Thank you so much Andrew Lenec for completing this transcript!
I'm David Torcivia.
[0:00] I'm Daniel Forkner.
[0:03] And this is Ashes Ashes, a show about systemic issues, cracks in civilization, collapse of the environment, and, if we're unlucky, the end of the world.
[0:12] But if we learn from all of this, maybe we can stop that. The world might be broken, but it doesn't have to be.
This week we're continuing our series on the American healthcare system. This is Part 2, but all three parts stand on their own. So if you haven't heard the first part, feel free to stay with us and catch part one tomorrow. Last week, of course, we covered the American health system and how it has derailed itself from the tracks of social good to one of profit. And this perverse incentive of profit has infected so many parts of it, whether that's the hospital system and other providers, whether it's the way that physicians and other doctors practice their trade, or the way that insurance companies compete on private markets in ways that end up driving up prices and premiums and deductibles for all of us. And, of course, we heard three personal stories from you, the audience, and in this Part 2 we're going to be discussing the cost of drugs. That's right, David. We are single-handedly going to tear down the pharmaceutical industry. So buckle up.
[1:16] That's right, Daniel. The pharmaceutical industry is maybe the big bad wolf out of everything that is the incredibly expensive American healthcare system. We hear news stories constantly coming in about a drug that might be originally a few hundred dollars raised to tens of thousands, of people bankrupted trying to buy prescriptions that they need to survive. But who would have ever guessed that an industry began with conmen selling questionable tonics would have become such an exploitative system concerning itself primarily with profit?
[1:52] Well David, I think most people understand that the companies that supply our drugs aren't always the most ethical. Because they feel it in the bills they receive. I mean, you mentioned last week how the primary cause of bankruptcy in America comes from medical bills. And it doesn't matter if these are individual drugs that someone's taking for a specific illness or a whole class of drugs to treat a much broader disease. I mean, the same drugs that were costing $10,000 per year to treat multiple sclerosis in the 90s, well, those same drugs rose to around $60,000 by 2015. And what's so maddening to a lot of people is that drugs that have been around for centuries are not immune to price hikes and increases like this. There's one particular medicine, it treats gout, and it has been used for hundreds of years. And today in Canada this pill is sold for about $0.09. That same pill in the United States, branded Colcrys, well, that will run you over $7, David.
[2:53] And typically with markets, as technology increases and the scale of production grows ever larger, costs are supposed to decrease. But for some reason with pharmaceuticals the opposite often occurs. Almost 10% of the entire US population has diabetes. Probably of course for many other reasons we've covered in this show: things like air pollution, sugar... the topics are endless. And all of these people need insulin. We have figured out at this point how to make insulin really well, and for a surprisingly affordable amount. But still the prices climbed, and unfortunately for the many people that absolutely require it in order to survive.
[3:31] In fact, an estimated 25% of those 30 million people cannot take insulin the way they need to because of the cost. Which puts them at risk for serious health risks, and even death, as we mentioned last week.
[3:44] The number one prescription drug in the world, Humira, is taken by patients for a number of things, and its price has increased dramatically in the United States, from $12,000 a year in 2012 to as high as $60,000 today. In Europe, though, the cost of this drug has been much lower, between 10 and $22,000, and it's about to get even lower than that because the drug's European patents have just expired a few days ago. But in the United States, although the main patent for Humira expired in 2016, the company that produces it managed to acquire more than 100 patents on the drug. And this means it'll extend its monopoly life at least into the 2030s. Some of these patents have nothing to do with the drug itself but involve processes like manufacturing. So while Europeans will get to enjoy this drug, Americans will be spending $60,000 a course for the next decade because this US drug patent system is truly one-of-a-kind. Snd we'll dive into this in more detail shortly in this episode.
[4:45] But David, you mentioned companies that raise prices on drugs, and a good example of this comes from the investment company Valeant Pharmaceuticals, which in 2015 came under fire for its explicit business model, which was to purchase established and essential drugs and then spike their prices. That's what their business existed to do. It took the price of Glumetza, an important diabetes drug, from $896 to above $10,000, basically overnight. In addition, an important medication for regulating heartbeats was increased by this company from $4,500 to $37,000, which they did in an instant.
[5:27] CEO of Valeant, Martin Shkreli, also had another investment company that bought up an important generic antiparasite drug and then raised the price from just $13 to $750, showing that these high prices and price manipulation are not exclusive to only brand-name drugs. Companies have been monopolizing markets for generic medicines, which don't hold any patents, and then raising their prices to as much as the market will bear.
[5:56] And before you say, 'Well hold up David, and Daniel. Martin Shkreli went to jail--"
[6:00] For unrelated charges.
[6:02] Yes, for misleading investors, not increasing the price of this drug. But you still might say, 'This is an isolated thing. This was a small, hedge fund company, not many people are doing this.' But in fact, this type of activity is so rampant that just this year these price hikes and frequent drug shortages have prompted over 300 hospitals across the country, and climbing, as well as the US Department of Veteran Affairs, to come together to form a new nonprofit dedicated to reliably supplying hospitals around the country with essential generic drugs. So the hospitals themselves are looking to get into the drug market in order to avoid this type of price and supply manipulation by Big Pharma.
[6:44] Now, we hope this turns out to be good news for the bottom line of many hospitals, and especially that this savings trickles down not just to the hospitals but to the patients that they serve. But the pharmaceutical industry is going to change even more dramatically with upcoming mergers that are under review right now. CVS and Aetna, the major insurance company and local pharmacy, are talking about one of the largest mergers in business history. Similarly, Cigna and Express, another insurance company and pharmaceutical provider, are also trying to merge in order to provide what they claim is a more unified healthcare experience, combining the healthcare information you get at your doctor or your hospital with the pharmacies that ultimately supply the drugs you get prescribed. But traditionally these types of mergers in the healthcare industry have not saved consumers money, but rather raised prices and streamlined the profit-taking ability of these companies.
[7:37] But David, once again I feel like the standard counter to all of this, you know, we're talking about the profit that pharmaceutical companies rake in at the expense of the American health bill and the prices that we pay.
[7:50] But a lot of companies say, 'Hey, we charge high prices because we have to recoup the high development cost, and because we need to spur additional investment into research to create new drugs.' And that's something we're going to be talking about in more detail later on in this episode, but I think there's one example that really challenges this notion that companies raise prices simply for research and development.
[8:16] And this, this example begins in the 1970s when scientists rang the alarm that chlorofluorocarbon chemicals and various aerosol products were ripping a hole in the ozone layer, threatening to end life on Earth. Countries took this seriously - they came together and they said, 'We need to ban all products that use these CFC propellants.' Now, asthma inhalers at the time, they used CFC propellants, and the active ingredient, Albuterol, was a generic drug, meaning anybody can make it. So the price of an inhaler was around $5 a pop at this time. Now, despite the fact that these inhalers had CFCs in them, these countries that came together to form the Montreal Protocol, they said, 'We need to exempt medical inhalers because of their necessity and because they have a negligible effect on the atmosphere anyway.' So that sounds like it worked out for the pharmaceutical companies, right David? They don't have to replace their inhalers.
[9:13] Yeah, it certainly sounds like they won the good end of the deal on that one.
[9:17] Well, the story's not over, so hold on. Many of the big pharmaceutical companies, they came together and they created a new inhaler anyway, with a different propellant system, one that would be free at these CFCs. And in the process they applied for new patents on these devices. But here's where the story gets crazy: then they used their trade group, The International Pharmaceutical Aerosol Consortium, which is a mouthful, to lobby Congress, and to lobby within other countries, to have those old CFC inhalers banned from the markets. So, just to clarify, they spent hundreds of millions of dollars to get Congress to ban their own product. And this resulted in a new monopoly where the only inhalers available were brand name with this new patent-protected propellant system. And as you would expect, prices went through the roof, where they say to this day. So David, those inhalers that people rely on to save their life, that cost $5 back in the day, how much do you think they cost today?
[10:18] Well, if I've learned anything from the healthcare industry, it's probably hundreds of dollars.
[10:23] That's right. The average price for a brand-name inhaler today is between $200 and $500. And although new generics have hit the market since 2015, even these are between $80 and $300, and we're going to see in a little bit why that might be.
[10:39] Well once again, Daniel, I think we've gotten ahead of ourselves a little bit. And to really understand the dollars involved in this process and, I mean, we all know that making a new drug is expensive - it's a lot of money to put in a research, a lot of money into testing and then ultimately marketing and deploying these drugs - and so maybe we need to understand exactly why that process is so expensive and why that process exists in the first place. And of course this process really gets started with drug approval. And the idea that we need to approve our drugs to make sure that they're safe is surprisingly, at least in the United States, relatively recent. It wasn't until 1962 that these companies actually had to run clinical testings that the FDA used then to approve, postpone, or reject the new drugs. But, like all things, this well-intentioned legislation had a lot of problems with it, and these problems have magnified as time went on. So let's explore what some of these problems with the legislation actually were.
[11:36] First, new drug applications simply had to show that these drugs being tested were safe. We never asked whether new drugs were better than those already available for the same treatment, which is something that a lot of countries outside of the United States do. We simply said, 'Oh, you want to bring this new drug onto the market, well prove that it does something more than if we just gave someone a sugar pill. And also that it doesn't kill them.' So very loose standards here. And second, missing from our evaluation of new drugs, was whether they would be cost-effective or affordable. This is something that every other country looks at in the process of bringing a new drug to market. And, in addition to this lack of price control, the American system for patenting drugs gained a lot of complexity that ended up hurting us as the consumers. Today pharmaceutical companies can hold more than a dozen patents for a single drug, which really gets away from the one patent, one drug ideal. And there are multiple avenues for extending those patents, which makes it very expensive and time-consuming for other drugmakers to bring generics and other alternatives to the market. They had to do a lot of litigation, they have to wait a long time, and all this gets really expensive. Which could explain why even those generic inhalers that we have today are still super expensive.
[12:55] Obviously this creates an environment that is ripe for profiteering and unfortunately slim in terms of social good. To this day, the FDA has to approve a new drugs so long as it is more effective than just a placebo. Gone are the studies that look at one drug's effectiveness versus another, which means that companies are spending millions to test, produce, and market drugs that likely should have never been made in the first place, so that they can create new patents on them and hike up their prices right when their would-be generics would start to hit market and began to take hold.
[13:28] And if that wasn't bad enough, David, that these drugs aren't evaluated on their effectiveness relative to other similar drugs, the HIV AIDS crisis in the 1980s caused the FDA to relax the rules even further. Manufacturers can get their drugs approved through an accelerated process in which their drugs are evaluated based on what's called "surrogate measures." So using a surrogate measure, the FDA will approve drugs that impact symptoms that correlate with an illness without any evidence that the drugs impact the underlying illness itself. Drugmakers are usually supposed to follow up these new medicines with studies to measure their long-term effectiveness, but often this never happens. And it means tons of ineffective drugs come out onto the market. Between 2004 and 2014, a study found that a full 74% of all cancer drugs did not add a single day to a cancer patient's life. But they were approved because they showed to have some impact on a random thing that correlates with cancer. And keep in mind that, while not effectively extending life expectancy at all, many of these cancer drugs can cost well over $100,000 per year.
[14:42] So to really understand this game, we need to understand the patent system that drives it. In the US, drug patents are for 20 years, but some of these regulatory processes can take up to eight years to be completed, meaning a drug company as about 12 years in order to profit off the drug that they've created, worst case scenario. In their eyes, this is far, far too short of a time. And they need, or would prefer, much, much longer periods for their drugs. And we've spoken about intellectual property, patents, drugs, a little bit in the past in Episode 33, "All Rights Reserved." And in order to better exploit this system, they've created a lot of little, clever loopholes and ways of playing these patent games. There are a number of strategies that they employ to maintain these monopolies, and there is no reason that they employ them except to maintain the monopoly and further extend their profit extraction. First and most obvious in the system is litigation. Under current US regulation, any objection to a new patent or claim of patent infringement sets off an automatic 30-month halt to the introduction of a new generic. That's two and a half years. Pharmaceutical companies either apply for new, weak patents, or sue would-be generic makers right before their own patents are about to expire to get that guaranteed 30-month extension. This requires expensive litigation on the part of generic makers to defend themselves, and that drives the prices of both the original drug as well as these cheaper alternatives.
[16:07] And it gets a lot worse from there. So once that pharmaceutical company gets its 30-month extension, it often employs something they like to call in the business as "product hopping." So manufacturers cannot bring a generic onto the market unless there is a brand-name version out there already. Because the generic makers do not have to run new clinical trials so long as they can show that the drug formula is the same as the brand name, and creates the same level of medicine in the body, called bioequivalence. Now David, if you're a savvy listener, you might see where this is going. If there's no brand-name drug on the market, there can be no generic introduced. So what these companies will do is they redesign the drug in some way, usually in the delivery system. So instead of swallowing it, you chew it. Or instead of one sugar coating, it has a different sugarcoating. But ultimately it's the same chemical formula. Well then they file patents on this "new and improved" drug, and then pull the old product from the shelves. Hospitals and doctors then have no choice but to sign new, long-term contracts for the new drug and the would-be generic manufacturers cannot bring their alternative to market because, oh, there is no brand-name version. So then the monopoly continues for several more years, until they do it again. And again.
[17:27] But of course it doesn't end just there. You often get situations where generics that have been available for a long time just suddenly disappear. There was a case several years ago where a generic drug that cost only $2, and was widespread in treating nausea in cancer patients and those in post-surgery, suddenly disappeared. The only available drug, Zulfran, made by Glaxo, was 75 times more expensive. Not only was Glaxo paying generic makers to halt production, they had convinced the FDA that the generics were dangerous, despite having the exact same side effects as Zulfran. In fact, these dangers only appeared at levels 100 times higher than what was traditionally prescribed in the generic. By the time the dust settled and Zulfran's patents expired, the original generic makers were out of business. And hospitals had long-term contracts for the far more expensive Zulfran.
[18:19] And David, you mentioned Episode 33 "All Rights Reserved." I think everyone should listen to this if they want to understand why these patents and intellectual property on drugs is so problematic. When you start looking at the history of intellectual property, we get a different narrative than the one that tells us that this is what's necessary for innovation. I mean, speaking of pharmaceuticals itself, some of the biggest and most successful pharmaceutical companies in the world come from Switzerland. And the foundations of these companies were built mainly by French entrepreneurs, chemists, and others in the field that were fleeing the French patent system into Switzerland in the late 19th century for the express purpose of setting up shop in a country that, at that time, did not have an established patent system that dealt with the chemical and pharmaceutical industries. The absence of intellectual properties is literally what led to the bedrock of Switzerland's international pharmaceutical presence. And it's that patent system that is now starving innovation for life-saving medications and driving costs rapidly up.
[19:28] So what, ultimately, does this boil down to? What is the meaning of these pharmaceutical patent games? We all know that pharmaceutical companies want to make money, but I think we need to take a step back for just a second and ask, 'What is the fundamental mechanism that allows a pharmaceutical company to make profit?' I mean, sure, they have sales - what's going on that enables those sales? Simply put, that mechanism is about restricting access. A company makes profit on life-saving drugs like insulin, or devices like inhalers or epipens, only by restricting the ability for people to access that drug. Without that restriction, no one would agree to pay these exorbitant prices. These are all themes we'll explore later on in this episode. But for the moment, let's continue examining exactly what it takes to bring a drug to market, especially the clinical trials and publications that it takes to produce a brand new drug.
[20:23] There are some crazy things that go on behind the scenes with these clinical trials, but real quick it's important to just touch on how this data is published from these trials.
[20:33] So before the FDA will approve a drug, the pharmaceutical company has to test it in clinical trials on human beings.
[20:41] But when it conducts these trials, the companies are not required to publish the results. And so the public, including your doctor that's eventually going to prescribe this drug to you, does not have access to much of the data. Pharmaceutical companies intentionally withhold negative results of their studies, often conducting multiple clinical trials until they get the results they want. Researchers in one case found that about 40% of all clinical trials are never published. And the story gets worse from here. Of the studies that pharmaceuticals do published, data is often left out. Meaning that the results have been cherry-picked to include only the data that makes the product look good, For example, the pharmaceutical company that owns the antidepressant Prozac published the results from a clinical trial in which, out of 245 study participants, the company had omitted data on 218 of them. This skewed the results to make Prozac look 5 times more effective than it actually is. Similarly, additional data manipulation is possible when these drug companies conduct multi-center trials in which one study is carried out in multiple locations. This allows them to publish multiple papers with different authors, all showing positive results, giving it the illusion that these drugs are more effective than they actually are. When in fact the underlying data is the same for all of these studies.
[22:07] Now, manipulating results of these trials, selected publishing, all of this is totally insane, and it's mind-boggling that this is even legal. But let's dive deeper one more time and look at the humans that are involved in this data. Because, in addition to the problems associated with this publication bias, there is a very long history of abuse when it comes to testing drugs and studying medically-related phenomena in human beings. Here the United States in 1932, the US government recruited 600 poor, black men for a study in which the participants were promised free treatment for what they called "bad blood." In reality, the government wanted to monitor the spread of syphilis. 399 men from the study had syphilis, but researchers hid that information from them and made it a point to deny them treatment, despite the availability of penicillin for treating syphilis as early as 1945. The study, which was supposed to run for 6 months, went on for 40 years, as these men with syphilis were simply studied until they died.
[23:12] And that story broke a long time ago. People were understandably outraged. But while the study was going on, one of the men who was involved in conducting the study was sent to Guatemala, again by the US government, to conduct a similar and even more tragic study there. This took place between 1946 and 1948, and we didn't learn about this study until 2010. But what they did is they took 1500 Guatemalan soldiers, prisoners, and mentally ill patients and then deliberately infected them with syphilis. I guess just to see what would happen.
[23:49] There's a very long list of unethical research in women's health as well. US doctors chose to test early designs of the birth control pill on poor women in Puerto Rico, and the heralded "father of modern gynecology," J. Marion Sims, advanced his practice by using the bodies of women slaves. He performed 30 surgeries, without any anesthesia, on one woman alone. And when it comes to the pharmaceutical industry, one spin-off of this pressure to bring drugs to market as quickly as possible is the degrading and exploitative nature of Phase 1 clinical trials.
[24:26] This brings us up to the modern day, and there are many examples of clinical trial abuse. In 1996, a company was discovered recruiting homeless alcoholics from shelters with a little bit of cash, in order to test drugs on them. And in 1999, a man died from a gene therapy trial in which researchers at the University of Pennsylvania cut corners in safety and disclosure in order to complete the study on time. But perhaps one of the biggest recent scandals was uncovered in 2005. In Miami, the company SFBC International had for years been running the largest clinical trial center in North America, in an old Holiday Inn Motel. And the subjects it was recruiting were largely undocumented immigrants and poor Latinos and African-Americans. The medical director was unlicensed, up to eight participants were house per room, and shortly after the story broke the county ordered the building demolished because of multiple fire and safety code violations.
[25:26] As crazy and it as improbable as this event sounds, it is not an outlier. Nothing has really changed since that story broke in 2005. Clinical trials are still almost entirely conducted by for-profit companies, known as contract research organizations, who have an incentive to complete these studies as quickly and as cheaply as possible with virtually no oversight from review boards. Participants sign contracts in which they will be paid under the condition that they make it to the end of the particular study. Then they are administered experimental drugs, sometimes kept in a facility for weeks at a time, and here's the insane part: as per a majority of these contracts, if a participant gets injured as a result of the tests being done to them, they are denied reimbursement for the cost of treatment. If they are injured as a result of the tests being done to them, causing them to drop out of the study, they are denied compensation for their participation. These companies prey on the poor and vulnerable classes of our society, offering a little bit of cash to become a human guinea pig. And then if anything goes wrong, these mostly uninsured individuals are stuck with the bill. This is part of how many of our expensive drugs ultimately make it to market. Not to mention the countless multitude of drugs that fail and these clinical trials and never reach us.
[26:46] Yeah, this whole process is pretty disturbing to think about. I mean, if you think about how many people in this country don't have a lot of money in savings, don't have a job, find themselves in a situation where maybe they don't have housing, the idea that you can go to a facility and participate in a study for 3 weeks and make a few thousand dollars, that is hard to turn down if you have the opportunity to do that. And many people make this their full-time profession. I mean, I think the average guinea pig, if this is what they do, just jumping study to study, can make around $17,000 to even $20,000 a year, but at what cost?
[27:25] Many of these clinical trials, they only accept healthy patients, at least on paper. And that's because you don't want to give an experimental drug to someone who might be receiving treatment for something else, which could then interfere with that treatment and causes their symptoms to get worse. But a lot of these people, they understand that this is a business transaction. The drug companies understand that, the people participating in the study understand that, and so they often will lie. They'll say, 'Yes, I'm healthy. No, nobody in my family has a history of disease.' Because if they say otherwise, they won't get to participate. And that's lost income. But David, someone might be wondering, 'Well, hold up. These companies don't just conduct, studies on their own, right? These things have to be approved. I mean, the government is involved in approving these drugs, they have to look at these clinical trials. How is it that something can go so horribly wrong that a company can be operating a large clinical trial center in a run-down Holiday Inn, churning these undocumented immigrants and poor people in and out? How is that possible when we should have regulatory bodies in place to ensure that these studies are safe?'
[28:30] Okay, well let's talk just for one moment about these review boards, because there's so much we can go on on these clinical trials, it could really be its own episode. It's really heinous, and there's additional reading available on our website, I encourage you to check it out. But, additionally, there's a lot that we can say. I mean, this is from the mentally ill homeless people in Philadelphia that recruiters entice with cash to participate in studies involving experimental psychiatric drugs to the ethical pitfalls of conducting research clinical trials in prisons all around the country. But, I mean, everyone is wondering, like, where's the oversight in this. And of course, clinical trials do have to be approved and monitored before they can go forward, right?
[29:08] I would think so, David.
[29:10] Well, yes and no. So institutional review boards do exist to protect subjects in these trials, but they were designed with the idea that these studies will be conducted in academic settings. Pharmaceutical companies used to recruit academic institutions to design and execute drug trials, and these review boards were made up of volunteer faculty members, would approve or recommend changes to studies their colleagues were conducting in their own the facilities. But all that changed. In the same way hospitals have chosen to save costs by selling departments like dialysis care to private companies, as we saw last week, pharmaceutical companies have chosen to save time and money by hiring private companies to conduct these studies. Who then conduct them in weird places like old Holiday Inn motels. Review boards still have to approve the studies, but all they are approving is a piece of paper. They don't actually see the studies being conducted. And to make this worse, review boards themselves are now semi-privatized. They are paid a fee to review these studies. And the companies that conduct these studies are free to shop around until they find a review board willing to take their money. And as far as the FDA is concerned, when they were view clinical trials they are primarily looking at the integrity of data, not the rights of the participants. No one monitors the safety of these trials.
[30:28] And what's really interesting is how common a trope this idea of a human guinea pig has become, We see it in media all the time. There's a Simpsons episode where Homer sells out and becomes a human guinea pig. There's a new TV series out right now on Netflix about experimental clinical drug trials and the dramatic effects it can have on the participants. This is a punchline in jokes, much the same way that rape has become when it involves prisons. In reality, these are people suffering in these situations. People who are pushed to the brink, who have no choice, and have to make money somehow, and ultimately do that by selling their bodies to these for-profit companies that exist solely to test experimental drugs on people who very much do not need them. This is a for-profit industry directly profiting off the health of some of the most vulnerable populations within the United States and abroad.
[31:21] I think, for the cynical listeners out there who might be saying, 'Look, I feel bad for these clinical trial participants. I don't like the fact that pharmaceutical companies are manipulating data to make their drugs look more effective than they are. But at the end of the day, if they're developing the drugs that we need, then in some way the system is working, and maybe we can encourage some nonprofits out there, some NGOs, to clean up some of these abuses going on along the margins.' But are these companies actually doing, fundamentally, what we want medicine to do, which is to create the drugs we need not just to survive but to prevent and cure our most terrible diseases and illnesses and restore us to a healthy body, one that is free of illnesses? It turns out that this system might not even be doing that. According to Dr. Michael Brownlee, "If the March of Dimes was operating according to today's foundation models, we'd have iron lungs in five different colors controlled by iPhone apps. But we wouldn't have a cheap Polio vaccine." And so that's the fundamental question, and it may be the most serious flaw in this profit-motivated pharmaceutical system. In a consumer economy such as ours, what happens, David, to a market when there are no customers?
[32:44] Well, there is no market.
[32:46] Exactly. And if the customers of drug companies are sick people, well, how might you get rid of them?
[32:52] Well, you could let them die.
[32:55] David, you cure them.
[33:01] Oh, wait. Whoops.
[33:03] If you cure the people who rely on your drug, the the market for your drug dies. This is what the ultimate purpose of medicine should be: to eliminate the market for diseases that we don't want.
[33:15] Eliminate in a good way.
[33:17] Exactly, eliminate it from the population. But when the process of creating that medicine is run by companies seeking growth and profit, you get some very serious conflicts of interest. A report delivered by Goldman Sachs was leaked earlier this year, and this really highlights this very conflict. In a report directed at biotech companies, the question was asked, "Is curing patients a sustainable business model?" A biotech vice president writes to her clients, "The potential to deliver one-shot cures is one of the most attractive aspects of gene therapy. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies." And she goes on to provide an example: "The company Gilead Sciences is a case in point where the success of its hepatitis C franchise has gradually exhausted the available pool of treatable patients. In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients. Thus the incident pool also declines. Where an incident pool remains stable, like in cancer, the potential for a cure poses less risk to the sustainability of a franchise."
[34:39] Yeah, David. Notice how she refers to treatments as a franchise, like you would a video game or movie franchise that you hope to keep churning out more and more sequels. And so what is her ultimate recommendation? Well, she tells her clients that, if they want to remain profitable, they need to ignore illnesses that disappear from the general population once treated. Instead, they should focus on illnesses that can be treated but continue to supply a pool of patients. Or better known as customers.
[35:09] And that's ultimately what this profit model of medicine comes down to. Yes, there are conspiracy theories that the drug makers are also the ones spreading disease, and you get a lot of crazy ideas like that, which, I mean, may or may not be that crazy, which we'll talk about next week. But really what this model means is that the companies we have entrusted our health to aren't at all interested in pursuing cures for things that they cannot make money from.
[35:37] David, as damning as this leaked report is, because of how explicit and direct it is, in a way pharmaceutical companies have admitted to this type of thinking for a while. You know, we've all heard the billion-dollar development argument: on the one hand, drug makers say that their high prices are justified because it costs so much money to develop drugs. But as it turns, out a lot of times up to half of their reported costs are opportunity costs, meaning the money they could have made by investing in a different type of drug. So when they say it's going to cost a ton of money to develop a drug for some rare disease, what they might be saying in reality is that they can make a lot more money developing another commercial drug, like another sleep-aid pill.
[36:24] But this is not the only model that drugs have to be produced on. As we talked about in that same intellectual property episode, Episode 33, "All Rights Reserved," there are some drugs made without a patent. Most famously, the polio vaccine, which was funded in large part by public dollars as well as money from charities like March of Dimes. They thought their drug would not be patentable, and under the law of the day that would very much be the case. But if that same drug were manufactured now, if it was manufactured at all, and odds are it might instead be a world where we had multiple choices of iron lung to pick from rather than the drug that cured this disease, as Daniel just mentioned, but if it was created it would certainly be patented. And that drug, that life-saving drug that quite literally changed the world, would be locked up behind expensive cost. And I think if there are any objections to this socialization of drug research and ownership, excluding those with financial interest in maintaining the status quo, of course, those objections would be along the lines of, 'Well, we don't want the government involved in something people assume is best left the markets.' But it's important to point out the government still, to this day, is already involved in funding a ton of our drug research. The only difference is that we, the people who pay for this research, do not then get ownership over the drugs that we fund.
[37:45] Under the Bayh Dole Act of 1980, companies can completely fund their research with our federal money which, again, is the people's money, and then patent their inventions, take control of them, and sell them back to us at any price they want. It's double-dipping: we're already paying for this technology as a country, why are we allowing companies to then sell it back to us for a profit?
[38:11] So David, that brings us to the question: what is the point of this episode? What, ultimately, is the point of illuminating the perverse incentives in the pharmaceutical industry, this need to generate profit on people's diseases? What is the point? Well I think, you know, if this story was being aired on NPR or a similar platform, the answer would be something like, 'Oh, we need to support organizations that can raise money for patients to help pay for their drugs, and we need to encourage some reform that will make it more difficult for pharmaceutical companies to put people at risk in their clinical trials. And, you know, we need to support legislation that will require pharmaceutical companies to publicize their financial data so we can see how much they're actually spending on development. That will get them back in line, cause then we can hold them to the fire, hold them accountable.'
[39:04] But ultimately, David, incremental reforms will not strike at the rotten core of this problem. It's not okay to own ideas, especially when those ideas save lives. It's not okay to profit off someone's disease. If we truly want to fix this broken system, we need something new. Now, there are multiple ways to go about demanding a new system. We should support policies that would truly socialize medicine and healthcare, and give the ownership and the access to that healthcare back to us, the people, everyone in this country. But in the meantime, we can also simply pick up the tools and start building something better today.
[39:44] Right now, there are people out there who are looking into other alternatives for these systems. And that means regaining control of their health. One such community really engaging in this right now is a large group of people around the world, a collection of hackers, doctors, and many people who would just be called patients, coming together to create a new class of do-it-yourself insulin pumps automated to the glucose levels in their system, making sure that they are always receiving the correct amount of insulin without these expensive, third-party tools that often aren't covered by insurance, or are less than adequate when compared to these do-it-yourself offerings. There's a huge community involved in this practice right now, actively creating these devices, which are just as safe as the professional medical models, but can be assembled for hundreds of dollars, rather than purchased for thousands, even after the coverage of insurance. Unfortunately, some of the manufacturers of these products, of the pumps themselves, have caught on to this do-it-yourself system and are locking up the firmware of their devices, preventing people from modifying them to create a better health product and shutting people out from actually owning these products that they've already bought. This idea of the professionalization of our medical care is something that is concerning trend. And while the idea of pharmaceuticals, of drugs with complicated chemical equations might seem like it can only exist in his hyper-professional, medical lab-grade environment, well there are some people out there who said, 'Well, you know, maybe this is not the case. Maybe it doesn't have to be this way.'
[41:18] Probably one of the most interesting groups involved in this type of work right now is the Four Thieves Vinegar Collective. They've been introducing ways for people to make their own medicine using off-the-shelf materials to create their own in-home lab reactors using very simple-to-follow, open-source instructionals and computers like the Raspberry Pi in order to synthesize the drugs they need to survive. Michael Laufer is the chief spokesman of this group and he has given a number of talks in which details the technical specs behind some of the products they offer, as well as some of the philosophy behind why medicine should be free and accessible to anyone. One of their most famous offerings is an EpiPen that someone can make for just $30 and refill for just $3. And this comes on the heels of efforts by the company that owns the EpiPen, Mylan, to restrict access to it while offering a product that isn't even reliable in some cases.
[42:21] I actually first encountered the Four Thieves Vinegar Collective at a recent conference here in New York, the HOPE Conference. And the presentation that Michael gave was so incredibly inspiring to me that it really sort of kicked off the idea for this entire healthcare show down the line. And we did have an interview with Michael lined up, but unfortunately some scheduling conflicts came up, but instead we've got some great clips of him explaining exactly why all these concepts are just so important. Here he is explaining the recent Mylan EpiPen controversy, and how they decided that there had to be a better way.
[42:55] If you have heard about us, it was probably through this, when the, uh, Mylan jacked up the price of the EpiPen. We produced the EpiPencil, which is made from off-the-shelf parts for about $30, you can reload it for about $3, and you can test it. And the interesting thing about this is-- Oh, right. Our YouTube video on how to do it was taken down because we were endangering the public. However, it's still hosted on our website. You can also get it on Alexandria Project and the internet archive. Here's the interesting thing: the FDA said, 'Yeah, you shouldn't make your own EpiPen.' Which was hilarious, because the interesting thing was that they started to fail, and 80,000 of them were recalled. And then after they were recalled, they didn't investigate why they, why they were failing. Interesting thing: it's a single-use tool, so you can't test it until you use it. I heard a horrible story about some guy who had to watch his daughter die on an airplane because two of them failed in a row. It was just terrible. And then on top of that, once the recall happened, even with the price hike, they still couldn't get them because there was a shortage. And the price didn't go down, and that was, that was almost 2 years ago.
[44:06] So what he's referring to here is, of course, massive shortages of Mylan's EpiPen, as well as failures that many people have experienced trying to use this in times of critical need. But because they couldn't test it first, and because they had no idea that it might fail, they were unprepared and, in some cases, many people died. He mentioned how the price hasn't come down: as of right now, David, the price of one of Mylan's 2-pack EpiPens is $650. And remember, what he's offering people is the ability to make your own, which is testable, and which is refillable, for just $30.
[44:45] When the medical infrastructure actually works, it appears to work, because you've been fixed. But you've been fixed only because you were disallowed from fixing yourself.
[45:00] I think this point that Michael makes is really important, and we should take a step back here real quick. Because when we think about the medical field and the American healthcare system, we know it has problems, but I think many people tend to fall back on the idea, 'Well, we need these doctors, they're highly specialized, and we wouldn't be able to solve our health problems on our own.' But he makes a great point here, which is that we might be missing the alternative reality, which is that we're perfectly capable of managing so many of these health concerns that we think is out of our reach. But in reality, we've only been led to believe that because there is a monopoly on access to care.
[45:37] Well, I think even further than that, we believe we have this sort of body autonomy these days. Like, 'My body is my body, and I can take care of it. I have the tools available to me in this world to hurt myself or to make myself better, and healthier.' Unfortunately, because of the way our medical system has evolved, the way that so many of our pharmaceuticals are locked behind these prescriptions and high prices, this autonomy continuously fails. Because if I can't afford the treatment that I need, if I can't afford the surgery that my body requires, then I've lost the ability to regain that body autonomy,` to repair something that I desperately need. And because these things are hidden behind the high price paywalls of the medical establishment, and there is no alternative for something outside of existing within this paragon of health systems, then what options do I have? Nothing. My autonomy has been taken away from me, because somebody, somewhere, has decided that health, and maintaining health, require somebody else to profit off of that.
[46:41] And David, this really comes down to a philosophical question of, 'What does it mean to be denied access to something? And what does it look like when we open that back up to universal access?' And Michael goes on here to define oppression, generally. And how that relates to this healthcare system that we're left to deal with.
[47:03] Often times, people are disenfranchised from access to services, access to financial institutions, access to firearms, access to food, access to medicine. And medicine is the one where we fall in. Looking at oppression, what is the structure that typically shows up? Well, there's a control of some sort of resource. Access to something. Again, banking services, manufacturing. And that comes from information control. Always. What allows you access to resources? The understanding of how that works. And this goes to a further layer: that information is only a commodity if it's shrouded somehow. When you force it become a commodity. And the only way that that's possible is when the understanding of that conceptual idea has been buried. And this happens all the time. And sadly, as everybody sees these difficult things where we have all this technology, we have all of this access, and somehow people aren't getting it. And the people in this room I think understand that better than most. We have so much that we can do so much with, and yet it's not doing what we hoped. Why not?
[48:14] And so in this clip he's defining oppression as a structure that controls resources and then blocks access to those resources, often by commodifying the information and the knowledge of how to use those resources. And what's interesting is that he uses this definition to inform how his work at the Four Thieves Vinegar Collective should strive towards avoiding what he calls the de-skilling process, in which, when we strive to create a new system to get around an oppressive one, often times we bring a lot of technological innovation to skirt the old system. But if we allow those innovations to then go through this process where the information on how to use that technology again becomes institutionalized and commodified, then we end up in the same exact place that we began from. Which is a great thing to keep in mind when we go forward, designing new systems, is: How can we prevent this better and new way of doing things from becoming monopolized in the future?
[49:18] And, I mean, they're really putting these sorts of ideas into praxis. You mentioned earlier they designed this automated lab reactor. You simply add these very safe, controlled precursors, let the software do its work, and next thing you know, you have estrogen pills. You have abortion pills. You have antibiotics. You have HIV prophylactics. These are all medicines. They have successfully figured out how to produce, create it, and even distribute it in many cases. This is something that's actually happening right now. And, again, for a price that's just a couple of hundred dollars, versus these systems where the HIV prophylactic, for example, can cost tens of thousands of dollars if you don't have a municipal program that's coming to help you with this. It's unbelievable how much money is being profited off of these very simple chemical reactions that these people have figured out how to liberate for us in order to better all of our health.
[50:07] And so Michael asks an important question: how did we get here?
[50:11] How did we get here? Why, why did it end up that we have all this technology and we're not delivering it? Somehow there was this ordainment that we gave science, and don't get me wrong, I'm a scientist, too, and I love it. But there's this faith that we have, that it's the greatest thing and it will fix everything, and that only those people who have letters after their name should really be trusted to talk about it. And this is why I love being in the hacker community, because that floats a little bit. We can say, "Eh, if you understand, that's enough.' So, an example is dental dams, latex for, you know, having well-protected sex or safer sex, have been controlled as a medical device in certain states in the US. Which is ridiculous. You shouldn't need the permission of a doctor to have safe sex. And there are a million examples of this, which are really frightening and bizarre. Now, why do we still go to the doctor, then? Well, the traditional answer is, 'Well, the doctor's the expert.' But that's not why.
[51:18] The reason is, well, if you don't, you're breaking the law. In the State of New York, where I lived for some time, if somebody says to me, 'I have a headache,' and I say, 'Have you thought about taking an aspirin for that?' That is a felony, and I am practicing medicine without a license, punishable by up to a quarter million dollars' fine and five-to-seven years in prison. Now, it's not usually prosecuted that way, but that's how blanket the laws are. And so instead, if somebody, if you go to a doctor and they actually fix you, you think you should be grateful. But what really happened was you were disallowed the access to do it yourself. And then you were forced to go somewhere and had to pay for it to get sold back to you. So looking at medical infrastructure, what have we got? Most of the institutions that are trying to keep people healthy are looking at a macro-ethical structure. They're saying, 'How do we keep the greatest number of people as healthy as we can with the resources which we're given?'
[52:25] But we all know that that is not anything that a sick person cares about. If you come in to the doctor and you say, 'Listen, I'm dying,' and they say, 'Yeah, we know you're dying, but the structure that we have, most people aren't so... isn't that okay?' No, it's not okay. And so we need to think about things on a micro-ethical scale as well. So we have to ask this question of, 'How would we like to approach health? What is the better way?' And when you see medical institutions, most of the time what they're doing is the factory model. They're just trying to mitigate risk. They're trying to say, 'What is the least amount of money that we're going to lose on malpractice and stay in business?' And... there are very impolite things I want to say about that. However, o the flip side, instead we can have an artisan model. We can have this idea of saying, 'How do you take somebody who will take an interest in your health specifically?' Not say, 'Oh, how can we keep the doors open? How can we keep things running?' But specifically, "How can we make you healthy?' That artisan problem can be applied to everything, and it should be. Because your body isn't like everybody else's. Your gut microbiome is different than everybody else's. Your DNA is different than everybody else's. The way you eat and breathe and walk and speak is different, and those things affect your health. Every single part of it.
[53:54] In past episodes, we've alluded to the idea that healthcare can be personalized, especially in Episode 8, "A Better You," where we talk about Crispr and designer medicine. But the idea that this way of customizing medicine solely to our each individual needs is something that's going to be locked up behind these very expensive procedures, and only the most wealthy will be able to afford this, is something that's disappointing. This is one of the largest, most important medical breakthroughs possibly ever in human history, since the first discovery of antibiotics. This should be something that we can all benefit from without having to think, 'Can I afford this? Should I save myself but have to face medical bankruptcy?' These types of choices are not choices. And any system that can push this forward and avoiding this catastrophe that is looming on the distant horizon is something that we need to be investing as much energy into as possible.
[54:49] Large-scale structural changes don't come from doctors. Doctors are the people you go to when that breaks down. The things that actually build health, it only happens on a communal level. Or on an individual level, when people take control of their own health, when people are invested in their own health. Now, going back to the idea of all these institutions that we're sort of born into, that we're sort of forced to take part in because it doesn't seem like there are options. Often times when I give talks to less enlightened people, I get these people who say, 'Oh, but you're not an expert. How can you do that?' You have to remember that anything, anything, any discovery, was done by one person, alone, in some lab for the first time. It was done first. Everything was DIY first, because there wasn't an institution. Just because the institution's been around longer than we can remember doesn't mean that there wasn't somebody who tried something first.
[55:47] But any discussion, David, that revolves around medicine, especially liberating the access to medicine to everyone, breaking down those prescription barriers, breaking down those patent barriers, inevitably is going to be met with the counterclaim that doing so is going to endanger public health, right? If we give everyone the ability to make aspirin, David, won't they won't they get it wrong? Won't they misuse it?
[56:13] This particular line of argument frustrates me so much, because it's only very recently that the professionalization of the medical industry has really taken off, especially in pharmaceuticals. For the vast majority of human history, and, granted, healthcare wasn't as refined as it is now, but it's very much about making your own medicines, about reaching into the community for the witch doctor or whatever you want to call it, the local shaman, who has some sort of cure for you. And often times, these cures still feed into the prescriptions and drugs that we have today, such as we talked about earlier in this episode with Colcrys, that medicine used to treat gout that iss based on a hundred-year-old treatment, long before patents were even a glimmer of an idea in any sort of industry or monster's heart. It's only recently that we've locked these valuable treatments behind this wall of ideas and access. And, granted, yes it is easy to make mistakes if you don't know what you're doing, but when people's lives are on the line... I mean, the medical industry itself is filled with mistakes, with wrong amounts of things, with drugs that are bad, as we talked about in Mylan already. I mean, these are things already sold out, supposed to be regulated, and they still have problems. So if the choice is let people die without any treatment, or let them try and take something into their own hands and try and make a difference, I think there really is no choice between these two options.
[57:36] I get another thing that I get often when I am teaching people how to make their own drugs or make their own medical devices, they say, 'You really shouldn't show people how to do that. They'll get it wrong, and then they'll hurt themselves.' ... is that better than not telling them? Is not telling them really better? Because then what happens is they just died because they don't have access to the thing. Take your pick. Furthermore, when you offer a tool, you say, 'Here, look. Now everybody has access and this isn't just something that's relegated to labs and factories far away,' new things are going to come up. People are going to discover things that we never thought of before. And as that information flows more freely, we will all be healthier. Now again, the rhetoric here that's important to remember is: let's assume for a moment it actually is dangerous. You have to have the personal choice, first. And second, even if it were risky, which is more risky? Shrugging and just waiting to die because you're sick? Or trying something experimental? you're already dying. Is it really going to be worse?
[58:44] That argument doesn't hold water. It's the same way where people are saying, 'Oh, vaccinations might be risky! I'm not going to utilize them for my child.' Well, I mean... even if they are, which is more risky? Again, it's saying, 'When was this bridge last tested? I'm not sure if it's up to spec. I'm going to swim through the toxic river.' It doesn't make sense. It is important to recognize that living life is about mitigating risk, and we have that. And we should all have the freedom to decide which we think is the better part of valor.
[59:20] You mentioned just before that clip, David, about the importance that community plays in health, historically. And I think one thing that is missing from these counterclaims is that, when we imagine a better system in which medicine can be liberated for everyone and people can take control again over their health and over their body, we can also imagine a world in which there is a lot of trust that we have within our community. The people who are involved in helping us procure our drugs are still people that we can know and we can trust, who have a track record, a reputation. Giving people access to drugs doesn't mean that they're going to be isolated in this pursuit of knowledge and access. In fact, the opposite is likely to happen, as Michael mentioned, in the same way that opening access spurs innovation. It also spurs us to work together, to solve these problems together. To compare notes, to compare research. That's what happens when we don't lock our information up behind intellectual property and patents. We have the ability now to work together for something much larger, much bigger, that will benefit all of us. Not just our own individual health, but the health of our communities. And that's ultimately what medicine and healthcare should be about, right David? The health of me as an individual but also the health of you and my community, and the population of our country and of the world. And speaking of intellectual property, here's Michael Laufer one more time:
[1:00:46] Throughout history, there have been times when economics and morality have come to an impasse. Those who have been coming from a moral space have said, 'What's occurring is not okay,' and those who were defending the status quo have said, 'Yes, we understand that, it's very unfortunate, but this is the way our economy works, so... we just have to live with it. And the response comes, 'Well, that's not good enough.' Classical examples, of course, are the Reformation, the Cold War. In the United States, a classic example is slavery: people were saying people can't be property. And many people said, 'You know, that's weird and it's sort of an old idea, but it's what our economy's based on so we just have to deal with it.' And many people said, 'Well, that's just not good enough.' I think that's happening now again. Specifically with intellectual property. The idea of saying, 'Ideas can't be property. They belong to humanity. We're all in this together.' And people are saying, "Well, yes, you know, it is kind of strange, and it is based on hundred-year-old ideas, but what we're really working for here is just trying to stabilize the economy.' And there are some of us who are saying, 'Well, that's just not good enough.'
[1:01:51] If someone were dying, and you knew how to save them, would you ever refused to tell them how? And say, 'That's my idea and I'm not going to share.' Nobody would. And yet, being complicit in the structure of intellectual property law that disallows people access from medical technologies that could otherwise save them... we're part of the problem. So. Can you make your own medicine? Of course you can. It's been done since time immemorial. The first people who made medicine made their own medicine. And again: is it okay? It has to be. It has to be. Because if you tell me I don't have the freedom to save my own life, that's capital punishment by proxy.
[1:02:31] I think what he just said there, that restricting access to medicine is capital punishment by proxy, is a really important statement. Because David, we already have an established pharmaceutical industry. We already have an established American healthcare system. Yet millions of people are suffering and dying because they can't access it. Who are those people? Well, most likely they are the vulnerable and marginalized and otherwise poor communities in our country. We are collectively punishing these people for being vulnerable. We are punishing them for being poor. In a lot of ways, this is what we've decided as a society: that if you want to be healthy, if you want to be successful, if you want to enjoy life - because isn't good health a precursor to enjoying life, to living? You can't live life when you're on a sick bed or you're stuck in a dialysis center. We've decided collectively that those who can't afford access deserve this capital punishment. They deserve to be left behind. And frankly, that's not a world I want to live in, and I don't think it's a world that we should continue to allow.
[1:03:41] Information wants to be free. The knowledge that we collectively create belongs to all of us. But when you take that knowledge and you lock it up, and hurt people because of that process, preventing people from being healthy and ultimately dooming some to death, well then you cross that idea of wrong and you enter the world of just plain evil.
[1:04:04] I know there is considerable concern and skepticism about the pricing of EpiPens, and I think many people incorrectly assume that we make $600 off of each pen. It's simply not true. After subtracting EpiPen-related cost, our profit is 100, or approximately $50 per pen. I wish we had better anticipated the magnitude and acceleration of the rising financial issues for a growing minority of patients who may have ended up paying the full wholesale acquisition cost or more. We never intended this. We listened and focused on this issue and came up with an immediate and sustainable solution. Going forward we will continue our leadership in developing high-quality medicine and expanding access.
[1:04:45] If you could rewind the clock a few months, I wonder if you would do anything differently.
I probably would have raised the price higher, is probably what I would have done. I think healthcare prices are inelastic. I could have raised it higher and made more profits for our shareholders. Which is my primary duty. And again, no one wants to say it, no one's proud of it, but, you know, this is a capitalist society, capitalist system, and capitalist rules. And my investors expect me to maximize profits, not to minimize them or go half or go 70%, or to go to 100% of the profit curve that we're all taught in MBA class. Try to be a CEO yourself, see how it goes. Try to maximize profits and not get kicked out of a company and let me know how that goes for you. You know, price drugs really low. You won't last very long. You know, it's people that are willing to make these hard choices, who arrange for their shareholders and, again, try to do the right thing with those profits and make sure that no patient's left behind... make sure that we invest in a disease that hasn't had a new investment in 70 years. We're developing three new drugs for toxoplasmosis. Which, by the way, will be very expensive if they ever get approved.
[1:05:58] Thank you for listening to Ashes Ashes. This has been a production of Daniel Forkner and David Trocivia. Please consult your therapist before listening to Ashes Ashes. Do not binge episodes of Ashes Ashes. Prolonged exposure to the topics we discuss could result in depression, anger, desire to dismantle the current system for a better one, and, in general, things that will make you unpopular at the various parties that you go to in society. David and Daniel are not responsible for any of these effects, and if you do want to last out and have problems that you would like to speak about, you can email us at [email protected]
[1:06:21] As always, you can read much more on our website. We have tons of articles, links, and a video of Michael speaking about all of this, as well as a full transcript of this episode. You can find all that and much more at ashesashes.org.
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[1:06:58] Next week we're wrapping up this pharmaceutical series by taking in all these elements that we've learned about, healthcare, pharmacy, and a lot of themes that we discussed throughout this show, and turning it into something very personal, very real, and confronting one of the greatest crises currently occurring in the United States today. We hope you'll tune in for that. But until then, this is Ashes Ashes.