The pharmaceutical industry is one of the most opaque industries in America, and they take advantage of this lack of transparency by setting ever-higher prices for lifesaving prescription drugs like insulin. But provisions in the Inflation Reduction Act are curtailing the exorbitant price-gouging strategies that the pharmaceutical industry uses to pump up their profit margins at the expense of seniors and people with disabilities who use Medicare. This week, we’re talking to Margarida Jorge, the Executive Director of Health Care for America Now, to help us understand more about drug pricing and the impact that drug price negotiations will have on Medicare and its recipients.
We apologize for the background noise you hear during this episode. We strive to provide you with the best possible audio quality, but sometimes external factors (like construction nearby) are beyond our control.
Margarida Jorge is the Executive Director of Health Care for America Now. She has been a prominent advocate for affordable and accessible healthcare for three decades, and she was the chief architect of the 47-state field program that helped win the Affordable Care Act under President Obama. Margarida has played a key role in shaping healthcare policy and has been instrumental in shaping policy discussions, advocating for reforms that prioritize the needs of patients over the profits of pharmaceutical companies, lowering drug prices, and ensuring access to life-saving medications for all.
Twitter: @MargaridaJorg17
Health Care for America Now: https://www.healthcareforamericanow.org
Lower Drug Prices Now: https://www.lowerdrugpricesnow.org
Explaining the Prescription Drug Provisions in the Inflation Reduction Act: https://www.kff.org/medicare/issue-brief/explaining-the-prescription-drug-provisions-in-the-inflation-reduction-act/#bullet01
Big Drug Companies Are in Court to Stop Medicare Negotiation and Protect Their Sky-High Profits: https://www.protectourcare.org/big-drug-companies-are-in-court-to-stop-medicare-negotiation-and-protect-their-sky-high-profits
How Prices for the First 10 Drugs Up for U.S. Medicare Price Negotiations Compare Internationally: https://www.commonwealthfund.org/publications/2024/jan/how-prices-first-10-drugs-medicare-negotiations-compare-internationally
Drug Companies Continue To Hike Prices Above Inflation: https://www.americanprogress.org/article/drug-companies-continue-to-hike-prices-above-inflation
U.S. Prescription Drug Prices Are 2.56 Times Those in Other Countries: https://www.rand.org/pubs/research_reports/RR2956.html
Website: https://pitchforkeconomics.com
Twitter: @PitchforkEcon
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Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
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It’s time to build our economy from the bottom up and from the middle out, not the top down.
Nick Hanauer:
Middle out economics is the answer.
Speaker 2:
Because Wall Street didn’t build this country. Great middle class built this country.
Nick Hanauer:
The more the middle class thrives, the better the economy is for everyone, even rich people like me.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Speaker 4:
Nick, like me, you’re in your early sixties, so I’m sure just like me, you’ve been looking at Medicare coming up. You’re going to qualify soon, and that’s going to be really important to how you’re going to survive your retirement.
Nick Hanauer:
Exactly.
Speaker 4:
Yeah. I joke about this because I’m not like you in this respect. I appreciate the generous health insurance that you provide us here at Civic Ventures, and people ask me, how long do I plan to work until I retire? And I always say, well, I hope to have this job at least until age 65, because that’s when Medicare kicks in. And I’ve always thought that, oh, if you make it to 65, you’re taken care of. You don’t have to worry about that crazy health insurance market anymore. And oh my God, I’ve started looking into it and it’s nuts first of all, how complicated Medicare is, all the different plans, whether you do health, you do an advantage plan or whether you get Medigap and the nine different flavors of Medigap and then all the other costs.
Did you know Nick, and this is a number that comes from Fidelity, this is a major financial corporation, very responsible people have their retirement funds? Fidelity says that the typical retired couple will spend, this is with Medicare. They must plan to spend $315,000 in retirement on healthcare costs, which is of course about double what the typical couple has saved for retirement.
Nick Hanauer:
Yeah, the whole thing is so screwed up. And today we’re going to talk to somebody who has devoted most of their career to trying to unscrew some of this stuff. Margarida Jorge is the Executive Director of Health Care for America Now!, HCAN in other words. She’s been an advocate for a long time. And Margarida has played a big role in shaping healthcare policy. In particular the Medicare drug price negotiation provisions included in the Inflation Reduction Act. That’s incredibly crucial because drug prices are driving a lot of the healthcare costs that people face. And as many of our listeners know, the federal government has been prevented, legally prevented from negotiating drug prices with the big pharma companies. Why you may ask, well, politics, there’s no economic reason or any common sense reason not to.
Speaker 4:
Or a constitutional reason. When you say that the federal government, what you’re saying is Medicare has been prevented from negotiating drug prices and they’ve been barred from this by Congress.
Nick Hanauer:
Congress, yes.
Speaker 4:
So it’s the federal government, barring the federal government government from negotiating drug prices as is done by the way, in every other country in the world.
Nick Hanauer:
And by the way, the federal government negotiates for everything else in the world. I’ve said before, I’ll say it again a million times that the defining feature of the American healthcare system is it’s the world’s biggest price fixing scheme. It is just an egregiously corrupt system benefiting some large companies and big institutions, but not America or American consumers. But there is some good news, which is that because of folks like Margarida, the Inflation Reduction Act has very significant provisions to begin the process of negotiating drug prices with these big companies. And to talk about that, we’re going to chat with Margarida and find out what’s going on.
Margarida Jorge:
I’m Margarida Jorge. I am the Executive Director of Health Care for America Now!, also called HCAN and the campaign director for Lower Drug Prices Now, a newer campaign that has been taking on pharma to win lower costs for people.
Nick Hanauer:
So Margarida, why don’t you create some context for our listeners. I think it’s reasonably well known that Americans spend more for drugs than almost anyone in the developed world, probably in the whole world. How did that come to be and what’s it going to take to change it?
Margarida Jorge:
Well, the reason Americans pay more for prescription drugs than just about anybody else is closely tied to the reason we pay more for our healthcare coverage than anybody else. And that is just very much tied to profit, right? We have a for-profit system where there’s very limited regulation. With the prescription drug corporations there’s been even less regulation over the last four or five decades than we’ve seen in a lot of the other industries. And as a result of that, the prescription drug industry for two decades was the most profitable industry in the S&P 500. So if you think about how much money they had, West Health put out a study a couple of years ago that basically showed that the drug corporations could lose $1 trillion in profits and still be the most profitable corporations in the country. So there’s a couple of reasons why their business model facilitates this.
One is that they don’t negotiate prices. That’s really unusual just about every place else in the world, they negotiate prices. And frankly, in a lot of other places in the US healthcare system, prices are negotiated. In the Medicaid program, prescription drug prices are negotiated in veterans, the prescription drug prices are negotiated. But in the biggest prescription drug program, the biggest payer of prescription drug costs in the US, the Medicare program, the program for seniors and people with disabilities who use the most drugs, there has been no negotiations. In fact, negotiations were expressly forbidden in that program.
And so what that means is that the drug corporations have unilateral power to just charge whatever they want. It’s not a shock as it turns out when you just let the prescription drug companies charge whatever they want, they just charge people more and more and more and more and more. So they have had pretty much free rein to do that without having any sort of boundaries or controls on them for quite a number of years. And it isn’t until recently that we’ve been able to even make small inroads into forcing negotiated prices that would then lower costs for people.
Speaker 4:
Wait, you’re telling us that drug prices are so high because the pharmaceutical companies prefer that drug prices be high?
Margarida Jorge:
That is what I’m telling you.
Speaker 4:
Wow. Oh my God. That’s not the way markets work, Nick.
Nick Hanauer:
Yes. But yeah, what about competition?
Margarida Jorge:
Essentially drug corporations have, I’m going to, I say it’s a sweet deal. They don’t have to compete because once a prescription drug corporation is able to bring a drug to market, and keep in mind that most drugs are invented with a pretty considerable investment of taxpayer money, right? Because it’s taxpayer funded research through the National Institutes of Health and research universities and public entities that often get us to the molecules, the building blocks, we got a chance to see this close up with the COVID vaccines. So the prescription drug corporations are benefiting from all this taxpayer money that’s funding research. They take that research, polish it up, take it to clinical trial, market it and sell it, and they get typically a patent that’s a 20 year exclusivity patent that enables them to sell that product at whatever price with no competitors. There are no competitors for brand name drugs. And it often takes well over 20 years for a brand name drug to become a generic.
So the competition model that we hear so many people talking about as being sort of the thing that’s going to fix things hasn’t really applied very well to the prescription drug market because frankly, the government is giving them 20 years of exclusivity so they don’t have to compete.
Nick Hanauer:
Right. Can you be specific about the difference in price that Americans pay for some of these drugs versus what people in other places pay for them?
Margarida Jorge:
Yeah, actually, a brand new study just came out from Rand, I think yesterday. It’s just a couple of days old, that again confirms that people in the United States are paying three times more, at least three times more for brand name drugs than people in comparable countries. So that’s people in France, people in Germany, people in Denmark, all over the world. And that’s pretty standard for brand name drugs. But if you are a patient that has a disease like cancer, for instance, and you need specialty drugs, then you’re probably paying a lot more than three times.
Nick Hanauer:
Really? So are the same companies selling the same medicines in Germany for a third or a fifth as much?
Margarida Jorge:
These companies are multinational, so they are selling in a whole bunch of different places. The difference is in other countries, the law requires them to negotiate a bulk price before they can sell. So if you’re selling a drug to England, to the United Kingdom, they have a national health service. And so you are selling that drug to the National Health Service and the National Health Service is negotiating for a bulk price. It’s done that way for other things in the United States. In the United States, when the United States is buying aircraft carriers or helicopters or whatever it is, that would be the process. It’s just that here in the United States for prescription drugs, that negotiation process is actually prohibited in Medicare, which is the biggest purchaser of prescription drugs. So every place else, they have to negotiate those savings, then get passed on to the patients, but not here.
Nick Hanauer:
Wow. It’s mind-boggling.
Speaker 4:
No, no, Nick, it makes perfect sense. Of course, an aircraft carrier or a helicopter that’s much more essential to maintaining our everyday quality of life than say, a life-saving prescription drug. Who needs insulin at an affordable price, as long as you can negotiate your aircraft carriers?
Nick Hanauer:
It’s true.
Margarida Jorge:
What’s really crazy is this is really, well-known, all of this is very known. The government accountability office has done a bunch of studies that actually compares what Medicare pays for prescription drugs versus the Department of Veterans and Medicaid, the two other big health programs where we do negotiate prices for prescription drugs. And Medicare pays two times more for prescription drugs than what the Department of Vets pays. That’s why the veterans that are covered under the Department of Vets, they get their prescription drugs through the mail, $10 co-pay, whereas seniors in Medicare, and if you think about how crazy that is. Seniors need more prescription drugs than anybody else. The amount of prescription drugs that they need is just increasing over time, and they’re at a point in their lives when their incomes are typically fixed.
And so here you have the people that need the most and who have declining income paying the most for prescription drugs. And a lot of times it’s exactly what you guys are saying. It’s not even a sexy drug. It’s insulin. It’s not like a new Alzheimer’s drug. It’s insulin, it’s blood pressure medication, it’s asthma inhalers.
Speaker 4:
Right. Insulin that was put into the public domain, what like 90 years ago exactly to avoid this type of thing. And yet somehow you’ve got these high prices here. I’m curious, one of the defenses that the pharmaceutical industry you’ll hear pharmacists say is that they wouldn’t develop drugs anymore. We had to negotiate because it wouldn’t be profitable. Are they losing money in other countries? Are they losing money when they sell to the VA or to Medicaid, or are they making a decent profit there as well?
Margarida Jorge:
They’re making very good profits. I don’t think anybody definitely on the show or any of your listeners should spend one second reaching for a Kleenex, worrying about pharma’s profits. They have plenty of profits. They’re among the most profitable industries in the world, they’re sort of constant complaining that they can’t develop new drugs. The truth is, even after many, many congressional hearings, and we’ve probably had 10 congressional hearings at this point where prescription drug CEOs have been invited to just show us. Just, okay, fine. Y’all are spending all this money on research and development. Show us exactly what you were spending and what has resulted. And the reality is they weren’t able to show that the reason they have to keep prices so high is because they’re spending on research and development. In fact, what we see is that their shareholder profits keep going up, up and up.
And mostly the research and development is subsidized by taxpayers, which is not to say that prescription drug companies don’t put anything into research and development. They do, but there’s even a problem with that model because when prescription drug corporations are investing in the medicines that they are helping to develop, their typical calculation is which of these medicines is going to make us the most money? It’s not sort of which of these medications is most needed right now? So during the COVID epidemic, when you had Operation Warp Speed developing vaccines, this issue came up a lot because we also don’t have things like modern antibiotics. So here we are developing sort of specialty medicines for weight loss, but we actually are just missing a whole bunch of other medications for more widespread problems that it’s not profitable to develop. I mean, that is why it has taken, for instance, so long to come up with a drug for sickle cell.
Speaker 4:
And the antibiotics, I think is a great example of a market failure because you spend years developing a new antibiotic, and it only takes a few years for a lot of the things it’s treating to develop resistance. So you don’t even get to take full advantage of that 20-year patent, whereas an erectile dysfunction drug, well, there’s always a market for that. And you don’t get resistance to ED drugs. It’s not like you’re developing resistance to Viagra.
Nick Hanauer:
Yeah, interesting.
Margarida Jorge:
I mean, the profit motive in the healthcare sector is such a perverse motive. And of course, healthcare advocates, we typically say, listen, the healthcare system doesn’t make money if we cure people. It only makes money if we keep people sick. And that really has been the defining feature of a lot of these decisions. They’re not guided by public health considerations. They’re not guided by what’s it going to cost American taxpayers. It really is what’s going to make us the most profit and what’s going to keep our shareholders the happiest.
Nick Hanauer:
But we have made progress. The IRA has a negotiation provision. Tell us about that.
Margarida Jorge:
Yeah, the IRA, the Inflation Reduction Act, it actually has a number of really good provisions, and some of them, I sort of talk about them in terms of price and costs. There are provisions of the IRA that deal directly with lowering prices, forcing the drug industry to lower their prices. And those are things like negotiations. They can no longer unilaterally set prices on a set of drugs. It’ll be between 10 and 25 of the most expensive drugs in Medicare. They’re now going to have to negotiate those prices with Medicare. So that’s a big deal.
There’s an inflationary rebate, which is essentially when prescription drug corporations raise their prices faster than inflation, which they do all the time. They have historically always raised their prices faster than inflation. Now they have to pay a rebate back to Medicare for the difference. So if inflation is 3% and they’re raising their prices 7%, they have to pay the difference back to Medicare. So that creates a big disincentive for them to keep raising their prices and raising their prices. And then there’s a lot of cost measures that make the medicine easier to afford for people paying on that end, on the patient end. And that’s things like the $35 insulin cap from now on. People who take insulin in Medicare won’t pay more than $35 per month for their insulin supply. Big deal. Big deal also, because there’s such a growing number of people on insulin in the Medicare system.
Nick Hanauer:
Can you remind us what the price of insulin was before the $35 cap?
Margarida Jorge:
Yeah, it varied very widely depending on which one you were using, but for some people it was $500 a month for if you were on Januvia, for instance. And for some people it was less than that, but for almost nobody, was it $35 a month. One of the things about insulin that I think is really challenging or with a system where the drug corporations have unilateral power to set prices, it’s very difficult to plan for that. So that means this month you might go and it’s $150 for a month’s supply of insulin, but next month you go and it’s gone up to $400. So it’s really impossible for people to keep up with a system like that because the drug companies basically have the power to set whatever price they want, and the consumer or the patient is just kind of stuck. I mean, it’s not like you have an option not to take insulin. If they raise the price of your insulin, you’re going to have to figure out a way to pay for it, or you are really facing a pretty dire health crisis.
Nick Hanauer:
So where are we in this process of negotiation and how consequential will it be if it succeeds?
Margarida Jorge:
The original bill that a lot of us were pushing for, which was HR3, had a much broader scope. So really what we wanted was negotiations on a much broader set of drugs. And I think actually eventually we’re going to get there, but the scope of drugs is pretty narrow. So where we are right now is the 10 drugs that are going to be negotiated over have already been selected. And the way that they selected these drugs was based on usage, like how widespread the usage was in Medicare and price. That’s really important because half of the spending in Medicare Part D is actually on a relatively few number of drugs. Things like Eliquis, you might’ve heard of the big controversy around Eliquis. It’s a blood thinner that is just a ridiculously expensive. Xeralto, another blood thinner. These are ridiculously expensive drugs and a good share of the spending in Medicare is just tied up with this handful of drugs.
And a lot of those drugs are included in this first 10. So right now, the HHS is setting up the process for negotiations. They’ve selected the drugs, they have asked the drug corporations for a whole bunch of information and data that will inform the negotiations. Over the course of this year they’ll be actually negotiating with the corporations, and then the new prices will go into effect in 2025. The drug companies, you guys are going to be shocked. They’re not happy. They’re not happy campers about this negotiation situation. So they have filed nine lawsuits to try to stop negotiations. I think this is tip of the iceberg on the lawsuits. They filed nine lawsuits basically asserting that this law is unconstitutional, that it curtails their freedom of speech, blah, blah, blah, all kinds of things.
Speaker 4:
I love that. Freedom of speech. Yeah.
Margarida Jorge:
Freedom of speech that they’re being coerced into having to say that they want to negotiate. It’s really pretty silly. They’re pretty silly lawsuits. Honestly, if the highest court in the land were not as wacko as it is, no one would really consider these to be worthy of much attention. But with the Supreme Court as it is, things that seem wacko can become reality now in our country. So they filed these lawsuits and at the same time that they’re filing those lawsuits saying, we’re doing this under protest, they are participating in the negotiations. I fully expect once the negotiations start that there will be another set of lawsuits about the substance of the process for negotiations.
Speaker 4:
But let’s be clear, Congress could decide to change the laws so that Medicare can negotiate the same way Medicaid can and the VA can?
Margarida Jorge:
There is already, you read my mind because one of the things about what passed it in the Inflation Reduction Act is that that policy only applies to Medicare. Now, that’s important because Medicare is a baseline program that establishes sort of a baseline for all other healthcare programs. And because as I said before, Medicare is the largest purchaser of prescription drugs. But what we really want is actually for prescription drug negotiations to apply for all the drugs in Medicare. All drug prices in every program should be negotiated, and we think that’s a better deal for consumers and an appropriate role for government to be a watchdog on behalf of consumers to actually negotiate something that’s stable and decent for people. So expanding that would be really helpful.
And then expanding the inflationary rebates. So right now, if the drug companies raise their prices faster than inflation and Medicare, they have to pay a rebate back. But guess what? There’s 150 million people who have private insurance and private insurance employers, small businesses, consumers are struggling to keep up with the cost of their healthcare because drug prices keep going up, up, up. In fact, that was one reason why labor unions and employers were so invested in passing the legislation because they see it as a step to actually a permanent solution that would prohibit drug companies from raising their rates faster than inflation.
Speaker 4:
So are private insurers negotiating with the drug companies, or are they just using the prices set in Medicare?
Margarida Jorge:
Private insurers are negotiating. They’re actually not directly negotiating. There’s these, you may have heard of them. There are these middlemen called PBMs that negotiate on behalf of health plans with consumers. And that’s a whole other set of stakeholders in the healthcare system that are getting a lot of attention right now because a lot of people feel like PBMs are not doing a very good job actually representing consumers, given that people who have private insurance through employers are seeing persistent increases in their prescription drug prices and in their premiums. And prescription drug prices often will drive the premiums. So there is negotiation, but I wouldn’t say it’s direct negotiation between the plans and the employers, because with respect to prescription drugs, you have this other layer of stakeholders called PBMs.
Speaker 4:
And PBM stands for?
Margarida Jorge:
Oh gosh, it stands for Pharmacy Benefit Managers.
Speaker 4:
Right. Just like to spell out the acronyms for our listeners, since we’re not all-
Margarida Jorge:
I know it. Listen, most people have never heard of a PBM, and I think that’s really emblematic of how they operate because they really operate in the shadows. But when you are getting a prescription drug, if you’re going to the pharmacy to pick up your prescription drug, you can be sure that PBMs have had a role in how much the insurance company is paying for that drug, how much you as the patient are paying for that drug, and how much the drug company is actually, what kind of rebate they’re going to get from the drug company. So it’s a very complicated system.
And ever since passage of the Inflation Reduction Act, a lot of attention has turned to PBMs. There’s in fact, a piece of legislation. We don’t expect a whole lot to pass in this Congress, but there is a piece of legislation that I think has a pretty darn good chance of passing in a bipartisan way in this Congress. And that legislation is about PBMs and sort of shedding some light on what the hell they’re doing, what are they negotiating, and how much money are they making?
Speaker 4:
Man, Nick, it sounds to me like socialism would be so much more efficient.
Nick Hanauer:
It sounds like it. It’s just, yeah, the American healthcare system is like the world’s biggest price fixing scheme. That’s what it is.
Margarida Jorge:
It is.
Nick Hanauer:
Yeah. It’s just unbelievable. So Margarida give us some hope.
Margarida Jorge:
Well, I am not typically sort of a glass half full type, but I will say as somebody who’s worked on healthcare for a long time, the victory on prescription drugs was an incredible victory. So I want people to really understand how hard it is and how long we have been trying to win on getting negotiations in Medicare. And also a few people to understand, however you might feel about President Joe Biden, he was central to it. He really was central to it, and he kept insisting that we had to do something about prescription drug prices. And I don’t think we should kid ourselves. A lot of the problem that has perpetuated this very long, long fight around the prescription drug companies has been the fact that drug companies are great at making donations, and they’re fine with making lots of donations to Democrats, and Democrats are fine with taking them.
So we’ve had lots of problems on the Democratic side and the Republican side, getting people to break up with pharma and actually vote in a way that helps their constituents. And for 20 years, the Medicare Modernization Act passed in 2003. That was the law that prohibited negotiations in Medicare and created Part D. Ever since 2003, healthcare advocates have been fighting to try to get negotiations back into Medicare. The industry has always outspent us. They outspent us this time too, probably 10 to one. They broke every record, every lobbying record, political donation records. So the fact that we have been able to pass this legislation, which is really Medicare negotiations for prescription drug companies, it’s the jewel in the crown. It’s the thing that they most hope to hold onto in terms of prohibiting anybody from getting into their space. So it was a huge victory. It was a huge victory.
And so I think there’s reason to believe that we will be able to implement this victory and that we’ll be able to build on it. Because unlike a lot of other things in politics and in Congress, people in America pretty universally support this no matter who they voted for. Prescription drug negotiations, lowering drug prices, it does not matter if you are a Republican in Utah or you are a Democrat in Georgia. People agree that the drug companies are jacking us up and have been for years, and that we ought to be paying a lot less for prescription medicine in America than we are. So nobody’s confused here about who the villain is, and there’s very few people holding out support, which is why I think that things like PBM reform are going to pass because Republicans are going to get as much pressure from their constituents as Democrats are going to get from theirs. This is actually a genuine thing in the United States that people agree on, no matter what race they are, where they live, how much money they have.
Nick Hanauer:
It never surprises me when Republicans are on the wrong side of an issue like this.
Speaker 4:
Because they’re insulated from voters Nick. I mean, this is why you want a heavily gerrymandered minority rule government that doesn’t have to appeal to the wishes of voters. That works out very well for the pharmaceutical industry.
Nick Hanauer:
That’s right. And because Republicans tend to be corporatists, but can you name names on the Democratic side who’s been the problem?
Margarida Jorge:
Sure, I’d be happy to name names. One of the problems is gone. That’s Representative Schrader who was in Oregon, who actually ended, he’s a “moderate Democrat” that tried to water down this bill and organized a little cabal of other moderates to try to water down and narrow the bill. And he was successful to some extent, but he wasn’t able to fully gut it to the extent that he wanted to. He then was promptly voted out by his constituents. So that was good. That was great.
Speaker 4:
And into a lucrative job as a lobbyist for pharma.
Margarida Jorge:
That’s right. Into the waiting arms of pharma. I’ll mention a couple of other problem people. You guys are going to be shocked at this one, Senator Kyrsten Sinema from Arizona. She was working pretty closely with Schrader to try to water down the bill and help the industry. And then one, maybe people aren’t that aware of, but it was actually quite a challenge to get Senator Bob Menendez in New Jersey to be on board with this legislation. A lot of the big companies, Johnson & Johnson, Pfizer, they are headquartered in the state of New Jersey.
And actually one thing that was interesting when I sort of knew that we were in a different moment on prescription drug reform, probably around 2019, 2020 was when the other New Jersey Senator, Senator Cory Booker was running for president and he was running very prominently on refusing to take corporate money from pharma. And that really caught my ear because I was like, wait a minute. A New Jersey Democrat who’s got pharma in his backyard, is not going to take money. He’s not going to make any friends back home. But I just thought, oh, we are now in a different moment on prescription drug reform. And I think it’s largely because the public has really turned, there’s almost nothing that drug companies can say that would persuade the public that they’re not ripping us off.
Nick Hanauer:
Interesting. Margarida, this has all been fascinating, first. The second is, thank you for what you do. What can we do? What can citizens do?
Speaker 4:
Our listeners?
Margarida Jorge:
So I think there’s a couple of things that people can do. One is I think people, one thing that we know from all the polling and the pundits and stuff is that even though we’re all pleased as punch about the Inflation Reduction Act, nobody in America knows what the hell that is or what it does. So one basic thing to do is to just say to people, “Hey, did y’all know that this law passed? And it does a bunch of things, but one of the things that it does is it makes vaccines free for seniors in Medicare. It lowers prescription drug prices.” And really don’t assume people know, I just took my mom to her primary care doctor and her primary care doctor was going through the list of vaccines, and the primary care doctor didn’t know that now shingles is a free vaccine for seniors because of this law.
So one thing is just like tell people about the law and tell people it’s a good thing and it’s passed and it’s going to lower drug prices. And then two, circle back to your lawmaker and say, if your lawmaker voted for it, “Hey, thanks for voting for that. We would like more.” This is great what you just did for people over 65 and people with disabilities. But the truth is, the people that are struggling the most right now with prescription drug prices is people between the ages of 50 and 64, and it’s resulting in medical debt and it’s making people go without medicines that they need, and it’s forcing people to choose between whether they can pay for their child care or pay for their medicine. So we really need an expansion of these reforms. There is already a bill, Mr. Pallone from New Jersey has a bill that would expand the provisions in the Inflation Reduction Act to apply to people with private insurance and people with other kinds of insurance.
So this is popular. People want this. It’s great that people in Medicare are getting $35 insulin, but guess what? We should have a national insulin cap where everybody gets $35 medicine, whether you’re insured or you have private insurance or you have something else. So I would say those are the two things. Tell people we did a good thing, and it’s not a small thing given who our opposition was. Pharma is the most powerful lobby in Congress, but now we can do more. The lesson of that is we could do more. Everybody should have that. It’s wonderful that we’re finally getting somewhere for seniors, but there’s hundreds of millions of other people that need the same benefit.
Nick Hanauer:
We have a question we call the benevolent dictator question, which is, if you were in charge, what would you do?
Speaker 4:
No political constraints.
Margarida Jorge:
Oh, if I was in charge of the whole country?
Nick Hanauer:
Yes.
Speaker 4:
Of the healthcare system, what would you do?
Margarida Jorge:
Oh, the first thing I would do is sort of make the top 10. Obviously I’d consult with experts, but I would implement sort of the top 10 things that we could do to limit profit in the system. So that is the problems that we have with consolidation and monopolization. I don’t know if you guys are following the prescription drug thing is a thing, but it’s also true that health insurance premiums went up 7% this year, 7% this year. That’s crazy. Wages only went up 5% and our insurance went up 7%. I worked for years. I came to DC to work on the Affordable Care Act and helped pass the law and defended it and had implemented it for 10 years. But the truth is, a lot of people who have Affordable Care Act plans and other insurance plans can’t use their healthcare because the deductible is too high.
So I would first start with regulating and sort of busting up the monopolies in the healthcare system and start that way as a way to start chipping away at the profit motive in the system, change the system from what we have now to fee for service. Value-based care, we should not be paying doctors for however many tests they want to do. We should be paying doctors and paying healthcare systems for how healthy they keep people. What is the benefit to the patient? What is the value of the care?
So there’s a whole series of reforms like that. But if you had to boil it down, I would say across all of these systems, whether it’s Medicare, private insurance, uninsured people, Medicaid, the first thing to do is to shrink the profit as much as possible. I don’t know if I would say no profit ever at any time. I think it would take time to get there, but right now, profit not public health, not people’s quality of life, not people’s survival. Profit is the central linchpin of the system, and unless we change that, people’s lives are not going to get better.
Nick Hanauer:
One final question, why do you do this work?
Margarida Jorge:
I used to be a labor organizer. I started as a labor organizer and I was organizing poultry plants, and I’m from a labor background. I was a Teamster, a UFCW member. My dad was a Teamster. And I sort of became aware as I was organizing around the country that when you knock on somebody’s door to talk to them about what’s going on with their job, the number one thing that people wanted to talk to me about, especially in the late 90s and the 2000s, was their health coverage. They would have health coverage for themselves, but they couldn’t afford it for their families. They were working for smaller employer and they couldn’t afford it. So I sort of fell into healthcare. I didn’t have any intention, and I’m not a healthcare policy expert. I’m really an organizer. I didn’t have any intention of working on healthcare, but I soon realized that no matter what, I went to talk to people about, what they wanted to talk to me about was healthcare and how to fix this system.
And after just years of doing that, years of going to people’s churches where somebody was taking up a collection because someone had cancer or somebody needed a tooth pulled or watching people waste away in their homes because they just couldn’t afford treatments. I came to DC to work on the Affordable Care Act because we needed to take a first step. And I came to DC from Missouri when I was in Missouri, the governor of Missouri, governor Matt Blunt, who was Roy Blunt, Senator Blunt’s son, we used to call him Blunt Trauma. He had cut 300,000 people off of Medicaid.
And so I just have found in my career, even though I’ve worked on a lot of different things, I’ve worked on taxes, I’ve worked on reproductive health, I’ve worked on criminal justice reform, records clearance, all kinds of things that I always come back to healthcare because healthcare is personal to people. It never goes away. It’s a central concern, and it’s just fundamental to people’s ability to take care of themselves and their lives. When you sort of think about American values like security and freedom and opportunity, all of that goes away if you don’t have your health.
Nick Hanauer:
Yeah, absolutely. Well, fantastic. Well, thank you so much for being with us, and thank you for your work.
Margarida Jorge:
My pleasure. Thanks for having me.
Speaker 4:
So frustrating.
A couple takeaways, Nick, which I think are really important and are often overlooked. The first of which as Margarida points out that the Inflation Reduction Act actually reduced inflation of at least some pharmaceuticals, particularly for folks on Medicare. That $35 a month cap on insulin has proven really substantial for a lot of families. There’s a big difference, by the way, I don’t know if you know this Nick, but $500 is a lot more than $35, and that’s meaningful to most people. The other thing, and I think this is really important, she kind of ended on this when we asked her about what she would do, and it would be remove most profit from the industry. And it gets to a core problem with the way we do healthcare in America. And that is, I mean, that sounds downright communist when you say no profits in an industry, that’s socialism Nick.
But we all know that markets are so much more efficient, and that can be true. Markets can be efficient. They’re not always efficient. They can be effective, as we like to say. But the healthcare market is not a market in the same way that there are markets for-
Nick Hanauer:
Hamburgers.
Speaker 4:
Right. Because if Five Guys is too expensive, you can go to McDonald’s, and if you don’t like McDonald’s, you can buy some ground beef and make a hamburger for yourself. These are actually markets where there’s a certain amount of competition, whereas with healthcare, it is so entirely opaque. You go to the doctor and he orders some tests, you don’t know. You don’t ask, “Well, how much is this test going to cost? And can you give me, maybe take 20% off of it?” You don’t negotiate that. And when you are prescribed a drug, you’re not asking, “Well, is there something that’s a little cheaper maybe?” No, you go to the pharmacy and you pay for the drug. There’s no negotiation.
So I want to introduce a new corollary to one of our core heuristics, Nick. Something you have been saying for years, and I’m sure we’ve repeated it on the podcast multiple times, and this has to do with the labor market, which is employers don’t pay you what you’re worth. They pay you what you can negotiate.
Nick Hanauer:
Yes.
Speaker 4:
And my corollary here is pharmaceutical companies don’t charge you what their drugs are worth. They charge you what you can negotiate.
Nick Hanauer:
Yes, absolutely. Of all the things I’ve ever worked on in my civic career, healthcare may be the most frustrating. It’s just so bad. Hats off to folks like Margarida Jorge who have devoted their careers to it and who continue to grind, because without those people, it would just get worse and worse.
Speaker 4:
And also, by the way, I don’t want to be too much of a cheerleader, but hats off to the Biden administration.
Nick Hanauer:
100%.
Speaker 4:
President Biden himself, who pushed these provisions into the Inflation Reduction Act. Because let’s be clear, one of the great things about the Inflation Reduction Act, it does a lot of different things. But one of the things that stood out to me was its name, because originally it was, isn’t this like the vestiges of the Green New Deal or the whatever? It gets renamed, and something that Democrats are really bad at and Republicans are historically really good at, is putting these Orwellian names on things to try to sell them. And so to some extent, yes, the Inflation Reduction Act, a lot of provisions in it were not directly about inflation, but this is one of them.
Nick Hanauer:
100%. Yeah, absolutely.
Speaker 4:
It was about reducing healthcare costs for millions of Americans. And it worked and it took presidential leadership and it took an administration. I mean, because let’s be clear, there’s a ton of opposition to this in Congress. I mean, the pharmaceutical industry is really good at protecting its interests. This is an industry that is so profit oriented that they pushed an opioid epidemic onto Americans for years just to squeeze a little more profit out of them. That’s what this industry does.
So if it can soak you for insulin or to push you into an addiction, they’ll do it. And there’s a lot of high price lobbyists out there, and a lot of campaign contributions, and a lot of politicians who are beholden to that industry. And so this was a fight, and they fought it, and they insisted on it, and they squeezed these compromises out of people like Joe Manchin and Kyrsten Sinema and got that through the Republicans were always going to be opposed to it. It was getting it through the Democrats in Congress that in the end was key to this. So kudos to Joe Biden. And I don’t know, Nick, maybe it takes a president who’s actually old enough to be on Medicare to actually care about people on Medicare. Maybe there’s an advantage to Biden being old.
Speaker 3:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at CivicAction and NickHanauer, follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram at PitchforkEconomics. As always, from our team at Civic Ventures, thanks for listening. See you next week.