By almost any measure, the drug companies are the most profitable in the world. The “back up the truck” compensation paid to their executives reflect that. They are among the world’s largest advertisers and political donors as well. They hide behind white lab coats. They parade around under the banner of curing diseases for the benefit of all mankind. They conveniently ignore how much of their research is underwritten by Americans through their donations and taxes.
They then charge those same Americans multiples more than they charge people in the rest of the industrialized world.
Drug companies only pretend to be strong proponents of free market capitalism. There really is no free market for prescription drugs in the United States. Free markets require price transparency and real competition, which they thwart at every turn. We are left with an ugly, expensive strain of crony capitalism. Products that are critical for life itself are meted out by patent-protected monopolies. Unregulated monopolies inevitably become inefficient and grossly expensive.
Drug Companies abuse the patent process by filing new patents for even minuscule changes to their original compound. As AstraZeneka did when they used the same active ingredient in Prilosec to produce Nexium. Or they dramatically raise prices after they get new patents for modifying the way a drug is produced, as they’ve done with insulin. Contrary to popular belief, Eli Lilly did not invent the process for purifying insulin. They have, however, profited enormously over the last century. Since they began producing insulin synthetically (with new patents of course) they have nearly tripled the price…to Americans. This has driven more diabetics to go to Canada, where it sells for a fraction of the price.
My core premise is not so much to say shame on the drug companies. Rather it is to say shame on us. We the People, through our elected representatives, have allowed this system to morph and metastasize into the expensive mess we have today.
It is tragic for those Americans who fall through the cracks. Those who do not have gold plated health insurance plans, including generous drug coverage. Due to the prohibitive costs, those insurance plans are becoming rare. Large co-pays and deductibles are the order of the day. So, more and more Americans are experiencing sticker shock as they struggle to pay for the drugs that they and their families desperately need.
President Obama promised to do something about this. He didn’t.
Enter a populist president who really believes in his America First agenda. He owes no allegiance to the all-powerful PhARMA. Even though he appointed the former CEO of Eli Lilly (who’s heart may or may not be in this fight) to head HHS, President Trump has relentlessly pushed this issue on several fronts. Much like his trade battle with China, he knows Americans are being taken to the cleaners and he is not going to stand for it!
Many of our countrymen see only the co-pay and don’t realize just how expensive these drugs really are. So President Trump authorized a plan that would have produced some price transparency. His effort to require suggested retail prices in drug advertising was predictably challenged and blocked by PhARMA in a federal court.
Trump persisted. He recently announced that by executive order, he would allow Americans to start buying Rx drugs from Canada. On insulin alone this could save Americans and their insurance carriers billions. When fully implemented, the savings for healthcare could easily top an eye-popping $50 billion every year!
The same people who become animated over free trade change sides when it comes to prescription drugs. They strongly support importing cheap knockoffs from Communist China. But, free trade must not extend to Rx drugs from Canada. God forbid! Canada has socialized medicine. In truth, the Canadians may be a lot smarter negotiators than we are. They do their homework. They research what it actually costs to develop and test a new drug. They then determine prices that are fair to both the companies and Canadians. It’s not all that arbitrary and it is still quite profitable.
Once again, President Trump’s instincts are spot on. He must press this fight. His persistence will pay big dividends for all Americans.
Gil Gutknecht served six terms each in the Minnesota and the U.S. House of Representatives. He writes about healthcare and political issues of the day.