The Media Aids Alex Azar's Devious Con To Increase Drug Company Profits... Then Drug Prices
Updated: Feb 12, 2019
Secretary of Health and Human Services Alex Azar is an oddity in the Trump administration. Simply put, he's not a fucking retard. He has kept his head down and done his best to seem mild mannered and uncontroversial during his tenure. In contrast to his predecessor Tom Price, who constantly attacked the Affordable Care Act and who was fired for being caught up in a private jet scandal.
Azar used political connections in Republican politics to gain a position in Bush's Health department in the 2000's. He then left to become a lobbyist for Eli Lilly and drug industry trade groups (Fun fact: he was moved to another position at Eli Lilly when Obama won the White House because they wanted Democratic lobbyists instead). He was later made an executive of Eli Lilly while still continuing his lobbying activities. During his tenure drug prices of Eli Lilly products rose considerably.
Then he was picked by the Trump administration to become the head of the department he once worked for and lobbied. He was immediately confronted with a serious problem. How to increase the profits of his former clients when the public at large was literally suffering and dying from drug prices? He needed the drug companies to increase profits so that he could be rewarded when he left office and to keep the electorate at bay so that they wouldn't protest him and vote even more of his fellow Republicans out of office.
Fortunately, either he or someone advising him designed a brilliant and elegant solution. They decided to attack Pharmacy Benefit Managers. Sure they would talk about other parts of the health care system, but they'd only issue serious regulations against PBMs. They want to blame them and destroy them for several reasons. But first we'll explain what a PBM is. They are entities that negotiate drug prices on behalf of the companies that own them. (PBMs also provide basic management services for parts of health care plans.) These companies are health insurers, pharmacies and hospital care systems. They are basically the negotiators for the groups that provide drugs to consumers. Their goals are to get drugs for the lowest price possible, while the parent companies want to then charge the consumer highest possible price to maximize their profits. Here's a video from the industry that might explain better.
Attacking PBMs is an exceptionally devious solution. This abolishes most price negotiations throughout the pharmaceutical industry. Most health care plans and providers will join Medicare, which is by law unable to negotiate drug prices. Donald Trump who loves to talk about negotiation and deals will disable them when it comes to drugs.
Three things will happen, drug companies profits will continue to rise, while profits of health care industry companies will decrease. Also consumers will see some short term price relief, but will pay higher prices in the future. This is because the money that went to PBM's owners will go customers, but then they won't be able to negotiate in the future as drug companies continue to raise prices over the coming years, which will eventually erase all savings from this move.
To see how this works imagine that health care spending is a giant pie. There will be three slices, one for the drug companies, one for consumers, and one for health care providers. Under the current scenario consumers' slice of the money is getting smaller, while health care providers' is growing, and drug companies slice is growing much faster. Under the new scenario, a large part of the health care providers' slice is immediately combined with the consumers' slice and the drug companies' slice is unchanged in size. Over time their slice grows even faster then it did before since negotiators can't stop it, which will put strain on both the health care providers' slice and consumers' slice.
You may be asking the question, why are you the only one talking about this? That's an easy one. The last part of this genius con is to get their allies in the media to sell this bullshit to the American people. The media is deeply in bed with the drug industry. After all, they are some of their largest advertisers. Media figures can also be hired for one reason or another by drug companies. So the media blitz was set up and critical coverage would be suppressed, but how do they sell it.
They use two talking points: middle men and transparency. They first lie about what PBMs are. They call them middle men when they are actually owned by health care providers who are retailing and using the drugs with patients and health insurance companies who pay for them. They used to be independent but then got bought out. (The only independent PBM in the article was later purchased by a health insurer.) They seek to end their negotiating power. Next they talk about transparency, which is great in a market place. The only problem is that by this point drug companies which can legally monopolize drugs through patents and other laws can just set the price they want tell people who ask and not be challenged to lower it since health care providers can't negotiate anymore.
The media knows this and shows it in this interview as part of the rollout. It's very easy to lookup who owns the PBMs and see that they aren't middle men, but instead the part of health care companies that negotiate prices. It's also very easy to question whether transparency will lead to price reductions in the long run. There are plenty of things whose price we know about that just haven't gone down over the years and instead have had their prices increased. Do they ask about these things nope. In fact, they actually agree and support his talking points with their explanation. The only hard question is should a drug company executive be in charge of reducing prices? I know Alex Azar shouldn't. However, even in this easy interview he had to acknowledge that health insurance premiums would go up so that the health care providers could make us some of the money that they lost from their PBMs.
The proposed rule is designed to allow drug companies to pay PBMs for non-negotiation services. Could this be used as a conduit for disguised payments by drug companies to use their drugs? Furthermore, the rule only affects companies working with Medicare and Medicaid programs. Expect in the future to have rules that further tweak the system to enrich drug companies and to eventually cover all health care in the country. This is just an easier to implement first step. The rule wants to switch from a rebate system to a discount system without even guaranteeing that the discounts will save customers as much money as current rates. The rule even bans volume discounts by PBMs, since they claim that the PBMs will only stock the highest priced drugs, which evidence hasn't shown to be true. If they cared about negotiations in Medicare and Medicaid plans they could have created an in house PBM that directly works for the taxpayers and saves Medicare and Medicaid money while getting people the drugs they need or implemented another solution with regulation or legislation. Or they could've just abolished the Medicaid Best Price rule, which they won't do. That rule was designed by drug companies to raise prices and hurt PBMs negotiating power.
If Alex Azar is successful in enriching his former clients, expect him to be paid ungodly sums of money when he leaves office. He might make over one hundred million dollars in his five years of leaving office.