With Big Pharma's history of criminal and ethical transgressions, Biden faces a challenge to lower drug prices
By Philip Mattera, director of the Corporate Research Project in the Dirt Diggers Digest
The pharmaceutical industry is indignant that the Biden
Administration is actually moving ahead with plans to implement the provision
of the Inflation Reduction Act that allows Medicare to negotiate drug prices. 
By Matt Davies
Responding to an announcement of
the first ten medications that will be targeted, the trade association
PhRMA complained about
a “rushed process,” even though the law was passed a year ago and the
negotiated prices will not become effective until 2026.
The industry is not just complaining—it is fighting the
law in court and doing everything possible to retain its longstanding power to
set prices at astronomical levels. The price-gouging is just part of the
problem. Drugmakers also have an abysmal compliance record in their dealings
with government healthcare programs.
Take the eleven companies which produce the medications
included in the first round of negotiations: AbbVie, Amgen, AstraZeneca,
Boehringer Ingelheim, Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson,
Merck, Novartis, Novo Nordisk and Pfizer.
Over the past two decades, these companies and their
subsidiaries have been penalized in more than 100 cases brought under the False
Claims Act (FCA) or related laws relating to government contracting. As shown
in Violation
Tracker, they have paid a total of more than $5 billion in fines and
settlements for overcharging federal agencies and others forms of fraud.
Six of the companies—AbbVie, AstraZeneca, Johnson & Johnson, Merck, Novartis and Pfizer–have each been involved in ten or more FCA cases, paying out enormous sums in penalties.
Pfizer, for example, has paid $1.15 billion in fines and
settlements linked to 16 different FCA cases. The biggest of these was a $784 million payment
by Pfizer and its subsidiary Wyeth to resolve allegations that Wyeth knowingly
reported to the government false and fraudulent prices on two of its proton
pump inhibitor drugs.
Novartis has paid $926 million to resolve a dozen
different FCA cases. Among these is a $642 million settlement
of allegations that included the payment of illegal kickbacks to doctors to get
them to prescribe its products.
Merck has also been involved in a dozen FCA cases, paying
total penalties of $796 million. The bulk of the total came from a $650 million settlement
of allegations that included both illegal kickbacks and failure to offer
Medicaid the same rebates it was offering hospital systems.
Johnson & Johnson’s $556 million FCA penalty total
comes from four kickback cases as well as several involving the submission of
inflated wholesale prices used in setting the rates for Medicaid
reimbursements.
Among AstraZeneca’s FCA cases is a $354 million settlement
of civil and criminal charges that the company provided large quantities of
free samples of a prostate cancer drug to urologists, knowing that many of them
were giving the medication to patients as free samples and then billing
Medicare and Medicaid.
Seventeen of the 21 FCA cases involving AbbVie and its
subsidiaries concerned allegations of falsified drug price reporting to federal
and state agencies.
What all this shows is that when federal negotiators sit
down at the bargaining table, they will be facing a group of companies that for
years have not only been charging high prices but have allegedly also used a
variety of illegal means to extract even more revenue from taxpayer-financed
healthcare programs.
Rather than expressing indignation, Big Pharma should be displaying penitence for its fleecing of the public for so long.