Katie Porter’s most recent takedown of a pharmaceutical corporate executive is masterful and should not be missed. I hope it goes viral, if it hasn’t already.
Some dialogue:
Porter: Mr. Gonzalez, how much did you spend, did AbbVie spent on litigation and settlements from 2013 to 2018?
Gonzalez: I don’t have that number. I can be happy to give it to you.
Porter: OK, $1.6 billion — $2.45 billion on R&D — $1.6 billion in litigation and settlements. What about marketing and advertising? How much did AbbVie spend on that?
Gonzalez: Well, marketing and advertising, we spend about $4 billion dollars a year.
Porter: Yep, $4.71 billion. How about executive compensation, 2013 to 2018?
Gonzalez: It’s probably on average about $60 million dollars a year.
Porter: Try $334 [million] on for size. Now, how much did AbbVie spend on stock buybacks… and dividends to enrich your shareholders from 2013 to 2018?
Gonzalez: Well, stock buybacks, if you actually look at just pure stock buybacks, it would be about $13 billion dollars.
Porter: Stock buybacks and dividends is the question, sir.
It’s worth reading the rest of the conversation, or better yet, watching the 3-minute video. She’s amazing.
I’m over her whiteboard act and ‘owning’ business people who don’t meet her standards. It makes her damn cool on social media, but maybe she could remember she’s in congress and can always write the damn bill.
I thought the stock buybacks for 13 billion, exclusive of dividends, v. 2.45 billion for R&D, was interesting. I didn’t quote the entire exchange due to rules here to not quote an entire article. It’s a short article. If you don’t like the source, The Hill also published a piece on their verbal exchange.
I think Katie Porter’s talent is to slam through the obfuscation constantly promulgated by big corporations about why we have to pay such high prices for drugs/health care, among other things, in this country. She demonstrates in clear and simple ways why it’s complete BS. I think that’s important. At least half the battle in Congress is to communicate why something must be changed.
The Rolling Stone article is paywalled (I must have reached my free limit) so while I love Porter’s style, I can’t get any context. Can you (briefly) fight my ignorance: What’s being debated here, and what changes might it help bring about?
Katie broke down the areas of spending for a Pharma company, showing that the largest proportion of their spending was stock buy-backs, and not R&D, attacking the claim that the reason drug prices are so high is not the amount of R&D expense.
AbbVie is raising the price on Humira (to $77,000 for a year’s supply… which damn…). Their justification was that it was necessary “to pay for research and development”.
The hearing in question was about a request that the FTC investigate AbbVie’s price increase. The particular allegations are that AbbVie bought out potential competitors (entered patent agreements) to allow it to jack up the price. These competitors do sell similar drugs to Humira in Europe. For a comparison, Humira costs about $14k/year in England (cite: AbbVie braces for impact of Humira biosimilars in Europe | Pharmaphorum)
Porter’s discussion is more about pointing out the hypocrisy of stifling competition to allow you to raise prices, then justifying the price hike with claims of R&D spending when in reality you spend far more on advertising than you do R&D.
My thanks to @mtnmatt and @Jas09 for explaining more thoroughly. I’m preparing a birthday picnic for a friend tomorrow and am in and out of the forum today. You both explained it perfectly.
@Akaj, I didn’t realize Rolling Stone paywalled after a certain number of articles. It’s hard to find cites without paywalls these days. My apologies.
If by “‘owning’ people who don’t meet her standards”, you mean demanding that people invited or subpoenaed to testify before Congress answer direct and straightforward questions, you should only be “over” this if you don’t feel that the American public deserves to know what government officials and corporations are actually doing. This isn’t about being “damn cool on social media” but rather doing the job that every elected representative should be doing in looking out for the interests of all of their constituents instead of just servicing corporate interests in search of easy campaign funds. As demonstrated above, Porter has sponsored or co-sponsored a vast array of bills but also uses her authority as a Representative and skill as a lawyer to assure that government officials are using their authority to serve the American people, such as forcing then-CDC Director Robert Redfield to commit to providing no-cost SARS-CoV-2 to the public within the authority and funding he already had and was failing to exercise:
To accuse Porter of grandstanding just for the ‘likes’ is at the very least disingenuous and really flies in the face of the fact that she is one of few Congresspeople openly calling out corporations for open corruption and gross profiteering at the expense of public health and fiscal security. Frankly, we could use a few hundred Katie Porters in Congress, doing their actual jobs instead of hassling fellow legislators over petty partisan disagreements, denying the corruption of their own party, and sucking at the teat of corporate and banking interests.
As for “whiteboarding” the CEO of AbbVie, Porter is illustrating the fundamental dishonesty in the premise that companies should be unregulated and unsupervised to foster innovation with efficieny. In fact, from her presentation and by the witness’s admission, AbbVie is primarily invested in ‘advertising’ their products and engaging in stock buybacks and other market manipulations to maximize profits at the expense of massively overcharging customers who are dependent on those products for their health. Development and testing of pharmaceutical products is actually a tiny fraction of AbbVie’s operating costs; essentially, it is a side business that offers the fig leaf that the company is engaged in some legitimate work among gross profiteering. This is just another piece of factual evidence why ‘for-profit’ health care is not a system that serves public health or the welfare of the nation regardless of whatever economic ideology you advocate.
My thanks to all of you, as well. And no problem on the cite – I think it’s also the first time I’ve been blocked from a RS article.
I sort of have a dog in this fight, as my son takes Humira for his Crohn’s – and we pay virtually nothing. We’re OK financially, but $77,000 a year would obviously cripple us. I have good insurance through my work but the Humira doesn’t even go against our deductible. I honestly have no idea who pays for it, if anyone.
Your insurance plan doubtless has some agreement with AbbVie to provide Humira at some modest fraction of the listed price, which is great for people who have access to a strong plan able of negotiating those kinds of “discounts” and disastrous for those with inadequate plans or who pay out of pocket. This is a great system for medical service and pharmaceutical suppliers, and also for medical insurance companies who are the gatekeepers to such discounts, none of which want any degree of transparency in complex pricing agreements which force “medical consumers”, i.e. patients, to participate in these plans without any effective options or even an ability to act as informed consumers in a hypothetical open market system where they can make rational decisions about health care.
Porter, and a few others like her, are shedding light on what actually drives pharmaceutical and medical costs (i.e. unvarnished profiteering at the expense of the health and lives of ordinary people), and the flagrant lie of the “billions” spent on research and development that mandate the exorbitant list prices for crucial treatments and medications that can end up bankrupting families or leaving them without effective treatments in the wealthiest nation of the world. Porter, like her mentor and former professor Elizabeth Warren, actually has first hand experience in the hardships of fiscal insolvency and living paycheck-to-paycheck, and a genuine empathy for her constituents that people like Mitch McConnell and Ted Cruz utterly lack, as well as a resolve to get clear answers to straightforward questions even if it makes her come off as a “harpy” or “bitch” (both terms explicitly applied to her by conservative media pundits). Katie Porter is an exemplar of what an elected official should aspire to be.
We all pay for it, one way or another. And that’s why it’s important that the public have transparency into the practices of these companies, as well as understand how they arrive at the amounts they charge.
This is one pharmaceutical company. The others are at least as bad, and some are even worse. What the Sackler family did with Purdue Pharma and their role in the opioid plague in this country is criminal. So they fixed the laws through their lobbying of Congress so they won’t be held accountable. And this doesn’t even begin to scratch the surface of what health insurance companies are doing to us.
@Stranger_On_A_Train is 100% correct. Health care for profit is not a system that serves public health or the welfare of the nation. Katie Porter’s work effectively communicates our abomination of a health care system to the public at large in a way they can understand.
Oh, somebody pays. in 2017 the average payments from all sources (insurance companies, governmental plans, and patients) was $4338/mo. A Medicare patient can expect to pay maybe $5k a year out of pocket for it. Cites: Does Medicare Cover Humira?
Using substitutions for Humira was a huge win for the UK’s NHS a few years ago. They saved hundreds of millions by moving patients to substitutes.
The main thrust of Porter’s argument is that if companies want to justify high prices because it funds R&D, great, spend the money on R&D. Don’t spend it on stock buybacks to jack up your stock price, dividends to reward investors, and massive advertising budgets (which most of the developed world doesn’t even allow).
The way they work it is that people go through their Rx insurance first, and then AbbVie subsidizes the remainder, with people paying a $5 or so copay.
I believe their annual subsidy is limited to about $20K per year, so I’m not sure how that angle works - possibly the remainder after insurance negotiations and payments is less than $20K. (I know someone who recently started taking it and I was involved in dealing with AbbVie on this, but that person has not been taking it long enough to have hit $20K in subsidies yet, so I’m not as sure as to how that will play out.)
I’m curious as to Porter’s assertion that AbbVie spent $2.45B on R&D from 2013-2018. According to AbbVie’s 10-K form, they spent $10.3B on R&D in 2018 alone (see page 60).
