The Democratic Party’s health care agenda would seem to be in dire straits. While a Medicare for All–style overhaul of a health care system whose frailties were so glaringly exposed by the Covid-19 pandemic was never quite in the cards, Democrats had at least appeared intent on including a slew of needle-moving measures in the impending budget reconciliation bill, including an expansion of Medicare benefits and making Obamacare subsidies both permanent and meatier. Even as austerity fetishists like Joe Manchin squealed about pay-fors, the bill’s provisions to cut prescription drug prices promised to bargain down federal spending and offset these more generous public insurance benefits.
But a handful of House Democrats have turned against the proposals to empower the Department of Health and Human Services to negotiate prices for medicines directly with manufacturers. This has already put a ubiquitous campaign promise on an issue with some 80 percent public support in jeopardy—and that’s before centrist senators like Kyrsten Sinema have had their chance to damage it further. With Nancy Pelosi, Chuck Schumer, and President Joe Biden himself turning the screws into their bucking colleagues, and reporters breathlessly covering every move of the showdown, it’s worth reiterating the obvious: Pharmaceutical companies have way too much power, and the only sustainable solution to the misery that results from that involves taking the necessary steps to ensure they have far less of it in the future.
Big Pharma’s chokehold around the U.S. political system surpasses that of practically any other industry. Its immense power relative to most of the other stakeholders in the $3.5 trillion health care sector stems from many factors, but it begins from what it does. Unlike, say, health insurance, the pharmaceutical industry performs a socially necessary function with no public competition: While officials were ultimately willing to regulate insurers’ most egregious practices and expand Medicaid to plug some holes in private coverage, there’s no public drug manufacturing to offset the pharmaceutical industry’s constant warnings that targeting its business model could undermine innovation. (There should be! More on that later.)
And as colossal as the hospital industry is, it’s a labor-intensive service provider, whereas drugs are pure commodities. And these commodities rake in billions of dollars, thanks to their uniquely plum treatment within U.S. law: Not only do drug companies unilaterally name their prices, they benefit from long-term private patents (often forged from publicly funded research conducted at mind-bogglingly flush universities); have carte-blanche permission to advertise nonstop directly to patients; bankroll one of the most formidable lobbies in Washington, regularly buying off both of its major political parties; and sponsor conferences and major events across the industry.
Such amazing fortune, of course, begets more of it: The pharmaceutical industry has some of the highest profit margins in the world, applying ever more upward pressure to increase already eye-popping rates of return. Thanks to the pesky fact that capitalism is predicated on endless growth, private firms tend to want to keep profits steadily climbing—particularly when buying drugs-in-progress from smaller companies, or the entire companies themselves, is such a common pathway to bestselling new products.
Drug companies’ status as titanic moneymakers directly impedes the regulatory process, as their sizable paychecks constantly beckon employees away from government agencies and send them back into higher positions, forming one of the most cynical “revolving doors” in politics: One recent study found that a majority of workers who exited the Food and Drug Administration went to work for private drug companies, often for those whose lucrative drug approvals they personally oversaw. It also spins in the opposite direction, and on a bipartisan basis: A current White House counselor, as well as Trump’s HHS secretary, both spent much of their careers working for Eli Lilly, the most notorious insulin price-gouger.
And while the go-to argument of the pharmaceutical industry’s P.R. outfits is that they need all of this cash to facilitate innovation, the real world implications of the profit-driven system are far less rosy. Too often, what these companies are “innovating” is new ways to circumvent patent law—like making superficial changes to a drug to buy more years of sales exclusivity or suing the pants off would-be generic competitors. Knowing they can afford to recircuit the regulatory process to bring to market drugs that add practically nothing to the existing pool, they have little reason to bother trying something new instead.
As drug-pricing experts Aaron Kesselheim and Jerry Avron recently explained for The Washington Post, “Paying any amount a manufacturer demands creates incentives to produce lucrative products that involve less financial risk because they continue down well-trod biochemical pathways or provide only incremental changes to existing medicines.” And that’s not even to mention the most devastating impact of soaring drug prices, which of course isn’t on federal budgets but on patients themselves, who struggle to pay for the drugs they’re prescribed and routinely skip using the medicines they need because the costs are too high.
It’s no surprise that drug pricing is so hard to solve. The immense power of the pharmaceutical industry keeps these prices artificially inflated, and those profits fund knock-down-drag-out fights against change—as well as deterring politicians from spending political capital hitting back. Things have finally gotten bad enough that the overwhelming majority of Democrats are unified in their intent to do something about it, but a few with majority-breaking power have nevertheless made the calculation that it better serves their interests to side with capital than against it. It’s natural to assume that this is Kyrsten Sinema’s endgame: After several years in politics, she knows damn well that catering to business rather than the American people can be an awfully lucrative gig, particularly when the only downside of pissing off the voters who sent you to Washington is walking through that constantly revolving door, straight into one of any number of industries to whom you sold out your constituents.
Whatever happens with drug pricing in the coming weeks, this context ought to make it clear that price cuts aren’t enough to overhaul Big Pharma. Reining in exorbitant drug spending is a worthy goal but won’t do enough to squelch the industry’s power to undermine productive change—not to mention ease pressures on patients bilked by sky-high deductibles that force them to shell out steep sums regardless. Publicly manufacturing drugs rather than sourcing them from the nation’s most reviled industry would go much further to address the root of the problem, if only the patients who’d benefit could muster the power to demand it.