Tags: Health Topics | Healthcare Reform | generic | insulin | research | biomedicine

Don't Make Patients Venture Capitalists for Future Medicines

drug and medical research in a laboratory

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By Wednesday, 29 May 2019 04:00 PM Current | Bio | Archive

Older readers may remember "Pogo," the comic strip by Walt Kelly, which brought us the memorable phrase "we have met the enemy and he is us."

I recall a Pogo episode when I read arguments by pharmaceutical company spin-doctors and people who swallow their arguments. These worthies warn that governmental regulation of drug prices would cripple the companies' ability to develop new medicines.

The Pogo episode featured a tiny bug who feared someone would step on it accidentally. "Skoosh a bug and we gets rain," it warned. The bug didn't care whether it rained, but just wanted to remain unskooshed. However it hoped that the larger critters in the comic strip didn't want rain, and that its warning would motivate them to be careful where they stepped.

If government forces pharmaceutical companies to stop charging outrageous prices, prices which have doubled, tripled or multiplied by much larger numbers in only a few years, it will obviously reduce their profits. And reducing their profits, they argue, would prevent them from developing breakthrough medicines.

The pharmaceutical companies are mainly interested in making a killing selling existing drugs. They spend huge amounts, which could otherwise fund research, on TV advertising of existing medicines.

Their new medicines are often only small modifications of existing drugs, mainly aimed at prolonging the life of patents that protect them from generic competition.

Of course some new medicines actually are big improvements.

Some can treat previously hopeless conditions.

But why should individuals who are currently sick or suffering from chronic medical problems be singled out to pay for developing new drugs that would treat different people suffering from other conditions?

Why compound the problems facing these already unfortunate patients?

Instead of funding biomedical research by ripping off people who are currently sick, the companies should get venture capitalists to fund the research.

Although most new treatments that are explored will prove ineffective or too dangerous, this won't deter venture capitalists from investing in such research.

Only a few oil wells ever produce any oil.

Still, venture capitalists willingly fund drilling new ones as long as the wells that do strike oil provide a decent return on their total investments.

In the case of some medicines, especially those attacking very rare diseases, prospective sales might be insufficient to attract venture capital to fund their development.

But again, it would be unfair to force current patients taking, say, insulin (discovered a century ago) to pay outrageous prices to subsidize such research. If such drugs are going to be developed, the costs of developing them should be spread as widely and thinly as possible, which is to say to all taxpayers.

A good deal of biomedical research is already taxpayer funded.

Clearly, the self-interested argument of the pharmaceutical companies against regulation of their prices should not be taken seriously. Nor should we fall for their alternative argument that drug prices should be "value based." Although this sounds plausible, what it really means is that the companies should be allowed to charge whatever the market will bear.

And since people do place a high value on living longer or more comfortably, "value-priced" medicines can have very high prices indeed.

Something clearly must be done. The price of a century-old medicine like insulin that is needed by millions of people has escalated beyond all belief.

People are dying prematurely from using an inadequate amount of insulin because they cannot afford to pay for the needed dosage.

Government itself conceivably could produce currently overpriced drugs like insulin and price them so reasonably that pharmaceutical companies couldn't compete. But it would probably be better just to impose price controls on medicines by treating their producers as regulated utilities. The companies would be allowed to earn a reasonable return on investment but couldn't force current customers to finance their future expansion.

Government would also do well to rethink some current regulations which make it hard for would-be competitors to produce generic versions of drugs. Some regulations may serve more to protect pharmaceutical companies from competition than to protect the public.

Although today's drug companies are not literally holding a gun to the heads of sick people, it's hard to avoid seeing an analogy with the robber who, pointing his gun at someone, demands "your money, or your life."

For a government seeking to promote the general welfare, and not just the welfare of special interests, the time may have come to skoosh the pharmaceutical bug by regulating prices.

Paul F. deLespinasse is Professor Emeritus of Political Science and Computer Science at Adrian College. He received his Ph.D. from Johns Hopkins University in 1966, and has been a National Merit Scholar, an NDEA Fellow, a Woodrow Wilson Fellow, and a Fellow in Law and Political Science at the Harvard Law School. His college textbook, "Thinking About Politics: American Government in Associational Perspective," was published in 1981 and his most recent book is "Beyond Capitalism: A Classless Society With (Mostly) Free Markets." His columns have appeared in newspapers in Michigan, Oregon, and a number of other states. To read more of his reports — Click Here Now.

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Government conceivably could produce currently overpriced drugs like insulin, pricing them so reasonably that pharmaceutical companies couldn't compete. It's probably better just to impose price controls on medicines by treating their producers as regulated utilities.
generic, insulin, research, biomedicine
Wednesday, 29 May 2019 04:00 PM
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