed drugs to be sold at free market prices. We would not need insurance to cover drug costs. When drugs can cost, hundreds, thousands, or even tens of thousands of dollars, people need insurance to cover this potential expense. However, if most drugs sold for ten or twenty dollars per prescription, insurance would not really be needed. (Lower-income people would still need assistance in paying for drugs.)
Since insurers take on average 20 to 25 percent of health care spending to cover their administrative costs and profits, having drugs sell at free market prices would save us tens of billions annually on insurance costs. This also has to be factored into any comparison of the relative efficiency of direct public funding and patent monopoly financing.

In other words, if we want to actually have affordable drugs AND keep up innovation in the most efficient, and effective, way possible, the solution would be to hand much more control over innovation—and the eventual control over drugs and drug pricing—to the government and shrivel up the role greed plays.

Oh, yes, about CEO greed. Remember that time that political leaders led a public outcry over the pay for CEOs of Big Pharma companies? Right… that never happened.

A taste of some juicy pay packages in 2020:

Gilead Sciences CEO Daniel O’Day: $19 million (his base pay went up 34 percent; the previous year he made a total of $29.1 million)
Abbott Laboratories CEO Robert Ford: $20 million (In fact, the top seven executives at Abbott Laboratories received on average a compensation package of $11 million)
Merck CEO Kenneth Frazier: $27.6 million
Johnson & Johnson CEO Alex Gorsky: $30 million

The connection to the phony “innovation” rhetoric is simple: much of the wealth of Big PHARMA CEOs comes from stock options, not a weekly paycheck (this is true, as I often point out, in every industry). When stock prices go up, CEOs make more money for themselves. Raking in huge profits is one way of keeping stock prices up because Wall Street likes to see fattening bottom-lines.

But, it’s a bit of a sticky PR problem to try to justify skyrocketing prices for drugs—prices that often mean people go bankrupt or simply die because they don’t have enough money for life-saving drugs—when Big PHARMA CEOs are enriching themselves.

So, instead, the Big PHARMA CEOs have to hide their greed by crying about “innovation”.

Don’t fall for it.

If teachers hadn’t already been through a crucible during the pandemic—whether it was the arduous task of teaching remotely or battling to make sure that reopening schools would be done safely—now they are the targets of attacks around critical race theory. Some teachers are quitting because of this concerted right-wing political campaign, which hopes to turn a ginned-up controversy into electoral victories in 2022.
The American Federation of Teachers has set up a legal fund to help pay for legal defense of members who are fired, disciplined or otherwise deprived of their contractual rights because they happened to, you know, teach history and facts about racism. I spoke with AFT President Randi Weingarten about all this (lightly edited for length and clarity)
JT: This feels like an analogy to the COVID debate where you had politics substituting for science, which ended up killing and sickening thousands and here in this realm you’re battling politics taking over educational truthfulness and the reality of just trying to teach people the history of racism.
Randi Weingarten: I see this as a modern day Scopes trial . There was a huge discomfort then that science teaches us that civilization evolved through evolution not through creationism to the point that this biology teacher [Scopes] in Tennessee was fired for teaching evolution. Right now, there is a discomfort looking at American history, a history which is a really good story. Yes, there are lots of bad things that happened but through movement building and through the voices in a democracy the country has changed by and large to be fairer, more equal and more diverse and that has made us better. The right wing, in its quest for power, is trying to toxify the debate so much that we actually would not teach real history and it will hurt kids in a number of ways because ignorance of common history is going to hurt their experiential learning and their ability to deal as adults with discomfort. The country will not be looking at its own history of which racism and slavery are a part of it.
JT: Talk a bit more about kids and abandoning children’s ability to think critically and especially confront things that are uncomfortable.
RW: Every adult needs the life skills of being able to deal with adversity and things that are uncomfortable and teachers help kids learn to respect things that are different, to discern fact from fiction not to tell them what to believe but to have a process by which they they arrive at their own belief systems. The right wing wants to stop the teaching of history and stop kids from being critical thinkers and appreciating and respecting differences.
JT: Teachers must be exhausted. They get through this pandemic, which isn’t over, they’ve been on the front lines for months and, then, they get thrown into the middle of this debate.
RW: They’ve probably worked harder this year than ever before, teaching remotely which is not easy, teaching through a screen and trying to figure out the cues for kids. You’re worried to death about yourself and your own family and you’re also trying to be engaging to kids and really open-hearted. For many kids their teachers were their lifelines this year. You probably have more freedom and more authority this year but it's completely exhausting and now Republicans who don’t want to blame their cult leader need to find a way to vilify teachers in their unions while we’ve been trying to get schools reopened safely.
JT: The AFT has established a legal defense fund to defend teachers who are being fired or disciplined. What leverage do you actually have in existing collective bargaining agreements to blunt these attacks or do you have to go to court?
RW: In many of the agreements that we have around country teachers should be protected. The dilemma is you have all these new laws that basically defy history. The Texas law essentially says you’re supposed to teach that slavery was a betrayal of the Founders intent which is completely wrong. They were slave owners so it wasn’t a betrayal of their intent, it was part of their intent. So, how do you teach the Civil War, the 13th, 14th, 15th Amendments, the Dred Scott decision, Jim Crow, the civil rights movement without getting in trouble under this new state law. It’s a real dilemma for teachers so we needed to make sure that they didn't have to think about whether or not they'd have the funding to have lawyers in either an arbitration or [protecting rights under] collective bargaining agreements if a school board or a state tried to bully them or fire them. I just want teachers to be able to teach the Constitution.
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This is a simple one. When you hear Fifth Columnist Joe Manchin and his ilk scream about the just-released $3.5 trillion proposed infrastructure bill needing to be paid for because of some phony debt “crisis”, here is your tale-of-the-tape:
INFRASTRUCTURE: $3.5 TRILLION over ten years for Medicare expansion so older people can get dental, vision and lower drug prices; child care, universal Pre-K, paid family and medical leave, increase in Pell Grants, and major investments in climate change (for example, electric vehicle expansion)—and much more…
And, then:
PENTAGON: if you assume the UNLIKELY scenario that the Pentagon’s budget will not increase over the next ten years (ha!!!), then, the Pentagon will spend $7.15 TRILLION OVER TEN YEARS (based on the proposed $715 billon for the coming budget year). And not a single whimper from the debt fear-mongering crowd.
That should clear up the story.
Every day, people die in dangerous factories around the globe, victims of corporate exploitation and greed. We just usually never hear about the carnage until the numbers get big (it’s similar to the invisibility, numbness and acceptance to the every-day shooting deaths of people in the U.S.)
When the Rana Plaza Rana fire murdered 1,138 garment workers in 2013, it sparked an outcry that led to the Accord on Fire and Building Safety in Bangladesh—a negotiated deal between global unions and a number of large garment companies (a whole slew of companies refused to sign onto the Accord, opting for a fraudulent “self-policing” alternative framework).
It’s maybe karmic that two recent events have happened so close together. On the one hand, the Accord was due to expire at the end of June—and, in the final hours, the sides agreed to a three-month extension. The essential question in the Accord negotiations is, as the worker witness signatories say: “will the Accord’s signatory brands agree to a new binding safety agreement that ensures the safety work in Bangladesh remains individually enforceable upon brands, keeps an independent secretariat in place that oversees the brands’ compliance, and allows for expansion to other countries? Without such an agreement, brands’ efforts in Bangladesh will amount to no more than the kind of self-monitoring practices that failed to prevent the Rana Plaza building collapse.”
And, on the other hand, as a reminder last week what is at stake with the Accord [bold is added]:
Police in Bangladesh have arrested on murder charges the owner of a factory where at least 52 people died in a massive fire, as it emerged that children as young as 11 had been working there.
Four of the owner’s sons were also among the eight people detained overall on Saturday over the inferno that broke out on Thursday and raged for more than a day. A separate inquiry has been launched into the use of child labour at the facility.
Emergency services told Al Jazeera they had recovered 49 of the bodies at the Hashem Food and Beverage factory in Rupganj, an industrial town 25km (15 miles) east of the capital, Dhaka. Three people also died after jumping out of the building.
The charred victims were piled in a fleet of ambulances and taken to mortuaries amid anguished shouts and tears from people watching in the streets.
Jayedul Alam, police chief for Narayanganj district where the factory is located, said the entrance had been padlocked at the time of the blaze and the factory breached multiple fire and safety regulations.
“It was a deliberate murder,” the police chief told the AFP news agency.
The fire—which burned for 24 hours—wasn’t in a garment factory; the seven-story building housed an operation where fruit drinks and plastic packaging were made. But, that’s kind of the point: the relentless global supply chain of capitalism means that no worker is safe in tens of thousands of factories sprinkled around the globe—unless she or he can be part of a real union or be protected by some system that puts values their lives over profits.
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I’ve written recently about the dangerous new Cold War against China (here and here)—fueled by rhetoric from both political parties and greased with large expenditures for the Pentagon and taxpayer handouts to profitable tech companies in the name of “global competitiveness”.
But, I have also pointed out that China is fair game for criticism, mainly as a welcoming haven for global corporations who salivate at the sea of cheap labor made available by China’s authoritarian control over workers. Chief among the enslaved workers in China are the Uyghurs who are essentially imprisoned in work camps in the the Xinjiang region—a scandal I’ve been writing about and following for more than a year including in the below podcast:
A few days ago, the Department of Labor warned companies they could be violating U.S. law by doing business in the Xinjiang region:
The People’s Republic of China (PRC) government continues its horrific abuses in the Xinjiang Uyghur Autonomous Region (Xinjiang) and elsewhere in China, targeting Uyghurs, ethnic Kazakhs, and ethnic Kyrgyz who are predominantly Muslim, and members of other ethnic and religious minority groups. These abuses include widespread, state-sponsored forced labor and intrusive surveillance, forced population control measures and separation of children from families, mass detention, and other human rights abuses amidst ongoing genocide and crimes against humanity. Given the severity and extent of these abuses, businesses and individuals that do not exit supply chains, ventures, and/or investments connected to Xinjiang could run a high risk of violating U.S. law.
Look, this “advisory” is tepid, mainly because you have to ask a key question: what really is the likely recourse that could be taken against companies who thumb their nose at anything that might crimp their drive for profits? A fine would be seen as just a cost of doing business compared to the large profits being made from slave labor. But, it beats letting this immoral behavior continue unchallenged.
What is a “panopticon” you might ask? It describes a form of control that Amazon uses that is “one of the most intrusive and pervasive systems of workplace surveillance the world has ever known”, say three analysts for UNI Global Union:
In his 1975 book Discipline and Punish, philosopher Michel Foucault used Jeremy Bentham’s panopticon as a symbol of the new techniques of control that emerged with modernity. In the late 18th century, social reformist Bentham designed a circular prison with the cells built around a central tower. The architecture of the panopticon was designed to allow a single security guard to monitor all of the cells from the tower at any time, while the inmates could not tell whether or not they were being watched. In Foucault’s words, the prisoner of a panopticon could only assume they were under perpetual observation in this asymmetrical system of surveillance: “He is seen, but he does not see; he is an object of information, never a subject in communication. As a consequence, the inmate police himself for fear of punishment.”
Upshot:
The suite of surveillance technologies Amazon has already developed, or is developing, has grown to encompass all facets of its global operations. The oceans of data Amazon collects about its workers—their productivity rates, location, driving habits, personal opinions, and health status, among others—provide the company with unparalleled amounts of information that it uses to undermine attempts by workers to unionize to improve their working conditions.
Read the report—and boycott this dangerous behemoth.
Speaking of the Amazon, this corporate Death Star has its tentacles everywhere in another aspect—it’s spending boat loads of money to make sure it gets its way with policymakers, hardly a surprise. You’all know about the power of lobbying in the U.S. but in Europe it’s a more recent growth “industry”. Amazon is spending plenty of coin influencing the European Commission which sets many of the regulatory frameworks through the European Union—with a big leap in 2020 to almost $3 million Euro (a little over $3.5 million at current exchange rates) as the intensity ramps up targeting Big Tech companies globally for anti-competitive behavior.