Faux Fight in DC Against the Financial Foolery in Healthcare

TO THE READER: In the bold, black font below, you see parts of a paper provided by Rep. Frank Pallone, Jr. (D-NJ, 3rd District), in anticipation of hearings held on May 9, 2019, by the Committee on Energy & Commerce of the U. S. House of Representatives. Rep. Pallone chairs the committee. The subject of the hearing? “Lowering Prescription Drug Prices: Deconstructing the Drug Supply Chain.”

In the bold, green font (with blue embedded links to sources), you see our comments on elements of the paper, and most particularly on points of fact that were omitted. Those omissions are telling. They reveal not only how politicians are beholden to very powerful lobbying interests inside the drug supply chain, but also the politicians’ lack of seriousness in fighting to reduce America’s disgraceful annual wastage of dollars spent on healthcare.  CLICK HERE FOR PDF FILE OF DOCUMENT WITH COMMENTS.

There are fighters, and then there are the faux fighters. The latter will choose the photo op and optics over substance every time. It’s what they do. It’s who they are.

Here is the lineup for the panels in the hearings of May 9 as found in the paper provided by Rep. Pallone.

Panel I

Justin McCarthy, Senior Vice President, Patient & Health Impact Group (Pfizer)
Kave Niksefat, Vice President, Value and Access (Amgen)
Jeffrey Hessekiel, Executive Vice President & General Counsel (Exelixis)
Amy Bricker, Senior Vice President, Supply Chain (Express Scripts)
Brent Eberle, Chief Pharmacy Officer (Navitus Health Solutions)

Panel II

Estay Greene, Vice President of Pharmacy Services (Blue Cross Blue Shield of North Carolina)
Lynn Eshenbacher, Chief Pharmacy Officer (Ascension)
Jack Resneck, M.D., Chair, Board of Trustees (American Medical Association)
Richard Ashworth, President of Pharmacy (Walgreens)
Leigh Purvis, Director of Health Services Research (AARP)


I. THE DRUG SUPPLY CHAIN

A. Pharmaceutical Manufacturers

Pharmaceutical manufacturers research, develop, and produce drugs. Once the Food and Drug Administration (FDA) approves a drug for purposes of marketing, the pharmaceutical manufacturer establishes a list price (also known as the wholesale acquisition cost). The list price could be determined by a number of factors such as research and development costs, demand, market competition, and manufacturing and marketing costs. Notwithstanding these factors, manufacturers may set any price they choose.

Manufacturers earn revenue when pharmacies, hospitals, and other health care entities purchase their drugs. For 2017, drug manufacturers earned about $324 billion in net revenues.

COMMENTS:

In his first sentence above, Rep. Pallone has identified who really does the serious work in the drug supply chain. All of the rest are middlemen, third-party payers, prescribers, dispensers, or consumers, none of whom are involved in research, development, or production.

The figure for total net revenues in the industry averages out to $1.7 billion for the over 190  pharmaceutical companies in the United States, which are responsible for 4.8 million American jobs, jobs that have been among the best in the country for years, attracting high achievers from the schools of the relevant sciences.

The U.S. is the preeminent manufacturer in the worldwide pharmaceutical market by a wide margin over its nearest competitor. We are also the largest market for pharmaceutical products. In short, the American pharmaceutical industry is indispensable. It’s where the most-serious work in the drug supply chain is done.

What is glaringly omitted from the “factors” that Rep. Pallone identifies as influencing a drug’s list price? The kickbacks (euphemized as “rebates”) that middlemen in the supply chain—the Pharmacy Benefit Managers (PBMs) and Group Purchasing Organizations (GPOs)—are allowed to accept without fear of prosecution.

The type of drug affects the manufacturer’s costs, as well as the revenue a company earns. Generally, small molecule drugs and their bioequivalent competitors, generic drugs, are cheaper to develop and have a lower list price than biologics. Biologics are made from living organisms and are used to treat serious diseases such as cancer, rheumatoid arthritis, and multiple sclerosis. Biologics often launch at very high prices, with annual list prices reaching tens of thousands of dollars. In addition, unlike the small molecule drug market, many biologics still do not face competition from biosimilar or interchangeable biological products. In 2017, biologics represented two percent of all U.S. prescriptions, but 37 percent of net drug spending. Generic drugs represent nearly 90 percent of all U.S. prescriptions, but only 23 percent of net drug spending.

In 2017, total retail drug spending was $333.4 billion, 6 which was a 0.4 percent year over-year increase from 2016. The key drivers of the slower growth in spending were a continued shift to lower-cost generic drugs and slower sales volume growth in some high-cost drugs.

COMMENTS:

Biologics received extended patent protection as part of a deal to grease Congress’s passage of the Affordable Care Act (detailed on pages 99-102 and 132-133 in America’s Bitter Pill, by Stephen Brill, an outcome for which Amgen alone spent $38 million on lobbying. NOTE: Amgen is represented in the panel testifying on May 9 before the House’s Committee on Energy & Commerce). And, yes, the makers of biologics enjoy large profits; the politicians who extended the period of patent protection to gain support for the ACA saw to that. There’s more than a little irony on display when we see politicians who supported the ACA vigorously (did they have to pass it to find out what was in it?) now pointing at BIG PHARMA as a notable culprit in the search for excessive cost in the drug supply chain. The top biologic, Humira, pulled in over $18 billion in revenues in 2017.

B. Pharmacy Benefits Managers (PBMs)

Pharmacy Benefit Managers (PBMs) are third-party firms hired by insurers, federal health programs, and plan sponsors to manage and administer the prescription drug benefits of health insurance coverage. This includes negotiating the prices of drugs to create formularies, as well as deciding which pharmacies are included in a plan’s network. Formularies developed by PBMs play a role in determining the cost of a prescription drug. The formulary is used to negotiate rebates and discounts with manufacturers, but it is also used to manage prescription drug use and spending by plan members. For example, cost-sharing, drug coverage, prior authorization, and member cost are all determined through a formulary. PBMs also negotiate fees and services with pharmacies, fees that may be based on each filled prescription.

PBMs mostly earn revenue by charging fees to the plans, pharmacies, and drug manufacturers, as well as by keeping a portion of the rebate they negotiate with the drug manufacturers. Increasingly, the large PBMs also earn revenue through the ownership of other parts of the supply chain including insurers and specialty pharmacies. Three companies cover about 70 percent of all prescription claims in the United States: CVS Health, Express Scripts, and UnitedHealth Group. According to one study, the PBM industry had an estimated gross profit of $23 billion in 2016.

COMMENTS:

The top PBMs have annual revenues in excess of $100 billion. This is astonishing. As of 2003, by grant of the Health and Human Services secretary at the time, these middlemen were granted a “safe harbor” from prosecution for receiving money (again, kickbacks) from drug manufacturers. In turn, the middlemen then identify the drugs that go into the formularies of the insurance companies. This is the very definition of a pay-to-play arrangement.

The arithmetic is breathtaking—the middlemen have revenues nearly 100 times as large as the companies that actually do the research and make the drugs.

When it comes to deconstructing the drug supply chain and figuring out where high and unreasonable costs are being injected into the chain, wouldn’t it make sense to mention this obvious fact when passing out white hats and black hats?

C. Insurers

Health plans assume the financial risk for the cost of drugs their customers receive as part of offering a prescription drug benefit. Insurers such as Medicare, Medicaid, private insurance companies, and self-insured large employers reimburse pharmacies, hospitals, and other healthcare entities for the amount paid to purchase the drug and related fees. The actual amount paid by the healthcare entities is confidential; therefore, insurers generally can only estimate the reimbursement amount.

Plans manage the prescription drug benefit by contracting with an external PBM, operating their own PBMs, or by purchasing drugs directly from manufacturers and dispensing the medication to consumers at their own pharmacies.

Plans earn revenue when the premiums they charge exceed the health care claims they pay. Plans use a range of strategies to hold down their drug costs, including through:

  • Formulary tiers (varying cost-sharing to encourage preferred or low-cost generic drugs);
  • Prior authorization (a physician must obtain approval from the insurer prior to prescribing a particular medication);
  • Step-therapy (a physician must begin treatment using the most cost-effective drug therapy before moving to more costly therapies if necessary); and
  • Cost-sharing and copayments (when a patient must pay a portion of health care costs not covered by the health insurance plan).

D. Hospitals and Physicians

Hospitals and physicians will often purchase large volumes of drugs from manufacturers or wholesalers through Group Purchasing Organizations (GPOs). GPOs help hospitals and physicians aggregate purchasing volume to negotiate discounts with manufacturers and distributors. If the physician or a hospital administers a drug to a patient, then the physician or hospital will use a buy-and-bill model, meaning that they will purchase the drug from a manufacturer first (sometimes with the help of a GPO), and then bill for it after it is administered.

Physicians and hospitals earn revenue if they are reimbursed at a higher rate than what it costs them to purchase and administer the drug.

COMMENTS:

The reader may have noticed that one type of middleman, the GPO, has been omitted from the drug supply chain. Did Chairman Pallone think that no one would spot that detail?

Professor Martin Makary, M.D. and Professor of Surgery at Johns Hopkins, has written in the Journal of the AMA, about the kickbacks that GPOs receive as the root cause of the over 150 FDA-documented drug and solution shortages that jeopardize the lives of Americas who are most in need of these medicines. Those shortages drive skyrocketing costs to patients, and increase costs to hospitals as both physicians and bedside nurses “MacGyver” their way around the shortages. We sure hope that the AMA board chair on the panel acknowledges the GPO role in juicing up the cost to the patient and gives Dr. Makary credit for speaking an uncomfortable truth. Dr. Resnick should also reveal what the AMA knows about the kickbacks and when they knew it.

Even pharmaceutical companies who make injectable drugs and solutions make it clear that their access to the market and attainment of market share hangs on their relationships with GPOs. This quote comes from the website of Amphastar Pharmaceuticals: “We currently produce approximately 15 injectable products while we continue to develop a portfolio of generic and branded products that target large markets with high technical barriers to entry. Amphastar’s long-standing relationship with the major group purchasing organizations and drug wholesalers in the U.S. enables it to establish significant market share upon the introduction of its new products.” Amphistar makes injectable Narcan (naloxone), which has recently been unavailable due to shortage.

To name just a very few, the following are among the drugs/solutions in short supply: epinephrine, saline solution, Pitocin, chemotherapy drugs, and insulin.

Philip Zweig has written about this very subject in the Wall Street Journal.

Multiple governmental panels have pointed to kickback to the GPOs as the root cause of these shortages and the related upward pressure on costs.

In a classic instance of the fox-in-the-henhouse paradox, Todd Ebert, the head of the GPOs’ lobbyist, the Healthcare Supply Chain Association, was a panelist on a FDA/Duke Margolis Center event to get to the bottom of the shortages. At the end of the hearings, Mr. Ebert declared that HHS can ask at any time to review the contracts between the GPOs and manufacturers of drugs that are or have been in shortage. During the symposium on shortages, attendees heard again and again that to get to the bottom of the shortages, transparency was key, and that the shortages were driven by economics.

Given that Congress in 1987 provided to the GPOs the “safe harbor” from prosecution for requiring and receiving “rebates” (again, kickbacks), reasonable people may get the impression that the Congress OWES the American people the effort of overseeing the contracts between the GPOs and pharmaceutical companies. They can make a modest gesture toward discharging that duty by calling upon HHS now to demand to see those contracts A few thousand government employees ought to be able to handle the job of reviewing the contracts.

Furthermore, those with financial acumen, but without conflicts of interest, should be present when those contracts are reviewed.

Anything less is staged faux fighting over the financial foolery embedded in the American healthcare system.

E. Pharmacies

Pharmacies dispense prescription drugs to individual patients. There are retail, mail, long-term care, and specialty pharmacies.

Pharmacies negotiate with manufacturers or wholesale distributors and purchase drugs at a confidential price. They will also negotiate with PBMs to be included in a PBM’s network and for reimbursement from the PBM, as well as other types of government and private payers. In addition to reimbursement for the cost of the drug, pharmacies will also receive a dispensing fee, which varies based on the payer. Total prescription dispensing revenues reached $423.7 billion in 2018.

F. Patients

Patients depend on prescription Rx drugs to manage chronic conditions, prevent, treat, or cure diseases, and reduce side effects from diseases or conditions. When patients purchase a drug, the price they pay may depend in part on how much of the cost their health plan covers. Patients are increasingly exposed to the list price of their prescriptions, either through their deductible or through a coinsurance percentage.

If the patient is not enrolled in a health plan, then they typically pay the full list price of a drug. Patients may access patient assistance programs and discount cards from manufacturers to lower the price they pay for a particular drug depending on criteria that is set by either the program or the manufacturer.

A recent poll found that a quarter of people who take prescription drugs say it is difficult for them to afford their medications. People are more likely to have difficulty affording their medications if they have monthly drug costs of $100 or more, are in fair or poor health, have annual incomes of less than $40,000, or take at least four drugs monthly. Three in ten 50-64 year olds report problems affording their drugs.

Comment: The saddest part of what appears to be another faux fight in the battle to help Americans have affordable accessible healthcare, is that Chairman Pallone, D-NJ, puts the patients last and the chosen panel is chock full of financial conflicts of interest. Who is speaking for the patients? We hope committee members ask pointed questions revealing who is making the big money and denying access to healthcare. Americans deserve the real truth and not another staged moment in American politics.

No More Middlemen! Reduce Drug costs and stop medication shortages!

Guest post by By: Holly L. Thacker, MD

Why Is There An Increase in Medication Costs?

I recently read a heart wrenching story about a young man with type 1 diabetes who died from preventable ketoacidosis. Since the cost of life saving insulin has sky rocketed, he was parsing out his insulin until his next paycheck as he couldn’t afford his insulin and died just three days before he was to get his next paycheck.

In my three decade career in the field of medicine, I have seen the emergence of so called ‘middlemen’ who control the market. These Group Purchasing Organizations (GPO) and Pharmacy Benefit Managers (PBM), dubbed as “Programs Bilking Millions” by our Cleveland Clinic Chief Pharmacy Officer Scott Knoer, emerge due to a loop hole in a federal law that allows for legalized kickbacks to these middlemen who control the market. This has led to increased costs of medicines and medical supplies and critical drug shortages.

For years, many of my patients used CanadaDrugs.com to get the same medicine at a fraction of the cost. However, this website has been shut down and it is illegal to get medications from another country. Daily, my nurses and Specialized Women’s Health fellows give patients information on how to reduce cost of their medications, including looking through coupons and trying to find rebates, ironically funded by some of these middlemen! We have told our patients to ask about the ‘cash price’ for medications as they are sometimes cheaper in cash without insurance as opposed to using medication insurance that is controlled by the PBMs.

I find that many of my patients are NOT aware of these GPO and PBM contracts. These contracts are highly lucrative for the middlemen and are this highly guarded and sadly a well-kept secret.

What Can Be Done About Expensive Medications?

1. We need to REPEAL this safe harbor loophole to reduce medication costs and end deadly drug shortages.

2. You can contact your two U.S. Senators and your U.S. House Representative.

3. Call and email your elected representatives. You can google to find your representative and call or email in just a few minutes.

4. Watch the video. Share this information with your friends and family.

5. I have become involved in the group Physicians Against Drug Shortages (PADS).

This is a bi-partisan issue, one that affects everyone regardless of political stripes. Both sides of the aisle are lobbied regularly to keep these kickbacks and control of the market in place.

Repeal of GPO Kickback Safe Harbor

It is critical that the GPO Kickback Safe Harbor {42 CFR § 1001.952} gets repealed as it:

  • Increases health care costs
  • Causes the unprecedented drug price spikes
  • Causes dangerous, even fatal shortages that began in 2006

It has been estimated that by eliminating these kickbacks in the healthcare supply chain we can save between $30 to $90 BILLION per year based upon published analyses.

If we can restore the drug marketplace so that inexpensive and available generic medications can become available to patients and rejuvenate the generic drug manufacturing industry in the U.S., it would allow for more competition, better prices and more available life-saving medications and supplies. Competition creates low prices and abundant supply. Competition lowers prices and improves quality. However, middlemen cartels inflate prices and can cause scarcity.

Be Strong. Be Healthy. Be in Charge!

-Holly L. Thacker MD

Action Alert: Stop Killer Kickbacks

On Tuesday April 2, the Oversight and investigations subcommittee of Energy and Commerce is holding a hearing investigating Insulin pricing https://energycommerce.house.gov/committee-activity/hearings/hearing-on-priced-out-of-a-lifesaving-drug-the-human-impact-of-rising

Team: we need to and HAMMER them with calls.

Congressional Switchboard: (202) 225-2927
Chair Rep. Diana Degette Phone: (202) 225-4431
Vice Chair Rep. Joseph P. Kennedy (202) 225-5931
Rep. Janice D. Schakowsky (IL) (202) 225-2111
Rep. Raul Ruiz (CA) (202) 225-5330
Rep. Ann M. Kuster (NH) (202) 225-5206
Rep. Kathy Castor (FL) (202) 225-3376
Rep. John P.Sarbanes (MD) (202) 225-4016
Rep. Paul Tonko (NY) (202) 225-5076
Rep. Yvette D. Clarke (NY) (202) 225-6231
Rep. Scott H. Peters (CA) (202) 225-0508
Rep. Frank Pallone (NJ) (202) 225-4671
Rep. Brett Guthrie (KY) (202) 225-3501
Rep. Michael C. Burgess (TX) (202) 225-7772
Rep. David B. McKinley (WV) (202) 225-4172
Rep. H. Morgan Griffith (VA) (202) 225-3861
Rep. Susan W. Brooks (IN) (202) 225-2276
Rep. Markwayne Mullin (OK) (202) 225-2701
Rep. Jeff Duncan (SC) (202) 225-5301
Rep.Greg Walden (OR) (202) 225-6730

Put their numbers in your phone find 3 friends to do the same. Tell them to call and to have people call tomorrow and Monday to say:

“Insulin costs so much, because of GPO and PBM rebates. stand for people over profits, and make PBM and GPO kickbacks illegal.”

It’s NOT enough to support the HHS PBM rebate Rule, not enough to support S. 657 The Drug Price Transparency Act (S. 657), intro by Senator Braun of Indiana.

April 1, in the Library of Congress, Physician and Patient Advocacy Leaders will be telling the world exactly this on LIVE STREAM! The meeting attendees represent over 30,000 physicians. Lawmakers are most welcome to attend or send your Health Care Aide Congress must introduce and support a bill that repeals GPO kickbacks as well as PBM !!

How can anyone possibly support legalized kickbacks for GPO/PBM Pharma Middlemen who do no Research, no manufacturing and distribute no product?” The only ENDURING solution for safe affordable medications like insulin is full repeal of the legalized kickbacks enjoyed by BOTH PBM AND GPO. Remember, congress, you work for US!!!!

Tweeters can tweet and retweet right @ those lawmakers and @potus, @pence @senatorbraun, etc:

Make insulin affordable by repealing the PBM AND the GPO #kickbackskill https://www.theintell.com/opinion/20190306/guest-opinion-make-lawmakers-cut-kickbacks-hold-drug-companies-accountable .

American ingenuity and free markets can solve the problem of rising drug prices… if we allow it.

A couple of major threats to the health of the prescription drug supply chain are finally getting some long overdue attention.

  1. We are over-reliant on foreign production.

More than 90 percent of our prescription drugs are either manufactured in China or contain key ingredients that come from China, and China isn’t our best friend. Drugs on this Chinese-sourced list include antibiotics, birth control pills, cancer treatments, anti-depressants, statins (for high cholesterol), and HIV/AIDS drugs.

Why in the world are we outsourcing this mission-critical aspect of American medicine to countries hostile to our nation? (Not to mention the fact that countries like China are stoking the opioid epidemic by exporting deadly illicit Fentanyl to our shores).

Steve Jobs famously took the Obama administration to task over the main reason Apple had 700,000 factory workers employed in China, instead of the U.S:  D.C. is not business-friendly and it is impossible to build a factory in the United States due to regulations and unnecessary costs.

https://www.businessinsider.com/president-obamas-lack-of-resolve-frustrated-steve-jobs-2011-10

Unfortunately instead of cutting the red tape, Sen. Elizabeth Warren and colleagues are proposing exactly the wrong solution to bringing drug production back to the US of A. Instead of unleashing the market forces that built America into the #1 economy in the world, Warren hopes to import the same policies that sank behemoths like the U.S.S.R. and helped ignite the dumpster fires consuming Venezuela and Cuba: nationalized takeover of production.

Even the most profitable industries are not immune to the destruction that government-run production can bring. Case and point: Nationalization has driven Venezuela from oil powerhouse into the poorhouse:

So let’s look for proven solutions instead of dooming the drug industry to a fate of greater drug shortages, stagnation, and even higher prices.

Yes, there is already a sea of red tape and failed policies standing between American patients and inexpensive drugs. Thankfully, unlike Senator Warren, the Trump administration’s FDA Commissioner Scott Gottlieb MD and HHS Secretary Alex Azar seem truly interested in getting to work cutting through it by unleashing competition not warmed over communism.

Which brings us to the second major threat to the supply chain that is getting some overdue sunshine:

2) Kickbacks to Group Purchasing Organization and Pharmacy Benefit Manager Middlemen.

According to nomiddlemen.org:

GPOs and PBMs are perpetrating “a dangerous and unethical game of ‘pay-to-play.’ It’s the dirty little secret behind the outrageous cost of medications and the shortages of many drug and medical supplies. Unfortunately, a law was passed that allows these medical market “middlemen” to accept kickback payments from drug and medical supply companies in exchange for exclusive sales contracts! It created a government-sanctioned system of racketeering that would be illegal in any other industry.

 

The FDA along with HHS have signaled a willingness to end the kickbacks. And since the beginning of 2019 Senator Susan Collins and the new Chair of the Senate Finance Committee, Chuck Grassley have also stated they are going to take a close look at these shameful business practices

https://www.collins.senate.gov/newsroom/senator-collins-urges-administration-prioritize-reducing-drug-prices

https://www.grassley.senate.gov/news/commentary/grassley-top-priority-reducing-health-care-costs

Bottom line? American ingenuity can solve the problem of rising drug prices. If we will let it.

Take Action by Jan 11: Eliminate the #GPO #PBM Middlemen #Safeharbor Creating Drug Shortages and High Prices

“Drug shortages are pretty much a daily disaster right now for most hospitals,” reported Pharmacy Times on December 10. Meanwhile, “The US Food and Drug Administration (FDA) is not just seeing an increase in drug shortages but also a spike in the intensity and duration of shortages,” writes Zachary Brennan, summarizing conclusions from an FDA event last month.

This summer FDA Commissioner Scott Gottlieb, MD convened a Drug Shortage Task Force “to seek root causes of drug shortages and potential enduring solutions.”

The Task Force has issued a request for public comment as it prepares a report to Congress, and the deadline to submit solutions is January 11. Please help us, your colleagues, and your patients, take advantage of this opportunity to share a few key ideas with the Task Force.

Here’s how you can help! Continue reading

Click and Comment to End Killer GPO/PBM Kickbacks

Co-Founder of Physicians Against Drug Shortages, Bob Campbell, writes:

Go to this site and click on the right button “Comment Now”
https://www.regulations.gov/comment?D=HHSIG-2018-0002-0001

There are already a bunch of comments from PADS members and you are able to read them first for inspiration. Those representing organizations should also submit a comment on behalf of their organization’s membership.

I wrote the passage below and then added an attachment GPO/PBM Facts which is added here as an attachment. There are some great WSJ comments below too which may be an inspiration. I hope this makes it easy. Say who you are why you care and then cut and paste to your heart’s delight. Also you can just compose from the heart.

During our October 22 White House meeting I hope to have a “large number” of comments to get rid of the Middlemen Kickbacks. I will personally deliver a “click count” to the White House so lets aim to impress.

Best
Bob Campbell

Suggestions for Comments:

In my 29 year career in medicine I have witnessed the emergence of middlemen GPO/PBM Kickbacks. What began as a nuisance has become the largest cost driver in healthcare. HHS should formally recommend repeal of the GPO/PBM Safe Harbor. It is a policy that is long overdue. Independent analyses demonstrate 35%-47% of the consumer cost of drugs is used to fund kickbacks. These GPO and PBM contracts are highly guarded and kept secret for a reason. Repeal the Safe Harbor. Reduce costs and end deadly drug shortages.

Repeal the Group Purchasing Organization (GPO) Kickback Safe Harbor {42 CFR § 1001.952(j)} and make the American healthcare system great again.

The GPO/PBM Middleman is the cartel responsible for spiraling healthcare costs, They are responsible for the unprecedented drug price spikes and dangerous, even fatal shortages that began in 2006. The GPO executives and there enablers are growing immeasurably rich in the process. Meanwhile the American people are facing escalating hospital costs. Americans can no longer afford health insurance or medications.
HHS OIG, the Department of Justice, and the Federal Trade Commission are failing to intervene to restore a competitive healthcare supply chain. Congress has failed to confront the powerful businessmen who have criminalized the healthcare supply chain.
Eliminating kickbacks in the healthcare supply chain will save $30b-$90B per year based upon empiric published analyses.

What can saving these billions of dollars do?

Restore the drug marketplace so that inexpensive and available generic medications are once again available to patients.

Rejuvenate the moribund generic drug manufacturing industry in the United States with the creation of hundreds of new plants and tens of thousands of new high paying jobs for American workers.

Allow savings to the Medicare and Medicaid programs totaling $11.1B-$33.3B that would occur immediately with no reduction in health care delivery.

Restore competition in the purchasing of all healthcare supplies. Kickbacks create high prices and low supply. Competition creates low prices and abundant supply. Competition lowers prices and improves quality. Cartels inflate prices and diminish quality.

End dangerous drug shortages that sometimes hurt and sometimes kill patients
Ending the healthcare supply chain kickbacks are a required component of any remedy for the rising cost of healthcare. It is also a necessary step if we are to continue to improve the quality of healthcare in any and all healthcare delivery institutions across the country. The intersection of law, economics, and medicine is where the next chapter in improving patient safety and extending high quality health care to all citizens begins.

The anticompetitive healthcare supply chain should be replaced by one that omits the market allocation fees and vendor access kickbacks. It is a necessary and inevitable event. There is no pathway to affordable high quality healthcare until Medicine’s Mobster Middlemen are vanquished.

Letters to WSJ:

Drug Rebates Help Many, but Not Patients

Pharmacy-benefit managers that are middlemen to middlemen, two orders of magnitude between the consumer and producer.

Joseph Antos and James C. Capretta write in support of pharmacy-benefit managers (PBM) that are middlemen to middlemen, two orders of magnitude between the consumer and producer, with market discipline totally absent (“Drug Rebates Aren’t ‘Kickbacks’” (op-ed, Sept. 17). Certainly, in today’s electronic age pharmaceutical manufacturers could have websites for consumers to purchase their products after an electronic prescription is received. Alternatively, for a known additional amount, a pharmacist could advise and dispense. Americans with health accounts could pay directly for most drugs, especially generics. Insurance could supplement the individual’s payment to purchase the newer, more expensive items. Reforms of the drug-approval process to lower costs would be beneficial.

Kenneth A. Fisher, M.D.
Kalamazoo, Mich.

The entire PBM industry is all about kickbacks and market manipulation. The more rent takers, the more forced manipulation of consumers and the less transparency there are, the less free any market can be. Oligopsony is the antithesis of a free market and directly leads to increased consumer prices. The safe harbor allowing kickbacks and market manipulation for PBMs needs to be rescinded.

Howard C. Mandel, M.D., FACOG
Los Angeles

Rebates create an environment where higher-list-price drugs are favored, providing zero incentive for pharma companies to introduce lower-priced medicines in competitive therapeutic classes. Over the last five years, according to the Department of Health and Human Services, pharmaceutical spending has increased by 38% while the average individual health-insurance premium has increased by 107%. During the same period, rebates, discounts and fees paid by the biopharmaceutical industry to insurers and PBMs have risen from $74 billion to $153 billion—an increase of 107%. Rebates, discounts and fees haven’t slowed precipitous premium increases.

Because PBMs retain a portion of negotiated rebates and other price concessions as compensation for their services, list prices are rising rapidly even as net prices have held steady. Unsurprisingly, manufacturers are willing to raise prices and transfer the greatest list-price-based rebate value to middlemen to secure preferred formulary position at the expense of real free-market competition, while also limiting the therapeutic options of physicians and patients.

Most rebates are generated from the medicines needed by the sickest patients, including those with cancer, autoimmune disorders and HIV. These patients pay 10 times more out of pocket than healthy patients and are forced to try cheaper or more rebate-rich drugs before getting medicines that work best. Faced with higher out-of-pocket costs and barriers to access, people are more likely to stop their treatment, getting sicker and more expensive to treat.

Rebates targeting the most vulnerable Americans aren’t just kickbacks, they are discriminatory and deadly measures as well.

Peter J. Pitts, Robert Goldberg
Center for Medicine in the Public Interest
New York

Legalized kickbacks for an industry that is controlling the prescription market? This has turned the pharmaceutical market into a pay-to-play operation as manufacturers can pay an increasing kickback for a coveted place on the formulary. Euphemistically calling them rebates is simply a way to keep the money flow of health care hidden from the unsuspecting public.

Marion Mass, M.D.
Perkasie, Pa.

You are either FOR Killer GPO PBM Kickbacks or Against Them

Bob Campbell, MD, co-founder of Physicians Against Drug Shortages writes:

Want to introduce an element of competition into healthcare? Ending the GPO/PBM kickbacks is the best place to start. Low hanging fruit and no room for compromise. You are either FOR sole source pay to play inflationary kickbacks or against.

So far since Trumps rumored new introduction of barriers to the kickbacks have been “rumored” to be “possibly written for possible introduction “ as new HHS rules Sen Warren and Hatch and Congressman Walden have emerged to keep the kickbacks in place and unfettered by HHS. They have not seen the rumored rules but if the rules might interfere with the essential kickbacks then the rules must never be enforced. Not good for America. Senators Toomey and Casey of Pennsylvania are both long time defenders of pay to play kickbacks. Pennsylvania Senate campaigns are very expensive and the PBM GPO cartels are very generous to supporters. Remember Trump can only erect barriers to access to the safe harbor. Congress made kickbacks and racketeering legal for GPOs and PBMs with the safe harbor law. Only Congress can make pay to play payola illegal again. That is an enduring solution. Trump cannot do that. Congress can.

A bill that is written, reviewed polished, and ready to go for any courageous Member of Congress. One version for the House and one for the Senate. President Trump says not one person in Congress is capable enough to take action on this matter. Is anyone willing to take him up on his challenge? All we need is a Healthcare Hero.  How about 100 new generic medication manufacturing plants with 200 jobs at each plant all in the state that leads the way. High paying clean manufacturing jobs that will stay busy throughout economic boom and bust cycles. Hundreds more just like it across the country, but the state of the Member of Congress who will introduce the bill gets first dibs.

A capital investment frenzy occurs if this bill passes. We need chemotherapy, saline, potassium chloride, potassium phosphate calcium carbonate, calcium chloride, sodium bicarbonate, epinephrine,ephedrine, norepinephrine, dopamine dobutamine, glucose, nitroglycerin, cardiac surgical drugs, antibiotics, obstetric medications, pediatric seizure medications and hundreds more.

I need drugs to paralyze people and unparalyze them. I need drugs to increase blood pressure and increase heart rates when they are too low. I need drugs to decrease blood pressure that is too high and slow down heart rates that are too high. Right now using smoke and mirrors. We should postpone all cardiac surgery until the Unsafe Safe Harbor is repealed. Right now we have Fake Anesthesia.

Trust me that is way more dangerous than Fake News. No more Fake Solutions from politicians for explosive healthcare costs and drug shortages. Exclusive Pay to Play Market Allocation Contracts is all that is keeping American companies from lowering costs for drugs and ending drug shortages. All contracts are written by an unnecessary extra layer of Middlemen inserted into the healthcare supply chain with a uniquely powerful ability to demand kickbacks from manufacturers to permit them to make lifesaving medications and medical devices for Americans who need healthcare. Drug Shortages never had to happen and can be ended. Healthcare Kickbacks never had to happen and can be ended.