Drug Deals: Publish Big Pharma’s Covid Supply Data
Amid criticism for a slower than expected COVID vaccine roll out, the First Minister of Scotland, Nicola Sturgeon, advised today (Jan. 28, 2021) that she will publish on her public site the amount of supply that she receives from pharmaceutical companies. The disclosures could reveal that some areas in the United Kingdom negotiated better price deals and supply contracts, while others languish lower down on distribution lists. Why have the 50 states and territories of the United States not yet done the same? Not tired of the excuses?
SEE: Sturgeon Says She Will Publish Vaccine Supply Figures Against Wishes of UK, The Herald (Jan. 28, 2021).
EXCERPT: The Scottish Government removed its vaccine rollout plan from its website earlier this month.
The UK Government had raised concerns the document contained sensitive details of how many doses the UK is receiving.
A source was quoted as saying: “The reason we didn’t want to publish these figures was because everyone in the world wants these vaccines. If other countries see how much we are getting, they are likely to put pressure on the drug firms to give them some of our allocation.”
Not so long ago, media outlets, such as Forbes, reported that on Sunday, September 13, 2020, President Trump signed a “’most-favored-nation’ executive order to reduce U.S. drug prices. It instructs federal officials to set pharmaceutical reimbursements under Medicare Parts B and D equal to the lowest prices paid in other developed countries, including Canada, the United Kingdom, and France.” Trump received heavy criticism from both the Left and Conservatives.
SEE [THE RIGHT]: Trump’s Drug Pricing Order Is A Costly Mistake, Forbes Magazine (Sept. 15, 2020).
EXCERPT: Tying U.S. reimbursements to those artificially low prices would cause biotech firms’ revenues to plummet. Drug development — which is already an expensive and risky undertaking — would become far less attractive.
SEE [THE LEFT]: President Trump Claims He’s Bringing Down Drug Prices Again, But the Details of How Are Skimpy, Politifact: The Poynter Institute (Aug. 25, 2020)
Sometimes timing is everything. Before announcements of Covid vaccine discoveries and their confirmed efficacy, pharmaceutical companies filed lawsuits to enjoin the Order’s execution. After a federal district court in Baltimore issued a nationwide injunction, the President’s proposal was destined to wind its way through the courts. “The case is hardly trivial, the judge said. ‘This case deals with a regulation that would for the first time implement the use of a price control mechanism not provided for by Congress.’”
SEE: Trump Plan to Curb Drug Costs Dealt Setback in Court, Associated Press News (Dec. 23, 2020)
EXCERPT: A late-term maneuver by President Donald Trump to use lower drug prices paid overseas to limit some of Medicare’s own costs suffered a legal setback Wednesday that appears likely to keep the policy from taking effect before the president leaves office.
U.S. District Judge Catherine C. Blake in Baltimore issued a nationwide injunction that prevents the Centers for Medicare and Medicaid Services, or CMS, from carrying out the so-called “most favored nations” rule as scheduled on Jan. 1. The judge wrote in her temporary order that CMS had failed to follow required procedures for notice and comment before imposing such sweeping changes.
The Trump regulation would tie what Medicare pays for certain drugs administered in a doctor’s office to the lowest price paid among a group of economically advanced countries. It would apply to 50 medications that account for the highest spending under Medicare’s “Part B” benefit for outpatient care. . . .
That suit was filed and decided after the 2020 election. However, the Trump Administration had been combating the industry pre-election, including a similar effort to compel companies to disclose prices in their TV advertisements.
SEE: Pharma Companies Sue Trump Administration Over Price Disclosure Mandate, Biospace (June 17, 2019).
Now, there is a new administration. Yet, as we have been thrust into a historic public health event, the rapid-fire development of novel vaccines, and burgeoning concerns over distribution allocations of the new drugs by a different cadre of government officials (“science first”), where has the issue of transparency and public data gone?
The new administration does have the option to restore the White House’s focus on Trump’s strategy of “international reference pricing.” One analyst suggested:
Biden’s team could reevaluate the referencing pricing model, but refine it to make it less administratively complex. They could also shift the focus from automatic price controls to an independent review board that would take the foreign prices into account while setting its own recommended prices for Medicare.
Biden could also revisit the Obama administration’s plan to change how Medicare pays physicians for certain drugs, which was introduced too late to be fully implemented before Obama and Biden left office, Levitt said.
SEE: What Joe Biden Could Do to Bring Down Drug Costs, Vox (Dec. 7, 2020)
Covid vaccine purchasing is essentially a series of “trade deals” — the drug trade. Scotland’s Minister, Nicola Sturgeon, is facing tremendous political pressure, as Big Pharma (U.S. based) is claiming confidentiality to protect against eliminating their price negotiation advantages. Also, other larger and more economically developed countries in the European Union, including the United Kingdom, worry that such disclosures could upend good deals they had already locked in for their own populations. Is Britain even legally bound to address other nation’s needs post-Brexit, as it (perhaps necessarily) disentangled itself from the bureaucracy inherent in multi-national, multilateral contract formation, let alone when it is life or death?
Sturgeon is demonstrating bold courage by accepting the fire directed at her for daring to publish industry data that affects the very lives of hundreds of thousands under her political charge. Notably, she is taking a page from President Trump’s treatise to orchestrate the “art of the deal.”
When President Trump endorsed a plan for the U.S. to bring down pharma costs across the board, like Sturgeon, he encountered a quagmire of political and global financial interests. Their lobbyists sidelined the initiative with judicial intervention. Multinational corporate and lobbying “might” is already mustering political forces against Sturgeon.
As the example of Scotland shows us, pharmaceutical companies may work out private commercial deals, perhaps including exclusivity or “first in line” agreements, that do not favor equitable access on a fair schedule for Covid vaccine delivery. Moreover, the issue of price has faded into the background, as most pharmaceutical developers have advised they will not stand to make a profit on the Covid vaccinations. That presumed “socially-altruistic” factor, however, does not inform us of whether we have secured relatively equitable pricing structures, or whether our supply comes at far greater cost to the national treasury than paid by other areas of the world, even if they can financially afford the difference.
And then there is the issue of allocations to individual states within the U.S. — who gets what when?
Now that the 2020 election dust has settled, and the Democrat Party secured both Senate seats in Georgia, the fate of price indexing and industry transparency may lose ground to other strategies. One party controls the White House, Congress, and the Governor’s Association. And in the states themselves, as we discuss below, knives are still out.
Does Blue State, Red State Divide Parallel the European Union?: Vaccines
Already, we spy a potentially pernicious and portentous paradox with the stance of the Democrat Party leadership surrounding the national system of Covid vaccine distribution. Could the U.S.’s “Blue state”/”Red state” divide soon resemble the fragmented purchasing and distribution power of the European Union, as follows?
Decentralization: Blue State Position Now
Curiously enough, now Governor Cuomo of New York wants the Biden Administration to authorize U.S. states to buy Covid vaccines direct from Big Pharma manufacturers in order to bypass red tape embedded in a behemoth federal bureaucracy. Cuomo’s request is being heralded as “rare,” and media reports on his request for a decentralized and “broader collaboration model” splash his photo grandly, as if to underscore it as “leadership.” His request to Pfizer and the White House was joined by Democratic Party governors from MI, WI, and MN.
SEE: Cuomo Wants New York to Buy Covid Vaccine Directly from Pfizer, NBC News (Jan. 18, 2021).
SEE ALSO: New York Seeks to Buy Vaccines Directly from Pfizer, Wall Street Journal (Jan. 19, 2021).
EXCERPT: In a letter to Pfizer Chairman and Chief Executive Albert Bourla, the Democratic governor said he was appealing to the company directly after Health and Human Services Secretary Alex Azar failed to deliver on a commitment to increase the doses to New York state.
Last week, the governors of Michigan, Wisconsin and Minnesota sent a letter to Mr. Azar urging him to grant permission for states to directly purchase doses of the vaccine. Mr. Cuomo’s request marks a rare attempt to bypass the federal government and get a state its own supply of vaccine. . . .
Mr. Cuomo told the [Pfizer] CEO he believed Pfizer wasn’t bound by commitments that the other major vaccine provider, Moderna Inc., made as part of President Trump’s Operation Warp Speed, and could sell directly to the state.
Pfizer spokeswoman Jerica Pitts said the company is open to a broader collaboration model that would help expedite the distribution. However, she said federal approval would be needed for any direct sales to states.
Centralization: Blue State Position Then
Yet, it was Cuomo, as Chair of the U.S. “National Governors’ Association,” and several other blue state governors who frantically and relentlessly criticized the Trump Administration last year for “forcing” states to buy ventilators direct from manufacturers — for the same reason. (Note, again the grandiloquent media photographs of Cuomo, as he took the exact opposite position.)
SEE: States Shouldn’t Fight Over Coronavirus Equipment, Gavin Newsom Says. Should Trump Take Charge?, The Sacramento Bee (March 26, 2020)
EXCERPT: Trump has left the procurement of needed medical equipment for dealing with COVID-19 to governors. Multiple governors have said in public statements that this means having governors compete against each other for ventilators and other necessary medical supplies, which drives costs up.
Instead, they want Trump and the federal government to handle the purchasing of medical supplies such as new ventilators and distribute them. Trump has not signaled he has changed his mind.
SEE ALSO: Governors Fight Back Against Coronavirus Chaos: ‘It’s Like Being on eBay with 50 Other States,’ New York Times (March 31, 2020).
EXCERPT: In New York State — the center of the nation’s outbreak, with at least 1,550 deaths — Gov. Andrew M. Cuomo said on Tuesday that the country’s patchwork approach to the pandemic had made it harder to get desperately needed ventilators.
“You now literally will have a company call you up and say, ‘Well, California just outbid you,’” Mr. Cuomo, a Democrat, said in his daily news briefing. “It’s like being on eBay with 50 other states, bidding on a ventilator.”
Gov. Larry Hogan of Maryland, a Republican, said on Tuesday that his state was “flying blind” in the fight against the coronavirus because officials did not have enough tests. . . .
Across the country, America’s governors are going head-to-head with the Trump administration over the need for testing supplies and ventilators, at times defying party lines. Some have sparred with the president on phone calls and in public interviews. Still others have sided with the [P]resident, or calculated that it would be easier to get the needs of their states met with support and praise.
Location, Location, Location
Truth is that location matters — always. According to pharmaceutical industry commentators, the top 10 hubs for the industry’s production and research are necessarily situated in industrialized, urban locations.
SEE: Top 10 Pharmaceutical Hubs in the USA, Proclinical Blog (Part of The Acacium Group) (March 15, 2016)
According to the above blog, the 2016 round up were: Boston (#1), San Francisco (#2), New Jersey (#3), San Diego (#4), Maryland (#5), Philadelphia (#6), Seattle (#7), Los Angeles (#9), and Chicago (#10) as nine of the top list.
The commentators then advised, “Hands down, the best states for landing a job in the pharmaceutical and biotechnology industries [in 2016] are Massachusetts and California. Already living in one of these states? Consider yourself lucky, especially if you are currently seeking employment in the pharmaceutical and biotechnology industries as there are an abundance of growth and career opportunities.”
Raleigh-Durham, NC (ranked #8) was the final location on the 2016 list. In the recent 2020 general election, the group of nine clearly and emphatically consisted of “blue voters.” NC was the outlier voting for President Trump.
But, wait. Raleigh is situated in Wake County. Both Durham and Wake counties voted blue: Durham County (18.1% Trump / 80.7% Biden) and Wake County (35.9% Trump / 62.5%Biden). So, ten for ten, the pharmaceutical industry physically sits within “blue control.”
SEE: North Carolina State Board of Election Results (Official) (2020)
Undeniably, with the pharma industry’s headquarters, operations, and personnel in their midst, several “blue states” already have distinct advantages in the race for the cure. Manufacturing and research facilities, experts, protocols, compliance regimes, relationships with local state and county public health officers, university labs, transnational procurement pipelines, charitable investments in local community organizations that foster trust, distribution infrastructure, banking financial relationships, etc., etc. Likewise without question, should these corporations subsequently encounter any windfall profits from manufacturing these global medicines, including any negotiated side letter deals for prioritization by other countries, it is the blue states in the U.S. that will reap the rewards through state taxation.
Granting governors in these geopolitical subdivisions additional, independent power to direct the vaccine drug traffic — without price and distribution transparency for all to see, does by dose —may result in the same disquieting inequities percolating in the European Union.
When the Trump Administration maintained a decentralized system for buying ventilators, there was a fair measure of price transparency. The input and purchase costs for the mechanical equipment was not a closely guarded business secret. Our states already had a procurement history with the manufacturers who fed their respective localized stockpiles. By contrast, the Covid vaccine formulas of respective pharmaceuticals are novel and highly proprietary. If governors want a decentralized vaccination procurement system, it is more likely that obscure pricing structures will lead to inequitable (and inflated) pricing models. We may also see the more wealthy and populous states garner advantages, such as prioritization schedules, that may not be related to medical need or equitable allocation.
Hence, like Europe, will we end up with some states with transnational purchasing pipelines (urban, industrialized, Northeast, NY & MI, “blue”) getting better deals than other states (rural, agrarian, South, MS & IA, “red”)?
What do you think: Should the public push to enact Trump’s “most favored nation” pharmaceutical strategy, or is there a better way?
[Update Jan. 31, 2021]
We are updating our discussion because of a news story released by Reuters yesterday (Jan. 30):
SEE: UK Says it Expects No Vaccine Interruption from EU; Brussels Admits Irish ‘Blunder’ (Jan. 30, 2021)
According to Reuters, the EU admits it made a “mistake” by invoking emergency powers to restrict vaccine exports to Britain and parts of Ireland that are under British governance. UK & Ireland protested the move, leading to a reversal and mea culpas. So, now it is Britain that was on the receiving end of proposed inequitable vaccine distribution plans by regulatory officials in the EU.
However, Britain has also been out ahead of the EU in distributing vaccines. Reuters reports that apparently their accelerated pace may be due, at least in part, to Britain’s deals with AstraZeneca, a British-Swedish vaccine manufacturer, as well as deals to import vaccines from U.S. based Pfizer. According to the Reuters article:
EU officials were furious earlier this month when British-Swedish drugmaker AstraZeneca announced that most of the vaccine doses it had promised to deliver to the EU by March would be delayed because of production problems in Belgium.
AstraZeneca has been making millions of doses in Britain, but it told the EU it could not divert any to the continent until it fulfills a contract with London. Meanwhile, Britain has been importing EU-made doses of a separate vaccine from Pfizer and BioNTech.
The EU announced regulations on Friday to control exports of vaccines, widely seen as an implicit threat to block Pfizer shipments to Britain unless London shared its AstraZeneca shots.
There is something to be learned in America from these ongoing international developments. Without transparency, fragmented buying of scarce resources naturally leads to leveraged deal-making. As we had pointed out in our Jan. 29th article above:
According to pharmaceutical industry commentators, the top 10 hubs for the industry’s production and research are necessarily situated in industrialized, urban locations. . . . Ten out of ten of the 2016 “Top 10 Pharmaceutical Hubs in the USA” physically sit within “blue control.”
Notably, it may no longer be the case that U.S. vaccination allocations are dictated by population density.
SEE ALSO: U.S. to Change Covid Vaccine Allocation to Favor States that Quickly Administer Shots, CNBC (Jan. 12, 2021).
Events across the pond emphasize it is important for all U.S. states to ask Big Pharma to disclose publicly information relevant to government plans to reach all of America (including any side letter agreements, pricing, and reasons for any distribution disparities), especially if states are demanding independent purchasing authorization. Pharmaceuticals may be private companies, but they are now leading one of the most expansive public health operations in our nation’s entire history.
SEE: COVID-19 Vaccines Distributed and Administered [State by State], Kaiser Family Foundation. Third-Party NGO’s and news outlets are reporting shots received and distributed. This link is one example.
SEE ALSO: Center for Disease Control (CDC) COVID Data Tracker