There are only a few things that can bring the nation together these days: demand for Marianne Williamson to appear in every Democratic debate moving forward, binge-watching Seinfeld several times, and disdain for the pharmaceutical industry. For years, Big Pharma has been the go-to target for Democrats and Republicans, even though politicians have received hefty campaign contributions from these companies. Although the public has the right to lambast its cronyism, the sector has done better for the nation than our esteemed representatives would care to admit. It just goes to show that leaders always need a bogeyman to stir national resentment as a pathway to public office.
Johnson & Johnson’s HIV Vaccine
Johnson & Johnson, a multinational pharmaceutical juggernaut with $82 billion in revenues, will test an experimental HIV vaccine in the US and Europe within the next six months. It is also in the process of performing a phase two clinical trial for the vaccine in Africa, experimenting on 2,600 women in five countries. The pharma behemoth confirmed to Bloomberg that this new product is a preventative immunization that goes after a wide array of strains of the HIV virus. The results of these trials will be released by 2021.
In April, J&J filed an application with the Food and Drug Administration (FDA) for a monthly injection treatment for HIV. The company, alongside GlaxoSmithKline, reported that the shot was as effective as standard daily pills for controlling human immunodeficiency viruses. This is a huge development for the 1.1 million people in the US, and two million individuals in Europe, who live with HIV. It is a virus that targets your immune system and, when left untreated, the disease can develop into AIDs, which can kill patients after just three years.
The White House recently promised to eradicate the HIV epidemic in the US by 2030. President Donald Trump successfully reached a deal with Gilead Sciences, a pharma titan, to donate $20,000 worth of Truvada, a preventative medication that limits the risk of transmission for up to 200,000 people a year. The agreement is for at least six years and could extend into 2030. By then, a generic version of HIV drug Descovy will likely be available on the open market.
Making Society Healthier
Some of the biggest diseases in the history of the world proved devastating in the 20th century, including polio, tuberculosis, yellow fever, smallpox, and pertussis. Cumulatively, tens of millions of people have died from these illnesses all over the world. However, thanks to research, development, and investment, many diseases that were common 50 years ago have been all but eradicated today.
Then, there are everyday health issues that cannot be cured with healing crystals and the power of positivity. From respiratory problems to cardiac difficulties, certain prescription drugs are necessary to survive and eventually eliminate these ailments. Now, there is a legitimate argument to be made that the developed world is overprescribed and drugged out, consuming medications that ignite a plethora of side effects that will need prescriptions of their own. For the most part, however, it is preferable to have these products on the market to treat health issues than nothing at all.
So, who’s to thank? Big Pharma.
Drug manufacturing and vaccine development are not easy. The process requires multiple stages, including exploration, basic research, clinical studies, regulatory review, manufacturing, and quality control. It can take as long as 15 years before a vaccine becomes publicly available. As you can expect, this is not cheap. Many would likely surmise that staffing and laboratory equipment are the most expensive part of developing a vaccine or a drug. But they are not. It is the red tape process with regulatory authorities that can cost as much as $3 billion. If one wants to rein in costs, then the answer is to take an ax to regulations.
How to Lower Drug Prices
One of the chief complaints about Big Pharma is the seemingly endless triple-digit price hikes that occur every year. But there is more to the story than just greedy corporations. In addition to burdensome regulations, there are three (or four) other causes.
The first is the paucity of competition at home, which is caused by cronyism and big government. Some of the largest pharmaceutical companies in the United States enjoy monopoly privileges because the FDA prevents other firms from selling alternative or generic versions of drugs. Then again, you could still make the libertarian case that these companies invested money, time, and resources in development, so why should others get the benefit?
The second issue is public financing. The cost of certain drugs and vaccines are covered by taxpayers and not directly by the beneficiary. If there were no Medicare or Medicaid, then patients would need to pay the $20,000 or $250,000 directly, which is not possible for most Americans, meaning that these businesses would be unable to make money. Therefore, companies will use the government tool of rent-seeking instead of finding ways to boost sales through traditional business methods.
The third way to lower pharmaceutical prices is importation. The US government prohibits importing most kinds of drugs, enabling domestic firms to spike prices without fear of global competition. So, for instance, when Martin Shkreli raised the price of Daraprim from $13.50 to $750, the public was right to be outraged. How could you take someone like Shkreli out of the equation? By permitting the importation of the same drug from India, which costs only pennies. Rather than spending millions on developing drugs for a fraction of the population, it would be cheaper, more efficient, and time-saving to import foreign drugs.
Finally, some contend that the rebate system has artificially raised drug prices, though the evidence is scant. These are discounts that companies provide to middlemen, like pharmacy benefit managers, in exchange for better insurance coverage. Still, it is an argument worth exploring.
While presidential candidates and incumbent leaders want to use the weapon of government to attain a modicum of economic justice, they should put away their arms and stand down to allow the free market to deliver the goods – affordably and efficiently.
President Donald Trump has thrown down the gauntlet and promised to slash pharmaceutical prices. He has tested a variety of methods so far, from public shaming to mandating that companies reveal drug prices in television advertisements – an effort that was blocked by a federal judge. Others, meanwhile, have suggested tying prices in the US to the median cost in places like Canada, the UK, and Japan – proponents typically ignore that these countries are freeloading off American drugs. There are also proposals to enhance the soon-to-be insolvent Medicare.
The Ds and Rs have different big government approaches, but, like every other contentious issue, there is never a free-market solution floating around. In the meantime, can we please give a moment of thanks to Big Pharma? Without the industry’s capital, manpower, and resources, perhaps the world would not enjoy the vaccines and prescriptions we have today, eviscerating ailments that have paralyzed populations in the past. Sure, it can be crony, but this is still preferable to not having the sector at all.
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