I used to be persuaded by arguments from “big Pharma” that the enormous costs of research and development justified the sometimes staggering prices of new drugs.
That justification seemed eminently reasonable, until I learned some inconvenient facts. For example, the amounts drug companies spend on television advertising (“ask your doctor for the purple pill”) exceeds the amounts they spend on research and development. And for another example, significant percentages of those front-end R and D costs are paid for by citizens’ tax dollars, through government research and grants.
Those discoveries left me disgusted, but unsurprised, by recent reporting from Pro Publica.
Five years ago, the U.S. Department of Health and Human Services tried to plug a crucial hole in its preparations for a global pandemic, signing a $13.8 million contract with a Pennsylvania manufacturer to create a low-cost, portable, easy-to-use ventilator that could be stockpiled for emergencies.
This past September, with the design of the new Trilogy Evo Universal finally cleared by the Food and Drug Administration, HHS ordered 10,000 of the ventilators for the Strategic National Stockpile at a cost of $3,280 each.
But as the pandemic continues to spread across the globe, there is still not a single Trilogy Evo Universal in the stockpile.
Instead last summer, soon after the FDA’s approval, the Pennsylvania company that designed the device — a subsidiary of the Dutch appliance and technology giant Royal Philips N.V. — began selling two higher-priced commercial versions of the same ventilator around the world
When Trump belatedly invoked the Defense Production Act, forcing General Motors to begin mass-producing a different company’s ventilator (for which taxpayers will also pay), no one even mentioned the Trilogy Evo Universal.
Nor did HHS officials explain why they did not force Philips to accelerate delivery of these ventilators earlier this year, when it became clear that the virus was overwhelming medical facilities around the world.
An HHS spokeswoman told ProPublica that Philips had agreed to make the Trilogy Evo Universal ventilator “as soon as possible.” However, a Philips spokesman said the company has no plan to even begin production anytime this year.
Instead, Philips is negotiating with a White House team led by Trump’s son-in-law, Jared Kushner, to build 43,000 more complex and expensive hospital ventilators for Americans stricken by the virus.
It’s despicably corrupt to use a pandemic to–excuse my phrasing here–suck even more deeply at the public tit. But it is the foreseeable result of America’s thoughtless, decades-long embrace of “privatization” and “public-private partnerships,” which have all too often simply been a more sophisticated form of patronage. Old-style patronage–whatever its flaws– mostly benefitted working people; you helped to get out the vote and if your candidate won, you got a (usually low-level) job with the city. Now, you write a nice fat check to the candidate and your company gets a lucrative contract with the city. (And no one gets out the vote, which is a different problem..)
As Pro Publica reported,
The story of the Trilogy Evo Universal, described here for the first time, also raises questions about the government’s reliance on public-private partnerships that public health officials have used to piece together important parts of their disaster safety net.
“That’s the problem of leaving any kind of disaster preparedness up to the market and market forces — it will never work,” said Dr. John Hick, an emergency medicine specialist in Minnesota who has advised HHS on pandemic preparedness since 2002. “The market is not going to give priority to a relatively no-frills but dependable ventilator that’s not expensive.”
Reagan began what has since become a concerted attack on the very idea of government–an attack that has benefitted corporations and businesses in a position to profit, but has eroded (“hollowed out” in the words of one scholar) the capacity of government to act on behalf of the common good.
We are about to see what happens–and how many people needlessly die–when what is left of our hollowed-out governing institutions is incompetent and corrupt.
To deny preparedness in order to profit MORE from a pandemic disaster is deepening the swamp to death.
I’m wondering if Trump’s apparent obsession with hydroxyquinolone is related to some investments he or his family members have made. After all, there are already no obstacles to doctors prescribing it off-label for compassionate use if they think it’s going to work, although the research that has in fact been done indicates that it’s not going to work.
Meanwhile, why are the automakers attempting to design new ventilators? Why not have them make ventilators according to existing designs and/or support their skilled workers in moving to other companies’s factories to do so?
Very insightful post, Sheila. It raises a question for me in the case involving Philips … within the scope of inquiry of apparent patronage and public accountability, does the definition of corruption arise?
This sucking on the American taxpayer’s unknowing tits is at least as old as 1980. I worked for a division of a major drug company that is headquartered in Indianapolis. My division built some of the first IV pumps and controllers and my job was to develop a manufacturing plan and project to assemble the circuit card assemblies that operated them.
When my million-dollar capital project came to the attention of the corporate moguls, they came out to California to hear my pitch. They approved it on the spot. But one afternoon I was invited to have lunch by the assistant CFO. I asked him about pricing for our product as well as everything else. “Well,” he said, “Since the other countries we sell our drugs to have capped what we can charge for them, we jack up the prices here to meet the demands of our stockholders for quarterly growth reports.” Obviously, this is still going on.
By adding some damned fool like Jared Kushner to the mix coupled with the staggeringly disconnected Ben Carson, we have the perfect storm for allowing far more deaths from this pandemic than is necessary or expected. They saw it coming. Their first response was: “How can we make money on this?”
Yes, all this government “de-tuning” began in earnest with Reagan/Regan, but it started in the 19th century when capitalism was growing out of its slavery days. Small “government” is the same thing to a crook and a criminal as “small police”. And, clearly, our corporations who sponsor our politicians are stone-cold crooks. Do you remember the fawning of the Senate finance committee when the big oil executives lied to their faces? Now, corporate/banking America has the most corrupt and inept government in our history to do their bidding.
How’s that working out for ally you “conservative” voters who thought Trump’s business acumen was going to keep Obama’s economy rolling? Well, wear a mask and stay at home. Ponder the issues when your loved one can’t get a ventilator when they get sick from being infected while playing on one of Georgia’s beaches that weren’t closed.
You can bet that with Jared in charge of federal supply chain management, there’s a greasy trump organization finger in the pie somewhere. Those 500 or so subsidiary companies aren’t on the books just to launder money. If I were a forensic accountant, I’d do this gig pro bono.
And if you elect people because they campaign on a “government is the problem” message, they’ll make sure that it is.
Vote the GOP into oblivion in November, all the way down the ballot. Never let another Republican hold public office ever again.
The fact that primary physicians no longer practice medicine, but are highly educated and paid information and referral sources, is an example of “Corporatism On Display” we are probably all familiar with. Our primary physician refers us to costly specialists who cannot reach a diagnosis without expensive testing on expensive equipment to reach a diagnosis our family doctors used to find in their neighborhood offices. Then they prescribe expensive treatment and drugs. As for Big Pharma and their “expenses”; somehow the new owner of the Epi-pen business raised the cost from a reasonable amount to hundreds of dollars for each Epi-pen needed immediately to save lives. Indianapolis’ own Eli Lilly recently received $10 MILLION from this city to improve their labs to study insulin which is too expensive for many patients to buy, even the cost of testing materials is too expensive for many diabetics. Harvoni; truly a miracle drug which often completely cures Hepatitis C, costs $1,152.58 PER PILL. My daughter is one of those miracles; her co-pay would have been $700 PER PILL but the 4th or 5th time she was hospitalized near death, Escenazi doctors found someone to cover her share and she was completely cured. But only after the Hep C caused many permanent physical illnesses. Research uncovered the fact that it costs $17 PER PILL to manufacture the drug. There was much hoop-la over this miracle drug in the oft repeated TV commercials…which is what much of the cost paid for.
The drug Trump is prescribing repeatedly in his “coronavirus updates”, saying “What do you have to lose?” is a sulfa based drug which many are allergic to. For those with the allergy, we suffer severe headaches, nausea, vomiting and loss of appetite and would cause lost time to be seeking a true working drug as it adds additional suffering which could confuse diagnosis and treatment if you have the coronavirus. Personally I believe he either has stock in the company or the name of the drug is a big word he managed to learn and he is using it while he can in his campaign speeches.
Like I said before, all we are, are commodities!
There are a lot of how’tos out there that purposely will not get put into action until it’s extremely financially beneficial for the companies, IE profit margin, to put into action.
There are a lot of what they call “orphan” drugs that have been developed by pharmaceutical companies that are not produced because the amount of lives it would save, is not worth the time or resources for them to produce.
See! This is just one small example! Maybe not so small for those of us “Commodities” that need the medication or piece of equipment that is setting on the shelf, the how’tos, rolled out only when there is a large enough financial windfall for these companies.
The public pays for the R&D and only benefits from it when the profit margin is high enough. And it doesn’t matter how much you have to pay for it after it’s rolled out, pay the price or die! Or die because it’s not in production yet as they are just waiting for the right time. (Example; the portable coronavirus test unit rolled out by Abbott)
Really, don’t expect compassion from corporate, as explained, your life is not worth the paper of your birth certificate, until the time is right!
And as a side note, if you want to know about the hydroxychloroquine I E plaquenil, maybe everyone should take a look at Rudy Giuliani! He has been the driver of Trump’s train of thought on that subject.
Patrick,
Yes. I totally agree. They’re more – or less – than a cult now. It’s a flat-out criminal enterprise.
Let me just add a little insult to injury here. After NIH or DoD or VA pay for the basic research, the company then begins phase one trials with the support of the agency that developed it. Then they do phases two and three, which test in larger and much larger cohorts. By the time phase three is complete, we know if the drug is safe and effective and we know what contra-indications there might be, that is who might suffer greater harm from taking the drug than not taking it. Then the drug companies spend a ton of money on phase four trials. Phase four are basically marketing trials, comparing the company’s drug to some other drug or combinations thereof. Eliminate phase four and eliminate advertising for drugs and the companies would save billions every year. BTW that doesn’t mean they’d lower their prices. Corporatism at its best.
Aimee–I said the same thing. Follow the money as I too want to know his obsession with that drug.
This pandemic is highlighting all the things that so many of us have been angry about for many, many years. Your recent posts have touched on it. The fragility of quite a few nonprofits who are expected to be the social safety nets for too many as oppose to gov’t will be heightened. The fact we do not have universal healthcare and our healthcare in this country is ‘for profit’. I may work and go to a nonprofit hospital but nothing else about health care is nonprofit.
I truly believe that this pandemic is a wake up call and we need to reset ourselves and really look deeply of what is to be valued.
There is a reason most hospitals are at least the academic affiliate ones have not allowed big pharma in their doors for at least the past 15 years and why you are not to fine any marketing items in our waiting rooms. We are not even to take a pen and pens are valuable. Big Pharma spends more money in marketing and lobbying of our gov’t officials than they do in research and development.
Why are people continually surprised that make more money now regardless of the impact on any others ever only works when limited by regulation and competition?
Vernon,
I like the way you phrased this:
‘Small “government” is the same thing to a crook and a criminal as “small police”.’
Patrick,
“And if you elect people because they campaign on a “government is the problem” message, they’ll make sure that it is.”
A quote for eternity!
You folks are on a roll today.
I have no doubt that you know the difference between corporatism, corporatocracy, and crony capitalism, but I am not sure all your readers do. Corporatism is the political ideology that advocates the organization of society by corporate groups, such as agricultural, labor, military, scientific, or guild associations on the basis of their common interests. Corporatist theories run the gamut from progressive to fascist. Corporatocracy, on the other hand, refers to an economic and political system controlled by corporations or corporate interests. These days many mistakenly use the term corporatism when they mean crony capitalism, which is the use of state power rather than competition over resources where the state exercises monopolist control.
I came across your blog while writing a piece on the ventilator fiasco. You say that you became disgusted upon learning how much the pharma companies spend on advertising, while taxpayer funds ($30-40 billion a year through the NIH) support development of the drugs that these companies are selling to us. Here is something else that deserves your disgust: all the corporate cash that the pharma executives distribute to the stock market in the form of dividends and buybacks. Read this op-ed (www.nytimes.com/2019/02/26/opinion/drug-pricing-senate-hearing.html) and this paper (www.ineteconomics.org/perspectives/blog/financialization-us-pharma-industry).