Americans get scammed for drug prices they’ve already paid for
Last week, we learned that Merck was planning to charge Americans forty times its cost for a COVID drug whose development was subsidized by the U.S. government. The situation highlights two sets of facts that have also been largely ignored in the legislative debate over whether to let Medicare negotiate for lower drug prices.
First fact: Americans are faced not only with expensive drugs, but with prices that are examples of pure profitability.
Second fact: In many cases, the drugs we get ripped off are the ones we, the public, have already paid for.
These facts show us that the drug-funded Democrats trying to kill drug pricing measures aren’t just bought and paid for in this particular skirmish – they’re foot soldiers in the industry’s biggest decades-long campaign. pharmaceuticals to seal and rig the so-called “free market.”
First, there is the price of drugs. It’s not just that Americans pay the highest prices in the world for pharmaceuticals, it’s that in many cases we pay prices that aren’t even close what consumers in other countries pay.
New Analysis From Public Citizen Shows Top 20 Selling Drugs Generated Almost Double The Revenue From The Pharmaceutical Industry In The United States Than Any Other Country combined. Of course, compared to others, Americans can buy a lot of prescription drugs, but this study reflects something much more important at play: pharmacy-carved public policies that allow drug price levels to rise. go beyond profit and make profit.
This term “profit” is important here because the drug makers don’t waste a lot of money in other countries where they sell drugs at lower prices.
Remember: Pharmaceutical companies are not altruistic charities that sell their products abroad at a loss. On the contrary, they are always make healthy profits at lower prices in the world market – and as the Interceptby Lee Fang Remarks, they are making these healthy profits while boasting about innovation and job growth in countries that have allowed their governments to use wholesale purchasing power to negotiate lower prices.
The same arrangement could happen in the United States. We could dramatically reduce drug prices, saving Medicare and individual consumers hundreds of billions of dollars, and in doing so, we wouldn’t do much to dramatically curtail pharmaceutical innovation. Indeed, a recent study by the Congressional Budget Office predicted that even if the benefits of major drugs were reduced by 25%, that would only lead to an average annual reduction of 0.5% in the number of new drugs entering the market over the course of the year. of the next decade.
The reason the reduction in new drugs would be so small comes from the other embarrassing fact that is currently being left out of the conversation in Congress: Despite all the self-righteous rhetoric from the pharmaceutical industry about its own innovations, the government federal government uses your tax dollars to fund much of this innovation, research and development.
A National Academy of Sciences study tells this story: The federal government spent $ 100 billion to fund research on each of the two hundred and more drugs approved for sale in the United States between 2010 and 2016.
Because we, the public, made early investments in these drugs, we have reduced research and development costs for pharmaceutical companies. Therefore, downstream, the public should have received some sort of feedback in the form of affordable prices. After all, we took the initial risk and reduced the overhead costs that pharmaceutical companies might need to recoup through higher prices. In business terms, the public is the primary venture capitalist in these products, and we deserve a share of the returns when the product proves useful.
However, in the mid-1990s, this business axiom was rejected when drug lobbyists convinced the Clinton administration to repeal rules that allowed federal officials to demand that government-sponsored drugs be offered to Americans. at a “reasonable price”.
A few years later, Congress – with the help of then-Senator Joe Biden – passed legislation to restore those rules, and the Obama administration later rejected House Democrats’ request that federal officials at least provide guidance to government agencies on how they can exercise their remaining powers. to fight against rising drug prices.
The result: We are now regularly faced with immoral situations like last week’s news that pharmaceutical giant Merck is considering billing Americans $ 712 for a COVID drug that costs just $ 17.74 to produce and is being developed. was subsidized by the US government.
This is just the latest example of the absurd paradigm: we take the risk of investing in the product early on, but instead of that investment earning us something valuable like affordable prices, we are rewarded with predatory pricing by the drugmakers who fund lawmakers who rigged the rules – and aim to keep them rigged.
All of this underscores how corrupt and insane the current conversation in Congress is – and indeed, it is far more corrupt than it even appears on the surface.
We’re not just watching drug-funded lawmakers trying to stop Medicare from negotiating lower prices for drugs – they are trying to stop the government from negotiating lower prices for drugs than the government. already paid, and for which we are charged the highest prices in the world.
This opposition is just the latest crusade to keep the US market safe from maximum manipulation. Laws written by drug lobbyists prohibit wholesalers from importing low-cost drugs from other countries, grant drug companies 20-year patents on government-subsidized drugs, prevent government from charging reasonable prices for drugs that the government pays for and prevents Medicare from using its wholesale purchasing power to negotiate lower prices.
It is not a “free market”. It’s a top-down run economy perfectly calibrated for predatory pricing, and the pharmaceutical industry and its puppet politicians want it to be.