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Rep. Katie Porter Calls Out Big Pharma CEO for Profiting Off Drug Price Hikes

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3 years ago

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  • 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.

Viral Video

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.

Other Findings

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. 

See what others are saying: (Stat News) (NBC News) (The Cut)

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Survey and Census Data Shows Record Number of Americans are Struggling Financially

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2 weeks ago

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May 23, 2023

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Americans are choosing not to pursue medical treatment more and more frequently as they encounter money troubles.

A recent federal survey shows that a record number of Americans were worse off financially in 2022 than a year prior.

Coupled with recent census data showing pervasive poverty across much of the country, Americans are forced to make difficult decisions, like foregoing expensive healthcare. 

According to a recent Federal Reserve Bureau survey, 35% of adults say they were worse off in 2022 than 2021, which is the highest share ever recorded since the question was raised in 2014. 

Additionally, half of adults reported their budget was majorly affected by rising prices across the country, and that number is even higher among minority communities and parents living with their children.

According to recent census data, more than 10% of the counties in the U.S. are experiencing persistent poverty, meaning the area has had a poverty rate of 20% or higher between 1989 and 2019. 

16 states report at least 10% of their population living in persistent poverty. But most of the suffering counties were found in the South — which accounts for over half the people living in persistent poverty, despite making up less than 40% of the population. 

These financial realities have placed many Americans in the unfortunate situation of choosing between medical treatment and survival. The Federal Reserve study found that the share of Americans who skipped medical treatment because of the cost has drastically increased since 2020. 

The reflection of this can be found in the overall health of households in different income brackets. 75% of households with an income of $25,000 or less report being in good health – compared to the 91% of households with $100,000 or more income. 

See what others are saying: (Axios) (The Hill) (Federal Reserve)

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Montana Governor Signs TikTok Ban

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2 weeks ago

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May 18, 2023

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The ban will likely face legal challenges before it is officially enacted next year. 

First Statewide Ban of TikTok

Montana became the first state to ban TikTok on Wednesday after Gov. Greg Gianforte (R) signed legislation aimed at protecting “Montanans’ personal and private data from the Chinese Communist Party.”

The ban will go into effect on Jan. 1, 2024, though the law will likely face a handful of legal challenges before that date. 

Under the law, citizens of the state will not be held liable for using the app, but companies that offer the app on their platforms, like Apple and Google, will face a $10,000 fine per day of violations. TikTok would also be subject to the hefty daily fine. 

Questions remain about how tech companies will practically enforce this law. During a hearing earlier this year, a representative from TechNet said that these platforms don’t have the ability to “geofence” apps by state.

Roger Entner, an analyst at Recon Analytics, told the Associated Press that app stores could have the capability to enforce the restriction, but it would be difficult to carry out and there would be a variety of loopholes by tools like VPNs.

Montana’s law comes as U.S. politicians have taken aim at TikTok over its alleged ties to the CCP. Earlier this year, the White House directed federal agencies to remove TikTok from government devices. Conservatives, in particular, have been increasingly working to restrict the app.

“The Chinese Communist Party using TikTok to spy on Americans, violate their privacy, and collect their personal, private, and sensitive information is well-documented,” Gov. Gianforte said in a Wednesday statement. 

Criticism of Montana Law

TikTok, however, has repeatedly denied that it gives user data to the government. The company released a statement claiming Montana’s law “infringes on the First Amendment rights of the people” in the state. 

“We want to reassure Montanans that they can continue using TikTok to express themselves, earn a living, and find community as we continue working to defend the rights of our users inside and outside of Montana,” the company said. 

The American Civil Liberties Union condemned Montana’s law for similar reasons. 

“This law tramples on our free speech rights under the guise of national security and lays the groundwork for excessive government control over the internet,” the ACLU tweeted. “Elected officials do not have the right to selectively censor entire social media apps based on their country of origin.”

Per the AP, there are 200,000 TikTok users in Montana, and another 6,000 businesses use the platform as well. Lawsuits are expected to be filed against the law in the near future.

See what others are saying: (Associated Press) (Fast Company) (CBS News)

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How a Disney-Loving Former Youth Pastor Landed on The FBI’s “Most Wanted” List

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1 month ago

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April 24, 2023

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 “Do what is best, not for yourself, for once. Think about everyone else,” Chris Burns’ 19-year-old son pleaded to his father via The Daily Beast. 

Multi-Million Dollar Scheme 

Former youth pastor turned financial advisor Chris Burns remains at large since going on the run in September of 2020 to avoid a Securities Exchange Commission investigation into his businesses.

Despite his fugitive status, the Justice Department recently indicted Burns with several more charges on top of the $12 million default judgment he received from the SEC. 

Burns allegedly sold false promissory notes to investors across Georgia, North Carolina, and Florida. The SEC claims he told the investors they were participating in a “peer to peer” lending program where businesses that needed capital would borrow money and then repay it with interest as high as 20%. Burns allegedly also reassured investors that the businesses had collateral so the investment was low-risk. 

The SEC says that Burns instead took that money for personal use. 

Burns’ History 

Burns began his adult life as a youth pastor back in 2007 before transitioning into financial planning a few years later.  By 2017, he launched his own radio show, The Chris Burns Show, which was funded by one of his companies, Dynamic Money – where every week Burns would “unpack how this week’s headlines practically impact your life, wallet, and future,” according to the description. He also frequently appeared on television and online, talking about finances and politics. 

The SEC alleges that he used his public appearances to elevate his status as a financial advisor and maximize his reach to investors.

His family told The Daily Beast that he became obsessed with success and he reportedly bought hand-made clothes, a million-dollar lakehouse, a boat, several cars, and took his family on several trips to Disney World. His eldest son and wife said that Burns was paying thousands of dollars a day for VIP tours and once paid for the neighbors to come along. 

Then in September 2020, he reportedly told his wife that he was being investigated by the Securities Exchange Commission but he told her not to worry. 

The day that he was supposed to turn over his business documents to the SEC, he disappeared, telling his wife he was just going to take a trip to North Carolina to tell his parents about the investigation. Then, the car was found abandoned in a parking lot with several cashier’s checks totaling $78,000

FBI’s Most Wanted

The default judgment in the SEC complaint orders Burns, if he’s ever found, to pay $12 million to his victims, as well as over $650,000 in a civil penalty. Additionally, a federal criminal complaint charged him with mail fraud. Burns is currently on the FBI’s Most Wanted list. 

Last week, the Justice Department indicted him on several other charges including 10 counts of wire fraud and two counts of mail fraud. 

“Burns is charged for allegedly stealing millions of dollars from clients in an illegal investment fraud scheme,” Keri Farley, Special Agent in Charge of FBI Atlanta, said in a statement to The Daily Beast. “Financial crimes of this nature can cause significant disruptions to the lives of those who are victimized, and the FBI is dedicated to holding these criminals accountable.”

His family maintains that they knew nothing of Burns’ schemes. His wife reportedly returned over $300,000 that he had given to her. 

She and their eldest son, who is now 19, told The Daily Beast they just want Burns to turn himself in, take responsibility for his actions, and try to help the people he hurt. 

“Do what is best, not for yourself, for once. Think about everyone else,” Burns’ son said in a message to his father via The Daily Beast. 

See what others are saying: (The Daily Beast) (Fox 5) (Wealth Management)

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