Lipstick on a Pig

The Department of Health and Human Services just announced it selected the first 10 prescription drugs covered by Medicare for price negotiation with the drug companies as authorized by the so-called Inflation Reduction Act (IRA). The 10 drugs accounted for $50 billion of the total Medicare drug costs in one year, 20% of the total. The Medicare enrollees taking these drugs paid $3.4 billion out of pocket for them.

The plan is to negotiate the first 10 drugs in 2024, with price reductions taking effect in 2026. Next up – 15 more will be negotiated for 2027 and 15 more for 2028. There is no urgency. Only the government would think this is an acceptable timeline.

Major drug companies are suing the government over the negotiation alleging it violates the companies’ right to due process, protection against excessive fines and free speech. Their lobbying group has joined the litigation.

Joe Biden and politicians on both sides of the aisle want us to think they are fighting for the little guy and going after big pharma. In truth, this will have about the same impact as spitting in the ocean, and they show their contempt for us with their dishonesty. This is election season politics.

I have been a member of the health care community for nearly 50 years. There is no doubt our health care capabilities far exceed any other in the world. I can personally attest that millions of professionals in all clinical disciplines are passionate about their work and are among the most highly skilled anywhere. Despite what we have to work with, our health care system is in decline. We spend far more and have poorer outcomes than many other countries. We have been witnessing  the politicizing of science, the ever-expanding corporatization of health systems and decision-making increasingly in the hands of those who know nothing about the work itself. Providers across all disciplines are leaving, driven from work they love by bureaucracies they cannot tolerate. I no longer trust the systems I once would have entrusted with my life.

Why my harsh criticism of the big announcement? Here are some truths for context.

• In 1983, the government, alarmed that annual health care spending had reached $355 billion and exceeded 10% of GDP,  addressed health care costs for the first time. Since then, implementing “cost saving” measures has been an ongoing priority. We now spend about $4.3 trillion, 18.3% of GDP, on health care.

• Americans pay higher prices for drugs than any other country in the world, more than 2.5 times as high as other similar income nations. New Zealand and the United States are the only two countries that allow drug makers to market prescription drugs directly to consumers. We cannot watch TV for an hour without being inundated with drug commercials. This is a brazen strategy that creates demand for products that require a diagnosis and prescription from a medical professional and fuels the American belief that there’s a pill for everything.

• A complex industry called Pharmacy Benefit Management takes in nearly $500 billion in revenue annually, serving as a middleman to help manage prescription drug benefits for the public and insurers. Complicated schemes using rebates, “spread pricing” and others make it nearly impossible to understand the flow of money through these companies. Shuffling money around in creative ways does not reduce total spending.

• The pharmaceutical industry funds ¾ of the drug division budget of the Food and Drug Administration (FDA), $1.1 billion in 2022. This money comes in the form of “user fees” charged for new drug applications and blurs the boundaries between the regulators and the regulated.

• Pharmaceutical companies pocketed nearly $75 billion in profits from COVID drugs with the help of government mandates and lax controls.

• In 2022, the pharmaceutical and health products industry spent $374 million lobbying the government, nearly $150 million more than the next highest industry. For context, the National Rifle Association (NRA) the liberals love to villainize as the “gun lobby,” spent $2.6 million that same year.

• The dishonest media is a mouthpiece for liberal government and refuses to engage in serious investigative journalism that would provide the people with the watch dogs of truth essential to free society.

Our health care system is a behemoth. The size and complexity boggle the mind. We should expect so much more than we get for our investment. Only a liar would claim to have the answers, but these are some things elected officials might focus on if they were serious.

• Immediately require all drug prices to be negotiated for the 34% of total health care spending paid by the government.

• Address the anti-trust concerns that should be raised by the consolidation of health care systems into a monopolistic industry.

• Revisit the concept of “not for profit” in health care. Health care companies are making billions and hiding behind outdated notions of “community benefit.”

• Ban prescription drug advertising on broadcast media.

• Create appropriate ethical boundaries between the FDA and the pharmaceutical companies.

• Reform the Pharmacy Benefit Manager industry.

We have not yet seen significant, successful efforts to address health care costs and outcomes. The government’s touting of the drug negotiation about to get underway is nothing more than election season politics. They are merely putting lipstick on a pig.

Have a great Labor Day weekend!