Robust competition usually keeps the price of generic drugs well below that of brand-name drugs. When there is little or no competition, however, generic-drug manufacturers can substantially increase prices, and drug shortages may occur. Such market failures can compromise care and negatively affect patients, health care providers, government insurance programs, and private health plans. We believe that market-based solutions are an important alternative approach to stimulating competition in generic-drug markets. One such solution is to establish a nonprofit generic-drug manufacturer with the explicit mission of producing affordable versions of essential drugs and ensuring a stable supply of such products. A consortium of hospitals and health plans, including Intermountain Healthcare, Trinity Health, SSM Health, and Ascension, in collaboration with the Department of Veterans Affairs and philanthropists, is following this approach and developing a nonprofit generic-drug manufacturer code-named Project Rx. Citation: Liljenquist D, Bai G, Anderson GF. Addressing Generic-Drug Market Failures -The Case for Establishing a Nonprofit Manufacturer. N Engl J Med. 2018;378 (20):1857-1859.
Public Procurement of Food in Canada
Unhealthy foods are widely available in public settings across Canada, contributing to diet-related chronic diseases, such as obesity and diet-related diseases especially among vulnerable groups, including children and seniors. Healthy food procurement policies, which support procuring, distributing, selling, and serving healthier foods, have recently emerged as a promising strategy to counter this public health issue by increasing access to healthier foods. Although numerous Canadian health and scientific organizations have recommended such policies, they have not yet been broadly implemented in Canada. To inform further policy action on healthy food procurement in a Canadian context, the authors conducted an evidence synthesis to assess the impact of healthy food procurement policies on health outcomes and sales, intake, and availability of healthier food. Based on this review, they recommend policies and practices for governments, publicly funded institutions, decision-makers and professionals, citizens, and researchers. They conclude that implementation of healthy food procurement policies can increase Canadians’ access to healthier foods as part of a broader vision for food policy in Canada.
Citation: Raine KD, Atkey K, Olstad DL, et al. Healthy food procurement and nutrition standards in public facilities: evidence synthesis and consensus policy recommendations. Health Promot Chronic Dis Prev Can. 2018 ;38(1):6-17.
Twenty-Seven Years of Pharmaceutical Industry Criminal and Civil Penalties:1991 Through 2017
Pharmaceutical Industry Financial Penalties, 1991-2017. Credit and source
A new report from Public Citizen concludes that the number and size of federal and state settlements against the pharmaceutical industry remained low in 2016 and 2017, with federal criminal penalties nearly disappearing. Financial penalties continued to pale in comparison to company profits, with the $38.6 billion in penalties from 1991 through 2017 amounting to only 5% of the $711 billion in net profits made by the 11 largest global drug companies during just 10 of those 27 years (2003-2012). To our knowledge, a parent company has never been excluded from participation in Medicare and Medicaid for illegal activities, which endanger the public health and deplete taxpayer-funded programs. Criminal prosecutions of executives leading companies engaged in these illegal activities have been extremely rare. Much larger penalties and successful prosecutions of company executives that oversee systemic fraud, including jail sentences if appropriate, are necessary to deter future unlawful behavior. Otherwise, the illegal but profitable activities will continue to be part of companies’ business model.
Cutting-edge NHS drugs do more harm than good
Almost all new drugs approved for Britain’s National Health Service do more harm than good, according to a study using modelling adopted by the government, reports The Times (London). Saving a life with a new drug can cost about twice as much as doing the same through more staff or equipment, according to official calculations that led to calls for reform of the way the NHS pays for medicines. The Department of Health and Social Care has implicitly conceded that the cost of most cutting-edge medicines kills more people through diverting money from other NHS services than the treatments themselves save.
FDA’s Gottlieb blames industry ‘Kabuki drug pricing’ for high costs
Reuters reports that U.S. Food and Drug Administration chief, Scott Gottlieb, criticized pharmacy benefit managers, health insurers and drug makers for “Kabuki drug-pricing constructs” that profit the industry at the expense of consumers. The comments, made at a conference organized by a leading U.S. health insurer lobbying group, stoked speculation over what steps the administration of U.S. President Donald Trump may take to rein in lofty prescription drug costs. “Patients shouldn’t face exorbitant out-of-pocket costs, and pay money where the primary purpose is to help subsidize rebates paid to a long list of supply chain intermediaries,” Gottlieb said at the meeting of America’s Health Insurance Plans (AHIP). “Sick people aren’t supposed to be subsidizing the healthy.”
Pension Funds Under Pressure to Sell Off Investments in Gun-Makers
Since the mass killing at a Parkland, Fla., high school earlier this month, many teachers have called on their state pension funds to sell their stakes in gun-makers, reports National Public Radio. Private investment firms including BlackRock and Blackstone are reviewing their firearms investments in response to clients’ demands. “I’m currently urging my colleagues to divest in retail and wholesale suppliers of weapons that are banned for possession or sale in the state of California,” says State Treasurer John Chiang, who sits on the boards of his state’s two largest pension funds — CalPERS for public employees and CalSTRS for teachers. “We can make a clear and powerful signal that the inaction by Congress is heartless, it’s intolerable, and there are people who want to make sure that kids aren’t losing their lives,” Chiang says.
Bank of America takes aim at gun-making clients
Bank of America Corp became the latest financial heavyweight to take aim at gunmakers, saying it would ask clients who make assault rifles how they can help end mass shootings like last week’s massacre at a Florida high school, writes Reuters. Bank of America, the second-biggest U.S. bank by assets, said its request to makers of the military-style weapons was in line with those taken by other financial industry companies to help prevent deadly gun rampages. “An immediate step we’re taking is to engage the limited number of clients we have that manufacture assault weapons for non-military use to understand what they can contribute to this shared responsibility,” the Charlotte, North Carolina-based bank said in a statement.
Spotlight on harmful pharmaceutical industry practices: Educating the public to build a foundation for reform
In the last year, policy makers, the media and the public have focused new attention on the harmful practices of the pharmaceutical industry. This scrutiny provides an opportunity for health faculty, journalists and advocates to educate their students, readers and members about the near daily revelations around these practices and their policy solutions. Dividing these practices into specific categories, we have highlighted some of the industry’s egregious practices that have surfaced under society’s microscope. By engaging their constituencies in learning about harmful pharma industry practices and considering options for reducing such risks, health professionals and activists can lay the foundation for meaningful reform. By having our students read and critically analyze these sources, we prepare them to contribute to solutions.
Pricing
Drug pricing has been a hot topic this year for both consumers and legislators. With as many as one in four of constituents reporting difficulty in paying for prescription medications, this issue has been brought to the forefront of American politics. For example, this past April, legislators in Maryland passed an Anti-Price-Gouging Law to protect its citizens and taxpayers from price increases within “…noncompetitive off-patent drug markets.” While this is a great first step for Maryland, there is still more to be done. This law does not affect specialty drug innovators or generic drug manufacturers. So specialty drugs like medications to treat cancer can still be priced exorbitantly high, much higher in fact than patients in the UK pay for the same medications.
If you are looking for more information on America’s fight against Big Pharma, consider watching Drug Short, a documentary in the Netflix Dirty Money video series that shows the rise and fall of Valeant Pharmaceuticals, led by a CEO who declared that his goal wasn’t to make new drugs but simply to “create stockholder value.”
Distribution of opioids
Another big ticket item taking the stage in American politics this year was the country’s current opioid epidemic and the role that pharmaceutical companies have played in the issue. A recent article from Reuters reported on a suit filed by Kentucky’s attorney general against drug distributor McKesson Corp. The suit claims that the distributor failed to flag large opioid orders being delivered different pharmacies in the state, fueling the current epidemic. While our country has seen a decrease in opioid prescriptions, according to a report from the CDC, the amount of currently prescribed opioids remains roughly three times the amount as was prescribed in 1999. What started off as a family business for the Sacklers, owners of Purdue Pharma and manufacturers of OxyContin, has generated billions of dollars for the family and company—and millions of addicts, as described in a recent New Yorker article.
Intellectual prosperity protections
Doctors Without Borders, Oxfam, the AFL-CIO and about 100 other groups focused on health standards and workers’ rights are urging NAFTA negotiators not to use the intellectual property chapter of the trade agreement to protect pharmaceutical companies and jeopardize affordable access to medicine. “It is vital that the NAFTA party governments reject any provisions that would expand or strengthen pharmaceutical monopolies and enforcement at the expense of access to affordable medicines,” the groups wrote in a letter to the top health and trade ministers of the U.S., Canada and Mexico.
In recent years, we have seen more examples of pharmaceutical monopolies and the powers that they hold come to light. Drug manufacturers like Celgene Corp., the makers of the cancer drug Revlimid have been able to extend their patent exclusivity for decades. This is especially problematic for consumers as generic medications are not developed and price gouging occurs.
Safety & Regulations
American consumers and patients rely on the FDA to approve and monitor safe prescription medications and medical devices. It’s common to see drug warning labels updated with newer side-effect information or even a black box warning if potentially adverse side-effects are known. These black box warnings often warn consumers of serious side-effects, as in the case of the blood thinner Xarelto which lacks an approved antidote causing serious bleeding incidents which have led patients to file thousands of lawsuits. Sometimes, however, this warning can hurt the drug manufacturer more than it benefits the consumers as shown in the case of varenicline, a prescription medication used to treat nicotine addiction.
For a more in-depth look into the medical device industry, consider the new book, The Danger Within Us: America’s Untested, Unregulated Medical Device Industry and One Man’s Battle to Survive It, an investigation of the products, practices and regulation of the medical device industry in the United States.
Tax Avoidance and Tax Evasion
A report from Americans for Tax Fairness examines the profits, taxes, and drug prices of the 10 biggest U.S. pharmaceutical companies: Johnson & Johnson, Pfizer, Merck & Co., Gilead Sciences, AbbVie, Amgen, Eli Lilly & Co., Bristol-Myers Squibb, Biogen and Celgene. The Pharma Big 10 had $506 billion in untaxed profits stashed offshore in 2016. These profits increased by 65% from 2011, as drug prices soared. U.S. tax law allows companies to indefinitely delay paying federal taxes on profits booked and kept offshore. The new US tax law could offer these companies a tax cut of up to $80 billion.
The late January US budget deal that reopened the federal government included a two-year delay of a proposed 2.3 percent tax on medical devices, originally included in the Affordable Care Act to help pay for the law’s health insurance subsidies. Industry had been demanding relief from the tax for months. The two-year suspension will cost the federal government about $3.7 billion. Medical device companies cheered the legislation.
Caitlin Hoff is a Health and Safety Investigator, aiming to educate people about consumer rights, and industries that seek to diminish them. Nicholas Freudenberg is founder and director of Corporations and Health Watch.
VW Poisons People, Monkeys and the Air We Breathe
Once again, new revelations about the illegal and deceptive practices of German car makers Volkswagen, Daimler and BMW attract media and public scrutiny. A few recent highlights:
Fortune reported that “Volkswagen’s CEO said he was ‘stunned’ by reports the carmaker had sponsored tests that exposed monkeys and humans to toxic diesel fumes and two years after an emissions cheating scandal, pledged once again to get to the bottom of the wrongdoing. Europe’s largest automaker has come under fresh scrutiny after the New York Times said last week that Volkswagen and German peers BMW and Daimler funded an organization called European Research Group on Environment and Health in the Transport Sector (EUGT) to commission the tests. The report came more than two years after VW admitted to cheating U.S. diesel emissions tests, sparking the biggest business crisis in its history, and pledged sweeping changes to ensure such misconduct never happened again.
The New York Times reported that in 2014 scientists in an Albuquerque laboratory conducted an unusual experiment: Ten monkeys squatted in airtight chambers, watching cartoons for entertainment as they inhaled fumes from a diesel Volkswagen Beetle. The details of the Albuquerque experiment have been disclosed in a lawsuit brought against Volkswagen in the United States, offering a rare window into the world of industry-backed academic research. The organization that commissioned the study, the European Research Group on Environment and Health in the Transport Sector, received all of its funding from Volkswagen, Daimler and BMW. It shut down last year amid controversy over its work. It also produced a skeptical assessment of data showing that diesel pollution far exceeded permitted levels in cities like Barcelona, Spain.
According to The Washington Post, the study by the European Research Group on Environment and Health in the Transport Sector (EUGT) was never published, and the research institute overseeing it has since been dissolved. All three carmakers involved in the study — Daimler, BMW and Volkswagen — distanced themselves from the research after the studies were disclosed. But the research institute behind the controversial tests on monkeys was founded by Daimler, BMW, Volkswagen and automotive components supplier Bosch, which has raised questions over the extent to which experiments with humans was backed by the three major carmakers, too.
Another account of the VW diesel emissions is featured on a new Netflix series “Dirty Money” an investigative series that exposes “brazen acts of corporate corruption and greed.” The first episode, Hard NOx, examines the VW deception on emissions.
Can litigation change pharma practices that contribute to opioid epidemic?
As journalistic and legislative scrutiny of the role of the pharmaceutical industry in the opioid epidemic continues, several new reports focus on the potential of litigation to curb Big Pharma abuses.
In The New England Journal of Medicine, Rebecca Haffajee and Michelle Mello, two public health lawyers, examine drug companies’ liability for the opioid epidemic. They describe five legal rationales for litigation against opioid makers and distributors that federal and state government agencies have used:
- Blaming the industry for unreasonably interfering with public health by oversaturating the market with drugs and failing to guard against misuse and diversion,
- Charging the industry with deceptive marketing that makes false claims about effectiveness and addictiveness,
- Accusing the industry for lax monitoring of suspicious opioid orders, a potential violation of the federal Controlled Substance Act,
- Asserting that the industry continued to promote opioid use despite mounting evidence lining the product to adverse health outcomes,
- Alleging that the industry accrued profits at the government’s expense through unfair business practices.
The authors outline some of the challenges facing litigation against opioid manufacturers but conclude that “litigation could help alleviate the opioid epidemic by changing industry practices and building public awareness.”
In an Oklahoma lawsuit recently described in The New York Times, a lawyer is using the Cherokee Nation tribal court to sue Walmart, Walgreens and CVS Health, as well as McKesson and other major drug distributors, for violating federal drug monitoring laws(reason 3 above) and enabling prescription opioids to flood into the Cherokee nation. “I believe these companies target populations” Todd Hembree, the Cherokee Nation attorney general, told The New York Times. “They know Native Americans have higher rates of addiction. So when they direct their product here, they shouldn’t be surprised to find themselves in a Cherokee court.”
The Washington Post and 60 Minutes investigated the failure of the U.S. Department of Justice to follow the recommendation of a Drug Enforcement Agency task force working across 11 states to revoke registrations to distribute controlled substances at some of the 30 drug warehouses of The McKesson Corporation, the nation’s largest drug company. The DEA team wanted to fine the company more than $1 billion and bring the first criminal case against a drug distribution company. Instead, reports The Post, “top attorneys at the DEA and the Justice Department struck a deal earlier this year with the corporation and its powerful lawyers, an agreement that was far more lenient than the field division wanted…. Although the agents and investigators said they had plenty of evidence and wanted criminal charges, they were unable to convince the U.S. attorney in Denver that they had enough to bring a case.”
Note to Corporations and Health Watch readers: Our next post will be on January 3,2018. Happy New Year!
Corporations and Health Watch 
