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BILL CRAWFORD: Monopolistic practices push drug prices higher

BILL CRAWFORD

“The high cost of prescriptions are leading many people to ration medicine or skip it altogether,” reads a story in the Clarion-Ledger.

An earlier story told about an 87-year-old WWII veteran with Type 2 diabetes. His glucose test strips suddenly jumped up from $25 to $90 a box. “That’s too high,” he said. “And I don’t understand how they can do that.”

Skyrocketing drug prices don’t just hurt Mississippians, it’s a national problem. President Donald Trump promised to bring down drug prices, but, beyond talking tough, has accomplished little. Congress has done nothing.

You reckon the billions of dollars the drug industry spends on lobbying and political contributions has anything to do with that?

According to OpenSecrets.org, lobbying costs over the past 10 years topped $2.4 billion and contributions to candidates topped $538 million.

Over the past five years, drug companies also spent another $28 billion on consumer advertising, according to Statisa.com.

Where does all that money come from?

Hmmm. Overpriced drugs?

Axios.com looked into drug pricing last week. Here are some findings: Spending on prescription drugs, by both hospitals and consumers, was between $450 and $475 billion in 2016. In the third quarter of this year, drug companies accounted for just 23% of the health care industry’s revenue but controlled 63% of its profits.

That and the following examples cited by Axios and Politico.com suggest the drug industry is all about profit and little about actual health care – Martin Shkreli bought Daraprim, a drug to treat AIDS, and raised the price by 5,000%; Mylan raised the price of the Epi-Pen by about 500% over 6 years; Kaleo raised the price of its life-saving opioid overdose antidote Evzio by more than 600% at the height of the drug crisis; and insulin prices keep creeping higher, up to 200% more for some products.

Axios’ look into insulin pricing reveals why that 87-year-old Veteran saw his insulin strips jump up so much. Drug companies like to blame increasing costs on insurance middlemen, arguing they take bigger cuts of the insulin market (all true). But drug companies have also raised their prices and used the patent system to keep them high. “Insulin is a complex drug to manufacture, and existing manufacturers have created patent thickets to shield their products from competition.”

Indeed, the drug companies have done a remarkable job limiting competition. They got Congress and the courts to make changes to patent law that encourage monopolization, higher prices, and less innovation, according to the Open Markets Institute. “These changes have made it easier for drug companies … to suppress competition.”  They also got Congress to restrict importation of cheaper foreign made drugs.

A Baron’s article called this a “dangerous monopoly of power.”

The Open Markets Institute says the U.S. has “largely abandoned the policies it previously used to foster healthy competition,” causing “a highly dysfunctional pharmaceutical market that produces high prices and less and less innovation.”

Axios said divided government probably won’t produce a grand bargain on drug pricing. “The industry is still very powerful, and Congress’ ideological differences are still real.”

A 2016 study published by the National Academy for State Health Policy says, “Prescription drugs are an essential good; they are as necessary to quality of life — and life itself — as water and sanitation,” and suggested drug companies might be regulated like utilities.

Perhaps it’s time for that.

» BILL CRAWFORD is a syndicate columnist from Meridian.

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