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Dec 15, 2021 Andrew Perez

Health Care’s Rotating Villain

Drugmakers, insurers, and hospitals pass the blame to each other, while working together to protect their lucrative scam.
Health Care’s Rotating Villain

In politics, there is the so-called Rotating Villain problem, whereby Democrats constantly blame different bad guys for their party’s inaction. The health care industry uses similar tactics, perpetuating an ever-worsening crisis — and preserving its own ever-larger profits.

Indeed, insurers, drugmakers, and hospitals regularly take turns portraying each other as villains for driving up health care costs, all while they jointly bankroll propaganda campaigns to convince the public that the current predatory system must never be changed.

A new report from drugmakers’ top lobby group illustrates the misdirection. The jeremiad righteously attacks health insurance companies, slamming common health insurance industry ploys such as demanding prior authorizations for services and requiring patients to fail first on other therapies before they are allowed to try medicines prescribed by their doctors.

“Three in ten Americans that have insurance still face a financial barrier to care, like having trouble paying medical bills or having out-of-pocket costs that are more than they can afford,” says the report from Pharmaceutical Research and Manufacturers of America (PhRMA). “The health care system isn’t working for everyone — especially those that are sick and vulnerable,” the organization added.

PhRMA’s statements are inarguably true — indeed, consumer complaints obtained by The Daily Poster make clear that patients with insurance often struggle to get their prescriptions filled on time because of roadblocks put up by their insurers.

But the lobby group’s report is also an admission of guilt: PhRMA works hand in hand with health insurance lobbyists to ensure that the U.S. health care system continues to be built around private health insurance and keeps functioning the way it does now, as a capitalist free-for-all, where every company involved is permitted to maximally gouge the American public. Calling out bad behavior by other industries and shifting blame is an essential part of their giant health care scam.

“Poor Health Outcomes And Higher Out-Of-Pocket Costs”

The PhRMA patient experience survey report is a direct shot at the health insurance industry: “The data reveal that health insurance benefit design — including out-of-pocket expenses not covered by insurance and utilization management practices — is contributing to health care access insecurity and may be leading to poor health outcomes and higher out-of-pocket costs,” the organization writes.

The report points to insurers’ cost-shifting as a key factor in people being unable to take their medicines on time: “More than half (52%) of patients taking prescription medicines with a high-deductible health plan report one or more episodes of non-adherence in the past year.”

Then there are insurance utilization management practices, like being required to get a prior authorization from an insurance company to take a drug prescribed by their doctor, or having to first try a different drug that doesn’t work before a patient is allowed to take the one their doctor recommended.

“These additional barriers to accessing prescription medicines can result in delays, prevent patients from picking up their prescriptions, or require patients to take an alternative medicine preferred by the insurance company,” PhRMA wrote, noting that these practices are “furthering inequities” and “appear to disproportionately impact people of color and people with serious, chronic diseases.”

“While majorities of Black Americans (56%) and Hispanic Americans (60%) report being subject to utilization management practices, only 36% of white Americans report experiencing the same,” the report said. “Patients with some of the most serious chronic diseases — autoimmune diseases (62%), allergies (52%) and diabetes (52%) — are more likely to report experiences with utilization management than other Americans who take prescription medicines.”

The report from PhRMA follows a regulatory letter from the Federation of American Hospitals (FAH), a lobbying group for investor-owned hospitals, which said that health insurance plans “have deployed a range of unfair payment practices and abuses to inappropriately deny coverage of emergency services” and employ “many other unfair and abusive plan practices that result in surprise bills for patients and/or burden providers and facilities with underpayments and disputes.”

“Unable To Get My Insulin”

Consumer health insurance complaints with state insurance regulators confirm that health insurance utilization management practices are often a nightmare for patients trying to get the medicines their doctors prescribed, according to files obtained by The Daily Poster.

“I am unable to get my insulin in a timely manner from Kaiser Permanente,” one man in Washington state wrote last year. “I had a prescription originally filled for Tresiba Insulin and then was told to get a prior authorization to get future refills. I had a PA sent over by my doctor and then was denied again for this insulin. I was told it was not on the approved list and to be eligible for this Insulin I had to have at least 4 hypoglycemic incidents within a month. I told Kaiser I had switched from Lantus to Tresiba because I had hypoglycemic incidents in the past, but they stated that since it wasn't under Kaiser they did not care.”

The man demanded an apology from Kaiser's CEO, noting that it "has been one week since I ran out of my long acting insulin and now I am in diabetic ketoacidosis, a serious medical condition. I want a call from a senior executive at Kaiser of Washington promising this will not happen again.”

The man did not get an apology from the CEO — instead, he was forced to accept a Lantus prescription and only received an apology from a Kaiser member relations coordinator "for any delay and frustration he may have experienced."

“Certain prescriptions are listed as available medications, but are noted as requiring prior authorization and subject to medical review," the Washington state insurance commissioner's office wrote. "If Lantus is not working for you, you may reach out to your physician to further discuss the options and have them send the supporting medical records to the insurance company for approval.”

In a separate Washington state complaint about Premera Blue Cross, one woman wrote: “I was prescribed a medication that needed prior authorization. When my provider emailed the prescription to the pharmacy, the pharmacy got a rejection for the medication and was told it needed a prior authorization request, which my provider provided. I emailed Premera three times about this and have spent in excess of 2 hours on hold in conversation with Premera. I got an authorization letter received on 1/27, approving the medication starting 1/20/2020 - 12/31/2020. Because this medication was picked up on 1/19/2020, Premera is refusing to cover it.”

The woman later noted that her pharmacist spoke with Express Scripts, which managed her plan's prescription benefits, and “Express Scripts was able to adjust the date on the prior approval and allowed the prescription to be covered by my plan.” But she added: “I spent hours in multiple phone calls to get this resolved. That is simply unacceptable to the patients insured by Premera or any other insurance company.”

Industries Built On Price-Gouging

To be clear, the drug companies and hospitals complaining about insurers’ abuses aren’t selfless, noble actors: Their industries are similarly built around price-gouging.

A new report from House Democrats found that Eli Lilly, Novo Nordisk, and Sanofi — which together control roughly 90 percent of the insulin market globally — specifically “targeted the United States for price increases.”

“The three insulin companies have engaged in strategies to maintain monopoly pricing and defend against competition from biosimilars,” Democratic lawmakers wrote. “These strategies include manipulating the patent system and the marketing exclusivities granted by the Food and Drug Administration (FDA), pursuing tactics to switch patients to new formulations of their products before losing exclusivity, and engaging in ‘shadow pricing’ — raising prices in lockstep with competitors — which keeps prices high.”

The report concluded that these companies and other drugmakers have “targeted the United States for price increases for many years while maintaining or cutting prices in the rest of the world.” This situation was made possible because Congress barred Medicare from negotiating drug prices in 2003.

Democrats’ Build Back Better reconciliation bill would allow Medicare to negotiate drug prices for the first time and would cap insulin copays at $35. But the provision has big holes and has been significantly watered-down by PhRMA allies in the caucus.

Pressed about Democrats’ conclusions, a PhRMA spokesperson “said the report was misleading and didn't address the role insurers and middlemen in the drug supply chain play in pricing,” according to Politico.

Meanwhile, a Los Angeles Times report last week found that Scripps Memorial Hospital in Encinitas has been using software that automatically marks up the prices of their medical services by as much as 675 percent. The report was based on screenshots from a former operating-room nurse at the hospital, who called the charges “insane.”

“Her screenshots, taken earlier this year, speak for themselves,” the Times wrote. “What they show are price hikes ranging from 575% to 675% being automatically generated by the hospital’s software. The eye-popping increases are so routine, apparently, the software even displays the formula it uses to convert reasonable medical costs to billed amounts that are much, much higher.”

The Times added that the “nurse said she decided to snap photos of the system as she watched stratospheric price hikes being imposed while a patient was still on the operating table.”

Among the charges: The price for sutures was marked up from $19.30 to "$149.58 = $19.30 + ($19.30 x 675%).”

“I started asking questions,” the nurse told the paper. “I was told that if we didn’t mark things up like this, insurance companies wouldn’t give us what we want.”

A Communal Swindle

Drugmakers and hospitals would have you believe that insurers are to blame for the problems in our current health care system, and yes, such insurers certainly are horrible. But these drug companies and hospital corporations want to maintain their own ability to gouge Americans for profit, too — and that’s why they work hand in hand with the health insurance industry to maintain the current system and make sure nothing ever changes.

In 2018, PhRMA helped launch the Partnership for America’s Health Care Future (PAHCF) with executives from America’s Health Insurance Plans (AHIP), a lobbying group for health insurers, and FAH, the group lobbying for investor-owned hospitals. The group’s 2020 tax return shows its board includes AHIP executive vice president David Merritt, FAH president Chip Kahn, and PhRMA senior vice president Anne Esposito. Corporate disclosures show that PAHCF has also received funding from pharmaceutical giant Pfizer.

PAHCF has been used to oppose any and all efforts to reform the health care system, including Medicare for All legislation supported by progressives and a public health insurance option promised by President Joe Biden, as well as proposals to lower the Medicare eligibility age and allow people to buy into Medicare early. A PAHCF affiliate has also campaigned against state-level public option proposals.

The crux of PAHCF’s propaganda campaign has been that having our health care system based around private insurance works fine, and most people are happy with it. One of their key messages has been that changes would be bad for communities of color. They make this claim even though such communities suffer worse health outcomes in the current system — and despite the fact that insurance industry practices “disproportionately impact people of color,” according to PhRMA.

PAHCF has warned that Medicare for All would specifically harm communities of color because moving to a universal, single-payer system would eliminate the need for many of the largely low-paying administrative and medical assistant jobs in the health care sector.

They have also argued that “the public option could worsen health disparities for communities of color,” on the basis that hospitals that “serve communities where racial and ethnic minority patients are overrepresented” would lose money if they get stuck treating extra patients on government plans instead of private health insurance plans that pay them more.

PAHCF has even cited health disparities in the current system as a reason to keep things the way they are: “Black and Hispanic Americans experience worse health outcomes and more barriers to care compared to their white counterparts, meaning service line disruptions or hospital closures in racial and ethnic minority communities could be particularly catastrophic for these populations,” they wrote.

This is a sick, deranged argument. As the PhRMA report makes clear, insurance companies put up these barriers to care and they’re creating worse health outcomes. And drugmakers and hospitals deserve just as much blame, because they’re propping up the current system to protect their own ability to gouge us all, too.


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