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Background

According to the Centers for Disease Control and Prevention – CDC , diabetes is a serious disease that affects 30 million Americans with another 86 million individuals who have elevated glucose levels that are considered pre-diabetic.

Diabetes can progress to become the underlying cause of other costly, disabling and deadly conditions such as cardiovascular diseases, damage to the brain, eyes, kidneys, nerves and result in lower limb amputations.

Diabetes accounts for 4.6 million deaths worldwide and is the 7^th leading cause of deaths in the US.

While the cost of treating diabetes and death rates varies considerably among counties, the US leads all other countries with $322 billion annually in direct and indirect costs.

By comparison, the United Kingdom, Japan and Norway have consistently had the lowest death rates due to diabetes over the past five decades and spend only a fraction of what the US does.

Why does the US Spends so Much and Get Such Poor Results?

The answer is simply because pharmaceutical companies, insurance companies and health care providers make billions of dollars with this costly, inefficient and ineffective method of selling, paying and delivering health care in the US.

According to the Center for Responsive Politics – open secrets , the pharmaceutical and health products industry employs more than 3 lobbyists for every member of Congress; spends about $1.2 million lobbying every day Congress is in session. It has also created a career path for loyal Congressional and federal employees to become well-paid private-sector pharma lobbyists.

Hundreds of million dollars are spent each year on lobbying and contributing to House and Senate members to maintain this monopoly and the industry’s control in setting their own drug prices, unlike the rest of the world.

Pharma’s huge profits occur at the great expense of taxpayers, employers and individuals with diabetes who experience the physical, emotional and financial pain and suffering.

Negative Impact of High Health Care Costs on the Economy

Health care spending in the US far exceeds that of other countries. It consumes 50% more of the economy than other countries. And, high health care expenses have a negative effect on patients, employees, employers, city, county, state and federal governments and the taxpayers that pay higher taxes for this efficient and ineffective system.

High health care expenses increase the cost of everything that is made in America and makes them less competitive to imports that don’t include high health care costs. High medical and drug expenses have resulted in decades of double-digit insurance premium increases, wage stagnation, high personal debt, medical bankruptcies, growing government deficits, higher taxes, the collapse of the middle class and a weaker US economy.

Price Waterhouse Cooper – PwC in its Pharma 2020 Vision report concludes: “the current pharmaceutical industry business model is both economically unsustainable and must fundamentally change the way it operates.”

Who Pays for Diabetes

The cost of diabetes treatment in the US continues to rise uncontrollably without any corresponding improvement in outcomes. And taxpayers, employers and patients pay the bills.

A study by the Health Care Cost Institute – HCCI, showed that employer health insurance spending on employees (under 65) with diabetes was $15,000 a year or 300% more than for people without diabetes.

And, Medicare spending is astronomical with over $5.5 billion dollars being spent on just two diabetes drugs- Januvia and Lantus insulin in 2014.

It Doesn’t Have to be this Way

The most troubling fact is it doesn’t have to be this way. Diabetes is not a rare, deadly infectious disease or an aggressive, deadly form of cancer that can’t be treated. And, no other country in the world allows drug companies to charge these exorbinate prices or regulate and require them to disclose more clinical testing and drug cost information.

Diabetes is a relatively easy to diagnose, monitor and treat disease in the majority of cases with appropriate education and interventions. But like other chronic diseases, diabetes has biological, behavioral, educational, care delivery, political and financial dimensions that need to be addressed in order to improve access to affordable and effective treatment.

Opportunities for Taxpayers to Save Billions and Improve Outcomes of Diabetes Treatment

Politicians frequently campaign on the need to cut wasteful government spending. However, after elected, they protect their sacred cash cows that finance them. They place their political and financial self-interest over the needs of millions of Americans with serious and disabling conditions to have access to affordable and effective health care including prescription drugs.

Numerous studies and reports have indicate that the US wastes hundreds of billions of taxpayer, employer and patient dollars that can be saved by:

Congress insuring that all citizens have access to affordable health services like the rest of the develop world.

The excessive financial burden placed on patients with serious and chronic medical conditions that require costly medications and treatment needs to be significantly reduced in employer-sponsored and ACA Exchange High Deductible plans as well as Medicare plans.

Medicare, Medicaid, ACA Health Exchange and employer-sponsored plans need to change from paying drug companies and medical providers based on the volume of medications, tests, procedures and visits provided to paying for the value and results of the drugs and treatment provided. To what extent does the treatment cure or manage the progression of the disease and minimize the patients’ pain, suffering and disability?

There is no positive relationship between medical care expenses and success in preventing or managing the debilitating progression of diabetes in the US.

Congress needs to promote competition and free-trade by reducing drug and devise patents terms and extenders consistent with other countries;
Congress needs to approve a strict Code of Ethics and Conflict of Interest policies with civil and criminal penalties that prohibits members of Congress and individuals and corporations with a financial interest before the federal government from soliciting or accepting direct or indirect payments, gifts or favors that place private interests over the public good for members of Congress and other federal employees. Investigations and the prosecution of violators should be independent and the responsibility of the US Justice Department and not Congress.

The FDA should be adequately funded and authorized to impose sanctions against pharmaceutical companies including the revoking of patents when ethical standards, regulations and laws have been violated;

Congress needs to repeal the section of 2003 law that prohibits Medicare (the largest drug purchaser) from establishing reimbursement rates with pharmaceutical companies like the VA and every other country does;

Congress needs to eliminating the ban on the importation of lower cost prescription drugs and biologics from Canada and other counties;

The Federal government needs to become an equity investor and require a financial return including royalties, from all intellectual property and patents developed and sold that have received government-funded basic & applied research, grants and loans.

Congress needs to ban direct marketing of prescription drugs to consumers and require that pharmaceutical companies fully disclosure the outcome of all clinical trials, drug research and the actual cost of research and development, manufacturing and administration including sales and marketing.

Summary

The current $322 billion being spent on diabetes with such poor outcomes is not sustainable. For meaningful change to occur, there needs to be major changes in the pricing, financing and delivery of care.

With the entrenched pharmaceutical industry’s interest to maintaining their influence and control over Congress, change will only come about by confronting members of Congress to determine whether they are for or against actions to lower the price of drugs and medical services, increase transparency and adhere to standards of ethical conduct.

Taxpayers, patients, employers and the US economy are being badly hurt by Congress’s lack of leadership and deference given to the trillion dollar health care and pharmaceutical industries over the interest and needs of American patients, employers and taxpayers.

2016 provides an important opportunity for citizens to learn the positions and records of national candidates for President, the House and Senate and elect candidates who will represent the peoples’ interest over their own political and financial self-interest.

You and your family’s life may depend on it.

Background

Big Pharma is a trillion dollar industry that has established a practice of demanding outrageous ransoms for new breakthrough therapeutics to treat life-threatening and chronic debilitating diseases. And, Congress has legalized their behavior with the passage of Patent laws, the 2003 MEDICARE MODERNIZATION ACT (MMA) and weak government regulations, oversight and enforcement.

Big Pharma’s Money and Influence over Congress

Big Pharma leads all other industries in spending billions of dollars on lobbying to gain preferential treatment with Congress’s federal laws and administrative regulations. In addition, many members of Congress, administrative officials and health care providers have been generously rewarded for their support of Big Pharma over the interests of patients and taxpayer

According to a recent New York Times story, pharmaceutical and devise firms paid $6.5 billion to physicians and hospitals last year. About 80% of the total payments went doctors whose prescribing decisions directly affect the profits of pharma and device firms. Payments were made to 610,000 doctors and 1,100 teaching hospitals.

According to the Center for Responsive Politics (CRP), the pharmaceutical and health products industry employs more than 3 lobbyist for every member of Congress; spends about $1.2 million lobbying every day Congress is in session and has created a career path for dozens of loyal Congressional and administration public employees to become well-paid private-sector pharma lobbyists.

The vast majority of Democrats and many Conservative Republicans opposed the MMA bill for different political and ideological reasons and it initially passed the House by just one vote. However, the Republican House Leadership heavily lobbied members of Congress and Big Pharma spent over $125 million to convince Congress to pass this very complex and costly drug benefit in which they were the primary beneficiaries.

To help build support, Big Pharma contributed nearly $10 million to federal candidates in the 2004 election campaign with 70% going to Republicans including more than $500,000 going to the re-election of President Bush.

Republican House Majority Leader Tom DeLay and Congressman Billy Tauzin were very effective in twisting arms, threatening and offering special deals to members of Congress who voted for this legislation.

Tauzin, who steered the bill through the House, quit after its passage to accept a $2 million a year job as president of the Pharmaceutical Research and Manufacturers of America (PhRMA). More than a dozen congressional aides and administrative staff also quit their jobs to work for pharma lobbying firms.

Tom DeLay left Congress in disgrace after charges of ethics violations and Bush appointee, Thomas Scully, administrator of the Centers for Medicare and Medicaid Services also left his leadership position to become a lobbyist for drug companies.

Other notable “wayward fiscal conservative” Republican leaders that publicly supported and encouraged the passage of this costly, unfunded drug benefit included: Newt Gingrich, John Boehner, Eric Cantor, Elizabeth Doyle, Paul Ryan, Mitch McConnell, Rick Santorum and Orin Hatch. With their strong influence over members, the MMA law was finally passed in 2003 with a slim margin by the Republican Congress and signed into law by President George W. Bush, just in time for his re-election campaign.

Bush went on to win a tight re-election against John Kerry with the smallest popular vote margin of any sitting president since Harry S. Truman in 1948. The passage of this new, complicated, unfunded Medicare drug program had the desired outcome of significantly increasing senior votes in support of Bush from 47% in 2000 to 52% in the 2004 presidential election.

Congress’s Unfunded Trillion-Dollar Medicare Drug Program

There has been long-standing public interest to reduce the high cost of health care and prescription drugs in the United States and to make these necessities available and affordable to everyone including seniors, similar to what has been done in Canada and European countries for decades.

However, partisan political conflicts and the controlling influence of millions of dollars from special interest to Congress has resulted in the status quo which profits the health care industry at the expense of patients, taxpayers and employers.

The new 2003 Medicare drug legislation did not include any cuts to existing federal spending to offset this new, costly benefit or to reduce the growing federal structural deficit for the existing Medicare Part B outpatient services and the Medicare Advantage plans that are run by private insurers.

Rather, the new Medicare Part D drug benefit, that it is run by private insurance companies, was made available largely by increasing the federal deficit.

Medicare beneficiaries contribute only 14% of the drug program cost and taxpayers pay the remaining 86%. The cost of the program is expected to grow significantly over the foreseeable future, due to uncontrollable drug prices established by drug makers and the growing senior population that uses them.

The annual cost of this drug program has grown dramatically to an estimated $76 billion in 2015. And, the 2014 Medicare Trustees report, projects the federal deficit just for the Medicare Drug program is estimated to go over $1 trillion in the year 2023.

Congress Restricts Competition, Purchasing Power and Consumer Protections

The 2003 MMA also includes a number of provisions that clearly benefit the financial interest of Big Pharma over the interests of patients, taxpayers and employers.

These include:

prohibiting Medicare from negotiating drug prices for over 55 million Medicare beneficiaries; eliminating price competition with extended-term drug patents;
making it illegal for citizens to purchase the same patented drugs, at a fraction of the price charged in the US, from Canada and other countries;
allowing pharma companies to increase the demand for their drugs by directly marketing them to consumers on TV and other media;
allowing pharma companies to withhold full disclosure of clinical data, adverse side-effects/incidents and the actual cost/benefit of drugs;
providing minimum government oversight and sanctions for illegal and unethical pharmaceutical and device-maker behavior.

I welcome your questions and comments.

Future blogs will describe in greater detail: the high cost of specialty drugs; how drug prices are established; the backlash from stakeholders; and some hope for future changes.

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The High Cost of Diabetes is Killing Americans and our Economy