By John Perryman, M.D.
Chicago Tribune, Letters, January 10, 2018
In an editorial celebrating “the genius that drives the development of…powerhouse drugs,” the Tribune Editorial Board continues to propagate the fallacy that high drug prices, driven by “market forces,” are a necessary cost to help fund further research. The drug in question this time is Luxturna, a treatment for a rare form of vision loss that comes at the whopping price of $850,000 per patient.
A few points need to be clarified.
First, most large drug companies spend more on sales and marketing than on research and development.
Second, since 1980 and the Bayh-Dole Act, drug companies can feed off research funded by the National Institutes of Health, which they acquire at late stages of development. As pointed out by former New England Journal of Medicine editor Dr. Marcia Angell, the big companies can either license the drugs or buy out small biotech companies carrying out NIH-funded research. In short, much of the research going into these products is funded by taxpayers, not pharmaceutical revenues.
Third, the pharmaceutical industry has a massive lobbying presence, consistently spending over $200 million a year, according to the Center for Responsive Politics. It has more than two lobbyists for every member of Congress and spends tens of thousands of dollars per election cycle. That type of investment is only undertaken when there is a significant return expected. For example, Congress placed a provision in the 2003 Medicare Prescription Drug Benefit that prohibits Medicare from negotiating with drug companies on pricing. Now that’s a return on lobbying costs!
I fully agree that there are many talented and dedicated people working at these companies. However, before we succumb to misty-eyed tributes to the role free markets play in providing miracle drugs, let’s be clear as to exactly what is going on. These companies profit from taxpayer-funded research. Also, as publicly traded for-profit entities, their primary goal is maximizing the wealth of their shareholders.
Those are the facts we need to remember when hearing about high drug prices.