Big pharma has been spending big bucks on their lobbyists very recently trying to prevent
Congress from taking action to stop their price gouging.
We know it's out of control.
But so far it isn't working, and the American citizens apparently are getting sick and tired
of paying ridiculous mark-up prices.
Now, this is an incredible story because most of the time the American public is fallen
right behind, certainly Congress has, has always fallen right behind the idea, "Oh,
poor pharma industry.
They have to do all this research and development, and they got to pay out all this money."
First of all, let me talk about those myths.
A, the research and development, if it's 12%, that extraordinary.
Sometimes they like to say it's as high as 20%.
The real outlay you see on MSNBC, ABC-
Advertising.
-advertising at night where you're watching the news, and you see nine pharma commercials
telling you that your legs are restless, that you can't sleep, you got erectile dysfunction.
[crosstalk 00:01:06] Whatever it is.
It's so ubiquitous.
So, they're spending all that money that they want to say, "Oh, poor us.
We're having to do research and development."
That's the first part of it.
Second part.
Most of the research and development doesn't even come from the pharmaceutical industry.
It comes from the National Health Organization.
It's comes from universities.
Taxpayers have already paid for all this, and then all that happens is they swoop in,
they make it into a cash cow drug, and they fly out of there.
CEOs make a ton of money.
They don't do any kind of really meaningful clinicals as far as safety anymore.
They don't have to.
They simply don't have to.
They make $10 billion on a drug.
If it kills a few people they pay out $1 billion and they go home with $9 billion.
So, it a real good deal for them.
But this story, what I love about this story ... I'm not sold on this, by the way.
I'm not completely-
Which part?
Well, this comes from The Hill.
The part saying that they're losing, pharma is losing where it comes to telling their
story, oh, poor pitiful me.
What is your take on this?
I don't think they're losing.
My God, their mark-up is sometimes 7,000%.
All you gotta do is look at their earnings per share, and the stock prices-
Well, you do that every day.
-they continue to go up.
So, I mean there's no way that big pharma's losing.
I mean that's ludicrous.
You just gotta look at the profits and the market capitalization.
They're hardly losing.
And no one questions whether they need a solid return based on the drugs they make.
But at the end of the day-
7,000% though?
I mean really?
But at the end of the day, there's gotta be some rationalization, some correlation between
the price of the drug and what they've spent.
It's no different, let's say a hurricane's coming.
I mean at the end of the day, you and I both live in a hurricane alley, you got a hurricane
coming.
Home Depot and Lowe's and everyone else can't jack up the prices of plywood to protect your
doors.
You can't jack up the prices of gas.
But, you can jack up the prices of pharma.
So, something that can save your life, it's okay to price gouge, but the plywood you stick
on the door, the gas that you use to run your generator, that's illegal.
But you can price gouge when it comes to saving your life.
That's pretty scary.
Every time Congress has been asked, "Why don't you do the same thing with pharma that you
do for the VA, and that is under no circumstances may you charge more than this price."
Under no circumstances.
So, in the last three years this has come up in one form or another at least four or
five times that I can remember.
It's come up to where Congress is asked to set some standards.
Go ahead and give us a ceiling.
Let me tell you something.
As you know, this is something I specialize in is suing pharmaceutical companies that
kill people with dangerous products.
It's what I've done for 30 years.
In there I've been able to take depositions, over the years everywhere from, most of the
time we have to end up going to Europe to take the depositions because they hide behind
the fact that the companies in Europe and they won't give a deposition unless you go
to Europe.
So, you go to Europe, and the last three pharmaceutical cases that I've handled, where I've taken
deposition, I always ask the question, "Why is it that you charge $20 for a pill over
here in Germany, but for that same pill you charge $150 in the United States?"
What's the answer?
The answer's, "Because we can.
Because government, they let us, therefore we can."
They don't even hide behind that anymore.
They don't even hide behind, "Oh, gee, the R&D's different."
It really is embarrassing.
I mean at the end of the day, they've dumped so much money into lobbyists, there's so much
pressure in D.C., the pharma controls what decisions are being made, that we allow big
pharma to take advantage of the American public and no one takes a step to protect them.
What they're doing here, Peter, this is the ugly part of this story, too.
This story talks about the idea that they're trying to confuse the American public by,
they'll come out with an ad, they've got these ad series that you're gonna be seeing in the
next few weeks.
It's called, Share the Savings, is part of their ad series.
The other series is called, Let's Talk About Cost.
Now, what they do with this is they make it so damn confusing as they're doing the segment.
They do a 30 second spot and at the end of 30 seconds they try to blame bureaucrats-
Hospitals.
-they try to blame hospitals, they blame the insurance industry, and they say, "Well, that's
the problem."
You know what the actual landing line on that should be?
They uniquely, and only them, control the right to reduce costs to pharmaceuticals.
When Valiant, you remember the story of Valiant?
Right.
Valiant was caught, they were raising pharmaceutical prices 7,000% and 8,000% on life saving drugs.
And in between the time that they first started doing that, and somebody would object, they
said, "Oh, that's because of insurance.
It's because of government involvement.
The government's really responsible for this."
What they really found out, and they had to admit, that, yes, none of that really matters.
We can lower our number today.
We can go from 7,000% back down to 10% if we want.
At the end of the day, why don't they?
And that begs the question of why-
Because they're greedy thugs.
But where does that money end up at the end of the day?
And I think this is what's fascinating.
You got some senior management, and how do they get paid?
You've heard me talk about this repeatedly.
They get paid with stock options.
That's where most of their money comes.
So, blindly they are going to maximize profit.
Why?
Because they want to drive the stock prices up.
Now, what is a stock option?
Stock option is Mr. CEO gets paid some small salary, but his big bonus pop is all tied
to the stock price.
So, he says, "I can buy the stock price at $40," but if he can drive the price of the
stock up to $80, or $90, or $100, he buys the stock at $40, and then sells at $80, or
$90, or $100.
So, the senior management of these pharma companies want to drive up profits.
It's just insanely and artificially as much as humanly possible so they can exercise their
options and capture what's called the spread.
So, if we would change that, and say you can't have so much of your compensation tied to
the stock prices.
Congress could do that tomorrow.
It'd be easy.
Congress could do that tomorrow.
And you'd see a lot of this stuff go away.
Okay, but here's one of the problems.
We're talking about Congress, those greedy little freaks.
This is an industry that spends a lot, about $2 billion a year spreading money around.
So, you're never gonna have Cory Booker, remember Cory Booker comes out, the issue comes up
in front of Cory Booker ... And by the way, another potential presidential candidate.
He comes out and says, "I can't support forcing pharma to reduce their prices."
Do you remember this?
I do.
And everybody asked Cory Booker, "What are you talking about?"
Cory Booker goes back to the argument, "Oh, it's R&D."
Somebody shows him no, it's not R&D.
R&D's about 12%.
The rest goes to advertising.
He still takes the position-
He refuses to move.
-that he's gonna support big pharma because they've given Cory Booker, he's their boy,
they give him so much money.