Pill Powers

8/30/23

Pill Powers

Take one a day for eternity [Source]

Politico magazine overpromised in its headline last weekend: “The Real Reason Drugs Cost Too Much—and Do Too Little”. The risk was high of under-delivering.

The effort was valiant. It wandered into the narrative failsafe positions for mainstream journalism of bashing pharmaceutical companies and Republicans. To wit, drug company greed paired with Republican heartlessness got us into the healthcare cost dilemma we face today, and now the drug company lawyers are resorting to the courts to secure their fat and obnoxious profit margins. The article nods at the idea that pharmaceutical makers spend a lot on drug development in the hopes of profiting off the ones that achieve FDA approval. And it casts a skeptical eye at pharmaceutical company entitlement to existing profits on the public dime.

Which makes this a good time for a confession: My personal dietary obsessions leave me beyond the reach of pharmaceutical worries for the most part. In fact, I have come to suspect that our national tendency toward hypochondria is to some extent driven by the pharmaceutical giants pushing their wares so aggressively. In my own idiosyncratic view, a national change in diet could render a lot of prescription drugs potentially obsolete. Nevertheless, we are where we collectively are, and many citizens in fact do rely on prescription drugs to survive. And since a significant portion of pharmaceutical costs are public in the United States, we have a collective interest in having broad access to the pills and trying to keep the government costs down in the process.

The government-sponsored and mandated part of healthcare contains perverse incentives for pharmaceutical companies to have long-term addicts rather than cured patients. Most of their research and development, by this logic, will be into keeping patients alive for longer so they can consume prescription drugs for longer, because that is a guaranteed source of long-term income and profit.

The public health system creates incentives for the drug manufacturers to keep illnesses just short of cured, one might cynically suppose. Since medical care makes up a significant share of the national gross domestic product, it only makes sense that the nation’s medical system concentrates its research on prescribing drugs rather than encouraging patients to change lifestyles in ways that might render drugs and treatments obsolete.

As the article allows:

Drug development is expensive: Estimates vary, but it probably costs, on average, somewhere between $1.3 and $2.9 billion to develop a new drug. Manufacturers make these enormous investments because of the possibility of future earnings, including from billing Medicare. As a result, a reduction in what they can hope to earn from Medicare may mean that some investments into promising drug candidates, especially for drugs meant for the elderly, may not be worth making.

Still, the magnitude of the effect is likely to be small. The private market and Medicaid spend billions on pharmaceuticals every year, and Medicare will still pay a lot for drugs, just a little less than before. There’s also the enormous global market.

Thanks to Josh for suggesting the article.