The Solution to High Drug Prices
by John Lawrence, January 1, 2020
The U.S. Department of Health and Human Services (HHS) protects the health of all Americans and provides essential human services so why not have them develop, control and sell needed pharmaceuticals to the American public doing away with the private pharmaceutical corporations which have been gouging the American public and raising drug prices by ungodly percentages? What good is Medicare for All if Medicare has to buy drugs from private corporations?
Trump’s original spending proposal for fiscal year 2019, released last month, included major cuts to not just to the National Institute of Health (NIH), but the National Science Foundation as well. It is those two publicly funded entities — not Big Pharma — that support the bulk of the country’s basic research into diseases and pathways to new treatments.
That’s why the cuts were especially unwelcome in the executive suites of drug and biotech companies. Their business models depend on Washington subsidizing expensive, high-risk basic research, mostly through the vast laboratory network funded by the NIH.
Since the National Institute of Health does the research to develop drugs and not the pharmaceutical corporations themselves, why does the American public have to buy drugs from Big Pharma? Why instead can't we buy the drugs directly from HHS or NIH? If we want to cut out the middle man and bring drug prices down, let's have a public option for buying drugs.
But the NIH doesn’t get to use the profits from these drugs to fund more research, the way it might under a model based on developing needed drugs and curing the sick, as opposed to serving Wall Street. Instead, publicly funded labs conduct years of basic research to get to a breakthrough, which is then snatched up, tweaked, and patented (privatized) by companies who turn around and reap billions with 1,000-times-cost mark-ups on drugs developed with taxpayer money.
Those companies then spend the profits on executive bonuses and share buybacks, and lavish mass marketing campaigns to increase sales of amphetamines, benzos, opioids, and dick pills.
So Medicare for All? How about public sale of drugs developed by publicly funded research? Why is the government being used as Big Pharma's research and development branch with all the ridiculous profits going to private corporations?
The LA Times reported:
Since the 1930s, the National Institutes of Health has invested close to $900 billion in the basic and applied research that formed both the pharmaceutical and biotechnology sectors, with private companies only getting seriously into the biotech game in the 1980s.
Big Pharma, while of course contributing to innovation, has increasingly decommitted itself from the high-risk side of research and development, often letting small biotech companies and the NIH do most of the hard work. Indeed, roughly 75% of so-called new molecular entities with priority rating (the most innovative drugs) trace their existence to NIH funding, while companies spend more on “me too” drugs (slight variations of existing ones.)
But if Big Pharma is not committed to research, what is it doing? First, it is well known that Big Pharma spends more on marketing than on R&D. Less well known is how much it also spends on making its shareholders rich. Pharmaceutical companies, which have become increasingly “financialized,” distribute profits to shareholders through dividends and share buybacks designed to boost stock prices and executive pay.
Take Pfizer. Economist William Lazonick has shown that from 2003 to 2012, it spent $59 billion on share buybacks and $63 billion on dividend payouts — for a total payout to shareholders of 146% of net income. All the while, Pfizer benefited immensely from U.S. government spending on life sciences research and drug development.
Why aren't the Democrats talking about this? The profits should accrue to the American people not to Big Pharma which won't even market a drug which isn't profitable. So drugs which cure an illness with one dose will not even be developed or marketed. They want a profitable drug which must be taken every day for life. The US is so devoted to capitalism that it wants the profits from government research to go to private corporations. The American people are being hoodwinked. If the government sold the drugs developed with taxpayer money to the American public at a reasonable price, that would be socialism. Sorry, if you'd rather be taken.
