Let’s return to being unexceptional. Americans deserve drug prices in line with those in other countries. They don’t deserve a constant barrage of confusing and misleading ads.
Advertising is the lesser of two evils and the simplest to counter: Just stop it already. Important voices have already made that recommendation.
Here’s what the drug makers are ignoring: “[The AMA’s] vote in support of an advertising ban reflects concerns among physicians about the negative impact of commercially-driven promotions, and the role that marketing costs play in fueling escalating drug prices….Direct-to-consumer advertising also inflates demand for new and more expensive drugs, even when these drugs may not be appropriate.”
Cutting drug prices presents a bigger challenge than cutting out drug advertising, but the rewards would be huge.
The research findings used to stay in the public domain, available to any company that wanted to use them. In 1980, the bipartisan Bayh-Dole Act made a watershed change: It allowed for the rights to be turned over to private parties.
While the point of Bayh-Dole was to hasten the harnessing of basic research, it also sent the price of drugs soaring. Spending on prescription drugs had been largely stable at around 0.4% of GDP from 1960 to 1980. In the decade after Bayh-Dole, it had doubled to 0.8%, and it doubled again in the next decade.
We now have this bizarre mindset that we have to give drug companies patent monopolies to get them to develop drugs or vaccines, even when the government is paying for the bulk of the research. The pandemic is showing the absurdity of this practice.
As one example, Gilead Sciences developed the drug remdesivir, largely with government funding, as a treatment for Ebola. While it turned out not to be an effective treatment for Ebola, it is somewhat effective in treating the coronavirus. Gilead is charging private insurers $520 for a single vial of remdesivir. Its actual production cost has been estimated at less than a dollar a dose.
The Trump administration is taking the same logic to developing a vaccine. Operation Warp Speed is a $10 billion government program to develop, produce and distribute a coronavirus vaccine. At least four Warp Speed contracts (to Janssen, Regeneron, Genentech and Ology Bioservices) exclude standard language “meant to ensure that products developed with federal funds are affordable and widely available.”
In effect, the government is putting up most of the money and taking the big risks. If one or more of these developers hit a dead end, they will still have been paid for their work; the government is out the money. But if they succeed and develop a life-saving vaccine, the government will give them a patent monopoly and allow them to charge whatever they want, with no restriction whatsoever.
It shouldn’t be too radical a proposition to say that drug companies only get paid once. When the government pays for the research, the drugs or vaccines developed are in the public domain, so they can be produced and sold by anyone as cheap generics.
It would be a great thing for humanity if a low-priced coronavirus vaccine became the first example of a new prescription drug policy in America.