Even as I got shocked to the core yesterday with news on how certain Biological Agent accusations are going in the wrong direction (turning my paranoid into overdrive in 7.2 seconds flat), I was also slightly bewildered a few hours later on how a greed driven industry is now getting a rather large shake up. It was the Washington Post that treated us to ‘Hospitals are fed up with drug companies, so they’re starting their own‘ (at https://www.washingtonpost.com/national/health-science/hospitals-are-fed-up-with-drug-companies-so-theyre-starting-their-own/2018/09/05/61c27ec4-b111-11e8-9a6a-565d92a3585d_story.html?utm_term=.8362898ab1fe). It is a not for profit pharmaceutical company that works exclusively for hospitals. That is the first really good unbiased news of 2018. I truly wish I was part of that place. The report by Carolyn Y. Johnson gives us “A group of major American hospitals, battered by price spikes on old drugs and long-lasting shortages of critical medicines, has launched a mission-driven, not-for-profit generic drug company, Civica Rx, to take some control over the drug supply“. And even as it is for now merely the generic side of it all. We need to realise that in the UK, the NHS gives us (at https://www.nao.org.uk/wp-content/uploads/2018/06/Investigation-into-NHS-spending-on-generic-medicines-in-primary-care.pdf) and that they spend £3.5B in 2016-2017. I am using that data for the mere reason that it is more up to date and more reliable at present. Consider that an ‘island’ with only 20% of the population of the US has that bill, yet to a larger extent, they have a similar aging issue and several similarities in health care. Now consider that this is a NFP situation, so basically, we see the optional saving of close to a billion pounds a year, implying that the savings for the US should increase drastically. It is also important to see that this is merely the beginning.
So as the too laid back greed driven US pharmaceutical industry is confronted with two nightmares, the first is not merely the current generic medication part, it is that if the US and UK unite the damage increases for the pharmaceuticals. In addition to that, the Pharmaceutical industry is confronted with well over a hundred patents maturing over the next 5 years, so the generic part is increasing with leaps before 2023 and so far a lot of them cannot be ‘reset’ by altering the patent slightly and forcing exclusivity for another 15-20 years.
So there is light at the end of the tunnel, it will not happen overnight, but there is a setting that the US could remove medicine cost pressures by a much larger amount then even before. So even as we are given “Backed by seven large health systems and three philanthropic groups, the new venture will be led by an industry insider who refuses to draw a salary. The company will focus initially on establishing price transparency and stable supplies for 14 generic drugs used in hospitals, without pressure from shareholders to issue dividends or push a stock price higher“, we need to realise that this is merely the start of something much better in two directions. The first is that if the costs go down, there is more money for other hospital needs and also in the other direction, when people get affordable medication more will work on healing and in addition with added funds, the chance increases that they will adopt a healthier lifestyle and actually get better and more energised in their old age, which might change a few other things too.
Yes, that will be a name to remember for a long time, especially when they start showing the results that their goals are set for. Yet this is merely the beginning. Let’s not forget that given a set of greedy hungry swine’s, when they get hungry they tend to let go of ‘morals’ and limitations, so unless severe warnings and protection is given to Civica Rx, they still have an uphill battle to fight. Forbes gives us (at https://www.forbes.com/sites/elliekincaid/2018/09/05/that-nonprofit-generic-firm-has-a-name-100-million-and-a-ceo-who-will-work-for-free/#38015e44ce06), gives us the name of the CEO Martin VanTrieste, he was also quoted with: “has agreed to work without compensation“. Now, I could never do that (due rent and such), but that shows a system where we would love to be a part of, does it not?
So when I see: “The healthcare systems involved: Catholic Health Initiatives, HCA Healthcare, Intermountain Healthcare, Mayo Clinic, Providence St. Joseph Health, SSM Health, and Trinity Health. The philanthropies: the Laura and John Arnold Foundation, the Peterson Center on Healthcare, and the Gary and Mary West Foundation“, I am actually surprised that the Bill Gates foundation has not (yet) knocked on that door offering a nice 8 figure amount, but you know, 2018 is not over yet.
So even as they start with 14 generic drugs, there is every indication that this can evolve to a number in the triple digits in the next 3-4 years making life a lot more affordable fast.
So what is the setting? Why is this given so important? Well, again we need to the UK numbers (as they are more reliable). It is not merely the setting of ‘cheaper’ that we need to realise, it is the attached setting of ‘proportion of spending on generic medicines that is in primary care, 2016-17’, which was 81% at that point. The second part is the logistics, a number that is even scarier than the margins and the exploded prices involved. You see there were 3,000 concessionary pricing requests made by pharmacists in November 2017, a few months earlier, basically before May 2017 the amount of requests made were less than 150, so an increase of 2000% of concessionary pricing requests. The impact of diminished budgets had that much a drain on logistical support for hospitals and NHS departments. When that pressure falls away, so much more can be done and that part is not visible to a much larger extent. there will remain a much larger issue when we look at the branded versus generic setting in both primary and secondary care, no one doubts that and that setting will remain, but over time that equation will change as well as speed up as the life cycle of branded patents end.
It becomes a little scarier when you consider that in the UK, Ten medicines accounted for £134 million of the net spend on price concessions. Topping this is Amlodipine 5mg, a medication for high blood pressure. This becomes important when we translate that to US numbers we can use. You see, in the United States, about 77.9 million, almost 1 out of every 3 adults have high blood pressure. Now consider when that becomes affordable and less of a drain for any health facility, the savings on this one drug could change the game for hospitals all over the US and at the same time prolong life for Americans. When we see that 18 out of 134 million is for that one prescription drug only, we start seeing the essential needs that Civica Rx is bringing to the table, and it has a much a much better impact than a salad (especially when reading about the McDonald Salads this morning).
SO what will come next? Well, they are off to a start, but I never trust anyone merely giving up their golden parachutes (referring to the current pharmaceuticals having to spread the negative news to their shareholders) and in light of the pharmaceutical patent escalations in India, I feel certain that Civica Rx is likely to face dozens of injunction meetings before the end of this year alone. After that the political engine will be turned against them as much as possible. I think it is important at that point to make sure that EVERY senator and congressman (m/f), will get the limelight set upon them to make the people aware of the elected officials that will make their lives more expensive.
Yet that is not the only part, the NHS report gives us the part that Civica Rx is trying to address as well, when the reporters investigated the underlying causes of pricing, the following parts were given on that report (attached here) on page 21.
“The immediate cause of concessionary pricing is pharmacies being unable to purchase a generic medicine at, or below, the Drug Tariff price“, as well as “The Department identified three main underlying causes of the 2017-18 increase in concessionary pricing“, and those three causes were:
- The Medicines and Healthcare products Regulatory Agency and European regulators partially suspending the licences of three manufacturers of generic medicines;
- A fall in the value of sterling; and
- Governments and insurers in other countries putting downward pressure on the price of generic medicines, resulting in lower returns and manufacturers withdrawing from some markets or medicines: the reduced capacity and competition then increased prices within the UK market.
Now, the first is only an issue when it keeps on occurring and until more evidence is seen, the solution is not easy in this, the second is an impact, yet short lives and the US might not face that issue as it produced its own need, the UK is much more reliant on American pharmaceuticals. The setting of Civica Rx would when effective take away the cause of that element, making that a non-issue over time, it might initially still be a short term factor for Civica Rx to consider.
And it must also be stated that the elements could not be verified or quantified. There were too many elements in play in all this, but the significance on the factors seemed to clearly shown, but to the extent of how much remains a question that can only be proven over time (and with a lot more precise data).
It is my personal view that the report by Sir Amyas Morse KCB is quite extraordinary and even as it leaves us with questions (as any report does), it also raised the curtain on several issues, not merely showing the essential need of Civica Rx in any nation that is getting drained by healthcare costs, it sets the stage that the report empowers the existence of Civica Rx as well as the essential need for their sponsoring and protection ‘against’ some of the pharmaceutical companies, because generic medication or not, you introduce me to a commercial board of directors who do not care about lessened profits and I will introduce you to a group of people lying to you, it is basically that simple.
So we enter Friday with goodness form another direction, today brought to you by the Washington Post, a paper that still states that ‘Democracy dies in Darkness‘, I say that this is not entirely true, it is currently actively getting smothered with a pillow by the needy for greed and those who get their coins from a similar direction, but again, that is just me thinking with temporarily a few paranoid clouds overhead.