What is a small business owner in the U.S. to do when an employee requires a prescription medication that costs more than their annual salary? Too many employees like that means you’ll be locking your doors soon.
Richard Master, CEO of a family-owned factory, faced such a dilemma when his company’s health care costs were rising by the equivalent of $4 per hour each year. This meant that there wasn’t much room for increasing wages.
Master decided to do something about this. He hired a filmmaker to document the problems faced by small business owners. The film “Big Pharma: Market Failure” looks into pharmaceutical companies’ profiteering, shows that this is a significant threat to American businesses and suggests a solution. Kansas City area residents can see this film free of charge on Saturday.
Profiteering by pharmaceutical companies is a relatively new driver of rising health care costs. The passage of Medicare Part D turned out to be a real windfall for the pharmaceutical industry. When seniors gained drug coverage, the industry benefited from acquiring a large number of elderly consumers. The industry also received an added benefit when the legislation in Part D stated that the government was powerless to negotiate drug prices. Whatever the industry charges, Medicare pays.
While President Donald Trump promised during his campaign to negotiate costs with pharmaceutical companies, nothing has been done since he met with industry leaders in late January. There instead has been talk of providing regulatory relief for manufacturers to speed up the drug approval process by the Food and Drug Administration.
Certainly, we would not want to inhibit drug development. The pharmaceutical companies claim it takes $2 billion to bring a drug to market. However, Elizabeth Rosenthal, emergency room physician, former New York Times journalist and editor-in-chief of Kaiser Health News, points out that figure includes ads and other promotional measures.
Master explains in the documentary that 80 percent of the cost of developing new drugs is already funded by our tax dollars through the National Institutes of Health and other similar publicly funded agencies. Justifying exorbitant drug prices when the public has already funded the research is disingenuous at best.
There is no more compelling argument for publicly funded drug research than Sendhil Mullainathan’s in a recent New York Times column: “Research is not just about what is discovered but facilitating others’ discovery.” This is precisely what is absent when research is proprietary and the products of research are inordinately patent-protected. The more we publicly fund research, the more we can align that research with our needs instead of short-term profits for a rapacious industry. And the less that industry can hide behind the illusory cost of research to justify its cynical perversion of our free market.
Let’s take that false defense away from them, fund our research publicly and retake ownership of the fruits of that research. Drug prices are high because of a legislative failure to protect the American people, not because high prices support innovation.
Health care costs run to $3.2 trillion per year and constitute 17.8 percent of the gross domestic product. These figures would seem to call for a change, but special interests such as pharmaceutical companies are happy with the status quo in that they are benefiting mightily.
If we are going to decrease the profiteering in health care, we all need to unite for the common good. These are times when we need government to work for us. Join us at 10 a.m. Saturday in the Pharaoh Cinema 4 in Independence to view “Big Pharma: Market Failure.” A spirited discussion will follow.
Ray Slavin, MD, is an internist and specialist in allergy and immunology. He lives in St. Louis.