And now, a drug shortage

 Drug shortages are approaching record levels. The FDA lists 137 drugs “currently in shortage,” including cancer drugs and one that reverses lead poisoning. Believe it or not, it turns out that a key part of the problem is low prices paid to manufacturers of many generic drugs. (Generic drugs are produced after a company's patent has expired. Their prices have fallen by about 50 percent since 2016.) Manufacturers’ profit margins are so thin it doesn’t make sense for them to invest in production. Some companies have shut down.

Here's why: drug manufacturers are squeezed by powerful wholesalers and buyer representatives that come in two flavors: pharmacy benefit managers and group purchasing organizations. These two types of organizations negotiate drug prices on behalf of their customers:

• Pharmacy benefit managers work on behalf of insurance companies and other payers to decide which drugs they will cover and how much they will pay for them. They mainly cover brand-name drugs sold in pharmacies.
• Group purchasing organizations represent hospitals, nursing homes, and other institutions. They negotiate discounts for generic drugs and biosimilars (nearly identical copies of the original product). They also negotiate discounts for medical supplies, such as needles and bandages. Manufacturers pay fees to these organizations for access to their customers (basically a kickback).

If a drug manufacturer wants access to the big markets, they have almost no choice but to go through one of these organizations, of which just a few dominate. Because the organizations have the power to demand low profits and high fees, they can shrink the manufacturers’ profit margins to the point where it’s barely worth the effort to manufacture the drugs. Many drugs are now produced offshore, especially in India, which has lower production costs. Some of these manufacturers are excellent; others are sloppy and corrupt with quality control issues.

As one congressman said, “We have an economic environment so unappealing to manufacturers that lifesaving drugs are produced by one, or at most two, companies worldwide, often at an unsustainable, artificially low price.”

Ridiculous: drugs are either too expensive or too cheap.

For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.

Remember drinking fountains?

 While viewing one of those iconic photographs of a Black man drinking out of a “colored only” water fountain, it occurred to me: Are water fountains still around? They used to be ubiquitous. Now it seems that everybody buys their water in plastic bottles. In 2021, 15.3 billion gallons of bottled water were sold in the U.S. Between 2010 and 2020, bottled water production grew by 73 percent.

As to plastic bottles themselves, around the world almost one million plastic bottles are purchased every minute—a situation having a devastating effect on the environment. Picture this: every day the number of bottles sold around the world would make up a pile half the size of the Eiffel Tower. (Only 6 percent are recycled.) 

I don’t get why people buy bottled water. You can get it out of your tap! If you need to take water with you, fill up your thermos or whatever! I don’t know what the experts say, but I fault two sources for this problem: 1) the persistent myth that you need to stay “hydrated” by drinking eight glasses of water a day (there’s no scientific evidence for this notion); and 2) the bottled water industry, which keeps the myth alive by sponsoring “public service” messages—such as the Evian-sponsored Hydration for Health campaign.

I have no data for this, but I think that people are scared to drink from a public fountain—if they could find one.

For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.

The U.S. pays more for drugs, yet gets little in return

On average, prescription drugs cost 2.56 times as much in the U.S. than they do in other countries. We’re pharma’s cash cow. The U.S. health care system, unlike health systems in other countries, isn’t set up to bargain with drug companies for lower prices. Until the Biden administration passed the Inflation Reduction Act, even Medicare was specifically prohibited from negotiating drug prices, thanks to the lobbying power of drug companies. (As I recall, preserving that prohibition was the price to be paid for the passage of the Affordable Care Act.) Medicare, by the way, is the world’s largest drug buyer.

Even though we’re overpaying for drugs, pharmaceutical companies report earning hardly any profits on their U.S. sales. They do this by using accounting tricks to avoid paying taxes on profits earned here. The trick is to assign patents and other forms of intellectual property to overseas subsidiaries located in low-tax jurisdictions, such as Ireland, Luxembourg, and Bermuda. The drug companies pay large fees to these overseas subsidiaries for the use of this intellectual property. But the benefit to them is to cause profits to disappear in the U.S. and reappear in one of the low-tax jurisdictions where they go largely untaxed. (In the pharmaceutical industry, patents, rather than manufacturing facilities, are companies’ principal assets.)

Because of these shenanigans, the U.S. government is losing a lot of revenue. Cracking down on tax avoidance could significantly reduce budget deficits. For the moment, however, the House is controlled by a party that wants to deny the I.R.S. the resources it needs to go after tax evaders.  

For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.

Our local medical clinic is closing

 As of June 30^th, our small town will lose its only medical clinic. Dignity Health Medical Group “apologizes for any inconvenience this closure may cause.” Our clinic has been a Boulder Creek mainstay for 60 years. For 50 of those years, it was a private practice. Dignity Health purchased it ten years ago. Now they tell us they have not been able to find a new clinic site. (Huh? What’s wrong with the existing site?)  

Even though there’s a shortage of primary care doctors, multibillion-dollar corporations are gobbling up primary care practices. (Example: CVS paid $11 billion to buy a chain of primary care centers.) Here’s why: primary care doctors oversee vast numbers of patients and thus have the potential to bring business and profits to hospital systems, health insurers, and/or pharmacies. Now, nearly seven in 10 of all doctors are either employed by a hospital or a corporation. This type of consolidation is driven by the quest for profits, not patients’ welfare, as some would have you believe.

There’s a big pot of money everyone is aiming at, money that comes from the growing privatization of Medicare. More than half of Medicare’s 60 million beneficiaries have signed up for a Medicare Advantage program. Medicare Advantage is not supplemental insurance as many of us believed. They are private insurers that are reimbursed by the government. (Ours is Anthem.) Medicare pays these insurers $400 billion a year.

One doctor, who works for an investor-owned company, must work longer hours in order to supply additional diagnoses for patients. The more diagnoses a doctor can supply, the more federal reimbursement the company gets under the Medicare Advantage program. “It’s not because I’m giving better patient care. It’s all tied to the billing,” she says.

As to the Boulder Creek clinic’s closure, I’m convinced that they simply don’t make enough money to satisfy Dignity Health, which, by the way, is the fifth-largest healthcare provider in the country and the largest provider in California.

For an introduction to this blog, see I Just Say No; for a list of blog topics, click the Topics tab.