Most of the time I take it for granted that a magic potion keeps me alive.
If you do stop to think about it it’s scary. When you hear about the price of any lifesaving drug going from $13.50 to $750 overnight, it makes you sit up and take notice. This is exactly what happened when a company purchased Darapim a drug used to treat deadly infections in people with AIDS or transplants. There was a lot of outrage in the US, the vileness of the price rise being about the only thing that Donald Trump, Hilary Clinton and Bernie Sanders are on record for agreeing upon.
As immoral as this decision is, the man who made it, has articulated brutally what most people refuse to admit. According to Forbes magazine, Martin Shkreli said if he had his time over again, he would have put the price up even more because he has an obligation to maximise profits for his shareholders. He pointed out that healthcare prices are inelastic (meaning people don’t buy less/more when prices rise/drop) and, therefore, he should put the price up as high as he can.
Is there an economic or moral line where enough is enough when it comes to healthcare pricing? It’s hard to think of a prouct with a less elastic price than insulin and that’s a bit scary. Does capitalism and the profit motive have a limit? I suspect most people other than Martin Shkreli think there is. Most governments exert some control over medicine prices and they help their citizens pay for them and the pharma industry have been quick to disassociate themselves from Shkreli. The CEO of Merck is quoted in Forbes as saying “I think it’s really important for our industry to make it clear that he is not us. We are a research-based pharmaceutical industry.
Where you draw the moral line on drug pricing is an interesting question. Pharma argue that they need high prices to recoup the cost of research and development.That’s fair enough, since governments stopped funding any such research through universities and government labs it’s been pretty much left to for profit companies and it is expensive to bring new drugs to market.
But what’s fair and who decides? If a company is recouping its costs selling a chemotherapy drug that is subsequently discovered to be beneficial at 1/40th of the dose to treat macular degeneration, is it right for the company to tweak a few things, rename the drug and jack up the price by over 1000%? How much evidence of efficacy should be required of a change to the drug’s formulation before the price of the new drug is deemed acceptable? What about selling an existing, about to come off patent drug in a more concentrated form? Does this represent a new drug? I don’t know but I’d want some pretty good evidence of improved performance before it was accepted as a new drug at a price comparable to that of a newly patented pharmaceutical.
What do you think about drug pricing? When does profit seeking become profiteering? Do you think drug production costs are transparent enough, given the level of government subsidisation involved? Should the government subsidise every new drug as a matter of course? How much of an improvement should be required to justify increased cost?
Can you think of any better ways to encourage research and innovation in pharamceuticals?