Big Pharma Can Be Beaten: This Union Proved It

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When Nevada Governor Brian Sandoval sat down at the Culinary Health Center in east Las Vegas on June 15 to sign the nation’s toughest-ever drug pricing law, Bonnie Sedich was thinking of her daughter Mary. Mary had Type 1 diabetes, and she had struggled to afford insulin as its cost rose by over 300 percent in recent years. Sedich thought about the still-unpaid bills for the credit cards that she and her husband maxed out trying to help Mary buy medicine. And she thought about Mary’s last grim months of life, partially paralyzed by a stroke and tortured by other diabetes complications, before dying in November at age 51.

Bonnie Sedich’s grief was still raw when she talked to Nevada legislators earlier this year about the need to rein in the price of insulin, a 95-year-old drug likely manufactured at a cost of a few dollars per vial but sold for as much as $400. For many diabetics, including all Type 1 diabetics like Mary, insulin is necessary for survival. “But what good does it do if you can’t afford it?” Sedich asked the lawmakers.

On the day of the bill signing, Sedich watched the governor talk with health care providers and working people with diabetes. The ceremony’s setting at the health center operated by the Culinary Workers Union of UNITE HERE was no coincidence. Sedich is a former union member, and the union was the driving force behind Nevada’s new law.

As the governor put pen to paper, several of those gathered around him were in tears, including Sedich. “It just seemed that Mary’s suffering had taken on some meaning,” she said later. “I felt encouraged.”

Others are feeling encouraged, too. The Nevada legislation is the most significant victory to date for the movement to hold pharmaceutical corporations accountable for their record-setting profits gathered from the skyrocketing prices on essential medicines. More than two dozen states are reviewing proposed legislation to address the drug pricing crisis. Multiple bills have been filed in Congress, ranging from allowing importation of low-cost medicines from Canada to bypassing the patents on overpriced drugs discovered with taxpayer dollars.

There is enormous public support for drug pricing reform, with national polls showing that 77 percent of Americans consider drug prices to be unreasonable. Strong majorities, including a majority of Republicans, support reform measures. But the populist anger — remember that even Donald Trump said the drug companies are “getting away with murder” — has not yet translated into widespread changes. Nearly all of the legislative efforts to advance drug pricing reform have been blocked or delayed.

However, the Nevada legislation is a sign that the tide may be turning. The new law requires transparency from the players in the secretive world of medicines pricing. If manufacturers raise Nevada prices on insulin and diabetes-treating biguanides, they are required to report their costs of manufacturing and marketing. Pharmacy benefit managers, the middle men in the medicines process, are forced to disclose the rebates they receive from the manufacturers. And pharmaceutical sales representatives, notorious for wooing physicians with gifts and misleading claims about their products, will be compelled to report the details of their interactions with those doctors. Even health care nonprofits that receive pharma industry donations will be required to make that information public.

No one in Nevada or elsewhere is claiming that these measures will alone fix the drug pricing crisis. But they are a historic first step toward doing so, especially since many observers believed that the powerful pharmaceutical lobby would easily block all reform efforts. Last April, the Wall Street brokerage and research firm Bernstein issued a report concluding that state-level drug pricing proposals are “a very modest risk to pharma, if at all.” The industry “is very much on the ball” in opposing reform, Bernstein concluded.

That prediction was partly on target, as the industry was definitely on the ball in Nevada. It hired dozens of lobbyists in the state, launched an aggressive social media campaign and threatened lawsuits to challenge any legislation. Yet the industry was beaten, and advocates across the world have taken note.

How was this victory won, and what lessons can be learned by other patients, activists and lawmakers wanting to build on the Nevada success? Here are the highlights.

Grassroots Organizing Works

No clever slogan, ad campaign, or social media plea will singlehandedly beat Big Pharma, says Bethany Khan, communications director of the Culinary Union. “You have to organize, and you have to organize every day,” she says.

Fortunately, Khan and her colleagues were no strangers to that challenge. With 57,000 members, the Culinary Union is the largest local of UNITE HERE, and has a reputation for being unafraid of a fight. In the 1980s and 1990s, the union led multiple fiercely contested strikes at Las Vegas casinos, including a battle with the Frontier Hotel and Casino that lasted six-plus years, the longest successful hotel strike in history. The union that stands toe-to-toe every day with some of the richest casinos in the country was not fazed by Wall Street analysts concluding that the pharma industry was unbeatable. “If money could buy everything in Nevada, this would not be a blue state,” says Khan.

As the legislative session began, union workers and allies flooded each legislator’s district with door-to-door campaigning and thousands of phone calls supporting the insulin pricing bill. For those who think of labor struggles as focusing only on wages and collective bargaining, it may be surprising that the Culinary Union put its full strength behind a piece of drug pricing legislation. But the union’s Culinary Health Fund provides health insurance for over 140,000 Nevadans who are union members or their dependents. Diabetes care is the fund’s fastest-growing cost, rising over 20 percent in 2016 alone.

So, it was not hard to find Nevadans like Bonnie Sedich who had stories to tell legislators and media about the struggle to afford insulin. The Nevada capital of Carson City is a seven-hour drive from Las Vegas, but that did not stop diabetes patients, family members and advocates from packing a legislature hearing room in April to testify about the bill. Afterwards, they fanned out across the Nevada Legislative Building to buttonhole legislators and talk to the media. Some of the patients who travelled to Carson City had lost legs to diabetes; some had lost homes when they had to choose between paying their mortgage and paying for medicine.

One of the patients who visited the legislature was Keyonna Lawrence. “About six months out of the year, I do not have the (insulin) medicine, because if I can’t afford the medicine, I don’t take it,” she said. “My biggest fear is that my 11-year-old son is going to wake up one morning and come in and say, ‘Mom!’ And Mom is cold as ice.”

A union-led coalition put other Nevadans’ insulin stories on a website and produced a “Stop Price Gouging” video that was viewed over 400,000 times.

The legislation would eventually earn votes from both Democrats and Republicans. A line could be drawn directly between that bipartisan support and the patients’ stories. The day after the diabetes patients made their in-person visits, State Senator Yvanna Cancela, the bill’s sponsor, was sitting on the floor of the Senate. A Republican senator who had previously not been interested in the insulin legislation pulled up a chair next to Cancela. “Tell me about your bill,” the senator said.

Election Support for Progressive Candidates Pays Off

It is an age-old debate among activists: Should resources and time be put solely into issue agendas, or should sympathetic political candidates be supported along with a policy fight? The Nevada experience provides a compelling argument for activist engagement in winnable election contests, since the state’s new insulin law owes its existence to the Culinary Union’s deep dive into electoral politics.

In 2016, the union made the decision to allow 300 of its members to take two-month leaves of absence to engage in grassroots campaigning. Those members talked to tens of thousands of Nevada voters and delivered 54,000 early votes. Not coincidentally, the 2016 election caused Nevada’s State Senate and State Assembly to flip from Republican majorities to Democrat control.

The Culinary Union is one of the most powerful players in Nevada politics, and it is not surprising that labor power led to groundbreaking health legislation. The world’s most comprehensive and successful health systems, including those in the UK and Canada, were enacted in the wake of progressive, labor-led parties coming to power.

Pharma Pushes Back — Hard

The pharmaceutical industry’s breathtaking profits — by some measures the highest of any in the history of modern capitalism — are the byproduct of decades of relentless corporate manipulation of government policies. For starters, the industry’s lobbyists in 1980 successfully pushed through Congress the Bayh-Dole Act, which set the stage for wholesale transfer of the fruits of publicly funded US medicines research into privately held monopolies. What is more, those same lobbyists have convinced the US government to voluntarily decline to negotiate the prices the Medicare system pays for the very medicines that taxpayers helped discover.

The industry’s weapons of choice include political campaign checks, ex-lawmakers installed as industry shills and image-bolstering TV ads . Pharma companies dominate the top of the lists for both campaign contributions and lobbying expenses. So it was hardly a surprise when the advancing insulin-pricing bill caused tiny Carson City, Nevada, to be overrun with nearly 70 lobbyists on the pharma industry payroll. Drug companies began giving generously to the campaigns of Nevada legislative leaders and created a brand new political action committee, the Healthy Nevada PAC.

The industry expressed much of its public opposition through surrogate groups that claimed to have patients’ best interests at heart. Nonprofits that had received funding from PhRMA wrote letters to legislators opposing the bill and others had their names featured in geo-targeted social media and pop-up ads criticizing the legislation. As the days of the 2017 legislative session waned, the dozens of industry lobbyists openly threatened legislators with protracted litigation challenging the law. In fact, a court challenge to the Nevada law is still expected, so the pharma resistance is far from over.

Popular Support Should Beat Pharma Money

Despite all the dollars and influence Big Pharma brought to bear in Nevada, Senator Cancela says the lobby does not intimidate her. “Of course, the drug company lobbyists have a long reach, but when the conversation becomes about what the overwhelming majority of voters want to see happen, pharma should have no chance,” she says.

Cancela knew that there is one thing that lawmakers care more about than campaign donations and lobbyist pressure: their re-election. So, she used some of her campaign funds to commission a poll on the drug-pricing crisis. The plan was to show her colleagues that following the pharma agenda would put their political futures at risk.

The results from Cancela’s poll made that case, and then some. In the weeks before the final votes on the insulin bill, 80 percent of a sampling of Nevadans told David Binder Research that they felt prescription drug costs were too high. A strong majority blamed pharmaceutical companies. Cancela’s poll aimed at the heart of lawmakers’ self-interests, revealing that a plurality of Nevadans said they would be less likely to vote for their legislator if the legislator voted against controlling the price of insulin. If the dissenting legislator was revealed to have taken contributions from pharmaceutical companies, that vote-against number went up to a whopping 71 percent.

“That poll gave voice to the hundreds of thousands of people who could not come to the legislature in person, but who supported the change,” Cancela said. “When the conversation becomes about public support, pharma’s political power disappears.”

The States Show the Way

In addition to the Nevada success, Vermont has passed a law that compels pharma companies to justify price hikes, Maryland has adopted legislation allowing its attorney general to sue generic drugmakers who sharply raise medicines prices, and New York’s new budget includes Medicaid regulations designed to lower the costs the state pays for its drugs. The dozens of other state-level proposals face varying prospects for success, but many are gaining far more traction in statehouses than the federal legislation is in Congress.

This trend is consistent with that of the minimum wage movement, which transitioned over the last decade from a federal focus to localized campaigns that have succeeded in passing dozens of laws raising wages for millions of Americans. The end game for drug pricing reform will require federal-level action, especially stopping the corporate giveaway of federally-funded medicines research and unshackling Medicare’s ability to negotiate drug prices. But an expanding patchwork of state-level laws will embolden activists and put pressure on federal lawmakers to move forward.

Odd-Bedfellow Coalitions Await

Bobbette Bond is the policy director for the trust fund that provides the health benefits for the Culinary Union members and their dependents. “That means I have this great job of figuring out where there are strategic opportunities for decreasing costs or increasing services,” she says. When looking at the cost side, it didn’t take long for Bond’s eyes to focus on prescription drugs. Medicines recently climbed over hospitalization bills to become the fund’s biggest expense.

The union knew it was not alone. Its Culinary Health Fund is a member of the Nevada Health Services Coalition, made up of 21 organizations that are similarly self-insured, including huge Nevada gaming corporations like Caesar’s and the Tropicana. After the union urged them to calculate their own spiraling diabetes and prescription drug costs, the companies came on board in support of the insulin legislation. They brought along political clout and a pro-business perspective that helped woo Republican legislators and the Republican governor.

With the average employer’s health care costs increasing far faster than the rate of inflation, and drug prices a top driver of those increases, Nevada advocates say this type of labor-business alliance should be a viable strategy in every state. In fact, similar drug pricing coalitions are already beginning to form. At the national level, the Campaign for Sustainable Drug Pricing is made up of a diverse group that includes insurance companies, corporations like Walmart, and the AARP. Richard Master, CEO of the Pennsylvania frame manufacturing company MCS Industries, has been pushing for fellow business owners to join his advocacy for controlling healthcare costs, including drug pricing regulations.

One Bite of a Larger Project

Compared to most drug pricing reforms, Nevada’s legislation has an unusually narrow focus on a single disease and drug type. But that does not mean that a diabetes-focused law is insignificant. One in three US adults are predicted to develop diabetes in their lifetimes, and Nevada’s diabetes-related costs exceed $2 billion per year.

With that kind of reach and a more specific topic to discuss, advocates found it was easy to make connections when talking with legislators and their constituents. “Almost every lawmaker we talked to shared that they had a family member with diabetes or that they were at least prediabetic themselves,” Cancela says.

Which meant that they knew a bit about the skyrocketing insulin costs in the US, which have been called “price-gouging, plain and simple” by a US senator and a “racket” by an endocrinologist writing in the New York Times. A pending class-action lawsuit alleges unlawful collusion among the three manufacturers of insulin — Eli Lilly, Sanofi Aventis and Novo Nordisk.

The Nevada law will not fix these problems overnight. The most ambitious portions of the original proposal, including a de facto price cap of mandatory rebates for prices that exceed inflation, were removed in the course of the legislative sausage-making. But Governor Sandoval said he would be open to revisiting the pricing problem, and advocates plan to take him up on that.

In the meantime, mandatory disclosures of marketing and manufacturing costs begin the long-overdue process of regulating an industry that has managed to enjoy enormous public funding with no companion oversight of its pricing.

“Once we get the insulin pricing data over the next two years, then we can start to ask, ‘Why shouldn’t we do this with hepatitis C drugs, and why not with all drugs?'” Cancela says.

Cancela is not the only one who is feeling optimistic about the future of drug pricing regulation. As the signing ceremony for the insulin pricing bill began, Bonnie Sedich shared her view that the campaign had made a big impact on Nevada lawmakers, including the state’s chief executive. “I think the governor finally got to see first-hand how people need help,” she said.

But it turned out that Sandoval did not need outside stories to educate him about diabetes. At the ceremony, he revealed for the first time publicly that his grandfather had struggled with the disease. “This was my mom’s dad, and he’s somebody that I saw suffer because of that,” Sandoval said.

Nevada’s new law does not include all that the Culinary Union and Senator Cancela wanted. And they expect the industry to file lawsuits to block what did pass, and to resist honest disclosure at every turn. But Cancela points to how the impact of the drug pricing crisis is so broad that it includes a personal reach up to and including the governor of her state.

That gives her confidence that the cause will ultimately prevail. “The stories are heartbreaking, and the numbers for changing this make sense,” she says. “Doing nothing is no longer an option.”