Worldwide, the pharmaceutical market is worth about $300 billion and rising, with profit margins of about 30 percent, depending on the drugs. 85 percent of the world’s pharmaceuticals are consumed in North America, Europe, Japan, and South America. When evaluating the global pharmaceutical trade and its shocking profitability, the World Health Organisation noted that there is: ‘an inherent conflict of interest between the legitimate business goals of manufacturers and the social, medical and economic needs of providers and the public to select and use drugs in the most rational way.’
There’s a lot of talk about ‘big pharma,’ and it’s an extremely complicated issue. Some people are very disdainful about pharmaceuticals in general, insisting that people are overdependent on medications for the treatment of disease — this comes into particular play with medications used in the treatment of mental illness1 and those used in the treatment of chronic illnesses, such as pain control medications used by people who deal with persistent chronic pain associated with underlying conditions.
People like to talk about big pharma as though it’s some kind of vast conspiracy of evil, but that’s not entirely accurate. Pharmaceuticals save lives. They radically improve quality of life. I would not be alive today without the products of numerous drug companies — products that I historically paid an extremely high price for until I was folded under the wings of a loving HMO. Drugs are expensive and this is something pretty universally understood by anyone who’s ever had to pay out of pocket.
The problem with big pharma isn’t that it has the audacity to produce lifesaving medications. The problem is that it has taken a fundamentally important and good mission and used it to create a profit line, with a focus not on creating change for patients but generating profits. Capitalism enables this by spurring pharmaceutical firms to keep developing, and overpricing, their drugs. They tend to target diseases of the West, potential big moneymakers, leaving issues of the Global South unaddressed because they don’t generate returns, and the R&D pipeline is largely private, making it extremely difficult to change this.
Martin Shkreli attracted worldwide attention for acquiring a drug and promptly jacking the price up. It wasn’t just that the price increase was a dick move, though. It was the way he did it — a huge increase overnight, paired with smug bragging on Twitter, paired with complete disrespect in the Congressional hearing held to discuss the state of pharmaceutical companies in America. This is a country that loathes Congress with a flaming passion, so it says something when members are so disgusted with someone’s behaviour in front of Congress that they start talking about what a punchable face he has. (He really does have a punchable face.)
The thing is, though, that while I think Shkreli is an asshole, he’s not alone. It’s not just that he’s actually done the same thing with a number of drugs he’s acquired, but other firms do it all the time — Valeant Pharmaceuticals’ entire business strategy, to pick just one example, consists of buying existing drugs and then abruptly hiking their prices to ridiculous levels. A number of companies do the same thing, shutting down R&D in favour of just buying drugs, which means that new classes of medication are not in the pipeline (a huge issue for things like antibiotics, which are growing stubbornly resistant to what’s available). It also weakens their claim that they have to charge more for medications to make up for R&D costs. Those costs have already been recovered — this is a plain and simple search for profit, and it’s working out well.
According to capitalism, them’s the breaks and so be it. Drug companies use aggressive business strategies that generate big returns, whether they’re private or publicly traded. They’re not in the business of compassion even if they produce consumer goods used in the health care industry, a business most people associate with healing, not profiteering (though they’d be wrong, as the health care industry overall has some serious capitalism problems of its own). Some nations have taken an aggressive stance right back, insisting that drug companies operate with the common good in mind.
Others have not. The United States claims that it is investigating companies like Valeant, and that it plans to institute new rules and regulations to put a stop to these kinds of behaviours. However, I’ll believe that when I see it, because the same people doing the investigating are the ones holding shares in these companies and typically receiving substantial lobbying dollars from them as well. No one bites the hand that feeds them. Getting lobbying out of Congress might make a start at resolving these issues (as would regulating campaign finance), because drug companies offer a carrot and they’re not going to be pleased if lawmakers don’t want to play along.
Addressing the problems within the drug industry requires admitting that capitalism is a fundamentally broken system. We cannot initiate ad hoc stopgaps — regulating pharmaceuticals for price-gouging but not other industries — because they don’t work, and they’re fundamentally unfair. We do need to reform the processes surrounding drug development, manufacturing, and distribution, because as the World Health Organisation has already pointed out, these are vitally needed drugs that are not getting to where they need to go. Reassessing the role of capitalism with respect to pharmaceuticals should have been done a long time ago.
1. Funny how everyone’s eager to medicate us when they think we’re responsible for all mass violence everywhere, but the same people turn around and say that antidepressants and other mental health drugs are overused. (return)
Image: the husband’s vicodin, sharyn morrow, Flickr