There has been plenty of talk about the prescription drug problem, but
no wholly thoughtful solution proffered by anyone. Every idea
propounded by various ideologues makes fanciful assumptions about key
components of the equation, utterly refusing to answer hard questions
about long term consequences and sustainability.
Some people fall into the camp of thinking that the ownership of ideas
is inviolate, and that the first person to think of an idea ought to
exercise god like powers over it. This seems to neglect the fact that
concepts of intellectual property are strictly human constructs, and
furthermore that ownership in general is part of the social contract.
In this regard, the problem with prescription drugs is the
monopolistic nature of patent law, both necessary and evil,
apparently. Researchers need to recoup their investment, but at the
same time their exercising total control over distribution is not at
all in sync with the notions of free market competition. There is, by
definition, no competition, unless other companies can somehow obtain
a patent on a different drug that has similar properties. Under these
auspices, there can be no gravitation of prices towards a fair market
value, and thus profit maximization will be capped only by what the
market will bear.
Then there are those who think that the US ought to allow importation
from Canada. These people claim that they are supporting the "free
market" principle of competition, pitting retailers from various
countries against one another. Of course, this is ludicrous. Foreign
countries impose price control on drugs by fiat, decreeing that
wholesalers may not charge retailers more than an artificially set
price, and capping the retail price as well. There is no way for
American retailers to compete with foreign retailers as their price
from wholesalers is not capped by government mandate. Furthermore,
this will cause drug manufacturers to limit their supply to foreign
countries that act as redistribution centers, likely having a negative
impact on consumers within the countries that harbor the
redistributors. Quite simply, in this scenario the redistributors act
as parasites on the systems enacted to ensure affordable drugs for the
citizens of their host countries. In the end, nobody wins.
This of course brings us to the argument that the US ought to fight
fire with fire by imposing price controls of its own. This would put
American drug retailers on even ground with foreign retailers, thus
obviating the cross-border flow of drugs. While this might provide
cheap drugs in the present, it would be disastrous in the long term.
According to a study
by Tufts University, the cost to develop a new prescription drug is a
whopping $802M. Someone has to foot the bill.
In the present arrangement, the US pays the lion's share. Were it,
too, to impose price controls, then this would make recouping research
costs for drugs nearly impossible. As much as various other nations
love to brag about the affordability of drugs for their citizens, they
always seem to neglect to mention that this is the result of free
riding off of US citizens who are purchasing the same drugs at
dramatically higher prices. There Ain't No Such Thing As A Free
Lunch, and Americans are perpetually picking up the tab for other
peoples' trips to the pharmacy.
This is culminating in a seething resentment among American drug
purchasers who cannot afford the drugs that they need. For every
dollar they spend on pills, a significant fraction of it goes to
subsidize the below market prices of foreign countries, the end result
being less treatment for themselves, or other lines being dropped from
their personal budgets. They will not abide this forever, and present
political rumblings are evidence thereof.
The present system is not just, and the terrible truth of the matter
is that the only way that things will get better is probably for them
first to get worse. The politicians of other countries are not
willing to cede ground, raising the price caps on drugs, as it would
be political suicide. On the other side of the divide, the
politicians of America cannot continue to ignore the fulminations of
their constituency about being bled for the benefit of other
countries. Something has to give, and regrettably it will almost
certainly be US politicians assenting to the demands of US consumers.
Cooperation would be nice, but brinkmanship is the far more likely
route in the arena of international jousting. We are all playing
chicken with pharmaceutical research, hoping that someone else will
This does not bode well for the development of future drugs. As
predatory as some drug manufacturers may be in exercising their
patents, they do have a valid point in that drug research is
expensive, that these costs must somehow be recouped, and risk
rewarded, if research firms are to continue to bring forth new
medicines. Alas, all consumers are copping a Not In My Back Yard
attitude toward the financial burden of drug research.
The collective stubbornness of the whole human species means that in
the long run, we all lose. Every combatant in the ring will stand his
ground, mortgaging his future and his neighbors' alike, trading better
drugs in the future for affordable crap today.