Nominating Alexander Azar to run Health and Human Services is like pinning a sheriff’s badge on Billy the Kid. For all his polish and small-town charm, when it comes to pharmaceutical predation, the mild-mannered Azar puts blowhard “pharma bros” like Martin Shkreli to shame.
Shkreli is the pharmaceutical exec people love to hate. That’s understandable. He sought out rights to drugs for rare diseases so he could extort outrageous prices from those whose lives depended on these treatments.
Shkreli became wealthy through his shameful strategy for extortion, but was convicted of defrauding investors in August. His smug narcissism and openly corrupt bullying made him an easy target, and a poster boy for pharmaceutical industry greed. The guy’s face tells the whole story. He even reportedly paid $2 million for the only copy of a Wu-Tang Clan album just so that the group’s millions of fans could never hear it.
Photos of Azar, on the hand, usually display a warm and open smile. “Trust me,” it seems to say. This smalltown graduate of Dartmouth and Yale, who clerked for Supreme Court Justice Antonin Scalia, doesn’t look or sound like a bare-knuckled capitalist. He might even make a fine dinner companion, capable of navigating both idle chit-chat and philosophical reflection with ease. He almost certainly orders the right wine, knows which fork to use, and never ever commits a faux pas over dessert and coffee.
He was a lobbyist, after all.
But when it comes to public harm, Azar puts Shkreli to shame. As horrible as Shkreli’s misdeeds were, some will dismiss them as the rogue acts of a bit player. Azar, on the other hand, is the ultimate pharmaceutical industry insider: he has gone through the revolving door from government to lobbying several times to ascend to the helm of pharmaceutical giant Lilly USA.
Azar’s face is the industry’s face, not just that of one corrupt fraudster. And his shame is the industry’s shame. And now the date has been set for his Senate nomination hearing: November 29.
Bad company
Azar is the son of an opthamologist, and grandson of an immigrant from Lebanon. He ascended to partnership at a white-shoe DC law firm after working for Independent Counsel Kenneth W. Starr on the Whitewater investigation of President Bill Clinton. He then became General Counsel of HHS under President George W. Bush, where he supervised the agency’s $1 trillion operations.
In 2007, he went directly from government service to become the top lobbyist for Lilly, where he could mine his government contacts for the Indianapolis-based drug manufacturer.
Lilly certainly needed friends in Washington at the time. As the Corporate Research Project’s Phillip Mattera reports, Lilly has paid more than a billion dollars in criminal fines and settlements to the federal government and the states, as well as hundreds of millions to settle private lawsuits.
For decades, Eli Lilly has repeatedly been accused of concealing dangerous and even deadly side effects of some drugs and illegally marketing others for unapproved purposes.
In a foreshadowing of today’s opioid crisis, Lilly’s Darvon proved to be seriously addictive, and was eventually pulled from the market. As the New York Times reported in 1983, Lilly knew of at least 29 deaths in Europe caused by its arthritis medication Oraflex before it was approved for use in the United States. But it did not report those fatalities because, it claimed, “federal regulations did not require reporting of foreign deaths.” Lilly eventually pleaded guilty to criminal charges in that case. its former chief medical officer pleaded no contest.
Lilly was also compelled to pay $1.42 billion to settle a raft of lawsuits over misleading marketing of the anti-psychotic drug Zyprexa as an anti-dementia drug, a use for which it was not approved. This happened less than a month after it agreed to pay $62 million to settle similar charges regarding its marketing of the medication for pediatric uses. It was apparently equally willing to prey on the young and the elderly.
Under par
A Lilly sales rep even once placed golf bets with doctors to put patients on Zyprexa, according to documentation in a South Carolina suit. “I got four pars out of nine holes,” the Lilly rep wrote. “I said I wanted my four new patients.”
Lilly’s greatest marketing triumph may have come with Prozac, the antidepressant that arrived with a massive social impact and the sheen of proven science regarding serotonin, only years later was it revealed that that pharmacological effects of these drugs were “clinically negligible.”
2007, the year Azar joined Lilly, was the same year the drug manufacturer was accused of misleading consumers about its canine version of Prozac. It looks like the company was willing to overhype a cure for depressed dogs, too.
Deadly greed
Did Azar help Lilly clean up its act, of just sweep its misdeeds under the carpet?
Azar became the head of Lilly’s U.S. division in 2012, and under his leadership – if “leadership” is the right word – the company stands accused of illegally conspiring with other manufacturers of insulin to keep prices high, a practice that reportedly began in 2002 and continued at least until 2013.
As the New York Times reports, prices for insulin have risen in “near lock step” for years, without any apparent increase in costs. The consumer group Patients for Affordable Drugs (P4AD) said in a statement that “Eli Lilly is one-third of an insulin cartel that has driven up prices by more than 300 percent.” A major class action suit accuses the three companies of racketeering, and probes of insulin pricing by attorneys general in multiple states remain underway.
And this isn’t just a case of financial fraud or malfeasance. Lives are stake. Websites like this one offer advice to desperate diabetics struggling to stay alive in the face of sky-high insulin costs. Sometimes diabetics are forced to choose: insulin or food.
As the Times reports, one lawsuit recounted horror stories of diabetics who can’t afford up to $900 per month for insulin and have instead injected expired insulin, or starved themselves in an attempt to control their blood sugar levels. The lawsuit said that other patients allowed themselves to develop a potentially fatal condition in order to obtain insulin in the hospital emergency room.
Lilly has also been accused of making billions by avoiding its tax responsibilities through offshore profits. Lilly reportedly had $21 billion parked offshore in 2013. Lilly reportedly paid an effective U.S. corporate income tax rate of only 14.8 percent from 2008 to 2012. Like other drug manufacturers, it has also been accused of dodging taxes in Australia and Lithuania.
Azar’s phony claims
Donald Trump has accused drug companies of “getting away with murder” – an assertion that is, sadly, more than a metaphor – and promises that Azar will be a “star” in reducing drug costs, despite his track record leading a pharma industry giant that has been sanctioned for its price-gouging practcies.
How likely is that?
Not very. Azar is a right-wing ideologue with close ties to Vice President and longtime corporate minion Mike Pence. His public comments about drug prices have blended misdirection and bullshit in roughly equal measure.
“The issue shouldn’t be just to focus on drug prices,”Azar said on the Fox Business show. “The issue is what are people paying when they go to the pharmacy to get their drugs.”
Actually, it’s both. Insurance companies and pharmacy benefit managers have sometimes conspired to overcharge customers for medications, as David Dayen reported last March. But Azar’s line is standard drug-company spin. Big Pharma wants Americans to think about the prices they see when they fill prescriptions. That’s why they often offer programs that waive copayments for certain high-priced medications.
But the costs we don’t see are just as important. Overpriced medications are taxing the entire health care economy, and Americans pay for them in a number of less visible ways: in higher insurance premiums, less covered services, and higher copays and deductibles. Azar wants us to forget about those costs, even as the insurance companies pocket undeserved billions.
The high cost of low innovation
Azar also spewed standard-issue Big Pharma doubletalk in 2014 when he said, “The narrow focus of costs of medicine to the exclusion of innovation would be self-defeating in the long run.”
Drug companies love to claim that we need to pay exorbitant drug prices because research and innovation are so expensive. But a recent study of new cancer drugs in the Journal of the American Medical Association showed that drug companies have been wildly exaggerating those costs and enjoying huge margins on new drugs.
Nor does the cost of research and development explain Eli Lilly’s excessive charges for insulin, an “innovation” which first came to market in 1922.
Azar also said this last year, at a panel hosted by the right-wing Manhattan Institute:
“When the government gets involved it is more likely than not to create perverse incentives and unintended consequences than when the market players can work together to figure that out.”
This claim has been disproven by every other developed country in the Western world, where government-directed health insurance is the norm and drug costs are substantially lower.
The player
Azar is a catastrophically bad choice for the government’s top health care job. It’s true that he never bought a Wu-Tang Clan album just so no one besides him could ever hear it. But then again, we now know the album Martin Shkreli bought may not have been the real thing after all. The would-be player may have been played.
Nobody’s played Alexander Azar. Thus far, he’s played the system with cold-eyed ease on a scale Shkreli could only dream of, regardless of the financial or human costs.
And now, unless his nomination is blocked, he’s about to be handed the keys to our nation’s health.
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