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Exorbitant drug prices are a matter of life and death. Not being able to afford life-saving treatments or prescription drugs can be the difference between whether you or a loved one can even properly function. If economic rigging is occurring in the prescription drug market, we’re talking about a bigger issue than price fixing.
Money and lives could be lost.
According to the Center for American Progress, “Americans spent $535 billion on prescription drugs in 2018, an increase of 50 percent since 2010. These price increases far surpass inflation, with Big Pharma increasing prices on its most-prescribed medications by anywhere from 40 percent to 71 percent from 2011 to 2015.”
This raises many questions:
- Why are drug prices so high?
- Are they unethically rigged or fixed and ripping us off?
- If drug prices are rigged, who or what companies are taking money from us?
The Zero Theft Movement seeks to start answering those pressing inquiries, and perhaps a few more, in this first installment on drug price-fixing. These articles merely serve as a jumping off point for you, the citizenry, to investigate the issue further.
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U.S. Pharmaceutical Market
The U.S. pharmaceutical market has steadily grown over the past two decades or so, more than doubling its size. Admittedly, we could not find one source that provided figures for all the years inquisition (2001-2019), so keep in mind that some variance exists in how the amounts have been calculated.
| Year | Amount |
|---|---|
| 2001 | $172,000,000,000 |
| 2002 | $195,000,000,000 |
| 2003 | $219,000,000,000 |
| 2004 | $234,000,000,000 |
| 2005 | $247,000,000,000 |
| 2006 | $270,000,000,000 |
| 2007 | $281,000,000,000 |
| 2008 | $286,000,000,000 |
| 2009 | $300,000,000,000 |
| 2010 | $307,000,000,000 |
| 2011 | $319,900,000,000 |
| 2012 | $325,800,000,000 |
| 2013 | $258,200,000,000* |
| 2014 | $310,400,000,000 |
| 2015 | $354,000,000,000 |
| 2016 | $446,000,000,000 |
| 2017 | $453,000,000,000 |
| 2018 | $484,800,000,000 |
| 2019 | $490,000,000,000 |
*non-retail sales not included
Statistic sources:
2001-2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018-2019
As it stands, the U.S. government cannot negotiate drug prices for Medicare Part D due to a non-interference clause. If the government were allowed to negotiate, would that reduce drug prices? Join the debate on the Zero Theft voting platform…
Pharmaceutical Industry Profit Margin
The pharmaceutical industry generates hundreds of billions of dollars in revenue, but how does it stack up in terms of profit margin?
Competitive industries will average around 10% in profits. Despite its reputation of high risk, the drug industry is among the most profitable in the world. Far more than most Fortune 500 sectors, in fact.
A study in the Canadian Medical Association Journal (CMAJ) claims:
“In 2002, for example, the top 10 drug companies in the United States had a median profit margin of 17%, compared with only 3.1% for all the other industries on the Fortune 500 list. Indeed, subtracting losses from gains, those 10 companies made more in profits that year than the other 490 companies put together. Pfizer, the world’s number-one drug company, had a profit margin of 26% of sales. In 2003, for the first time in over 2 decades, the pharmaceutical industry fell slightly from its number-one spot to third, but this was explained by special circumstances, including Pfizer’s purchase of another drug giant, Pharmacia, which cut into its profits for the year. The industry’s profits were still an extraordinary 14% of sales, well above the median of 4.6% for other industries. A business that is consistently so profitable can hardly be considered risky.”
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Claims of Big Pharma Corruption
Many people have questioned why the pharmaceutical industry remains so profitable, leading to countless debates between drug companies, politicians and the public about the high cost of medicine.
As you will see from the quotes below, prominent figures from both establishment parties clearly agree that drug prices need to drop. This case, like all instances of potential rigged economy theft, rip off all Americans, not just one party.
Bernie Sanders (Senator of Vermont)
“1 in 5 Americans can’t afford the medication they are prescribed, while pharmaceutical companies make billions in profit. When it comes to prescription drugs, there is #NoMiddleGround. We will take on the pharmaceutical industry and cut prescription drug prices in half.”
Donald Trump (45th President of the U.S.A.)
“For decades, other countries have rigged the system so that American patients are charged much more — and in some cases much, much more — for the exact same drug. In other words, Americans pay more so that other countries can pay less. Very simple. That’s exactly what it is. It’s wrong. It’s unfair.”
Hilary Clinton (Former Secretary of State)
“Over the past year [2016], we’ve seen far too many examples of drug companies raising prices excessively for long-standing, life-saving treatments with little or no new innovation or R&D.”
Candace Owen (Turning Point USA Communications Director)
“For far too long the pharmaceutical industry has been rigged against the American people. These companies have been in bed with regulators, in bed with the government, and honestly we need to reach a point where we’re talking about deregulation allowing fair market competition to bring prices down.”
Join the movement to eliminate the rigged layer of the economy! Don’t believe you’re getting ripped off by crony capitalists and corrupt officials? Read the Total Theft Report…
Drug Price Increase
While grand claims alone can attract and maybe even convince many, they need to be backed by strong evidence for them to spark good faith debate and eventual change. The same applies to the debates around cutting high drug prices.
Over time(given that the patent has expired), you should expect prices to decrease in a free market. That means competitors have flooded the space and made the treatment much more affordable.
Brand-Name Drugs
In 2019, the peer-reviewed Journal of the American Medical Association (JAMA) published a study tracking the prices of popular brand-name prescription drugs in the U.S. The study, authored by Nathan E. Wineinger (PhD), Yunyue Zhang (BA), and Eric J. Topol (MD), focused on “49 top-selling drugs that exceeded 100,000 pharmacy claims.”
“Substantial cost increases among these drugs was near universal, with a 76% median cost increase from January 2012 through December 2017, and almost all drugs (48 [98%]) displaying regular annual or biannual price increases. Of the 36 drugs that have been available since 2012, 28 (78%) have seen an increase in insurer and out-of-pocket costs by more than 50%, and 16 (44%) have more than doubled in price.”
Only one drug (Harvoni) experienced a price decrease, but only by 1% annually.
Data
Below is a partial table of the prescription drugs studied in the research paper linked above. The numbers under ‘January 2012’ and ‘December 2017’ represent the median cost in USD. We strongly encourage you to look at the full data set.
| Brand Name | Treatment or Condition | January 2012 | December 2017 | 6-y change, % |
|---|---|---|---|---|
| Advair | COPD | 225 | 360 | 60 |
| Chantix | Smoking cessation | 175 | 392 | 124 |
| Eliquis | Anticoagulant | 258 | 388 | 50 |
| Forteo | Osteoporosis | 1,116 | 3,088 | 177 |
| Januvia | Type 2 diabetes | 219 | 396 | 80 |
| Lipitor | Cholesterol | 116 | 274 | 137 |
| Orencia | Autoimmune disease | 2,482 | 3,777 | 55 |
| Viread | HIV | 746 | 1057 | 42 |
Generic Drugs
That being said, brand-name drugs may remain high even after the patent expires, as long as affordable generics become available to the public.
In 2018, professors Rena M. Conti, Kevin H. Nguyen, and Meredith B. Rosenthal published research on the price increases of drugs. They analyzed 6,182 generic drug prices between 2013-2014, looking for any ‘price spikes.’
“The mean inflation-adjusted price increase among all generic products was 38% (SD 1,053%), the median, 2%; the 95th percentile, 135%; and the mean price level, $29.69 (SD $378.44). Approximately half of all products experienced price increases in excess of the growth in the medical CPI [Consumer Price Index]; 28% had price increases greater than 15% and 23% had price increases greater than 20%. Drugs exceeding outlier thresholds exhibited lower baseline price levels than the mean price level observed among all generic drugs. The most consistent characteristic predicting whether a product would exceed ‘price spike’ thresholds proposed in legislation is being supplied by only one manufacturer.”
It is important to note that drug prices that spiked beyond outlier thresholds had lower initial costs. That means, despite a 20-plus percent spike, might not actually mean the prices are particularly high (e.g. $1 → $1.20).
Nevertheless, the study goes on to say, “ ‘price spikes’ among generic drugs are much more common than newspaper stories and legislative hearings focused on a handful of ‘bad actor’ manufacturers of selected products may suggest.”
Per the Commonwealth Fund, “the average U.S. resident paid $1,122 out-of-pocket for health care, which includes expenses like copayments for doctor’s visits and prescription drugs or health insurance deductibles.” Does the US healthcare system need to be so expensive?
Fixed Drug Prices
Now, we come to our main question: is there proof that drug prices have been, at times, unethically inflated, fixed, or rigged?
In 2016, an industry-wide scandal erupted involving generic manufacturers. An alleged scheme of price fixing, bid rigging, and collusion between big pharmaceutical companies had been unearthed.
Background
44 states filed a colossal lawsuit against 20 pharmaceutical companies and 15 individuals. Over 100 generic drugs had risen in prices by up to 1000%, in some cases.
Connecticut Attorney General William Tong has spearheaded the ongoing lawsuit, announcing in a press release:
“We have hard evidence that shows the generic drug industry perpetrated a multi-billion dollar fraud on the American people. We have emails, text messages, telephone records, and former company insiders that we believe will prove a multi-year conspiracy to fix prices and divide market share for huge numbers of generic drugs. These are drugs that people in this country rely on every day for acute and chronic conditions and diseases from diabetes and cancer to depression and arthritis. We all wonder why our healthcare, and specifically the prices for generic prescription drugs, are so expensive in this country—this is a big reason why.”
Teva Pharmaceuticals
Teva, the apparent major player, allegedly overcharged consumers by “at least 350 million,” per a DoJ 2020 report.
The Supreme Court charged the company with three different counts, all quoted directly from the DoJ press release linked above:
Count one
“On May 7, Apotex admitted to its role in this conspiracy and agreed to pay a $24.1 million penalty. On July 14, a grand jury returned an indictment against Glenmark for its role in the same conspiracy, which today’s indictment supersedes. According to the charge, Teva, Glenmark, Apotex, and unnamed co-conspirators agreed to increase prices for pravastatin and other generic drugs. Pravastatin is a commonly prescribed cholesterol medication that lowers the risk of heart disease and stroke.”
Count two
“On July 23, Taro U.S.A. admitted to its role in this conspiracy and agreed to pay a $205.7 million penalty to resolve that charge as well as its role in a separate antitrust conspiracy. Aprahamian was indicted in February 2020 for his role in the conspiracy with Teva, among other charges, and is awaiting trial. According to the charge, Teva and its co-conspirators agreed to increase prices, rig bids, and allocate customers for generic drugs including, but not limited to, drugs used to treat and manage arthritis, seizures, pain, skin conditions, and blood clots.”
Count three
“In March 2020, Sandoz admitted to its role in this conspiracy, as well as in conspiracies with other generic drug manufacturers, and agreed to pay a $195 million penalty. According to the charge, Teva and its co-conspirators agreed to increase prices, rig bids, and allocate customers for generic drugs including, but not limited to, drugs used to treat brain cancer, cystic fibrosis, arthritis, and hypertension.”
The Rest of the Story Awaits…
In the following article, we will go deeper into how pharmaceutical companies can work with officials and the medical community to get away with fixing prices and collusion.
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The Zero Theft Movement does not have any interest in partisan politics/competition or attacking/defending one side. We seek to eradicate theft from the U.S economy. In other words, how the wealthy and powerful rig the system to steal money from us, the everyday citizen. We need to collectively fight against crony capitalism in order for us to all profit from an ethical economy.
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