Pharmaceutical companies can push up prices dramatically because they are allowed to. Lets change that
In the classic arcade game whack-a-mole, automated moles pop up faster and faster, while the increasingly overwhelmed player attempts to beat them back down with a cushioned mallet. The political version of that game looks a lot like the recent controversy over the price of EpiPens.
Since buying up the exclusive rights to the EpiPen in 2007, the pharmaceutical company Mylan has increased the price of this life-saving medication more than 400%. The move sparked outrage, with most patients and politicians turning their ire on the easiest target: the company itself. Easy but wrong.
For starters, brand damage can be countered with savvy public relations without helping anyone. A few days ago, Mylan promised to help families afford its sky-high prices by expanding a coupon program. But it merely creates another bureaucratic hoop for sick people, and some insurers may not accept it. Many families could see no savings at all.
More importantly: the moles come faster than we can whack them down. Today we are upset about EpiPens. Yesterday, it was pharma bro Martin Shkreli, who hiked the price of a life-saving HIV/Aids medicine from $13.50 to $750. On any given day, it could be Gilead Pharmaceuticals spiking the price of Hepatitis C medication while shifting operations offshore to reduce taxes, or the cabal of companies raising prices on insulin in suspicious tandem.
Almost every case of outrage over pharmaceutical prices traces back to a company that has exclusive rights over a medication. We should blame drug monopolies for skyrocketing prices, not evil CEOs.
It may be because of patent law, in the case of Gileads hold on Hep C medication. Or the Food and Drug Administration blocking competitors, in the case of Mylan and EpiPens. We have created a system that allows these companies few or no competitors, but we are periodically shocked and publicly shame them when we do so. It almost seems a little unfair.
Instead of playing whack-a-mole, we need to break the monopolies themselves.
Many companies have effectively outsourced their R&D to federally funded academic research. Under existing law, federal funding of R&D requires companies to offer the medicine on reasonable terms. If they do not, we can demand generic versions for federal programs like VA hospitals, and pay a royalty in return. Or, we can simply break the patent for everyone.
In fact, we may not be limited to publicly funded pharmaceuticals. The federal government technically has the power to suspend a patent altogether. In 2003, the Bush administration threatened the maker of anthrax medicine Cipro with exactly that power.
Moving forward, all new patents could include far-stricter cost protections that link prices to median income. Or, if you prefer a more flexible system, you could incentivize innovation with hefty cash prizes, but place the resulting drugs in the public domain.
Instead, today, companies take advantage of taxpayers funding $32bn of research and development each year. Consider that the precursor to the EpiPen was the ComboPen, a product developed with public funds to protect our armed forces. When companies do invest their own money, it is often in drugs that generate steady long-term profits (like fighting baldness), rather than one which would cure a deadly disease but only be needed for two weeks.
Protecting pharma monopolies generates a poor return on public investment, while simultaneously spurring research into low-priority maladies. Labeling pharma execs callous or evil may be satisfying and even occasionally correct but it disguises the true concern. Going after companies one by one will get us nowhere. It is a pitiful strategy for lowering the price of life-saving medication.
Read more: https://www.theguardian.com/commentisfree/2016/aug/29/epipen-price-drug-monopolies-mylan