Pharmaceutical Pricing in the United States of America: Disease or Symptom?

Pharmaceutical Pricing in the United States of America: Disease or Symptom?


Bruce L. Wilder MD MPH JD


It is no secret that the prices of many prescription drugs in the United States are exorbitant, as has been documented in the media so well and so often that it hardly needs specifics in the short space of this article (for some specifics, see Note 8 below).


Standard justifications for such outrageous prices include the idea that drug companies need to spend lots of money to develop and bring a drug to market, and that they couldn’t possibly do it without the prices they ask.  This is at times ironic, in that much of drug development is being done in universities with public funding.  Another standard argument is that drug safety cannot be assured if drugs are imported from other countries where the price for an identical drug is significantly lower.


While these arguments may have merit in some instances, by and large they are smokescreens for the perpetuation of an unconscionable ripoff of patients.  The idea that competition and price transparency will have any significant effect may apply to non-essential consumer products is simply not apposite to today’s pharmaceutical market.[1]  For the most part, people with serious illnesses do not have the luxury of shopping among competitors for the lowest price, or simply deciding not to buy, if the price is beyond their budget.   Moreover, we should be asking ourselves why people with illnesses they did not choose to have be the ones to fund drug research and marketing (especially if they have no control over how that funding is used).  A price tag in the hundreds of thousands of dollars that must be borne by an individual patient, of a drug that could cure a potentially fatal disease seems a lot like ransom.  Some health insurers use their clout to negotiate prices, but also have varying degrees of restrictions on coverage.  Individuals without insurance, or with health savings accounts, have virtually no negotiating power at all.


A major source of the problem is our system of intellectual property law relating to drug patents, in large part influenced by the powerful pharmaceutical industry lobby.  A number of legal maneuvers to protect and extend intellectual property rights, doubtless due to the efforts of the pharmaceutical lobby, include the development of so-called “me too” drugs (sight modification of a drug to in effect extend the patent), and “pay for delay,” or “reverse-payment “ settlements (paying generic manufacturers to settle lawsuits challenging the validity of patents).[2]  More recently, the sovereign immunity status of Native American nations has been exploited by transferring a patent and paying a few million dollars for an exclusive license (under the doctrine of sovereign immunity, a nation cannot be sued without its consent).[3]  On the flip side, compulsory licensing (akin to the concept of eminent domain in real property law), a legal means for government to license patented drugs to generic manufacturers to lower drug price is an available but seldom used process.  Its critics claim that it will threaten innovation, but it seems appropriate in a situation where the public health benefit is clear, the price is prohibitively high, and the development of the drug was largely funded by public money.[4]


The availability of drugs to people with illnesses that they mostly have no say in acquiring ought to be treated primarily as a public good, rather than an opportunity for corporate and shareholder profits.[5]  A notable exemplar of the current business-oriented philosophy is Pfizer’s recent decision to discontinue research in Alzheimer’s and Parkinson’s.[6]  To be fair, a few token measures have been enacted over the years, but the effect has been minimal.  Overall, government has had little or no power to regulate the pharmaceutical industry in a meaningful way as far as drug pricing goes (of course the FDA has considerable power – although in the view of some, not enough – as to ensuring safety and efficacy).


Despite a campaign statement that drug companies are “getting away with murder,” Trump’s recent proposal to lower drug prices is little more than lip-service and still does not allow Medicare to negotiate drug prices.[7]  It is simply window dressing that represents a virtual capitulation to the powerful pharmaceutical lobby and will accomplish nothing.


Much can be done.  If they are serious about drug pricing reform, Congress and the President should convene a Commission to study and report on the causes of high drug prices in the United States, and make recommendations for a fair and equitable framework for drug pricing.  Much work along those lines has already been done.  The work of the US-Canadian Pharmaceutical Policy Reform Working Group,[8] should serve as starting point; a governmental Commission would carry considerably more weight in effecting needed policy reform.  Such a Commission should be tailored to fit our existing health care financing system, but should also be suitable for transition to a single-payer system.  It should study systems in other countries, and its members should include researchers, legal experts in the field, practicing physicians, and patient advocacy entities, all of whom are vetted for the absence of significant ties to the drug industry.  The voice of “stakeholders” can be heard via a formal public comment period prior to issuance of the report, as can the voice of the purchasers of drugs.


At the root of our problems with drug pricing and drug shortages lies the enormous economic clout of the drug industry, to which members of Congress are beholden for campaign contributions – something that Professor Lawrence Lessig, despite its being legal, has termed “dependence corruption.”[9]  Or, in the words of Alain Braillon, “   .   .   .   the pharmaceutical system is only one of the by-products of a bigger system.  Symptomatic treatment cannot be adequate for a most serious disease such as the plague of corruption.”[10]


[1]    Rosenthal E, Why Competition Won’t Bring Down Drug Prices, New York Times, 6/21/18, https://www.nytimes.com/2018/06/21/opinion/competition-drug-prices.html (access 7/16/18).

[2]    Vokinger K, et al, Strategies That Delay Market Entry of Generic Drugs, JAMA Intern Med 2017;177(11):1665-1669, https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2653452  (access 7/16/18).

[3]    Ablavsky G, and Oullette L, Selling Patents to Indian Tribes to Delay the Market Entry of Generic Drugs, JAMA Int Med 2018;E1, https://www-cdn.law.stanford.edu/wp-content/uploads/2018/01/jamainternal_Ablavsky_2018_vp_170035.pdf (access 7/16/18).

[4]    Krellenstein J, et al, Greed Allows an Epidemic to Persist, New York Times, 7/17/18, https://www.nytimes.com/2018/07/16/opinion/prep-hiv-aids-drug.html (access 7/17/18).

[5]    This statement applies equally to the well-known issue of shortages of some commonly used and essential drugs that, not by coincidence, are usually not profit-makers for the manufacturers.  See Thomas K, Emergency Rooms Run Out of Vital Drugs, and Patients Are Feeling It, New York Times, 7/1/18, https://www.nytimes.com/2018/07/01/health/emergency-rooms-run-out-of-vital-drugs-and-patients-are-feeling-it.html (access 7/16/18).

[6]    Hiltzik M, Pfizer, pocketing a bug tax cut from Trump, will end investment in Alzheimer’s and Parkinson’s research, Los Angeles Times, 1/8/18, http://www.latimes.com/business/hiltzik/la-fi-hiltzik-pfizer-20180108-story.html (access 7/16/18).

[7]    Perrone M, and Colvin J, Trump’s plan to reduce drug prices doesn’t include campaign pledge to allow Medicare to negotiate prices, Chicago Tribune, 5/11/18, http://www.chicagotribune.com/business/ct-trump-drug-prices-plan-20180511-story.html (access 7/16/18).

[8]    Gaffney A, et al, Healing an ailing pharmaceutical system: prescription for reform for United States and Canada, BMJ 2018;361:k1039, https://www.bmj.com/content/361/bmj.k1039.long (access 7/16/18); http://www.pnhp.org/pharma (access 7/16/18).

[9]    Lessig L, Republic, Lost, Twelve, New York-Boston, p. 17.

[10]  Braillton A, Euthanizing a terminally ill system that does not want to die!, BMJ 2018;361:k1039, https://www.bmj.com/content/361/bmj.k1039/rapid-responses  (access 7/16/18).

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