What a difference a day makes. Last week's posting presented some speculation as to why the board at Sanofi might have fired CEO Chris Viehbacher. The core argument was that the board may have dismissed Viehbacher for committing the unpardonable sin of trying to break pharma's cartel by agreeing to compete on price discounting. One reader in West Chester complained that while he may agree with the overall conclusion, he doesn't like what he considers our "vitriolic" attitude toward pharma.
That's perplexing, coming from a reader with pharma experience, because it's hard to see how any thoughtful person could feel anything other than caustic toward the industry. Just last week, for example, the Senate Veterans Affairs Committee held a hearing related to the VA's request for an additional $1.3 billion appropriation from Congress. The VA requested an extra billion dollars-plus for the sole purpose of buying more Sovaldi, a drug for treating hepatitis C. Even that amount of additional funding will only enable the VA to buy enough Sovaldi to treat 30,000 infected vets. Yet David Ross, director of the VA's HIV, hepatitis C, and public health pathogens programs, told the Senate that approximately 114,000 veterans might need it.
According to Veterans Committee chairman, Sen. Bernie Sanders, Gilead's exorbitant price for Sovaldiputs the VA "in the position where they are forced to choose which veterans get treated for their HCV and which do not because of cost...Companies like Gilead are gouging the American consumer and the American taxpayer and ignoring any sort of moral obligation to help very sick people access life-saving medications."
But Sovaldi is just a hint of the drug-cost iceberg that will scuttle U.S. health care. While CMS reported last spring that spending increases in all areas of health care, including prescription drugs, slowed in 2012, the major exception was spending on innovative specialty drugs. Even as the consumer price index rose just 12% between 2007 and 2012, during the same period the prices of 73 branded drugs increased by 75%.
David Lazarus at the Los Angeles Times could no longer contain his outrage against pharma. Last week he wrote that pharma keeps raising its prices "to wring profits from a captive market — the sick...Until the United States joins nearly all other developed countries in preventing prices for prescription meds from reaching unconscionably stratospheric levels, Americans will have to resign themselves to being routinely fleeced at the drugstore counter."
So some vitriol seems appropriate. Then a day or two after last week's blog posting about Viehbacher's firing appeared here, a news story broke that provided another angle on why the Sanofi board may have dumped its CEO. A former paralegal in Sanofi's contracts department alleges Viehbacher knew about a scheme run by various managers that used consultants Accenture and Deloitte to funnel approximately $34 million in bribes to pharmacy groups and hospitals as a means of increasing the company's diabetes product sales.
Now at this point it's not been determined whether the Sanofi board fired Viehbacher because they recently learned about the alleged bribery scheme. Frankly, one can make the argument that if such a program did exist, the board probably knew about it all along. Conversely, if they were late to learn of its existence, it's reasonable to suppose that their board members are worldly enough to know that such corruption is a routine part of the pharma business. Other pharmas have paid multi-billion dollar fines for multiple, similar infractions, yet their CEOs remained entrenched in their positions.
What's bleakly amusing, nonetheless, is the fact that in a single day, one can go from appearing vitriolic to seeming naive.
It's almost embarrassing, especially for someone who grew up in Chicago where corruption was the routine way of doing business. But then that's pharma. The industry can make even its most skeptical observers feel like someone in a film noir who thinks he knows how corrupt the world is, only to find that its leading, most successful operators are more degenerate and crooked than he ever imagined.