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What's Going on at 538?

Socialist Gas

The opinions expressed by columnists are their own and do not necessarily represent the views of
AP Photo/Toby Talbot, File

Our friend Grover Norquist at Americans for Tax Reform is making a huge radio buy, including spots on Rush Limbaugh. 

The latest version of the ad features President Trump loudly proclaiming that the “United States will never be a socialist country.” It then asks why we would ever import socialized medicines from countries that have socialized medicine? Drugs that can be purchased in those socialist countries (like Canada) for a fraction of what Americans are forced to pay. Apparently Grover has no problem with importing hundreds of billions of dollars worth of knock-off products from Communist China. 


One has to wonder who is really paying for those ads? It might seem a bit self-serving and less credible if the ads were paid for directly by…say…Big Pharma. 

There are few business associations that have less credibility than PhARMA, the association that represents the big pharmaceutical companies. They engage daily in deceit and deception. They mislead consumers and policy makers about the amount their members actually spend on research. They would have us believe that research and development consume the lion’s share of their oversized profits. When it was discovered that they actually spend more on advertising and marketing than they do on research, they mumbled and changed the subject. 

As you watch cable or network news tonight, just count the number of ads that tout the latest treatments for everything from psoriasis to lung cancer. To make it easier, just count the number of times you hear, “Ask your Doctor.” You will also note that they frequently feature researchers in white coats. They usually include disclaimers that their drug may cause drowsiness, constipation or even in rare circumstances, death. They never disclose the actual suggested retail price of their products or that their use may drain your bank account. 


That might cause uncontrollable rage!

PhARMA perpetuates the myth that we have a free market for Rx drugs here in the United States. There is nothing free about our drug market. Once a drug company receives a patent for a compound, they have a monopoly. Monopolies don’t compete. Monopolies concentrate on maximizing profits. Especially if they are selling things that are necessities, in many cases just to remain alive. Not surprisingly, even in cases where two companies have similar drugs, they don’t compete on price. They employ what is euphemistically called tandem pricing. They raise prices in tandem. There is a war raging right now between competing treatments for psoriasis. But the war is being waged on the airwaves, not on pricing. 

Drug companies do spend money on research and on trials to satisfy the FDA that the treatment is both safe and effective. They take risks and should be rewarded for those risks. Many other industries invest heavily in research and take big risks. Computer chip companies, for example. It costs a lot of money to develop the next generation of chips. But, chip companies can’t sell their products to German customers for less than half of what they sell them to Americans. If they did, American customers would simply buy their chips from German suppliers. That’s how free markets work. 


But, the pharmaceutical companies got the federal government to grant them protections against reimporting their products. Protections that no other industry enjoys. So, American consumers have no protection from their predatory pricing. We are just ducks in a barrel. 

Ely Lily recently announced they would introduce a generic version of their Humalog Insulin. Insulin is a lifesaving product that was first commercialized over 100 years ago. The new generic version will sell here for about $137 per vial, less than half the price of their branded Insulin. They neglected to mention that the same vial can be purchased in Germany for $55. 

Try to think of other examples of where we allow monopolies to charge whatever price they want, especially for things essential to life. We certainly don’t let the gas and electric utilities to charge whatever they want. Imagine the revolt if natural gas rates were three times higher in one state than the one next door. The leaders of the first state profess to believe in free markets as they accuse their neighbor of selling socialized gas. No amount of clever advertising would quell the angry constituents. 

It is only a matter of time before We the People reject this socialist gas nonsense and demand that these rapacious monopolies be put on a shorter leash. For many afflicted Americans, that day cannot come too soon. 


Gil Gutknecht served six terms in the U.S. House from Minnesota. This piece contains excerpts from his forthcoming book, PhARMing the USA, How the drug companies milk America.

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