- A now-viral clip of Rep. Katie Porter shows her laying into the former CEO of the drug company Celgene for tripling the price of a cancer drug and detailing how that price hike was connected to the CEO’s salary.
- The clip comes from a hearing concluding a damning 18-month investigation that found drug company profits are the largest driver of drug price increases and gouging.
- The reports show that the companies intentionally drove up the prices of essential drugs to meet quarterly earnings goals, engaged in anti-competitive behavior, and lobbied extensively against reforms.
Rep. Katie Porter (D-Ca.) trended on Twitter Wednesday after grilling the former CEO of the drug company over price hikes for the cancer drug Revlimid.
In a viral video, which now has over 19 million views, a white-board wielding Porter writes the number “$13 million” and asks Celgene CEO Mark Alles if it “rings any bells.”
“This was your compensation in 2017 for being CEO of Celgene, and that’s a lot of money. It’s 200 times the average American’s income and 360 times what the average senior gets on Social Security,” she said.
“Now, of that 13 million, about 2.1 million came from your company hitting yearly earnings targets, and more than half of the bonus formula was based on those targets,” she continued. “Any increase in the price of Revlimid would also increase your bonus by increasing earnings, isn’t that right Mr. Alles?”
Alles responded that that assessment was correct, and Porter went on to tell him that the House Oversight Committee found “that if you hadn’t increased the price of Revlimid you wouldn’t have gotten your bonus.”
“In fact, you personally received half a million dollars personally just by tripling the price of Revlimid,” she added. “So, to recap here, the drug didn’t get any better, the cancer patients didn’t get any better: you just got better at making money, you just refined your skills at price gouging. And to be clear, the taxpayer spent $3.3 billion on Revlimid.”
House Investigation Findings
The now-viral video comes from a House Oversight Committee hearing that took place Wednesday.
The hearing, which was the first of two, marks the conclusion of a nearly two-year-long investigation by the committee’s Democrats into prescription drug price gouging. The reports from that investigation — two of which were also released ahead of the hearing — are incredibly damning.
Those first two reports focus on Celgene, which is now owned by the drug company Bristol Myers Squibb, and its pricing of Revlimid, as well as another pharmaceutical company called Teva and its multiple sclerosis drug Copaxone.
Among other things, both reports reveal how the massive profits these companies made have been the driving force in the huge price increases for these essential drugs.
According to the reports, Teva has raised the price of Copaxone 27 times since 2007, and because of those price increases, an annual course of the drug now costs nearly $70,000 — seven times the $10,000 it cost in 1997.
As for Revlimid, since 2005, Celgene has raised the price of the drug 22 times, from $215 per pill to $719, the report said. After Bristol Myers Squibb got the rights to Revlimid last November, it raised the price again, to $763 per pill.
Those price hikes have been insanely profitable. As the reports outline, Copaxone has brought in more than $34 billion in net profits for Teva just in the U.S. alone. Meanwhile, just between 2009 and 2018, Celgene collected $51 billion in net revenues from Revlimid sales worldwide and $32 billion in the U.S.
As Porter mentioned in the viral clip, the reports also found that those profits end up costing taxpayers and Medicare tens of billions of dollars, which are then used to pay generous executive bonuses.
Another hearing is set to be held Thursday with testimonies from other CEOs of other drug companies. The reports on those companies will be released ahead of the hearing as well.
Reports Contradict CEO Testimonies
In Wednesdays hearing, Alles, as well as the CEO of Teva, both defended the price hikes as above-board and merited.
“The pricing decisions for our medicines were guided by a set of long-held principles that reflected our commitment to patient access, the value of a medicine to patients in the health care system, the continuous efforts to discover new medicines and new uses for existing medicines and the need for financial flexibility,” Alles told the representatives.
However, Porter specifically asked Alles if the drug’s formula had been substantially improved from 2005 , when the pill cost $215, to now, when it costs three times more. Alles confirmed that the manufacturing for the drug had not changed, but said it had been approved for new uses.
Arguably even more damning is the fact that internal documents and emails included in the report showed that executives at both Celgene and Teva raised prices unrelated to costs in order to meet quarterly profit goals.
In one of the most explicit examples, the Celgene report notes that in 2014, Alles — who was then the executive vice president of the company — ordered the price of Revlimid be jacked up by 4% because the company had not met its first-quarter sales goals. Just days later, Alles gave a presentation to the company’s drug pricing advisory board that noted the increase would result in $24 million in new net sales.
As for Teva, the company’s CEO Kåre Schultz also defended the price jacking of Copaxone during the hearing, though he offered another explanation.
“In order for any pharmaceutical company to research and develop new drugs, or improve old ones, the price of successful medicines must reflect the significant cost of ongoing research and development projects,” he said. “The public only sees and pays for the drugs that are ultimately approved by the government, like Copaxone, but you have to expend a lot of resources and endure many disappointments before bringing to the market safe and effective medicines.”
The committee’s report on Teva also disputes that claim too. In fact, it specifically found that Teva has only spent $689 million on research related to Copaxone since 1987 — just 2% of the nearly $34 billion it has taken in net revenue for the drug.
Beyond the price hikes, the reports also gives the public what has been described as the clearest proof to date that large drug companies are engaged in anticompetitive behavior to force competitors out of the market.
In one of the most egregious examples, Teva put out a new, stronger version of Copaxone as part of what they referred to as a coordinated “generic defense strategy.” According to internal documents, that strategy included working with middlemen to block other generic drugs from getting market access, as well as launching aggressive campaigns to lobby doctors and patients to stick with the more expensive version of the drug.
To that point, the Congressional reports also show how these companies have lobbied extensively against regulations and reforms that would prevent them from ramping up drug prices. However, in providing the public with this information, the Democrats on the committee hope to push for substantial drug pricing reforms.
In a letter prefacing the reports, Oversight Committee Chair Carolyn Maloney (D-Ny.) emphasized the need for comprehensive legislation such as the drug price bill passed by the House back December known as H.R. 3, which would reform the system by allowing Medicare to negotiate directly with drug companies over prices.
As Maloney notes, that bill essentially died in the Senate because President Donald Trump openly opposed it and Senate Republicans refused to even bring it for a vote.
Purdue Pharma Agrees To Plead Guilty To 3 Opioid-Related Charges in $8B Settlement, But Don’t Expect Them To Pay the Full Amount
- As part of a more than $8 billion settlement with the U.S. Department of Justice, Purdue Pharma will plead guilty to one count of conspiracy to defraud the U.S. government and two counts of violating anti-kickback, or bribery, laws.
- Because Purdue filed for bankruptcy last year, that full figure likely won’t be collected by the government.
- Under the settlement, which will need approval in bankruptcy court, Purdue would become a public benefit corporation that is controlled by the government, with revenue from opioid sales being used to fund treatment options and programs.
- A number of state attorneys generals and Democratic lawmakers have said the settlement does not hold Purdue or its owners fully accountable and could derail thousands of other cases against the company.
- They have also argued that the government should “avoid having special ties to an opioid company… that caused a national crisis.”
Purdue to Plead Guilty to 3 Criminal Charges
The Justice Department announced Wednesday that Purdue Pharma has agreed to plead guilty to three criminal charges related to fueling the country’s opioid epidemic.
Notably, those guilty pleas come as part of a massive settlement worth more than $8 billion, though Purdue will likely only pay a fraction of that amount to the government.
Purdue is the manufacturer of oxycontin, which is a powerful and addictive painkiller that’s believed to have driven the opioid crisis. Since 2000, opioid addiction and overdoses have been linked to more than 470,000 deaths.
As part of the settlement, Purdue will plead guilty to one count of conspiracy to defraud the United States. There, it will admit that it lied to the Drug Enforcement Administration by claiming that it had maintained an effective program to avoid opioid misuse. It will also admit to reporting misleading information to the DEA in order to increase its manufacturing quotas.
While Purdue originally told the DEA that it had “robust controls” to avoid opioid misuse, according to the Justice Department, it had “disregard[ed] red flags their own systems were sending up.”
Along with that guilty plea, Purdue will also plead guilty to two anti-kickback, or bribery, related charges. In one charge, it will admit to violating federal law by paying doctors to write more opioid prescriptions. In the other, it will admit to using electronic health records software to increase opioid prescriptions.
According to a copy of the plea deal obtained by the Associated Press, Purdue “knowingly and intentionally conspired and agreed with others to aid and abet” the distribution of opioids from doctors “without a legitimate medical purpose and outside the usual course of professional practice.”
The $8 billion in settlements will be split several different ways.
In one deal, the Sackler family — which owns Purdue — will pay $225 million to resolve civil fines.
As part of the main deal, another $225 million will go directly to the federal government in a larger $2 billion criminal forfeiture; however, the government is actually expected to forego the rest of that figure.
In addition to that, $2.8 billion will go to resolving Purdue’s civil liability. Another $3.54 billion will go to criminal fines, but because Purdue filed bankruptcy last year, these figures also likely won’t be fully collected — largely because the government will now have to compete with other claims against Purdue in bankruptcy court.”
Purdue Will Become a “Public Benefit Company”
Since Purdue is in the middle of bankruptcy proceedings, a bankruptcy court will also need to approve the settlement.
“The agreed resolution, if approved by the courts, will require that the company be dissolved and no longer exist in its present form,” Deputy Attorney General Jeffrey Rosen said.
However, that doesn’t mean that Purdue’s fully gone or that it will even stop making oxycontin. In fact, as part of this settlement, the Sacklers would relinquish ownership of Purdue, and it would then transform into what’s known as a public benefit company.
Essentially, that means it would be run by the government. Under that setup, money from limited oxycontin sales, as well as from sales of several overdose-reversing medications, would be pumped back into treatment initiatives and other drug programs aimed at combating the opioid crisis.
For its part, the Justice Department has endorsed this model.
Should Purdue Be Punished More?
There has been strong opposition to this deal, mainly from state attorneys general and Democratic members of Congress who say it doesn’t go far enough.
Those critics argue that the settlements don’t hold Purdue or the Sackler family fully accountable, especially the Sacklers since — unlike Purdue — they didn’t have to admit any wrongdoing.
“[W]hile our country continues to recover from the pain and destruction left by the Sacklers’ greed,” New York Attorney General Letitia James said, “this family has attempted to evade responsibility and lowball the millions of victims of the opioid crisis. Today’s deal doesn’t account for the hundreds of thousands of deaths or millions of addictions caused by Purdue Pharma and the Sackler family.”
“If the only practical consequence of your Department’s investigation is that a handful of billionaires are made slightly less rich, we fear that the American people will lose faith in the ability of the Department to provide accountability and equal justice under the law,” A coalition of 38 Democratic members of Congress said in a statement to Attorney General Bill Barr last week.
While this settlement doesn’t include any convictions against the Sacklers specifically, as the Justice Department noted, it also doesn’t release them from criminal liability and a separate criminal investigation is ongoing.
Still, last week, 25 state attorneys general asked Barr not to make a deal that includes converting Purdue into a public benefit company, urging the Justice Department to “avoid having special ties to an opioid company, conflicts of interest, or mixed motives in an industry that caused a national crisis.”
Part of their concern is that the government would essentially run this new company while also holding the original one accountable. Those attorneys general instead argued that Purdue should be run privately but with government oversight.
See what others are saying: (Associated Press) (The New York Times) (Fox Business)
Parents of 545 Children Separated at U.S. Border Still Can’t Be Found
- A Tuesday filing update from the ACLU and Department of Justice revealed that a Steering Committee in charge of reuniting families that were separated at the U.S.-Mexico border has not been able to find parents of 545 separated children.
- Efforts to reach these parents via telephone have been unsuccessful and those involved are not hopeful that will change. Two-thirds of these parents are believed to be in their respective countries of origin.
- So far, parents for 485 kids have been reached.
- Finding these parents is an already complicated process made even more strenuous by the coronavirus pandemic. On-the-ground searches were suspended because of COVID-19 but have now picked up in limited capacity.
Parents of 545 Children Remain Unfound
A Tuesday court filing from the U.S. Department of Justice and American Civil Liberties Union revealed that the parents of 545 children who had been separated at the U.S.-Mexico border have not been found or contacted.
Two thirds of those parents are expected to be in their respective country of origin. While there have been efforts to reach these families via phone, they have not been successful. Other efforts to reach these parents are in the works.
Thousands of families were separated in 2018 under President Donald Trump’s zero tolerance policy, but a federal judge ordered that those families should be reunited. Soon after, many were, but in reality many more families had actually been separated. It was later revealed that the Trump Administration had been separating families back in 2017 under a pilot program. A court order reuniting those families was not issued until last year.
A Steering Committee, of which the ACLU and other organizations are members, is now searching for these parents. According to the filing, the government provided a list of 1,556 children. The current focus on reaching children whose membership in this case is not contested and who have available contact information for a sponsor or parent. The Steering Committee has attempted to reach the families of all 1,030 children who fit that bill, and have successfully reached the parents, or their attorneys, for 485 kids.
“There is so much more work to be done to find these families, Lee Gelernt, the deputy director of the ACLU Immigrants’ Rights Project, told NBC News, which broke the story.
“People ask when we will find all of these families, and sadly, I can’t give an answer. I just don’t know,” he continued. “But we will not stop looking until we have found every one of the families, no matter how long it takes. The tragic reality is that hundreds of parents were deported to Central America without their children, who remain here with foster families or distant relatives.”
Efforts to Find Parents
Because so much time has passed between family separation practices and today, initiatives to find those parents are difficult. They are also further complicated by the fact that during the pilot program, U.S. officials did not collect thorough information from these parents, and many were deported before courts ordered they be reunited with their kids.
Nan Schivone, the legal director for Justice in Motion, which carries out on-the-ground searches for parents, told The Washington Post that attorneys “take the minimal, often inaccurate or out-of-date information provided by the government and do in-person investigations to find these parents.”
Schivone said it is an “an arduous and time-consuming process on a good day.” Sometimes, these lawyers might find themselves in remote villages where outsiders are suspect and language barriers can slow down communication.
The pandemic halted these efforts as lockdowns and curfews made it impossible for Justice in Motion to look for parents abroad. Though, Tuesday’s filing revealed that “limited physical on-the-ground searches for separated parents has now resumed where possible to do so.”
See what others are saying: (NPR) (NBC News) (Washington Post)
Scott Peterson’s Murder Convictions To Be Re-examined
- Scott Peterson was convicted in 2004 of murdering his wife, Laci, and their unborn child.
- He was sentenced to death for the crimes, but the California Supreme Court overturned the death sentence in August of this year after finding that the trial court improperly dismissed potential jurors. The court did, however, uphold the convictions.
- Now, the CA Supreme Court has ordered the San Mateo County Superior Court to review the convictions and determine whether Peterson should be given a new trial on the grounds that one juror “committed prejudicial misconduct by not disclosing her prior involvement with other legal proceedings.”
- That juror had not disclosed the fact that she was granted a restraining order in 2000 against her boyfriend’s ex-girlfriend for harassing her when she was pregnant.
Peterson’s Death Sentence Was Previously Overturned
The California Supreme Court on Wednesday ordered a review of Scott Peterson’s 2004 convictions for murdering his wife, Laci, and their unborn son.
Peterson was sentenced to death by lethal injection for those crimes in 2005, but in August of this year, the California Supreme Court overturned his death sentence.
“We reject Peterson’s claim that he received an unfair trial as to guilt and thus affirm his convictions for murder,“ the court said at the time. “But before the trial began, the trial court made a series of clear and significant errors in jury selection.”
As far as what errors the court is talking about, it said the trial judge wrongly discharged prospective jurors who expressed opposition to capital punishment but said they would be willing to impose it.
Court to Decide on Potential New Trial
Now, weeks later, the California Supreme Court has ordered that the case return to the San Mateo County Superior Court to determine whether Peterson should be given a new trial on the ground that a juror “committed prejudicial misconduct by not disclosing her prior involvement with other legal proceedings, including but not limited to being the victim of a crime.”
According to the Los Angeles Times, that juror had not shared the fact that she was granted a restraining order in 2000 against her boyfriend’s ex-girlfriend for harassing her when she was pregnant.
Peterson’s lawyers even say that when all potential jurors were asked whether they had ever been a victim of a crime or involved in a lawsuit, the juror said no to both questions.
They also say she was one of the two holdouts for convicting Peterson of first-degree murder for killing his unborn child, with the jury ultimately convicting Peterson of the first-degree murder of Laci and the second-degree murder of the unborn child.
For now, it’s up to the San Mateo Court to decide what happens next, but the California Supreme Court did say that prosecutors could again seek the death penalty for Peterson at a new hearing.