44 States File Suit Against Drug Companies for Inflating Prices

May 22, 2019

Ending patent monopolies and prosecuting big pharma will drive prescription drug prices down, says Alex Lawson, Executive Director of Social Security Works

Ending patent monopolies and prosecuting big pharma will drive prescription drug prices down, says Alex Lawson, Executive Director of Social Security Works

44 States File Suit Against Drug Companies for Inflating Prices

Story Transcript

WILLIAM TONG One of the biggest questions all of us are asking, which is why are prescription drugs so expensive? And, I think we know why now because the prices of generic drugs are fixed and there’s a widespread conspiracy to rig the market.

MARC STEINER Welcome to The Real News Network. I’m Marc Steiner and that was William Tong, who is the Attorney General of Connecticut, when he appeared on 60 Minutes the other day. Forty-four states have filed lawsuits accusing Teva Pharmaceuticals, here in the United States, for orchestrating a scheme with nineteen other drug companies to inflate drug prices, sometimes by more than a thousand percent. The lawsuit also names fifteen individuals as defendants. This could be the biggest anti-trust case in American history and, as Attorney General Tong said, these are companies that are too big to care. When he wrote that and said that, it just blew me away. We are joined by Alex Lawson who is Executive Director of Social Security Works and, Alex, welcome. Good to have you here on The Real News.

ALEX LAWSON Thanks for having me.

MARC STEINER “Too big to care.” I can’t get that one line out of my head that he said on another program. What do you think we’re dealing with here? I mean, what’s the extent of what you’re seeing in front of us?

ALEX LAWSON It’s simple. When it comes to pharmaceutical corporation greed, you’re talking about a sociopathic greed that knows no bounds. It’s actually a fathomless chasm of greed that they will happily funnel people’s health and their lives into, as long as they can get their money to buy another golden yacht, so that they can stash their money wherever it is that they stash their money, and I’m not being hyperbolic. I obviously am a little bit, but no, there is no limit, no limit to their greed. You know, their open criminality, price fixing—For so long, nothing has been done to rein them in, that they just operate notoriously and openly, and people die. And it still is barely starting to gain traction in Washington DC, that we need to take serious action to rein in pharmaceutical corporation power.

MARC STEINER Let’s go to this next clip here and we can expand on what you’re talking about. This is a clip from the same program of two investigators talking about what they’re discovering and what’s unfolding.

60 MINUTES VOICEOVER Joe Nielsen also found messages that seem to show companies, including Pfizer, conspiring to divvy up the market for other drugs. The lawsuit filed Friday refers to this email from Teva as evidence. “[T]ell Greenstone we are playing nice in the sandbox and we will let them have [the… customer].”

BILL WHITAKER [60 MINUTES] “Play nice in the sandbox.” What does that mean?

JOE NIELSEN Avoid competing with each other, take your fair share and don’t go after anything more than that. Keep the prices as high as you can.

BILL WHITAKER [60 MINUTES] But I thought the whole point of generic drugs was to have competition and keep the price down?

JOE NIELSEN That’s the point for us, but that’s what the companies who are selling the generic drugs want to avoid.

MARC STEINER [laughs] So, you know, it does beg the question, what do we mean by generic? I mean, you know when I go to the pharmacy and get a prescription filled, I go to the generic because it’s supposed to be cheaper. I go with generic because they’re supposed to be what the people get, and they won’t have to charge all this money. Clearly, that’s not what’s going on here.

ALEX LAWSON So, I want to be clear that there are large parts of the generic market that do actually function, but then there are these parts of the generic market that function like the branded side. It’s like, they got jealous. They’re playing golf with their buddies at Pfizer, for example, in that e-mail and their buddy is like, yeah man, we just charge whatever we want. We have no limits. We got a patent monopoly. So it’s no holds barred, and the generic guys are like, hey we want to get in on that sociopathic action. They just come up with a cartel and they form an illegal cartel to collude to fix prices and operate like the branded side, and that is happening.

We’re seeing that happen in real time. It’s very unique. I mean, I can’t say 100 percent, but it really is the US market where we see these market failures. Our branded pharmaceutical market is just one giant market failure. And then, parts of the generic market are also failing. If you think about that a little bit, it’s really in the branded market’s interest for the generic market not to function, since generics do put downward price pressure on the branded markets. So when a generic comes on the market, it’s supposed to lower all the prices, but if the generic market is fixing, if it’s fixed so that it stays high, both the branded and these generic companies who are acting illegally, are winners. And the losers are, obviously, everybody who needs these drugs to live.

MARC STEINER So what could be the outcome? Two things. A—what could be the outcome of this lawsuit? I mean, clearly, pharmaceuticals have tons of money to defend themselves in these lawsuits— Teva and the rest of them, the other companies that have been named in this, as well, major companies— so they could battle this back. What could be the outcome of that in terms of the lawsuit, but also, what do you think needs to be in place to prevent this from happening?

ALEX LAWSON We need a multipronged approach because we definitely need to prosecute criminality because that’s what we need to do to prevent criminality. There needs to be punishment for operating illegally, for price fixing. If we don’t—

MARC STEINER And this is criminality. You’re saying this is criminality.

ALEX LAWSON Right. Price fixing is illegal. Companies cannot collude and say, hey we’re going to work together to raise the prices, right? Otherwise, you know, the price of a car made in 1983, it’s going down as it’s facing competition. Now, if they somehow were able to fix the market, the 1983 price would keep going up. This is actually what we see in the pharmaceutical space, but even crazier, like the price of insulin, which is over 100 years old and goes up every single year like a staircase. The thing is, there are three companies who make insulin. How can, magically, their price go up year after year as a staircase? Like, these companies just magically raise the price at the exact same amount, at the exact same time? No. Obviously they’re colluding together to increase the price of insulin, which has the consequence of people dying. Alex Smith in Minnesota, being one of the most famous cases, turns 27, comes off of his parent’s insurance, and is dead from a lack of insulin, shortly thereafter.

MARC STEINER So I really do have a question about how this can take place and why it takes place because this is a huge lawsuit, but this is happening over and over and over again. I mean, there have been so many stories about similar situations, maybe smaller than this on some levels, but nevertheless very similar. So let me just play this clip for you and then we’ll launch into this part of the conversation. This is Congresswoman Alexandria Ocasio-Cortez. She is pushing someone from the pharmaceutical industry.

ALEXANDRIA OCASIO-CORTEZ In Australia, PrEP is $8 a month. In the United States, it’s almost $2,000 dollars a month because we have legislated a set of incentives and we have legislated a system that allows that to happen. This is a commodity. Her daughter’s life was not. People’s lives are not commodities. When we talk about economics, there’s something known as a demand curve with elasticity, and with every other commodity, you can say how much is this phone worth to you. And you can say, $100, $200, you can buy a Nokia phone, you can not have a phone at all, but you cannot ask the question, how much will you pay to be alive? How much will you pay to live? Because, the answer is everything.

MARC STEINER So the question I have, Alex, is why are we here and how did we get here? I mean, I think that’s a really important point to talk about before we talk about how we get out of this. I mean, you hear what she had to say. You know, I was thinking earlier before we started this conversation, of someone like Jonas Salk who developed the polio vaccine. He didn’t do it to make millions of dollars. He did it because it was the right thing to do, and he wanted to stop people from dying from polio and being crippled by polio. What has happened to us? What has happened to the industry in these decades?

ALEX LAWSON So that setup, what we say, you know, from Jonas Salk to Martin Shkreli. All right.  What happened in the intervening years? There are two other people who I think are very important to have in the mix, along with Jonas Salk, which is Banting and Best who invented insulin. When they created insulin, which allows people with Type 1 diabetes to live. I mean, this is an amazing discovery on a similar level with Jonas Salk. I mean, the polio vaccine—I don’t need to grade them. They’re both amazing. As Salk said, it would be like patenting the sun. Banting and Best actually gave their patent; it was basically free for everyone. The whole point was to provide this medicine and then later in the 70s, this Canadian university where the patent resided, they sold it to America. Now, we’re getting into how does this happened because in America, what we’ve allowed to happen is a full and complete capture of the government by the pharmaceutical industry. They create this system where they’re awarded patents and the patents allow them to charge astronomical prices.

What AOC was talking about in that clip, was actually Gilead and I don’t want to spend too much time on this, but just to get a picture of it, the public actually owns the patent on PrEP, which is Truvada. It’s the drug that people can take, and it prevents infection with HIV. The public paid to do the research to create the drug. The public paid to grant the patents and then, when Truvada was used in a new formulation, the CDC itself has the patent. The public has the patent, but it’s only used, it’s enforced internationally against generic forms of Truvada. In Australia, you get Truvada for PrEP for $8, and in the US, it’s $2,000. Let me tell you one more thing about this. What PrEP can do is end the HIV epidemic. With the actual correct usage of PrEP, you can end HIV, you can stop new infections by creating, in basically one generation, you get rid of HIV, but you know what’s happened instead? Nothing. We haven’t even seen a decrease in new infections in the US because Gilead and the pharmaceutical industry have created a system based entirely on private greed. Public need, public health, has no position in the system that we allow to exist in the US, which gets to why we need bold systemic reforms in both the branded side and in the generic side. But that’s what we need, policy solutions to these policy-based problems.

MARC STEINER So very quickly, before we run out of time, give us a sense, an outline, of what you mean by the policy changes we need. What would those policy changes look like?

ALEX LAWSON So on the branded side, the patent monopolies are really what grant these companies power. What we need to do is tell these companies that those patents are not theirs to do whatever they want. Those patents are actually a privilege and if they abuse their monopolies, they will lose their monopolies, and we will allow generic competition to drive the price down. That’s widely supported across the country. We just did polling on it. You can see it at SocialSecurityWorks.org. But you also notice that for that to work, we need a functioning generic market. And in that side, we’ve seen a bill by Elizabeth Warren and Jan Schakowsky that would allow public manufacturing to fix the market failure in the generic side. On the branded side, there’s a bunch of bills out there. One that Representative Lloyd Doggett is pushing does just that. It ends a monopoly, if a company is abusing that monopoly. Those are the kinds of structural, bold reforms that we need to actually drive down drug prices.

MARC STEINER Alex Lawson, is Executive Director of Social Security Works and joins us here at The Real News. Alex, thank you so much for your time. I look forward to talking you again as we continue to follow this particular case.

ALEX LAWSON Thanks for having me.

MARC STEINER Good to have you with us and I’m Marc Steiner and here for The Real News Network. Thank you all for joining us. Take care.