Recently I was reading an opinion survey of Nevadans taken in November, a few weeks in advance of the presidential caucuses, third delegate selection event in the nation.
More than six out of ten Nevadans were negative on prescription drug prices, more than half said they thought there should be an independent body to recommend drug prices, and more than seven of every ten wants the drug companies to have to disclose “research and development, marketing and sales costs.” But one really interesting finding was that of all the players – drug companies, the Food and Drug Administration, physicians, insurers, consumer groups, and so forth – none command the trust of more than two out of every ten Nevadans.
At about the same time I read that survey, the saga of Martin Shkreli was unfolding. A hedge fund exec, Shkreli was CEO of Turing Pharmaceuticals AG. During his leadership of Turing, the corporation received the license for the anti-parasite drug Daraprim, named by the World Health Organization as basic to a successful health system. Under Shkreli, the price was hiked 5,556 percent, from $13.50 to $750 per tablet.
Last month, a U.S. Senate committee report looked at another drug – Sovaldi, an expensive hepatitis C treatment made by Gilead Sciences.
The Senate probe took a year and a half and 20,000 pages of corporate records were examined. Knowing that its plans for pricing would generate anger, the corporation had laid a strategy for facing down the public. “Let’s not fold to advocacy pressure in 2014,” Gilead VP Kevin Young wrote in an email. ”Let’s hold our position whatever competitors do or whatever the headlines.” Senators said corporate documents showed little attention was given to affordability or other matters in the public’s interest. Gilead priced Sovaldi at $84,000 for a 12-week course of treatment, a level that courted refusals by insurers to pay for prescriptions, and also prompted the Senate investigation.
None of this is particularly surprising. This kind of thing has been going on in pharmaceutical corporations for decades. In his last great Senate investigation, more than half a century ago, Estes Kefauver of Tennessee turned up some of the same kind of information. The probe was prompted by unsafe drugs and misleading advertising, but also by pricing.
At one hearing on Dec. 7, 1959, Senate staffers presented evidence that Schering Corporation bought a medication called estradiol from a French corporation for about 12 cents for a bottle of 60, sold it to pharmacists for $8.40 and to consumers for $14. Schering’s president called the figures “misleading and valueless.” Perhaps they were, unless you were a woman needing the hormone therapy the tablets offered. For her, a purchase costing $8.40 in 1959 was the equivalent of $68.51 in 2015 dollars. Fourteen dollars in 1959 was $114.80 in 2015 spending power. More to the point, the markup was thousands of percent. These kind of markups were found time and again.
Kefauver particularly wanted a law that forced corporations to share their technology. After three years of monopoly sales of any medication, a pharmaceutical firm would be required to license its drugs to other firms. It would still make money from the patent but could no longer prevent competition.
Unfortunately, Kefauver ran afoul of a fellow Democrat – President John Kennedy. The drug industry and the American Medical Association opposed any reforms, and Kennedy kept bobbing and weaving on what he would or would not support. The scandal over terrible side effects from thalidomide erupted right in the middle of Kefauver’s effort, but Kennedy did little to funnel public concern into legislative action.
The Kefauver–Harris amendments to the Federal Food, Drug, and Cosmetic Act were approved, and Kennedy signed the measure, but many achievable improvements were not in it, thanks largely to the president. For no good reason, his administration had presented its own industry-friendly bill in 1962 that included no patent provisions. With Kennedy withdrawing his support for the three-year requirement, the bill was much less consumer oriented.
Any bill, of course, must be enforced, and the industry went right back to work finding ways to jack up prices in spite of the new law. It has been doing so ever since, and the kind of exposures of pharmaceutical ripoffs we have seen in the past year will no doubt continue. Little wonder so many Nevadans find so few players to trust.
Dennis Myers is an award-winning journalist who has reported on Nevada’s capital, government and politics for several decades. He has also served as Nevada’s chief deputy secretary of state.