Why We Allow Big Pharma to Rip Us Off
Sunday, October 5, 2014
America spends a fortune on drugs, more per person than any other nation on earth, even though Americans are no healthier than the citizens of other advanced nations.
Of the estimated $2.7 trillion America spends annually on health care, drugs account for 10 percent of the total.
(W)hile other nations set wholesale drug prices, the law prohibits the U.S. government from using its considerable bargaining power under Medicare and Medicaid to negotiate lower drug prices. This was part of the deal Big Pharma extracted for its support of the Affordable Care Act of 2010.
The drug companies say they need the additional profits to pay for researching and developing new drugs.
But the government supplies much of the research Big Pharma relies on, through the National Institutes of Health.
Meanwhile, Big Pharma is spending more on advertising and marketing than on research and development – often tens of millions to promote a single drug.
And it’s spending hundreds of millions more every year lobbying. Last year alone, the lobbying tab came to $225 million, according to the Center for Responsive Politics.
That’s more than the formidable lobbying expenditures of America’s military contractors.
In addition, Big Pharma is spending heavily on political campaigns. In 2012, it shelled out over $36 million, making it the biggest political contributor of all American industries.
(W)e’ve bought the ideological claptrap of the “free market” being separate from and superior to government.
And since private property and freedom of contract are the core of the free market, we assume drug companies have every right to charge what they want for the property they sell.
Yet in reality the “free market” can’t be separated from government because government determines the rules of the game.
It determines, for example, what can be patented and for how long, what side payoffs create unlawful conflicts of interest, what basic research should be subsidized, and when government can negotiate low prices.
The critical question is not whether government should play a role in the market. Without such government decisions there would be no market, and no new drugs.
The issue is how government organizes the market. So long as big drug makers have a disproportionate say in these decisions, the rest of us pay through the nose.