This would seem the least of our problems right now, but the pharmaceutical industry has become such a boogeyman that it gets roundly attacked even while racing to provide an indisputable boon to public health.
Bernie’s view that the people running the drug companies are “crooks” betrays his Marxoid belief that profit is a form of theft. Of course, even people who aren’t socialists stuck in amber circa 1930 are great scourges of the industry. Pharma brought much of this on itself with the opioid debacle, which was the product of genuine abuses. Yet these companies routinely create medical miracles for which we all should be grateful and that markedly improve human welfare.
Yes, they make money doing it, but the profit motive is the reason why they exist in the first place.
There’s a reason we introduce more new therapies than any country in the world.
When faced with what’s been called a once-in-generation pathogen, would we rather have a robust commercial drug industry or not? Brilliant, creative people scattered throughout companies and universities working to be the first to a solution or not? Investors looking to back promising research, or not?
If your answer to any of these questions is “no,” you are probably a socialist, a populist firing at the wrong targets, or someone incapable of doing basic cost-benefit calculations.
As Chris Pope of the Manhattan Institute notes, if a new drug—even an expensive one—obviates hospital stays and physician care, it can reduce health care costs over time.
Consider the current crisis. The costs of the “medieval” methods we are using to try to control the coronavirus virus are unimaginably high—shutting down swaths of the economy, throwing millions out of work, disrupting air travel and the free movement of people. Gross domestic product could drop 5 percent or more this quarter.
What would we pay for a vaccine to make this all unnecessary? Even if it were a trillion dollars, the price of the Trump-proposed stimulus package, it would be a bargain, saving untold human suffering and economic dislocation. Even if it required cutting a check directly to the most stereotypical mustache-twirling, profiteering-in-a-crisis, uncaring businessman it would be a great deal.
That said, the price for a vaccine probably won’t be exorbitant. The nightmare stories of ungodly expensive treatments usually involve drugs for rare diseases. In these cases, there is a very small base of people who potentially need the drug. Companies therefore charge higher prices to recoup research costs and make a profit. Also, there are unlikely to be any competitors providing a cheaper alternative.
With the coronavirus, there’s an incredibly vast pool of people who will want the vaccine, meaning it can be priced accordingly. Since so many companies are chasing a vaccine, there will almost certainly be competition, putting further downward pressure on the price.
The overall picture of prescription drugs is more complicated than advertised. Chris Pope writes that prescription drugs account for a lower percentage of overall health spending here than in most other advanced countries, and the per capita cost for hospital services has been rising at a much more rapid clip in recent years than the per capita price of prescription drugs. Once new drugs come off patent, cheaper generic drugs arrive. This is why per capita spending on traditional drugs has been declining.
As for patents, the point of them is, as the Constitution puts it, “to promote the Progress of Science and useful Arts.” They ensure that companies get the benefit of research that is expensive, time consuming and risky. Success is never guaranteed, and failure more common. Even in the best circumstance, after perhaps spending $2 billion or more on the research process, a company may wait 10 years or more for approval from the Food and Drug Administration.
If a company doesn’t have a period of protection for its intellectual property when it can reap the market benefits, much of this research would dry up. And who’s going to step up and fill the gap?
It’s true that the government provides support for basic research through the National Institutes of Health. That is well and good—and an entirely worthy government project—but it’s not the same as bringing a drug to market.
It is a marvel that the National Institute of Allergy and Infectious Diseases is already working with a Cambridge, Mass., company, Moderna, on a vaccine trail. This is a model of public-private cooperation. Anyone who would want to subtract Moderna from the process because it stands to profit from its work is an ideological zealot heedless of public health.
Drug pricing is a complicated matter and there are, to be sure, more things that the government can be doing to foster competition and keep companies from gaming the system. But this crisis brings home the incalculable value of a world-class pharmaceutical sector. We can shelter in place and try to mitigate the harms of this virus, or hope the “crooks” pursuing treatments and a vaccine make the current disruptions in our national life a thing of the past as soon possible.