By Gary Pepper, M.D.
Have you noticed that prices of prescription drugs including generics are skyrocketing? The public is being squeezed by the pharmaceutical industry to pay increasing prices for the same medications while inflation in other areas of the economy is all but absent. Some fairly simple answers exist as to why this is occurring and there is a need to do something to stop it.
These are heady times for pharmaceutical companies. Profits are soaring and mergers are plentiful. A prime sign of the times is the activity at Actavis/Allergan Pharmaceuticals a company formed through a merger not more than a year ago. Just within the past few weeks rumors are flying that another merger of this new company and Pfizer is in the works to create the world’s largest pharma company.
Three years ago, Watson Pharmaceuticals announced it was acquiring Actavis pharmaceuticals, retaining the name Actavis. The combination created the world’s third largest generic pharmaceutical company. Soon thereafter Actavis acquired Forest Pharmaceuticals for 25 billion dollars in what is described as one of the top 5 pharma deals of the decade. Almost immediately Actavis acquired Allergan and changed its name to Allergan creating a new top 10 in the world pharma company. Finally, the Pfizer deal is in the works at this very moment.
Here’s the disturbing part whereby the public gets screwed. We could focus on the fact that Pfizer is attempting to avoid paying U.S. corporate taxes by combining with Actavis/Allergan which completed a “tax inversion”, transferring its assets out of the country, just before the government cracked down on this tax loophole. As a physician however, I have my own view of what constitutes a national screwing. My concern is for the effects these corporate machinations have on the people the companies profit from. These companies primarily make their money by selling medications to people who are sick. People who are sick are not your average consumer because they lack a bargaining position. No one in a hospital bed is doing comparison shopping for their medications.
In my career as an endocrinologist I became concerned about the behavior of the pharma industry several years ago. What first troubled me was the lack of patient and physician support for Armour Thyroid, an extremely useful but underutilized treatment for hypothyroidism. I contacted Actavis to explore these issues with corporate management. After much time winding my way through a dense bureaucracy, I sent my comments to Mr.Robert Stewart, Chief Operating Officer at Actavis, who, I was told, would contact me if he was interested in what I had to say. I never heard from him despite several more tries. I then attempted to take my concerns to Bernie Sanders before he was a presidential candidate. That was a no go as well. My concern has only grown since then as more and more of my patients tell me the price of their medication has doubled in the past year requiring some to find other cheaper medications lacking the same benefits as Armour.
Through my blog at metabolism.com, I have been trying to raise awareness of the troubles brewing for the American people because of the growing callousness of the pharma industry. Then, thankfully, entered the bumbling Mr. Martin Shkreli who acquired Turing Pharmaceuticals and attempted to screw with the wrong people. Mr. Shkreli tried to gouge the price of a drug used mostly by those in the AIDS community. This community is the best organized, most well financed and popular health advocacy group in the world. The Turing CEO was swiftly and loudly exposed to be a true cut throat. As a Wall Street billionaire, Mr. Shkreli knew how to make a profit. He correctly identified an industry that had all the requirements for making easy money except he picked the wrong drug. Had he picked a drug to treat thyroid disease this probably would have been a great success story for him.
A larger threat now exists in the form of the proposed Pfizer Allergan merger valued at around 150 billion dollars. The resulting company will become the behemoth of the pharmaceutical industry. According to Forbes the present CEO of Allergan, Brent Saunders, would assume the leadership role at the newly combined company. Brent Saunders, according to Forbes, is known for his anti-research attitude. Forbes quotes him as saying, “the idea that to play in the big leagues you have to do drug discovery (research) is a fallacy.” Mr. Saunders is a profits first CEO and that’s why stockholders love him. His long standing approach as a CEO is to ramp up profits from existing drugs by raising prices while simultaneously dumping research and development of new treatments. This is not the man the public wants running the largest pharmaceutical company in the world. Making this more of a public disaster is the attempt by Pfizer to avoid paying appropriate taxes to the U.S. government by taking their assets overseas through this merger
The American health care system has been in disarray for decades, way before our most recent President took office. I have nothing but praise and respect for anyone who tries to fix it. The developments in the pharmaceutical industry described here are an important part of what needs to be changed. Because this is an election year and because of the Turing scandal, a great opportunity to be heard now exists. With the government in semi paralysis during an election year, Pfizer, Allergan and Mr. Saunders also know this is their opportunity to push ahead with their plan. Time is running out to stop them. Rumors are that the merger is to be announced right after Thanksgiving.
Higher prices for prescription medications will affect everyone, either directly or because of the impact on family and friends. There are few opportunities for individuals to be heard about national issues. Here is one of those opportunities while the candidates align themselves with popular causes. As a first step I advise contacting the presidential candidate of your choice with a simple message. Consider the following,
“Restore the balance in the pharmaceutical industry. Stop the Pfizer Allergan merger. Patients not profits first.”
Here is a partial list of contact information for presidential candidates. Anyone with contact information for other influential people or organization is invited to leave the specifics as a comment on this blog so others can make use of it.
Hillary Clinton: https://www.hillaryclinton.com/contact https://twitter.com/HillaryClinton Office of Hillary Rodham Clinton, 120 West 45th Street, Suite 2700, New York, NY 10036
Donald Trump: https://www.facebook.com/DonaldTrump
Bernie Sanders; http://www.sanders.senate.gov/contact
Ben Carson; (202) 760-2795 info@2016Committee.org
Chris Christie; Office of the Governor PO Box 001 Trenton, NJ 08625
Look for a follow up blog at metabolism.com which will lay out other reforms for the pharmaceutical industry required to restore the American way of health to something we can be proud of.