Responding To The Corporate Siren Call

The other day, I posted about our successive governments' inability to resist the siren call of the corporate imperative, wedded as they are both socially and ideologically to their summons. In my previous post, I explored how postal banking fell victim to that imperative. Today I explore another example of our representatives' unseemly subjugation of the electorate's well-being to the demands of their real overlords. 

Pharmaceuticals constitute yet another powerful tail that wags the government dog. The genesis of the problem lies both in the disastrous privatization of Connaught Labs and the extension of drug patent protections, both occurring under the aegis of former prime minister Brian Mulroney, a man who never met a corporation he didn't like. Since the former is widely known, it is the latter that I shall deal with here, en route to a larger point.

The problem goes back to 1987, when

pharmaceutical corporations promised to spend 10 per cent of their revenue on research and development in Canada in exchange for longer monopoly patents (and therefore bigger profits) on the drugs they produce. 

That was known as Bill C-22, (which also created the Patented Medicine Prices Review Board, which I shall return to momentarily).

The pharma promise turned out to be a false one. A 2014 study conducted by the Council of Canadians found that 

companies actually spent less than half that – in fact just 4.5 per cent – of their sales in 2013 on research. The National Post reports, “It is more evidence that the industry’s long-standing attempt to link patent protection with research investment holds little water, say experts in the area.”

Despite this, the Trudeau government is still clearly in the thrall of Big Pharma, as reflected in recent actions by Health Minister Jean-Yves Duclos.

The NDP has called for a parliamentary investigation into allegations the Liberal government caved to corporate lobbyists who oppose changes to drug pricing reforms, as Ottawa faces pressure over the long-delayed process to rein in pharmaceutical costs.

The demand comes as three members of the Patented Medicine Prices Review Board (PMPRB), the country’s drug pricing regulator, resigned — including two this week — after the government asked the board to pause consultations on a reform that Parliament’s budget watchdog estimates could save Canadians billions of dollars in drug costs. 

Earlier this week, online media outlet The Breach reported that Health Minister Jean-Yves Duclos penned a letter to the board’s acting chair requesting the pause due to stakeholder and industry concerns. One of the resigning review board members also slammed Duclos and the government, alleging they chose to echo corporate opposition to the changes and undermined the board’s work to keep drug prices in check.

“It is difficult enough for a sector-specific regulator to do its job in the face of a hostile industry. But when the government adds its voice to that of industry, all that lies before the regulator is an endless tunnel with no light,” wrote former board member Matthew Herder in his resignation letter this week.

The board's work is extremely important, and what is at stake is quite significant:

The regulations have been in the works since 2016, and they would allow the board to consider the market size, as well as the costs and benefits of certain drugs before it determines prices for Canadians. The proposed rules would also permit the board to change the list of countries it uses for price comparisons, among other things.

When Big Pharma went to court over the proposals, the Quebec Court of Appeal ruled some parts were unconstitutional; the Trudeau government didn't even bother to appeal.

“In choosing not to seek leave to appeal, the government effectively countenanced the evisceration of its own reform,” [resigning board member Matthew] Herder said.

Grovelling before Big Pharma has a long and odious history. As reported in The Breach, because Canadians pay among the highest drug prices in the world, in 2017 the government launched something called Protecting Canadians from Excessive Drug Prices. 

The original policy would have saved almost $13 billion in drug costs over 10 years. 

Almost immediately, the policy hit a wall of resistance from the industry and industry-funded patient groups. After a series of delays, court challenges, and threats that included withholding new drugs from Canadian patients, the industry appeared to have won the fight.  

To appreciate the full extent of industry resistance to anything that would reduce their profits, I encourage you to read the above Breach article in full.

And so I end as I began: our government, while happy to engage in political theatre, refuses to stand up to its real master, the corporate sector. And all of us, both literally and figuratively, are the poorer for that sad fact.

 

Oh, Those Poor Pharmaceuticals

There is little doubt today that the vast majority of us are feeling very kindly-disposed toward the big pharmaceuticals. After all, they brought us quite efficacious vaccines against Covidc-19 in record time, vaccines that will in the near-future allow Western nations to return to relative normalcy.

We wait with bated breath for that time to arrive in Canada.

While we wait, it might be good to remember a couple of things: the speed with which these miracles of medicine were developed was facilitated tremendously by the infusion of billions of tax dollars by an array of governments; the resulting profits have gone almost solely to the companies who hold the patents to these vaccines. In other words, governments assumed much of the risk while reaping none of the rewards.

But, we are told that the huge profits of big pharma wrought by its pricing regimes are necessary to fund research. After all, many promising therapies are pursued that ultimately don't pan out. To restrict drug prices would inhibit research, the story goes.

No doubt there is some truth to such assertions, but the following puts into sharp relief some other aspects of pharma's expenditures that are wholly unrelated to research costs. Katie Porter, a California Democrat who sits in the House of Representatives, had a run at AbbVie CEO Richard Gonzalez over the rising drug prices at his company. What she uncovered isn't pretty.

A Creeping And Very Real Threat

I am currently reading Linda McQuaig's latest book, The Sport & Prey of Capitalists: How the Rich Are Stealing Canada's Public Wealth. As with most of her books, despite her very clear, accessible writing style, I am having a hard time with it, disturbing as it is in so many ways. While I am not prepared to discuss it at this point, its thesis, not exactly startling, is that our government is ceding more and more of our formerly proud public institutions to the depredations of rampant capitalism.

I came across the following video on The Guardian today, about threats to the British National Health Service by Boris Johnson as he prepares to negotiate bilateral trade deals, perhaps the most impactful one being with the U.S. It addresses the sort of mentality that McQuaig talks about in her book. You can read the article here, and watch the disturbing claims being made by Labour's Jermeemy Corbyn below:

Corporate Corruption

With corrupt corporate practices so much in the news these days, thanks to the Trudeau government's attempts at subverting justice for SNC Lavalin, I couldn't help but be struck by the naked greed so evident in the practices of a pharmaceutical called Insys Therapeutics. Several of the company's executives

... are currently on trial in Boston on charges of racketeering, fraud, and conspiracy, in connection to an alleged nationwide scheme to pay doctors bribes and kickbacks in exchange for prescribing the company’s fentanyl-based pain medication Subsys to patients who would not otherwise require the drug. The executives are also accused of conspiring to mislead and defraud insurance providers that were reasonably reluctant to cover costs for a medication designed for cancer patients when prescribed to patients without cancer.

To appreciate the depth of the company's greed and depravity, go to the 9:16 mark of the following news report, which includes a video extolling the virtues of something called titration, the practice of increasing the dose of a drug:



The 'rap' video excerpted in the above report (I will provide links to the full video at the end of this post) was created for and shown at Insys' 2015 national sales meeting. The message was clear: the more you 'push' the drug, the higher your sales commission will be.

According to former Senator Claire McCaskill, who helped investigate Insys last year,

"What they are saying to their sales representatives is, 'It's not enough that you get a doctor to prescribe it," said McCaskill, now an NBC News analyst. She said the company was telling its employees, "'We're going to pay you five times as much if you can get him to prescribe the strongest dose possible.'"

Interestingly, the company's response to these charges echoes the one heard from SNC Lavalin about the 'rogue employees' who acted without company authority in bribery of Libyan officials to the tune of $48 Million - (their petty cash reserves must be a marvel, eh?):

"The company in no way defends the misconduct of former employees and is fully cooperating with the government."

Nothing to see here, eh?

NEW: Here's the internal Insys video to the tune of A$AP Rocky's "F--kin' Problems" in which employees dance around former sales VP Alec Burlakoff, who is dressed as a life-size bottle of fentanyl spray. It was shown to a jury in Boston federal court today. pic.twitter.com/0SPIEDRpnX

— Aaron Leibowitz (@aaron_leib) February 13, 2019

Here's Part 2. They're singing about "titration," a reference to the process of doctors increasing the dosage for patients as they build tolerance. pic.twitter.com/J60hYQw0PA

— Aaron Leibowitz (@aaron_leib) February 13, 2019

An Extreme Of Capitalism?

Anyone who reads my blog regularly and has drawn the conclusion that I am anti-capitalism would be completely wrong. I have nothing against business, entrepreneurship, nor corporations, per se. And I do believe that those who take risks should be appropriately rewarded.

What I am against, however, is extreme imbalance. I have nothing but withering contempt for the winner-take-all attitude that sees life as a zero-sum game. Such thinking betrays an unschooled mind and a woefully underdeveloped character, in my view. And that is exactly the mentality pervasive in so many realms today, be they political, economic, social, business, etc. Capitalism, yes. unfettered capitalism, no.

During the weekend I read a story in The Star about the development of drugs to treat what are known as orphan diseases, those maladies that afflict a relatively low number of people. Traditionally avoided due to high development costs and low market potential, pharmaceutical firms are now turning increasingly to them as a potential source of new profits.

Patents expire on drugs that have become standard treatments for afflictions such as heart disease, diabetes, etc., and drugs to replace tried and true therapies are not needed. The revenues arising from treating those standard diseases, while still substantial, have limited growth potential, something that is anathema in a fiscal culture that demands continual corporate profit growth.

The beauty of orphan diseases, from a profit perspective, is that the majority of them are genetically-caused, which means that those for whom the drugs are developed will be life-long customers. It is this fact that makes the development of such drug treatments not only a literal life saver for some, but also an everlasting curse for the governments that will be called upon to fund them.

“There is a big crunch coming in terms of the new (orphan) products being developed and in terms of cost,” says Dr. Michael Rieder, who holds a research chair in pediatric pharmacology at Western University’s Schulich School of Medicine and Dentistry.

“We’ve only seen the tip of the iceberg and it’s not going to go away.”

The issue came to the forefront again last week when young Madi Vanstone and her mother, Beth, visited Ontario Premier Kathleen Wynne to seek assistance in getting Madi's drug, Kalydeco, listed so that her costly treatments would be covered under the province's drug plan. It was approved by Health Canada in late 2012, but costs $300,000 a year per person and works only for a certain genetic variant of cystic fibrosis. It’s estimated about 20 people in Ontario need it but do not have private coverage.

Fifteen countries cover the medication, but so far Ontario’s drug-purchasing consortium has failed to negotiate what it sees as a “fair” price with manufacturer Vertex Pharmaceuticals.

Consequently, Madi's family currently must rely on fund-raising for the treatment which has left her symptom-free.

The problem, as you can see, lies in the extreme pricing that big pharma attaches to what can be sometime regarded as miracle drugs. These exorbitant rates are justified by what they claim are the high development costs of the therapies, coupled with their limited market.

Jared Rhines, vice-president of scientific and strategic affairs for the group Rx&D, which represents Canada’s research-based pharmaceutical companies, says,

“The development process from discovery to development to clinical research is the same, whether it’s a drug that treats a high number of patients or a drug that treats a rare population,” Rhines says. “And when you get to orphan drugs, it’s all those same requirements and development costs and profits spread over hundreds of patients versus what is a traditional drug that treats tens of thousands of patients.”

By the way, the industry claims, but refuses to offer any supporting documentation for 'competitive reasons,' that the average cost of drug is $1.3 billion.

This is a figure hotly contested by some:

Some experts, however, say drug companies grossly inflate their R&D costs, with the oft-cited $1.3 billion-per-drug figure out of whack with reality.

Trudo Lemmens, chair of health law and policy at the University of Toronto law school, says industry uses these claims to justify “unconscionable prices.”

He says that a credible New Jersey study claims that average drug development costs could actually be in the $45 million to $55 million range.

“The claim of $1.3 billion or higher costs of drug development is industry mantra,” he says. “But it’s based on things that the industry keeps close to its (chest) and it’s very hard to critically analyze.”

As well, such claims are misleading, if not downright untruthful, for other reasons:

Jillian Kohler, director of global health at the U of T’s Leslie Dan Faculty of Pharmacy, has this to say about the issue:

... these numbers, for people who are actually in the field, are highly controversial and industry doesn’t like to be honest about what goes into their R&D.”

Kohler says drug companies may routinely pack marketing costs into their estimates as well as lost investment returns — opportunity costs — from the money they actually do sink into research.

“They (also) don’t talk about the public funding that contributes to some of the development of these (drugs),” she says.

And so to conclude, I repeat what I said at the outset: I am not opposed to capitalism, only the unfettered kind which, it would seem, the charges attached to the treatment of orphan diseases are but egregious examples.