Guest Opinion: Monopolies, not markets, set U.S. drug prices
Drug prices are outrageously high in America because the U.S. government patent process allows corporations to maintain monopolies on new, essential, and sometimes life-saving medications.
Corporations have a single, sworn duty: To maximize shareholder profits. This means raising prices as high as possible for maximum returns, regardless of the impact on people’s lives.
Let’s encourage politicians to take the following position on drug pricing. Attend town hall meetings and ask for their support.
Just as monopoly utility companies have prices set by public utilities commissions, those granted a monopoly on patented medications must be subject to a Patented Medication Price Commission that sets a fair price for consumers, which also fairly rewards inventors.
Consider the case of the giant pharmaceutical company, Gilead:
Gilead bought the patent on a Hepatitis C drug that was developed through government grants (otherwise known as ‘taxpayer money’) that could be produced at a cost of $400/treatment episode.
Gilead calculated that profits would be maximized if they charged $84,000/treatment. At that price, only a fraction of the 2 million people who had Hepatitis C could come up with the money.
Among those who did, many suffered devastating financial hardships.
Many, who were unable to pay, became disabled.
The strategy worked well — for Gilead, at least. In 2015, based primarily on the Hep C drug they had purchased, Gilead made 50 percent more profit than Microsoft.
No buyers were able to significantly negotiate the cost because you cannot negotiate with a monopoly; the monopoly has all of the power.
Consumers are at an enormous disadvantage when something essential is owned by a monopoly. They have no choice and must pay whatever the monopoly demands.
Society has long recognized that monopolies that provide essential services must be regulated to protect consumers from extreme prices. Public utility commissions set fair prices for the monopolies that provide water, sewer, electricity and natural gas.
Health care is not a market choice. Health care is absolutely essential for all of us.
It is wrong to give pharmaceutical corporations monopolies on medications without controls. It is wrong for Big Pharma to charge such high prices that people can be effectively enslaved as they work to pay for health care that costs as much as they earn, and possibly still face bankruptcy. It is wrong that insurance plans and public health programs can be drained of funds that are needed for other people’s health care to cover extortionate drug prices.
These monopolies give corporations the power to determine life or death.
This must not stand. We can do better.
Like public utility commissions, a Patented Medication Pricing Commission can set fair prices that reward innovation and protects consumers. Such commissions have been shown to be effective in other countries, such as Canada.
Drug companies should never have been given — along with the right to have a patent on new medications — the right to charge anything they want. It’s time to fix the process to one that is fair, effective, proven and reasonable.
Ivan Miller, Ph.D., is executive director for the Colorado Foundation for Universal Health Care. Comments to IvanJMiller@gmail.com.