Peter Maybarduk on Busting up Big Pharma’s Monopoly Power

A poll released by Politico and Harvard University in September 2017 found that Americans think the number one priority for Congress should be combating high prescription drug prices.

Peter Maybarduk
Public Citizen

According to the poll, fully forty percent of Americans want lawmakers to focus on bringing down pharmaceutical costs – more than any other issue surveyed.

Now a group of citizen leaders wants to build a nationwide grassroots movement to pressure Congress to confront the pharmaceutical industry.

“We are now looking at how to build a national campaign to overcome the power of the pharmaceutical industry,” Public Citizen’s Peter Maybarduk told Corporate Crime Reporter last week. “It doesn’t seem that there has been nationwide organizing on medicine prices per se as a focused national grassroots campaign. But the energy, anger and suffering is all there now to support such a campaign. People want it and are demanding it. And it seems to be what is necessary to overcome the pharmaceutical industry in Washington.”

Since Public Citizen also supports single payer, isn’t single payer a magic bullet? You would have one buyer and the industry would have nowhere else to go.

“Single payer would be huge. We need increased negotiation power. There are some modest versions. And then there is the comprehensive version of single payer. But you also needs tools to block the price spikes and curb the monopoly power. We are pushing very hard for single payer. But in concert with that, you have to do something about the underlying business model. Even in a single payer system, that business model would give the drug companies a lot of leverage and potential for abuse in the United States and abroad.”

“Outside of Washington, the argument is won. People are not fooled by the pharmaceutical industry and their arguments about research and development and value. They want discipline on price. They want to push back on the industry. We have to help folks organize so that elected officials have nowhere to run and have to follow the people’s will on this.”

“We are having regular coalition meetings and talking with grassroots groups and activists around the country. We will continue to bring people together toward a major national push.”

What is your work at Public Citizen?

“We challenge the monopoly power of the pharmaceutical industry in order to improve access to medicines for all. We also work on knowledge economy issues, like supporting the privacy of internet users. We do this work in the context of trade agreements, we do it internationally and in the United States.”

“We are primarily focused on bringing down the prices of needed and life saving medicines in the United States and abroad. I was initially hired to help countries overcome patent barriers and introduce generic competition to lower price and improve access. And today we are increasingly focused on legislation and campaigning in the United States. We believe we have a significant moment here during which we can potentially break Big Pharma’s political stranglehold on the country.”

What do you mean by monopoly power?

“We mean that through patents and other government granted exclusivities, a company will have monopoly control over a particular life saving medicine. If you can’t substitute one medicine for another, then that’s a monopoly. Monopolies are built into our research and development system through a combination of historical accident and the lobbying might of the pharmaceutical industry.”

“Pfizer is the largest. And you have a number of other big players organized under a couple of trade associations who are invested in defending this business model. The companies will tell us that they will put new medicines on the market in exchange for the right to be the exclusive seller of the drug for a period of time. That means that they can charge us whatever society will pay to care for our sick.”

What’s an example of a drug that exemplifies the problem?

“The dramatic historic example is the HIV/AIDS drugs. Millions of people died for lack of access to existing medicines because companies were pricing them above $10,000 per person per year and blocking generics from the market. At that price point, governments and the international community didn’t find it cost effective to save poor people’s lives. The industry was complicit in the deaths of millions.”

How did that situation change?

“It changed through the activism of our friends and allies – people rising up around the globe and applying pressure and demanding a change to the status quo. You had a mass movement in South Africa and people taking to the streets. You had some creative lawyering around the world. And then eventually you had an alliance with some generics manufacturers out of India. They demonstrated that you could in fact produce these AIDs drug cocktails for just a dollar a day.”

Was it that – primarily a market solution – the generic companies in India pricing the same drug at a dollar a day?

“It was a market solution in the sense that competition has consistently proven the most effective way of reducing drug costs over time. It was a political solution in the sense that it took people rising up to change the political atmosphere to make competition possible.”

“Big Pharma did everything then and now to control the rules and make it impermissible to introduce market solutions. Pharma doesn’t want a market. They want these government granted privileges to be as long and broad as possible. It takes activism in order to create market possibilities to bring down prices and expand access.”

What’s a current example?

“Every expensive medicine contributes to treatment rationing to some degree. Governments do not have enough money to provide for everyone’s needs. They have to make difficult choices about how public monies are going to be invested. The outrageous costs of pharmaceuticals constrain the health deliveries we can provide.”

“Some headline examples are EpiPen and insulin. Insulin is a pretty good example for the moment. The new Trump nominee to head Health and Human Services – Alex Azar – was the president of Lilly USA – the largest affiliate of Eli Lilly. And he was the chief lobbyist for the company before that. He presided over the spiking of insulin prices in concert with a couple of other manufacturers and some pharmacy benefit managers. We have seen the price of insulin triple and in some cases quadruple in a little over a decade.”

“That’s six million people in the United States and about 200 million globally who use insulin. There is rationing. A lot of people skip or skate by or compromise other household expenses in order to try and pay for this century old hormone that was invented by researchers at the University of Toronto who gave it away for a dollar. We are not always paying for innovation.”

If the University of Toronto gave it away, how did the drug companies come to control the price? You would think there would be a drug company that would take a free drug and provide it for a lot cheaper.

“Insulin delivery technology continues to improve and the companies control that. We are not going to roll back the state of science when treating people. There is some disagreement as to how important these various improvements are. But essentially, you have three companies providing various types of alternatives. They are each a little different from the other. They have market power. They are doing whatever they can to influence prescription behavior. They lock others out from producing competing products. Then they drive up price in schemes with the pharmacy benefit managers.”

Those three insulin companies you mentioned are Lilly, Sanofi and Novo Nordisk. What can be done?

“Senator Sherrod Brown (D-Ohio) has a good piece of legislation on this right now. There are three tools that we need to do something robust about drug prices – increase people’s negotiating power, block price spikes and curb monopoly abuse.”

“The insulin case is less an issue of the launch price of the product than it is this year to year trend of companies having total freedom to increase the price with a lot of barriers to competitors. There we can just essentially impose a tax on annual increases in a progressive way so that if the price is above a certain amount it makes no economic sense for the company to continue to increase prices.”

“Martin Shkreli made headlines, but the industry as a whole increases prices by ten percent or so on many, perhaps most products, every January 1. Year to year, they increase the prices even on their older products. We should pass legislation to curb price hikes.”

“On monopoly power, you can license the patents. Government can use its authority to increase competition whenever it chooses and allow generic entrants to the market to bring down prices.” What does the Sherrod Brown legislation do?

“That legislation says that if a company increases the price of an existing product on the market, it shall be taxed at a progressive rate. It lays out a progressive taxation plan related to the price spike. So for example, a price spike of over 20 percent would be taxed at 100 percent.”

[For the complete q/a transcript of the Interview with Peter Maybarduk, see 32 Corporate Crime Reporter 3(12), Monday January 15, 2018, print edition only.]


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