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Child Psychiatrist /Adult Psychiatrist

The True Big Pharma Backers Show Themselves

Impact on Drug Innovation Image

Here is a hint – they are not psychiatrists or even physicians. They are Republicans. That may come as a shock to those of you who have absorbed all of the pharma conflict of interest stories about physicians over the past 20 years. Psychiatry in general was selected for much of that criticism. The average physician in the US had no significant conflict of interest even when trivial compensation like meals during continuing medical education (CME) courses were tallied. Some members of Congress even went so far to investigate some psychiatrist’s personal employment arrangements to point out any potential conflicts of interest when it came to pharmaceutical manufacturers.

Today we finally have some clarification on who really backs Big Pharma and wants to assure their large profits. It should come as no surprise that it is Congress – specifically members of the pro-business GOP. For years, Congressional conflict-of-interest has been sanitized by their disclosures as if that somehow prevented them from passing pro-Pharma legislation and regulations. For the record the amount of lobby money to the major parties varies from year to year. For 2022 a total of $26,297,445 was donated from the pharmaceutical industry with $15,175,518 to the Democrats and $10,994,723 to the Republicans. That is an average donation of $29,159 to $105,910. By contrast the Open Payments site recording payments to health care professionals claims that drug and medical device companies gave physicians $12.59 billion in 2022, but they are counting funds used to pay for research as well as profits from ownership of patents and medical devices (a total of $8.87 billion). Looking at general payments alone, the physicians receiving any type of reimbursement averaged about $441. The current reporting rule is that any amount exceeding $10 or an aggregate of $100 in the case of meals must be reported.

I previously asked the question whether a slice of pizza given to a doctor at grand rounds was more likely to get results for the pharmaceutical industry than the average donation to Congress ($46,579 at the time). I made the point that despite the continuous criticism of psychiatrists, they happen to be way down on the list of physicians getting these donations with about 37% receiving general payments and 3.6% receiving payments totaling more than $10,000.

But all the corruption by trivial payments discussion was based on shaky research. It is quite easy to demonstrate that physicians want to try new drugs as they come into the marketplace and show that marketing efforts correlate with prescriptions. We had a No Free Lunch movement to prevent corruption by pizza slices. We had a great deal of agitation about ghost writers, pharmaceutical companies not publishing negative studies, faulty research, side effect reporting, etc. Almost all of that involved psychiatry and often several self-appointed critics from the field. There are undoubtedly problems with clinical trials in all specialties, but during that 20-year span from about 1998-2018 it seemed as if there was an active conspiracy to sell psychiatric medications. To some extent that continues but it has less legitimacy in the field particularly since drug detailing and sales have been eliminated from most clinics and hospitals.

All of that commotion was probably good cover for Congress who was actually receiving payments that could make a difference. And during that time pharmaceutical companies recorded record profits.

What is different now? The Biden administration has decided that it wants to negotiate prices for Medicare Part D prescriptions. They are on solid ground. The Veterans Administration (VA) negotiates drug prices and has 399 drugs on their formulary. A GAO study showed that they paid 54% less per unit than Medicare. HHS has already selected the drugs that will be negotiated in the initial round and as expected most of them are the high expenditure drugs in the plan.

The Republicans claim that these negotiations will decrease access to care and raise drug prices although there is no evidence that the VA negotiations have done that. They also claim that there will be reduced innovation, research and development, and job losses. They seem to have missed the overall picture that pharmaceutical companies in other countries succeed – even when there are negotiated prices with the health plan in those countries. Of the top 15 pharmaceutical companies in the world 8 are in the United States and the remainder in Switzerland, UK, France, Denmark, and Japan. The numbers given for fewer new drugs, fewer new indications, and drop in R&D spending seem highly speculative to me. For example, the drop of $663B in R&D spending is the equivalent of about half of the total revenue for the top 15 companies. I seriously doubt they are spending that much on R&D. During the 20 year period that I am referring to companies left entire therapeutic areas and it was common knowledge that marketing was going to drive pharmaceutical sales. There is an entire section about decreased jobs. Are the Republicans really suggesting that Americans should pay (by far) the highest amounts for prescription drugs in order to fund a jobs program? And finally, the suggestion that the plan is “legally dubious”. Apparently Congress is set up to help industries optimize profits rather than protect people who can’t pay a thousand dollars or more for a Medicare Part D copay.

This post also has implications of pharmacy benefit managers or PBMs. You remember them? They are the business entities charged with “managing” your pharmacy benefits allegedly to make medications most “cost effective”. PBMs make about $315 B annually for doing nothing more than managing prescription drug programs for employers and other large entities with health insurance programs. In practice they are a price multiplier rather than a price reducer. PBMs control the spread or difference between what the insurance pays for a medication and what they reimburse pharmacies. In some cases, their reimbursement for pharmacies is lower than the actual cost of the medication. Since they are leveraging large number of patients, local pharmacies typically do not have much of a choice if they expect to do business – even though an affiliation with a PBM is draining. PBMs can own their own pharmacies and reimburse those pharmacies more than community pharmacies. For a physician the most onerous aspect of PBMs occurs with prices for drugs and their positions on formularies for hospitals and clinics. A formulary is a restricted list of medications available for physicians in that health plan to prescribe for their patients. That can mean a patient has to change their prescription for it to be covered or some newer medication may not be covered at all. During negotiations with manufacturers, PBMs can get a rebate from the manufacturer if they get their product exclusively in the formulary. That rebate is kept by the PBM rather than shared with the people paying for the drug.

The pharmaceutical landscape is a minefield that is set up to optimize corporate profits. Pharmaceutical companies are essentially guaranteed high margins based on patent exclusivity and high prices. PBMs generate a lot of revenue, add no value, and many pharmacists would add are a drain on their businesses. Let's face it - these businesses like most of healthcare in the US were essentially invented in Congress. If they are not a recipe for making money - I don't know what is. The Medicare Part D price negotiations through the Inflation Reduction Act is the first bright spot I have seen in a long time. Republicans clearly want to maintain the status quo and that means extremely expensive medications and copays for anyone who is in the Medicare Part D coverage gap. If you were ever surprised by one of these copays like I was recently – support the Biden Administration’s attempt to control high drug prices.


Supplementary 1: An obvious point that I forgot in the original post in terms of backing Big Pharma is the idea that any physician would back limited access to a needed medication because of financial (rationing) restrictions. Toward the latter half of my career, if anything physicians have made extraordinary efforts to get medications for their patients including having to manage large collections of samples and try to supply some patients from those samples. Incredibly - some critics saw that as another perk from pharmaceutical companies that was corrupting physicians. Some politicians on the other hand who are getting very large donations from pharmaceutical companies have no hesitation in suggesting that American patients should continue to pay exorbitant costs for pharmaceuticals - even if it means not being able to afford medication and compromised health.

Supplementary 2: Must watch video on regulatory capture or how Congress profits from disrupting free markets and establishing monopolies. Pharma and electronic health record (EHR) companies are cited examples, but there are additional examples including broadband and AI:

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