Martin Shkreli has sparked a storm of outrage from the global media after raising the price of the HIV/malaria drug Daraprim by over 4,000% — from $13.50 per pill to $750 per pill — citing a need to “turn a profit on this drug.” As The Washington Post observes, “the average cost per year for a patient weighing more than 132 pounds would be $634,500.”
Shkreli has since vowed to lower the price; how much lower is not yet clear.
So, this guy is a scumbag, by all working definitions of the label.
Perhaps, though, we can stop vilifying him for a moment (just a moment) and turn our fiery gaze to the pharmaceutical industry as a whole.
It just so happens that the pharmaceutical industry has been playing the game that Mr. Shkreli has just entered for many decades, hiking the prices of drugs to “turn a profit,” forcing those who cannot afford their medicines to go bankrupt in order to stay alive.
The fundamental problem here is the fact that Medicare is prohibited from negotiating drug prices. As Dean Baker observes in a recent column for The New York Times,
“The result,” Baker continues, “is that we pay roughly twice as much for our drugs as the average for other wealthy countries. This additional cost is not associated with better care; we are just paying more for the same drugs.”
It is indeed curious that the U.S. government lavishes Big Pharma with such privileges. Perhaps it has something to do with the fact that the pharmaceutical and “health products” industry has one of the most powerful lobbies in Washington, a lobby that has spent over $124 million so far in 2015, according to data compiled by Open Secrets.
Another problem that Baker emphasizes is drug patents.
“Patent protected drugs are often essential for people’s health or even their lives. Allowing a drug company to have a monopoly where it can charge whatever it can force the individual, or more typically the insurer or the government, to pay makes little sense. This is like negotiating the pay of firefighters at the point where they show up at your burning house with your family inside. This would give us much worse fire service and many very wealthy firefighters.
A monopoly that allows drug companies to sell their drugs at prices that can be hundreds of times the free market price has all the problems economics predicts when governments interfere with the market.”
It is often the case that the public funds the development of key drugs and, when they are ready for the market, the drugs are simply handed over, royalty free, to “private” pharmaceutical companies which then set absurd prices, actively screwing those who provided them with their product.
Director of Policy and Analysis of Doctors Without Borders Rohit Malpani underlines this point:
Aside from paying for research and development of medicines, the public also doles out millions in handouts to pharmaceutical companies, making them some of the most prominent welfare queens in the country (of course, they are never labeled as such).
To give one example, Pfizer, one of the largest pharmaceutical companies in the world, has received 225 federal, state, and local subsidies, costing taxpayers over $326 million since 1992.
Hopefully the antics of Mr. Shkreli will bring about a long overdue national conversation about the pharmaceutical industry as a whole, and — in my naively optimistic fantasy — hopefully we will finally put an end to the absurd system that prohibits Medicare from negotiating drug prices and allows pharmaceutical companies to decide who is able to receive care and who isn’t.