Why Drug Prices Are Out of Control, And What We Can Do About It
Jamie Love of Knowledge Ecology International told the Real News that our system does little to curb outrageous drug prices, and it’s not because there aren’t good alternatives
Well, it used to–it used to be a lot more journalism around these various scandals. Certainly the ’80s and the ’90s you’d be, you saw more investigative work on these kind of corporate malfeasance stories, or drug pricing scandals and things like that.
I think one thing that’s changed now is a lot of people are insured. And when there’s a lot of people are insured there may be a problem in the price of the drug, but they may not experience it themselves. So if a drug goes from $13 to $750 a pill, or if a treatment cost $84,000 or $184,000, what the patient’s really looking at is what, what their co-payment is. And as long as they have insurance and the insurance covers it, they don’t really complain too much. What they really want to know is are they in or out of the system. It’s pretty painful if you’re out. But if you’re in then you just feel like, okay, it’s not my problem anymore.
Collectively it’s evryone’s problem. I mean, the reason why we pay so much for insurance is because it’s just become, prices have become out of control.
Eventually you begin to see sort of the predictable backlash. Which is to say, it’s harder and harder to get certain products covered by insurance, the co-payments are higher, and the–you can’t experiment with cancer drugs on patients as easily because the insurance company won’t allow you to try a drug that doesn’t have a strong approval even though you might benefit from it.
If you think we have about a trillion dollars of a drug market, less than 8 percent of that is reinvested by the private sector back into R&D for new drugs. Of that 8 percent that’s reinvested less than half of that is invested in products that have any kind of medical benefits that anybody cares about. There’s a certain amount of money that’s just disguised bribes to doctors. And consulting fees on clinical trials that is really just about getting favor with doctors that prescribe your products. All of that’s good from a commercial point of view but it doesn’t really do anything for medical outcomes.
One sort of interpretation is that the White House figures that we’re, Americans, we’re the sellers of drugs. We have companies like Pfizer and Merck and Johnson and Johnson. So we should push for high prices everywhere because we would benefit more than it would hurt us. The pharmaceutical industry is not the whole U.S. economy. And yet for the trade agreement they’re almost the whole enchilada. I mean, like, basically the biggest demand the United States has in the trade agreement is to give big pharma what it wants. That’s coming at the expense of things for auto workers and for other sectors of the economy that are going to be disadvantaged by the trade agreement.
If you look at the CEOs of companies, old school would be CEOs that knew something about the industry itself, that worked in, you know, as an engineer or as a, they were doctors or things like that. Like Roy Vagelos from, is that how you say his name? Former CEO of Merck, was one of these sort of old-school guys. Now you see these people that come in. Pfizer for a while they had a CEO that came out of business school, then they had a lawyer running the firm. Novartis fired one of their guys and replaced him with a ketchup salesman. I mean, now people running the firms are just, you know, their basically expertise is in marketing, sometimes finance. And it’s just, they’re just, they’re just trying to–you know, they have assets. The assets are whatever products they have, which are whatever drugs they have. And they just figure out how to make as much money from them as possible.
Pharmaceutical drugs should be generic drugs. They should be generic drugs all the time. You’d have to replace, taking away the monopoly system. You’d have to create a separate way to pay off the innovation. And that’s not that difficult to do for drugs. You can have a fund that rewards innovation, that looks the the same type of information that’s used right now as a reality check on, on reimbursements for high prices. Just to make it more concrete, you can de-link the way that you finance R&D from the price of the drug that the patient sees.
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