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The Pharmaceutical Industry

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from: Andrew Sullivan
to: Merrill Goozner

Posted Wednesday, April 11, 2001, at 3:00 AM ET

Merrill,

To start with some small points: I see you simply ignored my last point about the enormous general benefits these drugs provide our society—vastly outweighing the costs. I'll take that as a concession that I'm right.

You also argue that, if there were no private pharmaceutical sector, the government would have come up with all the dozens of anti-HIV drugs that are now available because "HIV-carriers like yourself were demanding it, and offering their bodies by the tens of thousands to join clinical tests to get the job done." Are you even faintly serious? You think the Reagan-Bush administrations would have dropped everything to find a cure for AIDS because ACT-UP asked them? Or that Clinton, who consistently asked for less NIH funding than even Newt Gingrich, would have followed suit? More important, do you think the government would have come up with not one but several protease inhibitors, each one competing with the last, and each one a little better than the last? Having taken four such drugs now, I can tell you that I am extremely grateful for the industry competition that gave us some drugs that do not keep me in bed half the day or puking my guts out at night or unable to eat in the morning because of nausea. For two years, I could barely function on the first group of protease inhibitors. The feds would not have been able to come up with a single drug in the same time. Look at the socialized medical systems in Europe you love so much. How many new anti-HIV drugs have they come up with? There's a reason why the international pharmaceutical industry is now almost entirely based in the U.S. This country is the last place on earth that values innovation and success over envy and resentment. That's why 10 years ago, five out of the top 10 best-selling drugs came from Europe, and now only three of the top 25 do. And you want to replicate that success rate over here?

As to Africa, I'm all for trying as hard as possible. I just think you don't have a clue how an effective anti-HIV program could be enforced. In South Africa, the most promising country, the government has only just acknowledged that HIV and AIDS are connected. And of course the local clinics say they can cope. You think they're going to turn down the equivalent of a lottery ticket for the sake of intellectual honesty? Dream on, bubba. The reason the drug companies have been so generous is that they know none of this will actually happen. This plan for Africa is not serious. It's just grandstanding from internationalist liberals.

You then argue that drug companies are different from other technological companies because "consumers don't have to buy their products if they don't want to." I think this is the crux of your case. Lets unpack this. Strictly speaking, no one has to buy any drug, especially not the latest, hippest, best one. In most cases, there's a cheaper and worse alternative. If we're both honest, we'd say the following: There's a trade-off between innovation and accessibility. If you move this system to the one you want and put price controls on pharmaceuticals, or use government power to regulate this industry and confiscate its profits, you may well be able to make some new drugs more affordable for more people now. But you will also kill off the financial incentives for new research and halt medical progress. You may have some drugs today; but you will have many fewer drugs tomorrow. Given the enormous social savings of this research, I think this is a fool's bargain. If you don't think this scenario is likely, look at pharmaceutical R&D over the last 15 years or so. Most years, it grew at a phenomenal rate of around 12 percent to 15 percent, leading to the pharmaceutical miracle we are now experiencing. There are two exceptions—1993 and 1994—when Hillary Clinton attempted her government take-over and R&D collapsed to around 6 percent growth. Investors aren't dumb. They knew what that meant. And they pulled out. The same is happening now on a smaller scale. If Gore had won the election, who knows what damage would have been done to future scientific research.

You raise two canards. You don't like research on me-too drugs. But these create competition. How would you like to see another industry where there were no copycat products? Only Dells. No Gateways or Apples or Toshibas or Compaqs. Drugs should be no different. You loathe drug marketing. But why shouldn't a company market its products? These companies are trying to sell things. Consumers want to buy them. Your assumption that consumers cannot be trusted to read an ad or look after their own bodies is condescending. Just the other day, I saw an ad for a new HIV drug that combines three I already take. It saved me and my health insurance money. I wouldn't have seen it but for the ad. Is that so wrong you would recriminalize it? In my view, patients are often better guides to what works in their bodies than doctors or governments. I interviewed five doctors before I found my current one. I trust their judgments like I trust any professional—but I trust my own instincts first. Let freedom ring. Besides, if consumers want to spend much much more money on pharmaceuticals, that's their choice. The soaring rate of drug costs is not because of price-gouging but because of demand. I think consumers are onto something. They know there is no better product out there right now than prescription drugs—in terms of quality of life per dollar. And you think you know better than they do. Guess what. You don't.

Let me address the hard question for my side. There's a brand new drug, the product of expensive research, that ameliorates, say, Parkinson's. But it's too expensive for most Parkinson's patients. What do you do? My view is: nothing. It's a brutal consequence of a system that generates this kind of innovation that its products will not be instantly available to everyone as soon as they are produced. Once the patent runs out, the drug will be affordable. Until then, medicine is a product like any other—you can only buy it if you can afford it. If you really wanted to make this available to everyone—the way anti-HIV drugs are made available through government subsidies—then the government should step in and pay the cost. That's fair and honest enough—especially if it really is a life-and-death drug or can stop an epidemic. The trouble is, governments don't like to concede this kind of trade-off, hate raising taxes and telling their constituents the brutal truth, so they blame the industry for price-gouging and then threaten them with confiscation of their profits. Will you be honest and say that you're comfortable with this trade-off or are you going to continue to argue that there's a free lunch out there, denied us because of the greed of the drug companies?

Just asking,
Andrew

dialogues
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123456
from: Andrew Sullivan
to: Merrill Goozner

Posted Wednesday, April 11, 2001, at 3:00 AM ET
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Merrill Goozner, former chief economics correspondent for the Chicago Tribune, is a professor of journalism at New York University. Andrew Sullivan blogs at the Daily Dish.
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Reader Comments From The Fray:


Here I was clicking on this "Dialogue," ready to agree completely with Mr. Sullivan, my state of libertarian high dudgeon well prepared. But Mr. Goozner has made me see the error of my ways. His arguments are very persuasive. They are so persuasive, in fact, that I wonder why we shouldn't simply nationalize the entire drug industry.

1. If indeed most basic drug research is taxpayer funded, then we'd be cutting out a lot of middlemen by simply banning private drug research. Maybe we'd let Merck set up a branch office at NIH, to retain some tradition.

2. We'd have socially responsible research. As Mr. Goozner says, we don't need more variations on heartburn drugs. Left to the government, we'd only get the drugs society really needs. In particular, I bet Sen. Thurmond would be really interested in appropriating more money for anti-agathic research. I wonder what the fair price of a pill that adds two more Senate terms to your life would be? I bet Mr. Goozner knows the answer to that question, and that he'd be happy to help write a law fixing prices at that level.

3. If indeed most useful drugs have licensed patents, then we could save a lot of money by simply seizing all of these patents using eminent domain. Since "public and nonprofit" groups hold the majority, according to Mr. Goozner, we wouldn't be depriving them of any meaningful assets--after all they're not being used for profit in those cases (it's not like we're seizing a school's classrooms!). And these organizations would have access to them at the new Bureau of Drug Development's pleasure anyway (after they fill out the requisite forms, of course).

4. Mr. Goozner says that private firms should be compensated for their work, and that they continue to play a role in what he calls a "public health" endeavor. Why? From his previous arguments I can see no aspect of drug development whatsoever that government would not perform more efficiently and ethically. This part of his argument reads like a disclaimer, along the lines of the sort many conservatives employ when, after offering brilliant arguments for deregulation, privatization, etc., they write something like "But of course the government has an important role to play...". Maybe so, but what?

--Ananda Gupta

(To reply, click here.)

(4/11)

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