Trump’s difficulties solving problems identified in the campaign

During the presidential campaign, Donald Trump identified and pledged to repair a number of problems facing the country. Among those problems were high tax rates, over-regulation, repealing and replacing Obamacare, the high cost of prescription drugs, immigration, and strengthening the military. All these need solutions, and all will be difficult to solve.

Illustrating the difficulty in changing entrenched policies and practices is the high price of prescription drugs. Early on, the administration’s handling of this issue seems confused. President Trump has changed his focus a couple of times; part of the process of learning the differences between running a business and running a country, perhaps.

He is caught between helping consumers get better prices, and at the same time not hamstringing the companies that manufacture crucial and beneficial medications.

First, Trump met with prominent Democrats, like Representative Elijah Cummings, D-MD, and promised to lower drug costs, and then he met with drug company executives and backed away from that promise.

The goal hasn’t really changed, but figuring out how to get there is tricky, and the reality is that the president has limited power to bring it about.

Many are content to blame high drug prices on greedy pharmaceutical manufacturers, and that sometimes is a reasonable criticism. But that view ignores the steep hill manufacturers have to climb to get needed drugs to market. It takes the creation of 1,000 drug formulas before the right one is found and gets through that step to clinical testing and patent protection, and only 8 percent of those getting to the testing phase actually pass FDA requirements for approval.

Thus, many years and millions or billions of dollars later, a beneficial drug makes it to market. The pharmaceutical company then has to sell enough of the product in the remaining few years of the exclusivity period or patent protection to cover those enormous costs before other companies are free to produce a generic form without investing much to do so.

And then, someone who takes the drug and has a bad experience may sue the manufacturer, despite the stringent quality requirements for FDA approval, and the fact that the drug was prescribed for the plaintiff by a physician. Such lawsuits add to the substantial costs of manufacturing drugs.

If Trump negotiates with manufacturers to get prices down and threatens that if they don’t lower prices the government – the largest drug buyer – won’t buy their drugs, he risks preventing Medicare and Medicaid recipients from getting what in most cases are the best drugs on the market. And without sufficient profit from their products, pharmaceutical companies will be substantially hampered in funding research necessary for new and better drugs.

Even a successful negotiation for Medicaid/Medicare has no effect on those Americans with private insurance through their employers, or through exchanges, or otherwise. Their prices would undoubtedly rise as drug makers try to recoup money lost due to the government paying lower prices.

“In addition, prescription drugs often substitute for, and reduce, other health-care costs — by, for instance, reducing surgeries or hospital stays,” wrote Michael Tanner, a senior fellow at the Cato Institute published in National Review. “Limiting the availability of prescription drugs, therefore, may do less to reduce overall health-care costs than we think.”

Going back to the steep hill drug manufacturers must climb to produce a marketable drug, working to streamline the FDA’s approval process can certainly reduce the length of time it takes and also reduce the cost to get drugs through the approval maze and to market. For example, when Mylan acquired the EpiPen and raised the price by about 400 percent, two manufacturers had competing products that had been awaiting approval for five years. Had there been a streamlined approval process, there would have been no EpiPen price gouging.

Tanner also points out that during this fiasco, “in Europe there were three different versions of the product on the market.”

“And finally,” he wrote, “we can inject more consumer choice into the health-care system by expanding health savings accounts and transitioning Medicare to a system of premium support. Nothing more effectively disciplines a market and forces down prices than engaged consumers spending their own money.”

It is easy to outline solutions; it is much more difficult to actually get them done.

Only 30 days into his presidency, Democrats and much of the media criticize Trump for nearly everything he has done and not done, and a good bit comes from some on the Right, as well. The traditional honeymoon period, where a new president is allowed 100 days to get his administration formed and active, ended before it began for Trump. And to be objective, the president often pokes the bear, further complicating things. But there is little recognition for the things Trump has accomplished, compared to the manic nit picking that passes for news these days.

Congress needs to stop hemming and hawing, and get busy, and the Democrats and anti-Trump media need to abandon their obstruction and focus their criticism on things that really deserve it, and give the Trump presidency the same hands-off treatment Barack Obama received for eight years, or at least until the honeymoon is really over.

The wildly outrageous costs of pharmaceutical drug production

Drug companies – “Big Pharma,” as they are called – are targets in America. Especially with Mylan’s recent EpiPen pricing issue and earlier when Turing’s odious CEO Martin Shkreli raised the price of Daraprim by more than 55 times, from $13.50 per pill to $750 per, and his smug reaction to criticism over that questionable move. There are bad guys in all areas of life, of course, and pharmaceutical companies are no exception. Perhaps these two examples are evidence of bad players at work.

Without getting into the minutiae of either of these situations – and certainly not defending either Mylan or Turing – here is some badly needed and eye-opening information about the business of producing pharmaceuticals.

Making drugs is a business, and like other manufacturers drug producers find something people need or want and produce it. Life-saving drugs, or drugs that improve our health are valuable and needed. Drug companies spend billions of dollars over many years to develop useful, needed pharmaceutical products, improve them so that they will meet or surpass the FDA’s strict standards, and once approved market them.

In June of this year, the American Action Forum released research addressing the process of producing new drugs. The process “is extraordinarily expensive and time consuming,” the article stated. “A Tufts University study found that the average cost to bring just one drug to the market is about $2.6 billion. It takes an average of 15 years from the time a drug developer first begins testing a new formula until it is approved by the FDA. Only 1 in 1,000 drug formulas will ever enter pre-clinical testing, and of those, roughly 8 percent will ultimately receive FDA approval.”

Let’s say PharmX creates 100,000 drug formulas, but only one in a thousand, or 100 of them, gets to pre-clinical testing and only eight will receive FDA approval. PharmX will have invested on average $2.6 billion in each one of the eight. The company has to sell enough of each of those eight drugs to pay for its development, and to have enough left over to finance new research and development, and some profit.

Like other inventors, drug companies patent their products, or receive an exclusivity period. A patent is issued for 20 years from the date of filing, and drug makers usually file early in the development stage to prevent other companies from moving in on their idea. If it takes an average of 15 years to get a drug through approval and to market, the pharmaceutical company has on average only five years to sell enough of the drug to recoup the $2.6 billion in development, approval and marketing costs. At the end of the patent period and/or the exclusivity period, another drug maker might make a generic form of the drug, and sell it for a lot less.

So, when you do the math for a drug with development costs of $2.6 billion, you find that if PharmX charges a dollar a dose, it will have to sell 2.6 billion doses in five years just to break even. If PharmX charges $100 a dose, it will have to sell 26 million doses in five years, just to break even. John LaMattina, senior partner at PureTech venture capital, noted that drug development “is a high-risk, expensive, and long-term endeavor.” Classic understatement.

Another aspect of this issue is when drugs made by US companies cost more at home than they do in other countries, such as Canada. It doesn’t seem right that Canadians can buy American drugs cheaper than Americans can. But what is the drug company supposed to do when the Canadian government, or another government, wants to buy millions of dollars of its product at lower than market price when it is trying to recoup billions in costs? There are likely other drugs made by other companies that treat the same disease that these governments could buy instead, so should the drug company pass up that opportunity, leave the millions of dollars on the table, and perhaps suffer financially as a result, while a competitor sells millions of dollars of its product to these countries at a below-market price?

Another obstacle to manufacturers’ ability to recoup the cost of bringing a new drug to market is that regulations imposed by other countries, perhaps to protect one of their own companies, makes the potential market for sales smaller.

And, despite the rigorous development and testing process required to gain the FDA’s approval that the drug is safe for public use, the required warnings about potential side effects and such that go on product sheets, and the fact that drugs are prescribed by patient’s doctors, drug manufacturers still get sued by patients.

Doing business in the U.S. is a real challenge, with often burdensome and unreasonable regulations and other hurdles that must be negotiated that make producing needed and wanted products and services difficult and expensive.

The more expensive drug production is, the greater the need for high prices. While we would all like lower prices for drugs and healthcare in general, we also want to continue to have companies developing new and better drugs and medical devices.