by Ken Frisof MD
(Plain Press, October 2017) Most folks have seen TV ads for and against Issue 2. Mostly against it, because Issue 2 – to lower drug prices in Ohio – is opposed by PhRMA, the drug industry lobby, the lobby that has spent more than any other industry over the last 18 years to get its way in Washington DC.
Issue 2, the Ohio Drug Price Relief Act limits what Ohio state programs pay for prescription drugs to no more than what the VA pays for the same drugs. The prices charged to the VA are limited by federal law. The objective of the Act is to secure the same savings for Ohio programs. It directly affects almost 4 million Ohioans and indirectly affects everyone who pays taxes in Ohio.
PhRMA wants to frame the vote as an up or down vote on technical policy-particulars. It claims the legislation is unworkable, that there are secret rebates that would prevent Ohio from knowing, let alone, paying, the price the VA pays. When that claim doesn’t work, it claims the lower prices don’t really add up to all that much money saved. And, if that doesn’t work, it brings out its veiled threat – the poor drug companies will have no choice but to raise prices on everyone else, including veterans.
You are of course free to look at Issue 2 from the industry’s narrow policy point of view. It is better to think about it from a larger political point of view. Issue 2 is, really, about whether the drug companies, pretending to be patients’ friends, are going to continue to get away with outrageous prices and profits in our land.
Let’s look at some facts:
- The U.S. spends twice as much per capita on prescription drugs than the average spent by 19 other industrialized countries. Prices for many drugs are 2 to 5 times more expensive than in those countries.
- Between 2006 and 2013, while overall inflation rose less than 20%, the prices for 113 drugs to treat chronic conditions rose 190%.
- The twenty largest drug companies made $125 billion in profits in 2015 (up from $101 billion a year earlier).
- The average profit margins of the industry are 25-30%, more than twice as high as the other large companies in the S&P 500.
- Drug companies spend only between 10% and 20% of their revenues on R&D. In recent years, major drug companies have spent more on share buybacks and dividends than on R&D.
The drug lobby tries to claim that competition keeps its prices down. Experts in the field disagree. An article in the Journal of the American Medical Association last year asserted that “prescription drugs are priced in the United States primarily on what the market will bear.” The National Academy of State Health Policy observed that “instead of competition holding down prices, competitors match each other’s price increases.”
So, the real issue is not a small technical policy issue about which reasonable people can disagree. It is a political issue about who has the power to tame an industry that puts its financial welfare above the health and welfare of the American people. Hidden prices and secret rebates may make sense in some industries. They don’t make sense for an industry whose products seek to treat illnesses and save lives. As a retired family physician, I struggled way too often to figure out what a specific drug would cost my cash-strapped patients. We need fair prices, not “market” prices. We need visible prices, not hidden prices.
The swarm of lobbyists makes it very hard for our elected politicians to take meaningful steps to lower prices. Last year the D.C. drug lobbyists even prevented a simple experiment to see which of two ways of paying physicians to administer cancer drugs was better. Needless to say, the drug makers’ widely distributed campaign contributions to help to deter strong measures against them.
So, it is up to the people in a ballot initiative. Voting for Issue 2 won’t put a lot of money in your pocket right away. It will send a message to the drug industry and to politicians that the American people, like Ohioans of all political persuasions, are sick and tired of putting up with high prices for drugs. Our call for action in passing Issue 2 will resonate far and wide. And, that is what PhRMA is afraid of.