Tag Archives: Racketeering

Big Pharma and the Rise of Gangster Capitalism

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By Charles Hugh Smith

Source: Of Two Minds

$8 per vial in competing developed-world nations and $38,892 in the U.S. That says it all.

Thanks to decades of gangster films, we all know how gangster capitalism works: the cost of “protection” goes up whenever the gangster wants to increase revenues, any competition is snuffed out, and “customer demand” is jacked up by any means available– addiction, for example.

This perfectly describes the pharmaceutical industry and every other cartel in America. You might have read about the price increase in Acthar gel, a medication to treat Infantile Spasms. (via J.F., M.D., who alerted me to the repricing of this medication from $40 in 2001 to the current price of $38,892.)

The compound first received approval in 1950, and various branded versions have been approved in recent years. Let’s be clear: this medication did not require billions of dollars in research and development, or decades of testing to obtain FDA approval; it’s been approved for use for the past 68 years.

Yes, you read that correctly: a medication that’s been in use for 68 years went from $40 a dose in 2001 to $38,892 today. Don’t you love the pricing? Not a round 38 grand, but $38,892. You gotta love these gangsters!

There’s another related term to describe this form of capitalism: racketeering.That’s what mobsters do–operate rackets.

The Big Pharma racket enriches a number of gangs practicing gangster capitalism: the drug companies themselves, of course, but some doctors are profiting from the racket, and so are pharmaceutical lobbyists:

Study highlights role of doctor conflicts of interest in Medicare spending on Mallinckrodt drug Acthar Study published in JAMA indicates nearly 90 percent of doctors prescribing HP Acthar Gel took payments from drug’s manufacturer.

Here are the money quotes:

In 2014 Mallinckrodt raised the price of Acthar further to $34,000. The Federal Trade Commission and attorneys general from five states sued Mallinckrodt for anti-competitive behavior with regard to the acquisition of Synacthen Depot and the monopolistic pricing of Acthar, and in January 2017 the company settled, agreeing to pay $100 million and to license Synacthen Depot to a competitor. According to Kaiser Health News, Mallinckrodt responded by increasing its Congressional lobbying to $610,000, and its contributions to Congress members to $44,000, in the first quarter of 2017.

As an off-patent pharmaceutical, a similar drug, differing in formulation, available in Europe, made by a different manufacturer, sells for $8 per vial.

So a medication to treat infants costs $8 per vial in Europe and $38,892 in the U.S. Don’t you just love gangster capitalism to death? Because death and suffering is the gangsters’ ultimate threat: pay up or die.

Here’s another example of Big Pharma gangster capitalism at work: Insulin Drug Price Inflation: Racketeering or Perverse Competition?

Don’t you wish you had a racket where you could raise prices by 10% a year like clockwork, or triple the price of your “product” every decade?

Pfizer just raised prices on 100 medications:

The increases are effective as of July 1. In most cases, the increases are just over 9%, which is in line with the annual 10% price hikes adopted by most drug companies. Putting that number in context, core inflation printed at 2% last week.

Here’s a chart of the net result of gangster capitalism:

Gangster capitalism is the new model of “growth” in America, the model used by every cartel from higher education to Pentagon contractors. Eliminate actual competition, raise prices in lockstep with other cartel members, lobby the government to pay your extortionist prices, and threaten any resisters with severe consequences.

Try resisting your local government’s property tax increases to cover insiders’ pensions and healthcare benefits: it’s always “for the children,” of course, and if you don’t pay up, we’ll just auction off your house.

There’s no difference between that and being told you’re gonna be wearing concrete overshoes if you don’t comply.

The U.S. economy is nothing more than an exploitive jumble of rackets, insider plundering and gangster capitalism. $8 per vial competing developed-world nations and $38,892 in the U.S. That says it all.

Racket of Rackets

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By Charles Hugh Smith

Source: Of Two Minds

If you thought banking in our time was a miserable racket — which it is, of course, and by “racket” I mean a criminal enterprise — then so-called health care has it beat by a country mile, with an added layer of sadism and cruelty built into its operations. Lots of people willingly sign onto mortgages and car loans they wouldn’t qualify for in an ethically sound society, but the interest rates and payments are generally spelled out on paper. They know what they’re signing on for, even if the contract is reckless and stupid on the parts of both borrower and lender. Pension funds and insurance companies foolishly bought bundled mortgage bonds of this crap concocted in the housing bubble. They did it out of greed and desperation, but a little due diligence would have clued them into the fraud being served up by the likes of Goldman Sachs.

Medicine is utterly opaque cost-wise, and that is the heart of the issue. Nobody in the system will say what anything costs and nobody wants to because it would break the spell that they work in an honest, legit business. There is no rational scheme for the cost of any service from one “provider” to the next or even one patient to the next. Anyway, the costs are obscenely inflated and concealed in so many deliberately deceptive coding schemes that even actuaries and professors of economics are confounded by their bills. The services are provided when the customer is under the utmost duress, often life-threatening, and the outcome even in a successful recovery from illness is financial ruin that leaves a lot of people better off dead.

It is a hostage racket, in plain English, a disgrace to the profession that has adopted it, and an insult to the nation. All the idiotic negotiations in congress around the role of insurance companies are a grand dodge to avoid acknowledging the essential racketeering of the “providers” — doctors and hospitals. We are never going to reform it in its current incarnation. For all his personality deformities, President Trump is right in saying that ObamaCare is going to implode. It is only a carbuncle on the gangrenous body of the US medical establishment. The whole system will go down with it.

The New York Times departed from its usual obsessions with Russian turpitude and transgender life last week to publish a valuable briefing on this aspect of the health care racket: Those Indecipherable Medical Bills? They’re One Reason Health Care Costs So Much by Elisabeth Rosenthal. Much of this covers ground exposed in the now famous March 4, 2013 Time Magazine cover story (it took up the whole issue): Bitter Pill: Why Medical Bills Are Killing Us, by Steven Brill. The American public and its government have been adequately informed about the gross and lawless chiseling rampant in every quarter of medicine. The system is one of engineered criminality. It is inflicting ruin on millions. It is really a wonder that the public has not stormed the hospitals with pitchforks and flaming brands to string up that gang in the parking lots high above their Beemers and Lexuses.

There are only two plausible arcs to this story. One is that the nation might face the facts and resort to the Single Payer system found in virtually every other nation that affects to be civilized. There is no other way to eliminate the deliberate racketeering. The other outcome would be the inevitable collapse of the system and its eventual re-set to a much less complex, cash-on-the-barrelhead, local clinic-based model with far less heroic high-tech interventions available for the broad public, but much more affordable basic care. Both outcomes would require jettisoning the immense overburden of administrative dross that clutters up the current model, with its absurd tug-of-war between the price-gouging hospital “Chargemaster” clerks and the sadistic insurance company monitors bent on denying treatment to their sick and hapless “customers” (hostages). Be warned: these represent tens of thousands of supposedly “good” jobs. Of course, they are “good” because they pay middle class wages, of which there are fewer and fewer elsewhere in the economy. But, they are well-paid because of the grotesquely profitable racket they serve. They’ve turned an entire generation of office workers into servants of criminal enterprise. Imagine the damage this does to the soul of our culture.

My suggestion for real reform of the medical racket looks to historical precedent:

In 1932 (before the election of FDR, by the way), the US Senate formed a commission to look into the causes of the 1929 Wall Street Crash and recommend corrections in banking regulation to obviate future episodes like it. It is known to history as the Pecora Commission, after its chief counsel Ferdinand Pecora, an assistant Manhattan DA, who performed gallantly in his role. The commission ran for two years. Its hearings led to prison terms for many bankers and ultimately to the Glass-Steagall Act of 1932, which kept banking relatively honest and stable until its nefarious repeal in 1999 under President Bill Clinton — which led rapidly to a new age of Wall Street malfeasance, still underway.

The US Senate needs to set up an equivalent of the Pecora Commission to thoroughly expose the cost racketeering in medicine, enable the prosecution of the people driving it, and propose a Single Payer remedy for flushing it away. The Department of Justice can certainly apply the RICO anti-racketeering statutes against the big health care conglomerates and their executives personally. I don’t know why it has not done so already — except for the obvious conclusion that our elected officials have been fully complicit in the medical rackets, which is surely the case of new Secretary of Health and Human Services, Tom Price, a former surgeon and congressman who trafficked in medical stocks during his years representing his suburban Atlanta district. A new commission could bypass this unprincipled clown altogether.

It is getting to the point where we have to ask ourselves if we are even capable of being a serious people anymore. Medicine is now a catastrophe every bit as pernicious as the illnesses it is supposed to treat, and a grave threat to a nation that we’re supposed to care about. What party, extant or waiting to be born, will get behind this cleanup operation?