Price Controls on Pharma

Resolved: The United States federal government should impose price controls on the Pharmaceutical industry Affirmation Blocks POOR PEOPLE The pharmaceutical industry is literally killing off poor people Hartmann et. al 15 Thomas Carl "Thom" Hartmann is an American radio host, author, former psychotherapist, businessman, and progressive political commentator. Daily Take Team, 6-3-2015, "Big Pharma Is Killing Us," Truthout, http://www.truth-out.org/opinion/item/31160-big-pharma-is-killing-us //GF DDI 17 Drug company profits are literally killing people - and now even doctors are speaking out. Dr. Leonard Saltz, chief of gastrointestinal oncology at Memorial Sloan Kettering Cancer Center, rebuked the pharmaceutical industry for the sharp rise in cancer drug prices over the last decade. The median monthly price for new cancer drugs nearly doubled between 2000 and 2014 - from a monthly cost of $4,716 between 2000 and 2004 to a monthly cost of about $9,900 between 2010 and 2014. Dr. Saltz explained part of the problem: "Cancer-drug prices are not related to the value of the drug. Prices are based on what has come before and what the seller believes the market will bear." See more news and opinion from Thom Hartmann at Truthout here. And that's a neat feature of our current patent system: Drug companies don't have to worry about what people can afford to pay for a product. Because monopolies set their own prices. And that's what a patent is: a state-backed monopoly on a product. Thomas Jefferson knew that monopolies would be a threat to the people and the people's government. Jefferson wrote to James Madison on December 20, 1787, expressing concern that the draft of the Constitution did not include a Bill of Rights "providing clearly [...] for freedom of religion, freedom of press, protection against standing armies, restriction of monopolies, the eternal and unremitting force of habeas corpus laws, and trials by jury..." Jefferson wanted safeguards from monopolies included in our Bill of Rights, but a patent gives a company the state-sponsored monopoly on a product for the term of the patent. And patents aren't inherently bad. It would be hugely discouraging to inventors and writers if any old troll can steal a novel idea and peddle it without crediting the inventor. That's why Article 1, Section 8 of the Constitution gives Congress the power "to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." And that's what the writers of our Constitution wanted our patents to do: encourage innovations for the public good by allowing innovators exclusive rights to their inventions or writings for a limited time. But as corporate power has taken hold of every aspect of our government, copyright and patent law in the US has changed dramatically. The 1790 Patent Act allowed patents to last for seven years with a one-time renewal offered in certain cases. Now patents last for 20 years after filing, and drug companies even enjoy special extensions to make up for delays in FDA approval. And that means that drug companies don't have to worry about competitive pricing or creating demand because the consumer can only choose between treatment or misery and death. So when a company develops a drug that treats a life-threatening illness, they can simply set their price: $1,000 per pill for Hepatitis C treatment; $10,000 for a month of cancer treatment; $300,000 for the year of treatment. Can't pay? Don't want to pay? Maybe you'd prefer to die. It's all the same to the companies. Because the companies that make our medicine don't do it for public health - they do it for profit. Corporations like Walt Disney and Bristol Myer Squibb have lobbied to shape patent and copyright law to fill their corporate coffers instead of "promoting the progress of science and the useful arts." As drug costs continue to climb, we're creating a two-tiered society: those who can afford to pay to stay alive, and those who can't. Public health is an issue of the commons, and it's time that we reform patent law to discourage monopolistic price-gouging on drugs that treat life-threatening illnesses. Price Controls Good Drug Price Controls Are Vital in a Market That's Not Free Jared Bernstein (Senior fellow at the Center on Budget and Policy Priorities, former Chief economics for Joe Biden and executive director of the White House Task Force on the Middle Class), New York Times, "Drug Price Controls Are Vital in a Market That's Not Free - NYTimes.com", June 29, 2016, https://www.nytimes.com/roomfordebate/2015/09/23/should-the-government-impose-drug-price- controls/drug-price-controls-are-vital-in-a-market-thats-not-free If Charles Dickens were writing today and seeking a life model for one of his villains, he’d be pleased to find Martin Shkreli, the former hedge fund manager who, upon acquiring the rights to a critical drug for patients with life-threatening infections, raised its price to $750 from $13.50 per tablet. But the problem we face is less this particular individual than the fact that we’re imposing a market structure on something that should be a public good. We wouldn’t squirm watching this guy try to explain himself if he were selling yachts or high-end real estate. The challenge is finding the public policies that will take pharmaceuticals from what any objective person would view as a highly distorted market — prices don’t rise 5,500 percent overnight in a functioning market — to a more rational one. Hillary Clinton just released a new proposal with various ideas that point in that direction: allowing Medicare to bargain for lower drug prices, a monthly cap of $250 for patients with chronic conditions, research and development investment requirements for highly profitable drug companies, prohibition of delaying tactics that keep generics out of the market, and more. All good ideas that incrementally push in the right direction. But to go further will require two more aggressive steps: price controls and new incentives for drug research. Price controls for drugs, which are common in other advanced economies, increase affordability. But even when the mechanism is “cost-plus” pricing — the government allows drug companies some degree of markup — their profits will still decline from current levels. The producers argue that this will stifle their incentive to innovate. But the evidence is increasingly clear that we cannot count on the private sector to make necessary medicines affordable. In fact, given the incentive structure, neither can we count on private drug companies to develop the drugs we most need versus the ones that will be most profitable. In health economics, maximizing social benefits is often at odds with private benefits. The simplest solution is to take excessive profit out of the equation and ramp up what is already a robust public medical research infrastructure. This could take the form of an expanded National Institutes of Health, where researchers are employed by the government, or private research could be subsidized. Either way, the key outcome is that the patents themselves would be public goods in the public domain, meaning no more price gouging. But wouldn’t this arrangement fail to inspire the most innovative researchers? To keep such competition alive, economist Joe Stiglitz recommends a prize fund, where those who developed the most beneficial medicines would get a windfall reward. The winners could get rich, but they could not restrict the benefits of their findings to extract more profits from sick people. It may take incremental steps like those offered by Hillary Clinton to start the ball rolling. If such steps prove insufficient — and if Dickensian stories still haunt the news — we’ll need bolder steps. But the status quo cannot hold. Price controls work to lower prices Sara Kliff, May 10, 2018, Vox, https://www.vox.com/science-and- health/2016/11/30/12945756/prescription-drug-prices-explained The true story of America’s sky-high prescription drug prices What would happen if the United States started price-regulating drugs? For one thing, we’d spend less on prescription drugs. If the United States set up an agency that negotiated drug prices on behalf of the country’s 319 million residents, it would likely be able to demand discounts similar to those of European countries. This would mean that health insurance premiums wouldn’t go up nearly as quickly — they might even go down. There would be trade-offs. We’d likely have to give up some of the choice of drugs that our insurance plans cover. If a national board made decisions about what prices were appropriate for drugs, it would need to have the ability to reject the drugs that didn’t make the cut. Consider the Veterans Health Administration, which does negotiate drug prices. It gets drugs that are usually 40 percent cheaper than what Medicare pays. But it also covers fewer products. Margot Sanger-Katz recently reported for the New York Times that “many older patients who get their health insurance from the V.A. also sign up for Medicare drug plans to cover medicines that the V.A. won’t.” At the same time, VA doctors do say their patients are generally able to obtain the medications they prescribe. Correct Market Failures Pharmaceutical companies have enough market share generally that they have little incentive to make their products affordable. Bennett, Sara, Jonathan D.

Load more