American Pharmaceutical Company Keeps HIV Risk High

One of the reasons for America's sky high health care costs is the daily gauging of consumers by large pharmaceutical companies.  Americans pay in some cases, thousands of times more for crucial drugs that cost a relative pittance in other countries.  A prime example is Truvada, the brand name for a type of HIV pre-exposure prophylaxis, or PrEP, which is up to 99 percent effective at preventing HIV infection.  The cost in America?  Thanks to the monopoly of Gilead Sciences, over $20,000 per year, far outside the reach of even many affluent individuals even with insurance (assuming carriers do not deny coverage).  The cost elsewhere?  In other countries, a one-month supply of generic Truvada costs less than $6.00. If widely administered, PrEP could largely eliminate HIV/AIDS in America.  But just like the opioid manufacturers behind the crisis in many parts of America, money is Gilead Science's god.  Human lives mean little.  A piece in the New York Times looks at this shocking example of corporate greed.  Here are excerpts:

On July 3, 1981, this newspaper wrote about a “rare cancer” killing gay men in New York and California. . . . Today, after 37 years, we finally have a proven pathway to ending the AIDS epidemic in this country.

The only catch? Poor policy and pharmaceutical price-gouging have blocked the way, making critical drugs a luxury rather than an imperative.

The solution comes in a pill: Taken daily, Truvada, the brand name for a type of pre-exposure prophylaxis, or PrEP, is up to 99 percent effective at preventing H.I.V. infection; it also lowers the amount of H.I.V. circulating in infected patients' blood streams. Used as directed, it’s one of the most effective methods of preventing a viral infection ever discovered, as good as the polio vaccine, the miracle of modern medicine. When you combine that protection with the discovery that people with H.I.V. cannot transmit the virus to others once Truvada has suppressed it to undetectable levels, we could be on the verge of a swift end to the epidemic.

Truvada was approved by the Food and Drug Administration in 2012. But over six years later, the United States is failing miserably in expanding its use. Less than 10 percent of the 1.2 million Americans who might benefit from PrEP are actually getting it. The major reason is quite clear: pricing. With a list price over $20,000 a year, Truvada, the only PrEP drug available in the United States, is simply too expensive to become the public health tool it should be. Gilead Sciences, the company that makes Truvada, maintains a monopoly on the drug domestically. In other countries, a one-month supply of generic Truvada costs less than $6, but Gilead charges Americans, on average, more than $1,600, a markup from the generic of 25,000 percent. Infuriatingly, American taxpayers and private charities — not Gilead — paid for almost all of the clinical research used to develop Truvada as PrEP. Yet the price stays out of reach for millions, and will for at least several more years.

The disparities in PrEP access are astounding: Its use in black and Hispanic populations is a small fraction of that among whites. In the South, where a majority of H.I.V. infections occur, use is half what it is in the Northeast. Women use PrEP at drastically lower rates than men . . .

The ability of PrEP to greatly reduce new H.I.V. infections is no longer in question. In New South Wales, Australia, a program providing free access to PrEP led to a drop in H.I.V. diagnoses in the most vulnerable communities by a third in just six months, one of the fastest declines recorded since the global AIDS crisis began.

So how can we import such progress into the United States? Faced with more than half a decade of inaction by the federal government, activists have developed their own national strategy to begin the end of the H.I.V. epidemic. At the International AIDS Conference later this month, our organization, the PrEP4All Collaboration, will release its plan for a national PrEP program to ensure all Americans who need PrEP can get it.

A critical component of this plan is insisting that federal agencies use their statutory authority to break Gilead’s undeserved monopoly. With low-price, generic Truvada, the cost to cover every American who needs PrEP — including both drug costs and clinical care — would be less than a tenth the amount that the federal government already spends on H.I.V. care. The billions saved could pay for vital services to ensure those who need PrEP the most can get it and those living with H.I.V. can keep the virus suppressed. If the patent on Truvada remains, the plan will cost over $20 billion. Science has delivered answers, but Gilead’s greed and the government’s inaction are keeping it from those who need it most. There’s a pill that stops H.I.V. We can make it possible for everyone who needs that pill to get it.

Gilead's greed is replicated across the medical spectrum and is a prime reason why Americans pay far, far more for healthcare than in any other nation in the world.  We need a single payer system with government negotiation of drug prices. 

Politicians Continue to Allow Big Pharma to Screw Americans

Americans pay more for healthcare than residents of any other developed country.  The same goes for drugs.  It is common for American consumers to pay three times (often many times more) the prices paid in Europe, Canada and even Mexico.  The reasons for this rip off of American consumers?  First, the lack of a decent, national health insurance system where managing care, not maximizing prices for private interests, is the goal  Nowhere is the greed and rapaciousness in American healthcare worse than in the area of prescription drugs.  Big Pharma is allowed to hold monopoly power and charge whatever outrageous price it wants and the government refuses to force price negotiations of prices for programs such as Medicare.  The result stems from politicians being bought by pharmaceutical companies.  Indeed, Congress has played a huge role in allowing the opioid epidemic to grow by tying the hands of would be government regulators.  A piece in the New York Times looks at America's broken system.  Here are excerpts: 

So Donald Trump broke another promise: he did not, after all, empower Medicare to negotiate lower drug prices. Instead he (and Michael Cohen, who definitely isn’t his bagman) took money from drug lobbyists, appointed them to key positions, and announced a plan that sent drug stocks soaring. I’m sure you’re shocked.

But promise-breaking aside, would introducing a policy of bargaining drug prices down have been good for America? Actually, yes.

Oddly, I never got around to doing my homework on the economics of drug-price bargaining – partly because I was realistic enough about the political economy to realize that it wasn’t going to happen in America any time soon. Still, the fact that Trump promised to do something makes it somewhat relevant, even if he did predictably break that promise. And it turns out that the economic case for doing what Trump just didn’t do, for putting caps on drug prices, is remarkably strong.

Let’s start with where things are right now. After a drug company gets a patent, it has a temporary monopoly on sales of its drug. So its situation looks like that of a standard monopolist . . . It charges a price that is above the marginal cost of producing the drug – usually well above marginal cost.

[O]verall, society gains from the drug’s existence. However, . . . . society would gain more if someone – regulators, purchasing managers at government agencies, whatever – forced the drug company to charge less than the monopoly price.

[T]he United States would almost certainly be better off with a moderate level of bargaining/price control than it is under the current hands-off regime. Why? I count at least four distinct reasons.

First, a point made by Lackdawalla and Sood is that the profit effects of constraining a monopolist’s price are second-order. . . . . What’s going on here is that the profits lost on existing sales are almost fully offset by the profits on additional sales.

What this means in turn is that the negative effect on innovation is small if prices aren’t pushed down a lot, while the consumer gains are first-order. Some price bargaining is always welfare-improving.

Second . . . . . it’s often argued that pharma companies basically develop too many drugs, wasting resources on what amounts to unnecessary duplication. To the extent that this is true, discouraging some innovation isn’t a bad thing.

Third, the consumer surplus calculation assumes that consumers actually pay for the drug. In fact, many drugs are paid for by insurers – which is necessary, because like much of modern medicine the cost if you need it is far beyond most people’s ability to pay out of pocket. But this means that the price someone is willing to pay may greatly exceed the value to the patient. In general, the interaction of drug insurance with monopoly pricing creates potentially huge distortions in both drug development and drug use, reinforcing the case for bargaining.

Finally, it’s a global market – which means that much of the consumer surplus from drug development accrues to foreigners, not U.S. citizens. Maybe there should be more drug development from the point of view of global welfare. But given the unique unwillingness of the U.S. to bargain over prices, we end up paying a much larger share of the costs of that development than we receive of the benefits. Funny how Trump is America first on everything, except when a nationalist position might be bad for Big Pharma.

Yes, Trump says he wants to force other countries to raise drug prices. Good luck on that.

What this comes down to is that there is a very strong case for doing what Trump promised to do but didn’t. I’m aware that simply saying “let’s bargain over drug prices” isn’t effective unless coupled with a willingness to say no – to tell a drug company that an overpriced drug will be excluded from the formulary. So it wouldn’t be politically easy. But it would be good economics.

The Secret of the Seven Sisters - The Cartel That Contols the World's Oil

For newer readers, in my initial years out of law school I worked first for a private law firm that did a huge amount of oil and gas work and later I was in-house counsel for the then largest independent oil company in America out side of the so-called "Seven Sisters" - Exxon, Shell, BP, Mobil, Texaco, Gulf and Chevron - the biggest oil companies in the world.  Hence, I have known the oil industry from the inside - both the good and the bad.  And, despite the rise of OPEC and set backs in some nations where thy saw their assets nationalized, in part often because of poor stewardship, the Seven Sisters (now diminished in numbers due to mergers) still have largely still ended up on top and still wield immense power.   When you hear advertisements lauding the job creation by the oil industry or attack ads against politicians who want to tighten up on the oil industry - often run by the American Petroleum Institute - you are hearing the Seven Sisters at work.  Interestingly  enough,  Al Jazeera is running a four part series on the history of the Seven Sisters and how they continue to control the world's oil supply.  Here are some highlights (go to the article to view a video clip):

On August 28, 1928, in the Scottish highlands, began the secret story of oil.   Three men had an appointment at Achnacarry Castle - a Dutchman, an American and an Englishman.

The Dutchman was Henry Deterding, a man nicknamed the Napoleon of Oil, having exploited a find in Sumatra. He joined forces with a rich ship owner and painted Shell salesman and together the two men founded Royal Dutch Shell.

The American was Walter C. Teagle and he represents the Standard Oil Company, founded by John D. Rockefeller at the age of 31 - the future Exxon. Oil wells, transport, refining and distribution of oil - everything is controlled by Standard oil.

The Englishman, Sir John Cadman, was the director of the Anglo-Persian oil Company, soon to become BP. On the initiative of a young Winston Churchill, the British government had taken a stake in BP and the Royal Navy switched its fuel from coal to oil. With fuel-hungry ships, planes and tanks, oil became "the blood of every battle".

The new automobile industry was developing fast, and the Ford T was selling by the million. The world was thirsty for oil, and companies were waging a merciless contest but the competition was making the market unstable.

That August night, the three men decided to stop fighting and to start sharing out the world's oil. Their vision was that production zones, transport costs, sales prices - everything would be agreed and shared. And so began a great cartel, whose purpose was to dominate the world, by controlling its oil.

Four others soon joined them, and they came to be known as the Seven Sisters - Exxon, Shell, BP, Mobil, Texaco, Gulf and Chevron - the biggest oil companies in the world.

In the first episode, we travel across the Middle East, through both time and space.

"We waged the Iran-Iraq war and I say we waged it, because one country had to be used to destroy the other. As they already benefit from the oil bonanza, and they’re building up financal reserves, from time to time they have to be bled." - Xavier Houzel, an Oil trader

Throughout the region's modern history, since the discovery of oil, the Seven Sisters have sought to control the balance of power.

They have supported monarchies in Iran and Saudi Arabia, opposed the creation of OPEC, profiting from the Iran-Iraq war, leading to the ultimate destruction of Saddam Hussein and Iraq.

The Seven Sisters were always present, and almost always came out on top.  Since that notorious meeting at Achnacarry Castle on August 28, 1928, they have never ceased to plot, to plan and to scheme.

Am I being cynical?  I do not think so.  One need only remember that Dick Cheney's Halliburton before all else was (going back many decades) and is a major oil services corporation totally intertwined with the Seven Sisters.  The America public was played for a bunch of suckers and fools by Messrs Bush and Cheney.