Local Governments Have Power to Lower Dangerously High Prescription Drug Cost
And Trump Administration and GOP just rigged the coronavirus relief so Big Phrama can price gouge on the future COVID-19 vaccine
By Robert Kraig, Executive Director
Outrageously high prescription drug prices, forced on the public by pharmaceutical corporations who have been granted monopolies over life saving medications, are at the very top of voter concerns in 2020. Ultimately, the federal government (which performs most of the nation’s drug research then grants unnecessary monopolies to predatory corporations) has the most power to fix this problem. State governments can provide some relief as well. But few realize that local governments have an opportunity to provide lower cost prescription drugs to their residents, although none have yet taken advantage of it.
More on this innovative local angle in a moment, but first a little on the magnitude of the problem.
The poster child drug for Big Pharma’s reign of medical terror is insulin, which makes it possible for diabetics to live healthy and productive lives. National data shows one in four people with diabetes skip or ration insulin because of cost. This practice comes as little surprise when the price of some varieties of insulin have increased by more than 17.5% per year from 2012 to 2017. Already in 2020, drug corporations have hiked the price of prescription medicines by over twice the current rate of inflation.
Meanwhile pharmaceutical companies like Eli Lilly–the nation’s largest insulin producer–continue to reap billions of dollars in revenue. In just 2018 alone, Eli Lilly brought in $9 billion in revenue from their diabetes medications. Rather than take action to stop this assault on patients, President Trump has rewarded bad behavior by giving big Pharma billions in tax breaks. Eli Lilly paid $0 in federal taxes in 2018 thanks to Trump’s 2017 tax law.
When high prices force patients to ration their medicine, the consequences are clear: their conditions worsen, and some even pay with their lives. Here in Wisconsin, according to a statewide survey by the Healthcare Value Hub and Citizen Action of Wisconsin, 18% of respondents had not filled a prescription in the last year because of excessive prices.
Instead of holding the drug corporations accountable, President Trump keeps promising to lower drug prices while proposing tweaks and half-measures that protect the drug corporations’ power to set and keep prices high. And now, according to The Intercept, Trump is using his power to make sure Big Pharma will have a monopoly on the Covid-19 vaccine once it is developed with our public research dollars, yet another massive corporate giveaway. Congresswoman Jan Schakowsky (D-IL) fought to put price controls in coronavirus relief legislation, but it was stripped by Trump’s team and GOP legislators, meaning Big Pharma will be able to charge whatever they want. This is not a surprise, as Trump’s Health and Human Services Secretary Alex Azar is a former Pharma lobbyist, as are two members of his Coronavirus Taskforce.
This means that when a COVID-19 vaccine is developed, the U.S. will likely be the only country without any price limits on the life saving medication. The Intercept also reports in a separate article that Wall Street lobbyists are actively pushing Pharma executives and other health care industry leaders to jack up their prices to wring more profits out of the unprecedented national health crisis we are now facing. This gives the attentive public a rare glimpse into the role Wall Street plays in pushing Pharma and other big corporations to extract windfall profits out of the American people in every sector of the U.S. economy. For them, no level of profit is enough, they always demand more, no matter what the consequences to average people.
This brings me back to what local governments can do. I want to be clear that the problem of runaway prescription drug prices is caused by the federal government, and the ultimate solution must be found there by electing a new crop of leaders that will shift the balance of power away from profit-hungry corporations and towards the people. But there is an interesting policy tool local governments can use to get the lower prescription drug prices negotiated by other advanced industrial countries. These prices are also too high, but they can be up to 80% lower than the prices in the U.S., where Axios reports that Big Pharma makes 63% of its profits.
According to Kaiser Health News and NPR, over 500 U.S. cities and counties are already making it possible for their employees to buy brand name FDA approved drugs from Canada, Great Britain, and Australia. These drugs often come in the same packages as the Big Pharma drugs sold in the U.S. The employee ordering the medications has to have a valid prescription from a local doctor, so it works just like it would with a local pharmacy. Although the federal government, at the behest of Big Pharma lobbyists, bans these governments or other large scale buyers from purchasing directly from overseas, this course of action is legal because the local governments work through middlemen located in Canada, with whom employees deal directly. The cities and counties are merely enabling a transaction that is legal in the U.S., the importation of small amounts of prescription drugs for personal use. The savings are substantial, as the drugs cost as much as 80% less than in the United States! The Trump Administration has tried to deter the practices, but more and more local governments are signing up, many of them in red states.
Now you may be asking, it’s great that local governments are saving money for public employees, but what does that do for other residents? Well here at Citizen Action of Wisconsin we wondered why a city or county could not enable the same benefit for all of their residents. We called the largest middleman firm that provides these services, and a representative told us that it could work, but no local government has asked the question!
Already one of the two finalists for Milwaukee County Executive, Chris Larson, is campaigning on making it possible for both county employees and local residents to import prescription drugs from Canada, Great Britain, and Australia. (Note, Citizen Action of Wisconsin has endorsed Larson in this race).
As I said the ultimate solution to Pharma price gouging is at the national level, and requires fundamental structural reform of the system, but in the meantime smart and innovative local officials can at least take advantage of the negotiations other advanced industrial economies do with Big Pharma to lower prescription drug prices. This could mean great relief in the short term for diabetics and others with chronic conditions, and for all of us when the COVID-19 vaccine finally becomes available next year.