Re-Evaluating the Role of Big Business in Medicine

With the costs of prescription drugs increasing at a rapid pace people are looking at a wide range of potential solutions. Their ideas typically range from tax increases on companies that overcharge Americans all the way to the negotiation of drug prices covered by Medicare. These solutions may help around the edges, but I think that it is time to talk about the problem at a more fundamental level. Perhaps a better solution would be to entirely separate drug development from drug distribution entirely.

Every year the cost of producing any particular drug goes down significantly. Technology is advancing such that bio-processing techniques are becoming increasingly efficient and the manufacture of drugs can be an incredibly profitable enterprise. On the other hand, the development of drugs can become quite pricey and companies often point to drug development as one of the main drivers of prescription drug prices. Drug companies often gloss over the the fact that a large portion of drug development is government funded, even when it is done in the hands of private companies.

The core problem today is the fact that companies that develop drugs will receive a patent, and then be the only company for nearly 20 years that is allowed to produce that particular drug. This gives them not only the incentive but also carte blanche to set prices as high as they please. Often, when a patent is nearing its end, a company will double or triple the price to get a last boost of profits before production becomes available to the generic market.

Now imagine an entirely different system. Imagine a situation where the FDA would "buy" the patent of every approved drug and make it publicly available so that any drug manufacturer would be able to produce that drug. This open market would lead to price competition driving costs down and would prevent the high prices we are seeing today.

Ultimately this system would mean driving more drug development research into the public sector, which would be great news for patients. A study published in the New England Journal of Medicine examined new drugs and vaccines produced by private companies compared to publicly funded research institutions, and their results were clear. Publicly funded pharmaceuticals play an outsized role in healthcare and produce disproportionately large therapeutic effects.

A shift towards publicly funded research would redirect resources from high-profit drug research and onto more clinically necessary research. Finding a breakthrough drug for a rare disease may take money and time that would prevent a big company from considering researching potential treatments. On the other hand, developing a new opioid that could be given to anyone who went into a doctors office for pain would be a prime candidate for a profit-minded business. Instead, a publicly funded research system would be able to focus on drugs that would have the most significant impact on public health and individual wellbeing.

Ultimately, incentives are out of sync with ethics, and we won't be able to solve the problem until we start to deal with the issue head-on. Any solution that is offered needs to address the current disconnect between market incentives and the needs of the American people. Drug companies should not be allowed to single-handedly bankrupt American families, and our patent system shouldn't be used to support this immoral predation on people with medical conditions.