With the recent vote on the imported drugs plan failing to pass, I am quite literally fuming behind the keyboard as I write this.
I don't know which is a bigger lesson to learn from this: finding a way to loosen the death grip the pharmaceutical industry has on Congress, or seeing the sheer monstrosity of the lie perpetuated by big business that what they strive for is a "free market".
Free, indeed.
For the former, let's have a little bit of background on the matter (For those who want extra credit, Marcia Angell's book "The Truth About Drug Companies" is a fascinating and worthwhile read, and is written by the former New England Journal of Medicine Editor, so she knows her stuff), taken from a paper I wrote:
1980 was a landmark year for the Pharmaceutical Industry. From 1960 to 1980, drug prices remained static and inexpensive, yet from 1980-2000 drug prices tripled. (Angell 3) What happened? Angell argues that with the inauguration of the pro-business Reagan Administration in 1980, the government became much more sympathetic to the pharmaceutical industry. (Angell 6) In order to "improve the position of American-owned high-tech businesses in world markets," Congress passed the Bayh-Dole Act of 1980, which allowed universities and small businesses to "patent discoveries emanating from research sponsored by the National Institute of Health (NIH), the major distributor of tax dollars for medical research, and then to grant exclusive licenses to drug companies." Before this act, taxpayer-financed discoveries were released to the public domain. As a result, the pharmaceutical industry could now profit off academic research rather than conducting in-house research and development. The academics, in turn, began to hold equity in the corporations they were involved with so that they could also profit from their discoveries. Now, at least a third of drugs marketed by major drug companies are now licensed from universities or small biotech companies (Angell 8). In addition, the Hatch-Waxman Act of 1984 extended the patent life of drugs, allowing companies to profit longer from their drugs until patent expiration allowed generic companies to produce similar compounds.
The effect of this pro-industry legislation caused pharmaceutical industry stock prices to skyrocket in the two decades following Bayh-Dole. Now, worldwide sales as estimated by IMS Health is about $400 billion in 2002 (Angell 5). The top 10 drug companies on the Fortune 500 make more net profit than all other 490 businesses put together (Angell 11).
Although the pharmaceutical industry is not typically responsible for new innovations in health care drugs nor are they paying the majority of the expenses of the new drugs, they have been very successful in portraying themselves as doing so and received extensive governmental protections against competition. With such a vital public good as health care, where true competition has been virtually eliminated, it seems obvious that government should regulate prices. But the pharmaceutical industry has also been hugely successful at preventing regulations. These successes are a result of the most massive and expensive lobbying campaign in the world. Our nation’s pharmaceutical companies utilize both inside and outside lobbying in their access strategy at both the legislative and executive levels of government in order to secure policy that ensures them monopolies in the drug market while simultaneously preventing regulations from government and gaining protections from foreign competitors.
When it comes to inside legislative lobbying, nobody is more influential in Washington than the pharmaceutical industry. With 675 lobbyists employed in 2002 (more than one for each member of Congress) that include prior members of Congress and congressional staff, close relatives of Congress members, and former chairmen for the Republican National Committee, at a cost of $478 million between 1997 and 2002, the pharmaceutical industry has by far the largest lobby in the country which enables them to pursue effective inside lobbying campaigns as part of their access strategy (Angell 198). Another expensive method of inside influence that the pharmaceutical industry relies on is contributing to political campaigns.
Pharmaceutical companies spend huge sums of money to assure the victories of political candidates, mostly incumbents, who in return are likely to support favorable policies. In the 1999-2000 election cycle, the industry spent over $20 million just on direct campaign contributions (Public Citizen). Although most of this money goes to Republicans, pharmaceutical companies will pay anyone who is willing to endorse their cause and so certain Democrats also take large rewards for the industry. This tactic of lobbying both sides enables the industry to gain broad support in Congress for when it comes time to vote on a bill that may affect the industry without alienating the Democratic party. This has proven to be a very useful strategy. Angell gives the example of former Democratic Senator Robert Torricelli who gained substantial amounts of industry favors and money. In 1999, Torricelli introduced a bill to make it easier to extend the patents of Schering-Plough’s blockbuster Claritin the day after Schering-Plough donated $50,000 to the committee that Torricelli chaired (Angell 200).
Recently, the pharmaceutical industry has developed new ways of pressuring the government into an unprecedented double-standard of granting market exclusivity without regulations. Typically, an electoral strategy is taken by those interests with broad public support because their most valuable resource is votes. Although the pharmaceutical companies do not have broad public support they have discovered a way to look like they do. By creating a variety of front groups to pose as citizen coalitions, the industry is able to appear as a grassroots organization. One such group, The Citizens for Better Medicare, spent millions in the 2000 election to fight against any form of drug price regulation. "Citizens for Better Medicare sounds like it might have been a group of senior citizens advocating for prescription drug coverage under Medicare. Actually, the group was a coalition of drug companies, hospitals, and other health care providers that opposed the Democrats’ plan to expend Medicare to include prescription drug coverage (Cigler & Loomis 151)." These strategies are disturbing because they virtually ban fair competition in the market of ideas and more importantly they mislead the public by not requiring the donors to disclose their identity. "They are effective precisely because they are not what they seem (Angell 201)." The result of these questionable tactics is what Senator Richard Durbin called PhRMA’s "death grip on Congress (Angell 196)."
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As for the second lesson to be learned from this, corporations do not want free markets. Or at least, not accessible to the consumer. International free markets are OK in the labor market, where manual labor, assembly, and manufacturing jobs can be taken from other countries who compete for the lowest working wage, which ends up being a fraction of the minimum wage here. However, international free markets where the consumer may choose products from other countries that employ price controls for pharmaceutical products all of a sudden becomes verboten.
Why? The pharmaceutical companies claim that it is due to counterfeit articles... FTA:
But the pharmaceutical industry has argued that pharmacies risk being flooded with counterfeit drugs. And the White House, which also opposes importation, had threatened a veto of the drug safety bill if it eased restrictions...
Sen. Thad Cochran, R-Miss., said the problem of counterfeit drugs was his main concern. "Americans deserve continued access to safe and effective drugs," he said. "Serious problems exist with products from other countries."
Yes, Canada has been a hotbed for using horse Viagra instead of Viagra for years now. And by that, I mean Cochran's claim is so bullshit I don't even know where to start.
Maybe it has something to do with this instead, FTA:
Overseas, drugs can cost two-thirds less than they do in the United States, where prices for brand-name drugs are among the highest in the world.
In many industrialized countries, prices are lower because they are either controlled or partially controlled by government regulation.
So instead of competing in a truly free market with international drug vendors, Pharmaceutical companies prohibit people from actually buying them from other countries, while employing overseas labor and importing drugs themselves. (Cough)?
Free market, indeed. As long as it's free labor market for Big Business and not a free market for the consumer.