For those trying to clean up the costly harms that Big Pharma inflicts on Americans, the how-to details not only matter, they can be confounding. For evidence, just ask federal court officials trying to unravel part of the finances of the opioid and overdose crisis, or the Trump Administration’s soggy efforts to deal with skyrocketing prescription drug prices and scary medication shortages.
The latest bedeviling development in the long crackdown on destructive and highly potent prescription painkillers involves Purdue Pharma, the maker of the addictive drug OxyContin, and the U.S. Justice Department.
For months now, courts in New York and Cleveland have sought to negotiate a “global settlement” of thousands of lawsuits, consolidated first in a federal court in Ohio, and claiming that states, counties, cities, Indian tribes, and others have suffered costly harm due to the opioid abuse and overdose crisis.
This nightmare may cost 700,000 American lives between 2016 and 2025, and, in just one year — 2015 — economists estimate its fiscal toll at $504.0 billion, or 2.8% of GDP that year. The Covid-19 pandemic has only worsened the opioid and overdose mess.
As state courts reached their own, separate conclusions about Purdue’s finances and liability in the opioid crisis, negotiators in Cleveland hoped they had neared an agreement. The Wall Street Journal described it, thusly, including the firm’s decision to enter bankruptcy court in New York to protect itself and its assets to make a prospective settlement stick:
“Since entering bankruptcy, the Stamford, Conn.-based company has been in talks — overseen as of March by two $500,000-a-month mediators — to split its limited pool of assets among competing factions of creditors. Some of the sticking points have been around how much money Purdue’s owners, members of the Sackler family, are willing to personally contribute. The company entered bankruptcy valuing its settlement proposal at as much as $10 billion, though the recent mediation has generally valued the company’s assets at $5 billion, a person familiar with the matter said. At least $3 billion of any settlement would come from the Sacklers.”
The Justice Department, however, filed formal notice with the bankruptcy court that the feds have their own claims to resolve with Purdue and the Sacklers — $18.1 billion of them. The federal demands stem known criminal and civil investigations Uncle Sam launched some time ago into potential wrongdoing by the drug maker and its plutocratic family owners, again, as described by the Wall Street Journal, based on court filings:
“Federal prosecutors are investigating whether Purdue’s marketing and distribution of opioids violated criminal statutes including anti-kickback laws, misbranding under the Food, Drug and Cosmetic Act and conspiracy … On the civil side, they are looking at whether Purdue offered kickbacks to doctors and pharmacies to encourage them to prescribe and dispense more OxyContin, and whether the company transferred cash to hide money from creditors … the Justice Department valued its civil claims at $2.8 billion, which could be tripled under the law. In the event of criminal charges and a conviction, the government said it would seek a $6.2 billion fine and the forfeiture of potentially $3.5 billion more.”
The newspaper provided further details of Justice’s digging into Purdue:
“The federal government [alleges] that from 2010 to 2018, Purdue marketed OxyContin to prescribers it knew wrote medically unnecessary prescriptions and paid kickbacks to keep the prescriptions flowing. The practices caused reimbursements to be paid from federal health-care insurance programs in violation of the False Claims Act, the government alleges … The allegations include that Purdue paid at least $137,000 in kickbacks to specialty pharmacies to get them to fill prescriptions others wouldn’t fill … The filing also mentions probes into Purdue’s relationship with Practice Fusion, a health-care technology company that this year admitted to receiving kickbacks to use its software to help push certain opioids and agreed to pay $145 million to resolve criminal and civil investigations …
“The Justice Department claim also details $10.4 billion in cash distributions it says were taken out of the company from 2008 to 2019, including $4 billion that went to Sackler family members after taxes were paid. The government alleges … that some of the transfers, including $412 million worth of stock and intellectual property rights made to a parent company, weren’t fully documented and were made with the intent to hinder creditors from recovering money.”
Purdue has insisted that its executives and the Sacklers — well-known philanthropists supporting cultural institutions across the country, including in the nation’s capital — have committed no wrong and that the company and the family have cooperated fully with federal investigators.
The courts now will determine how to weigh Justice’s claims against those of other creditors including, Bloomberg news service reported “individuals who lost a loved one to opioid addiction, hospitals who treated addicts and state, and local governments that spent tax dollars on the fallout from the epidemic.”
All the claimants, of course, may see an even less speedy remedy in the civil justice system — notably potentially sizable sums in a settlement that could go to assist those savaged by the opioid and overdose crisis.
The Purdue case also could serve as a stark reminder to those outside the industry about the complexity in wrangling with Big Pharma — a reality that Trump officials still flail with as their four-year term hurtles toward the presidential election.
Barking without bite
The president boasted that his years of real estate deals would give him magical prowess in negotiating with Big Pharma to slash ever-rising prescription drug prices, and, more recently, to improve shaky supply-chain issues that have become a glaring problems during the novel coronavirus pandemic. With time running out on the administration and its achieving progress on these challenges — rooted deep in Big Pharma’s voracious pursuit of profits — the administration, alas, has turned to executive orders. These have been impressive sounding but bereft of actionable analysis and details for their execution.
As the Atlantic magazine writer Ed Yong has observed of the Trump approach, it is as if bakers pulled open an administration recipe and found these dessert instructions: Make cake.
The Washington Post reported this on a quartet of executive orders issued at July’s end and why they may be political theater and ineffectual:
- Aims “to speed up the timeline for a proposal the administration introduced late last year to allow states, drug wholesalers and pharmacies to import certain drugs from Canada. Drug companies have pushed back fiercely on that proposal, arguing there is ‘no way to guarantee the safety of drugs that come into the country from outside the United States … The Canadian government also opposes the measure, warning that the drug supply for Canada’s 37 million residents cannot possibly fulfill the demands of the much larger U.S. market and that allowing importation would cause severe drug shortages for Canadians …
- Seeks “to tie some Medicare drugs’ prices to those paid in other countries with significantly lower list prices — a so-called ‘international pricing index.’ The idea, which Trump called the ‘granddaddy of them all,’ is anathema to most congressional Republicans, who see it as price fixing, as well as to the pharmaceutical industry …
- Purports “to end a widespread practice in which drug makers give rebates to insurance middlemen in government programs such as Medicare. The administration’s goal is to channel that money to consumers instead. Trump killed the rule last year,which is favored by the drug industry, after initially embracing it when he saw projections showing it would raise Medicare premiums for many seniors.
- Requires “the provision of insulin and/or an EpiPen free through an existing program mandating pharmaceutical companies to provide steep discounts to thousands of hospitals and community health centers that serve large numbers of low-income patients. Drug makers have targeted the program, known as 340B, arguing some facilities getting the discounts should not be eligible.
The foibles of a ‘buy American’ order
Now, atop these policy attempts, the president “signed an executive order … requiring that “essential” drugs and medical supplies purchased by the federal government be manufactured domestically, a move the administration said is aimed at plugging gaps in the medical supply chain that have been revealed during the coronavirus crisis.”
The White House “buy American” plan drew swift objections from drug makers and many economists, who decried the policy-by-fiat approach as impractical and so vague as to be impossible to carry out.
The administration called the order a step to safeguard the nation, ensuring prescription drugs and medical supplies crucial to the nation dealing with “pandemics, bioterror attacks and other national security threats.”
But the president’s order leaves it to the federal bureaucracy to determine at some unset time what medicines and gear would be covered. The order opens a Grand Canyon-sized loophole, allowing emergency purchases and waivers if domestic production causes price spikes for necessary goods exceeding certain levels.
The order also fails to reckon with inarguable “facts on the ground,” experts said: Big Pharma and medical device makers, to maximize their profits, have spent decades off-shoring supplies and production to cheap-labor hot spots, as the Washington Post reported: “90% of U.S. prescriptions are filled with generic medicines, and the majority of generic ingredients are sourced overseas, especially China and India.”
News reports about the “buy American plan” were notably lacking, too, in details as to how the administration would protect U.S. patients from yet further medication cost spikes or shortages of drugs or medical goods due to supply chain disruptions, as Big Pharma tries to bring its business onshore.
Kodak’s curious leap into the drug business
The presidential “buy American” plan chiefly served to focus yet more attention and criticism on the administration’s sketchy decision to lend Kodak, the legendary photography products firm, $765 million to leap into a business it never has been in before — producing ingredients for key generic drugs. Congressional Democrats have howled about how Kodak’s CEO received 1.75 million stock options from the company on the day before the U.S. loan was announced. Company board members also received 240,000 stock options as Kodak discussed the government deal — to which the company began alerting others, notably local media, a day ahead of its official announcement.
In my practice, I see not only the harms that patients suffer while seeking medical services, but also the damage that can be inflicted on them and their loved ones by dangerous and harmful drugs. The opioid and overdose crisis — fueled by greed and deception by Big Pharma, doctors, nurses, hospitals, insurers, and others in health care — should be case study in how failed oversight and regulation allowed a powerful slice of the economy (Big Pharma and medical device makers) to kill, injure, and rip off patient-consumers in the relentless pursuit of profit.
This rampage won’t be stopped by vague edicts signed with flourishes. It will take sustained, hard, and unpleasant work, involving lawmakers and angry and frustrated Americans. We’ve got a lot of work to do to battle the opioid and overdose crisis, slash excessive prescription drug costs, and ensure the access and affordability of crucial medications.