The Drug Industry’s Redheaded Stepchild

America pays, the world takes
By Steve Hirsch

Comparing US and Other Countries Rx prices

There was collusion. I’m not talking about the so-called conspiracy between President Trump and the Russians that happened only in fevered minds of Hillary-loving Democrats who can’t understand why their fair-haired princess lost.

The collusion I’m talking about costs Americans. I’m not sure if it’s a conspiracy, which is illegal, but it’s definitely collusion. And it steals money directly out of our pockets. It’s why the US is the only wealthy nation on earth that doesn’t negotiate prescription drug prices, and why we pay two and three times what British and Swiss citizens pay.

You want to know how it ended up this way?

There are these people called drug-industry lobbyists. And there are these other people called Senators and Congressmen. They hang out with each other. It’s been going on for decades. Having drinks together at Washington DC taverns, hobnobbing at fancy country clubs, powwowing in conference rooms.

Ordinarily, there’s nothing wrong with this. Lobbyists are supposed to lobby. Lobbying is just another word for petitioning government. And the founding fathers thought so much of the right to petition that they put it in the First Amendment. Yes sir, it’s right up there with the freedoms of speech, religion, and the press. I like lobbying. I like that conservative organizations have the right to lobby. Heck, I like that liberals get to lobby, even though thinking about it makes me queasier than that time my mother made me swallow cod liver oil.

It’s just that somewhere in this game we call politics, during all this huddling between drug-industry lobbyists, Senators, and Congressmen, they drew up a game plan to beat the average American out of a lot of his dough.

That’s right, we’re being played. There’s no way an American with rheumatoid arthritis should have to pay $32,028 for Humira when an Englishman pays half that and a Swiss citizen pays $10,000.

That’s what I was thinking about this morning while crossing the Delaware River. Few paintings depict anything as consequential as that classic of George Washington when he crossed the Delaware. Having lost battle after battle, our then future president took off on the evening of Christmas Day 1776 to ambush the Hessians in Trenton. We needed a victory, and it was in Trenton that we finally got ourselves a decisive win.

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Anyway, there I was on my way across the Delaware to visit friends in New Jersey, and my brain wandered. I stopped thinking about prescription drug prices, and thought of Washington’s perilous boat ride while I stared yonder at the riverbank on the Jersey side. But I’m not the kind of guy to sit astride a horse while floating on a flat-bottomed raft. I was in my car. It’s safer. I took the Trenton Makes Bridge.

There’s a sign on the bridge: Trenton Makes, The World Takes. The slogan meant something back in the day, when Trenton had a reputation for world class steel mills, ironworks and tire manufacturing. Nowadays, Trenton is famous for not much except being the capital of New Jersey. But that’s not why I’m talking about that sign.

Trenton Makes, The World Takes.

I mention it because it got my brain back to thinking about prescription drugs. About how we Americans end up paying more than Europeans, Canadians, and Australians for pharmaceuticals (and even weirder, how we pay more than Europeans to defend Europe, but that’s a subject for another day.) I thought up what would be a better sign. A sign more in tune with the times.

America Pays, The World Takes.

Sounds cool, huh?

Even though the Trenton Makes Bridge has history, my sign deserves a structure with more gravitas. I’ve settled on The George Washington Bridge. It’s almost a mile long, so the sign can be really big. Not only that, but think of the symbolism. Sure, George Washington beat England in war, but that was centuries ago. Nowadays, the Brits beat us every freaking day on drug prices. Speaking of symbolism, the GW is right smack between New York and New Jersey, and guess what? NY/NJ is the capital of America’s pharmaceutical industry. That’s right, those two states are home to Johnson & Johnson, Pfizer, Merck’s US division, Novartis US, Bristol-Myers Squibb, Regeneron, and others.

A lot of people will say it’s stupid for me to talk about putting a sign on the George Washington Bridge. They’ll say it would take an act of Congress. And that it would take a lot of lobbying against the drug industry lobbyists. And that I don’t even have a Let’s-Plaster-It-Onto-The-GW-Bridge Foundation to raise money for lobbying Congress.

Maybe they’re right, but to paraphrase Alexandria Ocasio-Cortez, the world’s most excellent champion of stupid ideas: it’s my idea, I’m the boss of it, and no one has the right to question it (the modern version of what that Saturday Night Live guy used to say, I’m good enough, I’m smart enough, and darn it, people like me.)

Don’t get me wrong. I’m not one of those wacky conspiracy theorists who goes around badmouthing Big Pharma. I love the drug companies. It’s great that they have so much to spend on Research and Development. Big budget R&D is how they come up with blockbuster drugs that improve our lives. Humira is a breakthrough for different kinds of arthritis, psoriasis, and Crohn’s Disease. Imbruvica treats various forms of leukemia, and lymphoma without chemotherapy. Januvia/Janumet helps people with type-2 diabetes. The list goes on.

But.

Americans end up paying more per capita for prescription drugs than any other wealthy nation. Not just a little more. Crazy more.

Comparison Chemo Drugs US UK Australia Oncotarget

That’s right. Every time a drug company considers whether or not to spend a few billion developing a drug, the executives sit around a long mahogany table in a dark board room. I’m serious. And at every one of these meetings, there’s always an accountant who looks like Poindexter.

The drug companies don’t want us to know what’s discussed at those meetings.

But I know.

There they are, sitting around their fancy table with hands folded before them, watching intently while the Poindexter punches buttons on his calculator. It usually takes about ten minutes. That’s when the Poindexter always turns his head and peers through his thick eyeglasses at the drug company’s gray-haired CEO.

It really happens like this at all the drug companies. Really.

The Poindexter says something like, We’ll get the French to spend $4.99 per bottle, and England, if we’re lucky will spring for $6.82 per bottle. The Germans, I’m pretty sure we can get them to spring for $7.50 per bottle.

He prattles on, while gesticulating his skinny arms, about what Papua New Guinea, Australia, India, Luxembourg, Sudan, and others will pay.

The drug company’s CEO doesn’t care. But he listens patiently, rubbing his bloodshot eyes every thirty seconds or so to stay awake. Yes, he’d prefer that his Poindexter get to the point, but it’s a time-honored tradition throughout the drug industry: a CEO listens when his Poindexter rambles.

After about twenty minutes, the CEO stretches his arms and lets out a bellowing yawn. All the other executives follow suit, partly because yawning is contagious and partly because the CEO is their leader and it’s their duty to follow his lead.

That’s when the Poindexter knows it’s time to get to the point. But drug-industry tradition is drug-industry tradition, and the Poindexter is obligated to talk about Canada. “The Canucks, they’ll pay four bucks a bottle.”

It’s a cue. This is when the CEO and all the rest of the execs lean forward, their tense forearms on the long table, eyes widened. They say nothing. They know why they’re there: their Poindexter is about to talk turkey (turkey, not Turkey, about which they couldn’t care less.)

The Poindexter makes a show of pulling his eyeglasses from the bridge of his nose, then gazes myopically from executive to executive. “The Americans will pay six dollars.”

Everyone oohs and aahs. The aging CEO claps his hands like a young boy at a baseball game who just witnessed his hero hit a homer.

But one of the younger execs, usually some kid with rich parents who graduated six months ago with an MBA from Wharton looks surprised. “Six dollars a bottle doesn’t sound like a lot.”

Everyone laughs at the kid.

“What’re you, stupid?” says the Poindexter. “The Americans don’t negotiate. We’ll charge ‘em six bucks a pill.”

Yup, that’s what goes on at the drug companies behind closed doors. Oh, I forgot to say how they always close out these kinds of meetings: Each and every executive takes turns high-fiving all the other executives. It’s drug-industry tradition. Except the young Wharton twerp. No one wants to be seen too close to anyone dumb enough to underestimate how much the Americans will pay.

The CEO then looks squarely into Poindexter’s bespectacled eyes. “Do you know why God invented Americans?”

Poindexter and everyone else has heard it before. But it’s time-honored tradition to play dumb so that the CEO can deliver his punchline.

The CEO swivels his head slowly, glancing at each person in the room, then licks his lips. “Someone had to pay full boat.”

The room roars in laughter. It’s not funny anymore. It’s even sad. But that’s how the meeting always ends. It’s drug industry tradition.

But seriously.

Medicare Part D spent $129 billion in 2016 on prescriptions; negotiating to cut that in half would save $65 billion per year.

Yes, it’s true that $65 billion per year isn’t enough to return Medicare to financial health. But drug-price negotiation is painless compared to increasing FICA taxes or decreasing benefits or upping the age at which seniors become eligible. If Congress can’t gather up enough courage to allow Medicare to negotiate drug prices, what are the chances they will confront the really tough choices before it’s too late?

I’ll tell you the chances. Zilch.

And it’s not just Medicare that should negotiate drug prices. I’m sick and tired of the fact that Americans of all ages pay wildly more for prescriptions than citizens of other wealthy nations. I’m sick and tired that all other nations use their governments to negotiate from a position of strength, and ours doesn’t.

Free markets are great, but Americans are the only ones not negotiating with the drug companies from strength. American Seniors wants America to negotiate from strength.

But ok, I’ll admit it. There’s an argument against all this, and it’s an honest argument. If America stops paying such high prices, the drug companies will make less profit. Less profit will mean less money spent on R&D. And less R&D will mean life-improving drugs will come to market at a slower pace.

Still, I want Americans to pay less. I want our government to negotiate drug prices just like the governments of other wealthy nations. We Americans can’t afford to be suckers, even if it means less new blockbuster drugs. Does that mean I’m a bad person?


Sign up for my newsletter, and let me know what you think. Am I a bad person?


Or maybe I’m paranoid. Because here’s what I think. President Trump has come out and said he wants to bring down drug prices. I haven’t seen any surveys on it, but I bet the vast majority of Americans agree. It’s probably the only thing that Republicans and Democrats agree on.

But we’re still paying high. And we’re still getting played. I’m no conspiracy theorist, but I can only think of a few people who don’t want lower drug prices. There are these people called drug-industry lobbyists. And there are these other people called Senators and Congressmen. They hang out with each other. I’m thinking that something might have happened. I’m not going to say what it is, but I’ll give you the initials. C-O-L-L-U-S-I-O-N (ok, so they’re not initials.)

How about the Justice Department look into it? Wouldn’t it be cool if President Trump asked new Attorney General William Barr to pick out a team of prosecutors? A team to be led not by Robert Mueller. But by someone else like him. Someone better. A new Robert Mueller. A better Robert Mueller.

Yeah, that would be cool.

How about it, President Trump? Did the drug companies and Congress collude? I want to know. What do you think?


Steve Hirsch

Steve Hirsch
I'm a businessman who is fast approaching retirement age. Liberal politicians are funny people, so I make fun of them on Brock Summerton Podcasts. Listen at the Brock Summerton Website or on Youtube.