Pricey Pharmaceuticals "Free Market"

Pricey Pharmaceuticals

By Thomas M. Biancaniello M.D.

EpiPen photo GoodRxThe news has been ripe with reports of steep rises in drug prices and the potential effect on patient needs.  Most recently there has been an uproar over the price of EpiPen which is sold as two pre loaded syringes to inject epinepherine (Adrenalin) into the thigh to potentially save the life of a patient having a severe life threatening allergic reaction called anaphylaxis.  This caught everyone’s attention because many parents are purchasing Epipens for the beginning of school. EpiPens expire after a year and must be replaced when they reach the expiration date or when the adrenaline turns pink or brown.

We have all learned that in a “free” market supply and demand determine prices. The supply side determines the basic pricing.  How much does it cost to produce the drug?  Companies frequently cite the high cost of research, development and clinical trials as explanations for the high cost which they pass on to the purchaser.  Our FDA is vigorous in requiring a three phase clinical trial process to approve a drug for general use.  

Phase 1, use in healthy volunteers determine the drug’s most frequent side effects and also how it is metabolized and excreted. This typically involves 20-80 healthy voluteers.  If there is no unacceptable toxicity the process moves to Phase 2 which determines effectiveness – does it help the patient in the way it was designed for?  Often this requires up to 300 patients with continued monitoring for safety.  Phase 3 gathers more information on effectiveness and toxicity as well as dosage, at this point the drug is used in combination with other drugs and with different populations of patients sometimes up to 3,000 patients. 

Patents (granted by Patent and Trademark Office are for 20 years) and exclusivity (granted by FDA for 3-7 years for most) can protect the developer of a new drug from the marketing of a generic equivalent so the company can recover its investment in research and development.  In addition to this, of course, there is the cost of producing the drug (acquiring the resources needed, manufacturing and distributing).  After all is accounted for, the company determines what its profit should be.

What are the demand factors?  1^st is the number of patients who can be treated with the drug.  The more common the affliction, the larger the market (cardiovascular, diabetes, cancer, infections).  Conversely, it can be difficult to get drugs developed for rare conditions or limited populations because the company may never recoup the costs.  2^nd, who is paying for the drug?  If the insurance companies or government do not consider the drug to be indicated or necessary for the patient, the patient has to pay out of pocket. 

Finally, are there group purchasers who can negotiate down the price for the patient?  If there are large purchaser groups in the market such as hospital systems or large insurance networks, there may be pressure on the pharmaceutical companies to accept lower profit margins. 

Unfortunately, the largest purchaser, Medicare is not permitted by law to negotiate drug prices.  

Back to the EpiPen, only one company (Mylan) makes the product. The price of EpiPen has gone from about $100 in 2007 to about $600 for the standard 2-pack (~461% increase). Without a large group purchaser with the power to bargain, the only remedy to exorbitant price increases is the power of public opinion or governmental action to exert pressure to lower the price and reduce profits.  

It is ironic that two senators have daughters on the opposite side of supply and demand tug of war.   Sen. Joe Manchin (D.-W.Va) is the father of Mylan CEO Heather Bresch.  Ms. Bresch’s salary has gone from $2.45 M in 2007 to $19 M in 2016 (675% increase).  Sen. Amy Klobuchar’s (D.-MN) daughter needs to carry an EpiPen. Sen. Klobuchar has asked the Federal Trade Commission and the Senate Judiciary Committee to investigate.

Stay tuned, things could get interesting.

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Thomas Biancaniello, MD is a Professor of Pediatrics (Cardiology) Columbia University Medical Center, Former Chief Medical Officer, Stony Brook University Hospital, Emeritus Professor of Pediatrics and Medicine, Stony Brook University 

SUFFOLK CLOSEUP - FOIA And FOIL For Access To Information

SUFFOLK CLOSEUP

By Karl Grossman

The Freedom of Information Act, I tell my journalism students, was the best thing to come along for journalists since the typewriter. For nearly 40 years in my Investigative Reporting course at SUNY Old Westbury I teach the history and use of what is acronymed FOIA.

In fact, not just journalists but anybody can utilize FOIA. It’s a window on what government does—a breakthrough in what these days is called transparency.  But mainly journalists use it, and what a treasure for democracy.

“Democracy works best when the people have all the information that the security of the nation will permit,” said President Lyndon Johnson when he signed FOIA into law on, appropriately, the Fourth of July, 1966. 

Considered the “father” of FOIA is Congressman John Moss of California.  In his 12-year struggle, he faced enormous resistance from fellow officials. 

With its provisions allowing the public to obtain information from the federal government (with nine exemptions), FOIA went into effect in 1967. Most states—including New York—followed it with similar laws. In New York, a Freedom of Information Law, acronymed FOIL, was enacted in 1974. Because counties, cities, towns, villages and school districts are all created by the state, they are covered by FOIL. To oversee FOIL in New York, there’s a Committee on Open Government. Since 1976 its executive director has been Robert J. Freeman. He is wonderful! An attorney, he’s always available with advice and opinions when there’s trouble in getting information under FOIL.

And there often is. The passage of a law is time again not enough. There are officials and government entities that won’t comply.  And with FOIL, this includes a number in Suffolk.

The organization Reclaim New York has just brought a lawsuit in State Supreme Court in Suffolk against the Southampton School District and Islip and Babylon Towns for refusal to comply with FOIL. Reclaim New York, as its website states, “is a non-partisan organization dedicated to advancing a statewide, grassroots conversation about the future of New York, its economy and its people.”  Major focuses are “government reform and accountability.” Based in Manhattan, it has been doing a lot on Long Island including working its New York Transparency Project here. 

The organization filed FOIL requests this year and last with every town, village and school district and both counties on Long Island for copies of records of expenditures to vendors for fiscal year 2014. The object: to get the records so residents could see where their tax money had gone. Not exactly a radical request. Most—but not all—of the entities complied.

Towns in Suffolk that denied providing the information under FOIL were Islip and Babylon, according to a run-down on Reclaim New York’s website. One Suffolk village, Islandia, refused. As for Suffolk school districts, those which denied giving the information —or ignored repeated FOIL requests—were Bridgehampton, Eastport-South Manor, Quogue, Sayville and Southampton. The Suffolk County Economic Development Corporation ignored, too.  More were on the list when Reclaim New York initially published it, but with the attention, they then complied. What’s left are “the worst,” says a spokesperson for the group.

The Town of Smithtown, in contrast, provided the requested information under FOIL as did villages in Smithtown—Head of the Harbor, Nissequogue and the Branch—as well as the Smithtown School District.  

The Southampton School District has become quite a FOIL violator—why it is so deserving of a lawsuit. This April The Southampton Press sought under FOIL the findings of an investigation into allegations against Scott Farina before he resigned as superintendent of schools with a $300,000 pay-out. The district said this would be an “unwarranted invasion of personal privacy.” And, yes, there is an exemption under both FOIA and FOIL when personal privacy is involved. But here a law firm conducted—with taxpayers in the Southampton School District paying its bill—an investigation into the allegations and $300,000 in tax dollars was given to Dr. Farina, a public employee, upon his resignation.

Surely, the publics’ right-to-know is preeminent here. Mr. Freeman has offered an opinion that there is no FOIL prohibition against the Southampton School District releasing the information. The Press is pursuing this issue.

With FOIA and FOIL, many times you have to fight to get information. I not only teach about each, but as a journalist use them. An especially big FOIA battle came after I learned that a 1986 mission of the Challenger space shuttle had it lofting a plutonium-fueled space probe. Under FOIA, I sought all government information on the consequences if the Challenger underwent an accident and deadly plutonium was spread on that May launch. The U.S. Department of Energy denied my request claiming the information was technical and also I would be paid for reporting about it as a journalist—both baloney claims under FOIA. I appealed. It took a year of fighting but I won and received the grim information just before the Challenger exploded on launch in January. Its next mission was to be the nuclear one—and not just seven brave astronauts but many more people would have died if the disaster happened on it. I detailed this FOIA fight in my book “The Wrong Stuff.

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Karl Grossman is a veteran investigative reporter and columnist, the winner of numerous awards for his work and a member of the L.I. Journalism Hall of Fame. He is a professor of journalism at SUNY/College at Old Westbury and the author of six books.

Fire and Heavy Smoke At A Home On Sterling Lane

A house fire on Sterling Lane in Smithtown sent a mother and two children to local hospitals. According to Jeff Bressler, spokesperson for the Smithtown Fire Department, an alarm was received by the Smithtown Fire Department at 3:30 a.m. August 24 reporting a working sructural fire.  When the firefighters arrived there was a lot of heavy smoke coming from the residence. 

Fire fighters made a search of the home and located a mother, a three year old toddler and a four month old baby all suffering the effects from smoke inhalation. Mom and babies were resusitated and brought to local hospitals.  The two children were taken to Stony Brook University Hospital, the mom was initially taken to St. Catherine of Siena Hospital before being transferred to University Hospital. 

Fire fighters came from Smithtown, Hauppauge, St. James and an ambulance from Kings Parks were on the scene.

According to Mr. Bressler the fire was quickly extinguished, “The real story here is the heavy smoke and how dangerous it can be.” said Bressler.

The Smithtown Fire Marshal is investigating the cause of the fire.

Three Adults and A Child Die In MV Crash On LIE

Suffolk County Police Seventh Squad detectives are investigating a motor vehicle crash that killed three people and critically injured a child in Manorville today. (The child, Christopher Pinales succumbed to his injuries after being transported to Stony Brook University Hospital.)

Carmelo Pinales was driving a gray Subaru Outback eastbound on the Long Island Expressway when he apparently lost control of the vehicle which crossed over the grassy median, went airborne and struck two vehicles, a BMW and a Honda, that were travelling westbound near Exit 68 at approximately 9:35 a.m.

Carmelo Pinales, 26, of Hicksville, and his sister, Patricia Pinales, 27, of Westbury, were pronounced dead at the scene by a physician’s assistant from the Office of the Suffolk County Medical Examiner.  Carmelo’s 10-year-old son, Christopher Pinales, also from Hicksville, was transported in critical condition to Stony Brook University Hospital via Suffolk County Police helicopter. Christopher Pinales later succumbed to injuries he suffered. Winnifer Garcia, 21, of Hempstead, and Patricia’s 3-year-old daughter, also of Westbury, were transported to local hospitals where they were treated for non-life-threatening injuries. 

The driver of the 2014 Honda, Scott Martella, 29, of Northport, was pronounced dead at the scene by a physician’s assistant from the Office of the Suffolk County Medical Examiner. His fiancée, Shelbi Thurau, 29, of Northport, was transported to a local hospital where she was treated for non-life-threatening injuries.

Marvin Tenzer, 73, the driver of the 2016 BMW, and his three passengers, Sandra Tenzer, 69, Helen Adelson, and Isidore Adelson, 81, all of Westhampton, were transported to local hospitals where they were treated for non-life-threatening injuries. 

Detectives are investigating reports that the driver of the Subaru was traveling at a high rate of speed.

All three vehicles will be impounded for a safety check and the investigation is continuing. Detectives ask anyone with information regarding this crash to call the Seventh Squad at 631-852-8752.

Update on Monday, August 22, 2016 at 6:52AM by .

Isidore Adelson, 81, of Westhampton, has succumbed to his injures at Southside Hospital in Bay Shore. His wife, Helen Adelson, was transported from Peconic Bay Medical Center in Riverhead to Southside Hospital where she is in critical condition.

SUFFOLK CLOSEUP - Most Vulnerable Pay For Suffolk County's Financial Bind

By Karl Grossman

Suffolk County government is in a financial bind and is cutting county bus routes 

to save money. Suffolk County Transit routes to be cut on October 3 include the S71 between  the Stony Brook railroad station and Shirley, And Vanessa Baird-Streeter, assistant deputy county executive for public information, says “additional cuts may be necessary.”

There are no Smithtown bus routes being cut now, but could they in the future be on the county’s cutting block?

The elimination of the routes is a result of a shortfall in sales tax receipts—a result of Suffolk government’s increasing reliance for its income on the sales tax. Suffolk government is high on the list of county and city governments in New York State that have been depending on the sales tax. And it’s an unsteady source of funds. A whopping 58.9% of the county’s operating budget for 2016 is based on sales tax receipts—and that money has not been coming through as expected. 

The reason also involves transportation, ironically, as outlined in a just issued report from New York State Comptroller Thomas P. DiNapoli. For Suffolk as well as other areas of the state, his report says, the sudden drop in gasoline prices has caused significantly less sales tax money to be collected at gas stations. What’s been good for motorists is causing financial pain, especially for Suffolk government.

Suffolk County Executive Steve Bellone two weeks ago ordered county government to go into an “extreme austerity” mode because expected sales tax receipts have not materialized. There’s a shortfall of $78 million. Mr. Bellone issued a “notice of funding deficiency” and announced, among other cost-saving efforts, that all purchases of more than $250 in any county department would have to be approved by his budget office, and the elimination of eight bus routes. 

Suffolk County has had an outrageously limited public transportation system. It’s been a factor in highways in Suffolk, a county with a population now of 1.5 million, being congested with automobiles. A car-dependent culture has developed. 

It’s a horror show these days on many roads in Suffolk, particularly during rush hours, whether it’s the Long Island Expressway between Exit 64 and Route 112 in Medford to Exit 49 and Route 110 in Melville or even on roads in the less-populated eastern portion of Suffolk such as Route 27 and then County Road 39 and Montauk Highway from Southampton Town all the way out to Montauk. (As someone who worked for many years out of the Suffolk County bureau of the Long Island Press on Route 347 or the Smithtown Bypass in Hauppauge and enjoyed Veterans Memorial Highway and Route 347 as being free-flowing, rush hours on those roads now present quite a contrast.)

Importantly, not only do busses reduce auto traffic—they’re vital for people who can’t afford autos and for senior citizens who no longer drive.

After years of public advocacy, in 1980 Suffolk County Transit was created and through the years, with more advocacy, its system of bus routes has been expanded. It’s been not nearly enough but a start in reducing the car traffic that jams roads all over Suffolk making getting from point to point often an ordeal.

Aren’t there less important county functions that could be reduced? Being hurt here are Suffolk’s most vulnerable people.

Ms. Baird-Streeter emphasizes that the decision to cut the eight routes came after “careful analysis” by the county’s Department of Public Works. The routes chosen to be eliminated, she said, were found to have the fewest riders. By cutting them the county “will save $4 million on an annual basis” and, because they would be cut late in 2016, “$1 million this year.” She said about “in the future” possible “additional cuts may be necessary,” that “the Department of Public Works has already identified additional routes that may be necessary to cut to save additional money.” Further, she said “Suffolk County provides the largest local bus subsidy of any county in New York State.”  

Also, she Ms. Baird-Streeter said public hearings on the route eliminations will be held in the Suffolk Legislature’s auditoriums, in Hauppauge on September 8, and in Riverhead on September 9, both from 3 to 7 p.m.

How did Suffolk County get into this financial mess? It’s not a new problem. The county has been in financial difficulty for years. Indeed, every year since Mr. Bellone took office in 2012 he has declared a “state of fiscal emergency.”

The situation is having an impact on the county’s credit rating. Wall Street’s Fitch Ratings downgraded Suffolk County from an A to an A-minus rating in June. “The county lacks the reserves to address fiscal pressures in the event of an even moderate economic downturn,” wrote Fitch analysts.

The key source of the problem predates Mr. Bellone. When I started as a journalist on Long Island in 1962, the local revenue that financed Suffolk government came from property taxes and fees. That caused difficulty for Suffolk’s elected officials when people received their tax bills at the end of the year, saw a large increase and became, naturally, upset. This is despite the fact that the county property tax has always been a small portion of the property tax bill. In the property tax bills for 2016, for example, a countywide average of 68 percent was for school taxes and only 11.4% for “county purposes.” Using a sales tax affects citizens a little at a time.

In 1965, New York State began a sales tax—initially 2%. The state share is now 4%. And in 1969, the state allowed counties and cities to also have sales taxes. Suffolk’s sales tax started in 1969, also at 2% and now it’s 4.25%. An additional .375% percent of sales tax paid in downstate counties, including Suffolk, goes to the MTA.  So the combined sales tax total in Suffolk today is 8.625%

Counties and cities all over the state began using the sales tax increasingly to finance their governments—with Suffolk way up there. But the sales tax is undependable. When the “Great Recession” hit in 2008 and people cut their purchases big-time, Suffolk’s counting on the sales tax became especially impossible. 

The most recent reduction in sales tax receipts and its connection to what’s been happening at gas stations is documented in the just-issued report by Comptroller DiNapoli, himself a Long Islander, from Great Neck Plaza.

Mr. DiNapoli’s report is titled: “Local Sales Tax Collections Slow in First Half of 2016, Decline in Motor Fuels Price a Continuing Drag on Sales Tax Growth.”  It notes that “between 2014 and 2016 the price of gasoline declined. This decline likely contributed to local governments collecting…less in fuels sales taxes in the first half of 2016 compared to the first half of 2014.” It said “the decline in motor fuels tax collections from the first half of 2014 to the first half of 2016, isolated from other factors, caused the overall decline in sales tax collections.” Suffolk was among the state’s counties with a decline of “between 35% and 40%” in “motor fuels sales tax collections” during this period.

There is somewhat offset in that county government now pays less for gas for its own vehicles. But this doesn’t come close to offsetting the drop in sales tax receipts.  A county official also noted that there are limits to expenditures that the county can eliminate or reduce because many county services are “mandated” by the state. But, in contrast, bus service can be cut “because the county can” do it.