People needing to buy prescription drugs in the US are being robbed to a degree that can scarcely be imagined. To put it in a nutshell, in some cases we pay 10X what is charged in other countries for the same drugs, and by the same companies.

Let’s take a look at a couple of examples. Since I have some first-hand data we’ll go with that. As a nearly life-long asthma sufferer. I’ve become well acquainted with the cost of medications on this front. Now that I am on Medicare the situation for me is no longer so dire, but still illustrative. The co-pay for my daily-puff inhaler is $42 for a 30-day supply. Doesn’t sound so bad. But for someone without good insurance the cash cost is well over $400. Nuts, right? Well it gets worse. Remember, $42 is the co-pay. The drug company and its retail network get paid substantially more than that.

Now let us compare this to another country. Back in 2019 I was in South Africa and needed to get a refill. My full price payment, no insurance, was the Rand equivalent of $38. This was for the same product, the same drug maker—GlaxoSmithKline—with the same packaging and formula. The difference was the outer box, the label and a small variation in dosage. The pricing set in the United States is pure profiteering.

Another medication I take, also costs a $42 copay. But outside of insurance this drug costs over $1000 for a 30-day supply. This is a diabetes drug, Rybelsus. I can tell you, from decades-long experience in printing, that the packaging of this medication costs far and away more than the pills themselves. It is a widely known fact that the cost of diabetes medications including insulin—which is extremely inexpensive to manufacture—have sky rocketed in recent years. More profiteering.

The pharma companies are not the only participants in price gouging practices. Many years ago I was given a prescription for an antibiotic, Levaquin. The prescription was for 7 days, one pill per day. I presented the script at CVS and was told that the price was $125. For a generic version. I had no insurance at the time. I was also told this was the “discounted” price. Discounted from what I could not imagine. I took the script back and went to a small, family owned pharmacy in Glendale. The price I paid was $21. My wife and I did a pricing “survey” with other pharmacies, Rite-Aide, Walgreens, Costco and Walmart. All were in a similar range to the CVS nosebleed price except Walmart which came in at $85. To us, it sure looked like price fixing for generic drugs. More discussion on this later.

The real point here is that necessities which people must have in their lives, that in some case determine whether they can stay alive or not, are being priced to the moon, over and above any sense of propriety. If you factor in the price gouging of asthma drugs alone by the estimated 25 million Americans who suffer from this condition, you can see the vast stream of money this profiteering practice generates.

Your Money or Your Life

I am more fortunate than most since I can afford my co-pays. But what about people who require monthly treatments of insulin—the cost of which has gone from $20 to $450? Without this medication, the prospects of declining health and death loom.

Diabetes and asthma drugs are widely used. But what about drugs that are for smaller patient populations with more rare conditions. A drug called Myalept is prescribed to treat a fairly uncommon condition called a leptin deficiency. This can cause the person to be constantly hungry and have to constantly eat leading to morbid obesity. A monthly prescription of Myalept costs about $71,000.

What do you do if your life literally depends on getting medication that has an impossible price tag attached to it? What part of your life do you give up? Patients all across the country are faced with this dilemma with depressing frequency.

Profiteering Pharma Companies or Cartels?

Martin Shkreli, the so called “Pharma Bro” infamous for jacking the price of a anti-parasitic from US$13.50 to $750 per pill, is hardly a unique individual in the pharma business. He became the widely reviled face of this culture of greed, but has largely been off the radar since convicted of securities fraud and sent to prison. Shkreli personified the “I don’t care” attitude of the industry quite well. Others are just not obvious about it.

The parallel that can be drawn between pharma companies and drug cartels is obvious and it is a parallel that needs to be explored for the sake of the health of 300 plus million Americans.

One wonders how this condition could continue on so long without a massive public outcry. Well, just like the cartels of Mexico and Colombia, there are a LOT of people with their hands in the cookie jar.

It is not just the company sales departments. There are the Pharmacy Benefit Managers (which exist to “negotiate” between pharma companies and insurance companies. There are the huge publicly traded pharmacy chains themselves—they have shareholder profits to deliver.  And then there’s the legions of lawyers working for all these companies trying to keep this all appearing legal. Remember the example of the antibiotic Levaquin earlier? It is a very strange coincidence that all the huge corporations involved in this sector had nosebleed prices. That is not merely a red flag for illegal price fixing, it is a fireworks display saying “LOOK HERE FOR CRIMINAL ACTIVITY!”

Solutions

This problem is one of staggering proportions and intractable due to one simple factor—the amount of money being siphoned out of the economy by this business sector is so huge as to defy the imagination. For example, in 2012 GlaxoSmithKline was forced to pay a fine of $3 billion to resolve fraud allegations, bribing doctors and off-label marketing of psychiatric drugs plus another $2 billion in civil penalties. This settlement did not put an appreciable dent in their value. Glaxo is not the only company to pay out multi-billion dollar fines.

Here are a few ideas:

First, increase fines and penalties by an order of magnitude. If Glaxo’s fine had been set at $30 billion it would have caused a sea change in the company structure. Simply put, if executives are not screaming about the amount, the fine is too low.

Second, jail executives who allow fraud and criminality on their watch. Shkrelli is not in prison for his price gouging but for securities fraud that did not involve the drug company he controlled. Perdue Pharma, the company most infamous for the opioid epidemic and 10s of thousands of deaths yearly, is being shut down because of their actions. But their executives and founders so far have escaped personal justice and are trying to retain their blood-soaked fortunes.

Third, reorganize the industry. Because of the amount of money involved, this is the hardest by far. But the reorganization of Perdue Pharma into a “public benefit” corporation is a clue of the direction that should be taken. Serious consideration should be given to the fact that over 1/6 of US GDP is made up of healthcare revenues including massively inflated drug and hospital (an entire story in and of itself) fees. There is something seriously wrong with this picture because it means that illness and the management of it is a profit growth sector. To call that a problem is a vast understatement.