I got this great email from Elizabeth Warren.
Over the past 50 years, America’s medical innovations have transformed the health of billions of people around the world.
One way we’ve done that? Blockbuster drugs. Today, about 100 different drugs are used by so many people that each brings in more than a billion dollars a year in revenue. Just 10 drug companies generate more than $100 billion in sales for drugs that treat high cholesterol, diabetes, HIV, asthma, rheumatoid arthritis, breast cancer, colon cancer, and leukemia. Those drugs do a huge amount of good, but they also produce huge profits; over the past 20 years, profits for S&P 500 companies have been in the 5-10% range, while profits for the blockbuster drug companies have been in the 18-24% range.
Those very valuable blockbuster drugs don’t just appear overnight as if by magic. They are the end result of generations of huge taxpayer investments, principally through the National Institutes of Health. Drug companies make great contributions, but so do taxpayers. Put simply, the astonishing scientific and financial successes of the pharmaceutical industry have been built on a foundation of taxpayer investment.
With revolutionary new treatments and a giant drug industry built on blockbuster drugs, this should be a moment of great triumph. But in recent years, the American engine of medical innovation has begun to sputter. Why?
- Government funding. Congress used to work in a non-political, bipartisan way to expand NIH funding. But instead of increasing the NIH budget at the pace of potential scientific innovation, budget cuts, sequestration, and other pressures mean that the NIH budget over the last decade hasn’t even kept up with the pace of inflation.
- Drug companies. Over the last ten years, some of our wealthiest drug companies – the ones with those blockbuster billion-dollar drugs – have found another way to boost profits. In addition to selling life-changing cures, some of these companies are increasingly making money by skirting the law. They’ve been caught defrauding Medicare and Medicaid, withholding critical safety information about their drugs, marketing their drugs for uses they aren’t approved for, and giving doctors kickbacks for writing prescriptions for their drugs.
Between these two problems – shrinking government support for research and increased rule-breaking by companies that have blockbuster drugs – lies a solution: requiring those big-time drug companies that break the law to put more money into funding medical research.
Here’s how it works: Just like the big banks, when blockbuster drug companies break the law, they nearly always enter settlement agreements with the government, rather than going to trial.
Under the proposed Medical Innovation Act, those blockbuster drug companies that wanted to settle legal violations would be required to reinvest a relatively small portion of the profits they have generated as a result of federal research investments right back into the NIH.
This isn’t a tax. This is simply a condition of settling to avoid a trial in a major case of wrongdoing. If a company never breaks the law, it will never pay the fee. If an accused company goes to trial instead of settling out of court, it will never pay the fee – even if it loses the case. It’s like a swear jar – break the law and pay something forward that benefits everyone.
If this policy had been in place, over the past five years, NIH would have had about six billion more dollars every year to fund thousands of new grants to scientists and universities and research centers around the country. That’s nearly a 20% increase in NIH funding.
With too many in Congress willing to sit by and watch the NIH starve – and too many in pharmaceutical industry willing to make a quick buck by breaking the law, it’s easy for cynicism to set in – and it’s easy for us to forget the commitments that we’ve all made to each other.
Today we are choking off support for projects that could lead to the next major breakthrough against cancer, heart disease, Ebola, Alzheimer’s, diabetes, or other deadly conditions. We’re starving projects that could transform the lives of our children on the autism spectrum. We’re suffocating breakthrough ideas that would give new hope to those with ALS.
That’s not who we are. We are not a nation that abandons the sick. We are nation of people who invest in each other – because we know that when we work together, we all do better. We’ve done it for generations – and for generations, we have led the world in medical innovation.
Thank you for being a part of this,
All content © 2014 Elizabeth for MA, All Rights Reserved
PO Box 290568
Boston, MA 02129
Paid for by Elizabeth for MA
January 23, 2015 – 10:20 AM EST.
About half an hour ago, Elizabeth Warren made a post of her Facebook page about this. Her post has a link to the item My new bill: A swear jar for the drug companies on her web site. The post on her web site is essentially the email that I quoted above.