When it comes to US healthcare and insurance, we have a tendency to sensationalize the details until we’re missing the big picture.
Martin Shkreli is one of our most vilified champions of pharmaceutical industry greed, but in reality, he is just the brazen face of a system that’s successfully price gauged its consumers for decades. As Rep. Elijah Cummings put it during Shkreli’s Congressional board hearing, “The way I see it, you could go down in history as the poster boy for greedy drug company executives or you could change the system.”
When we try to account for the fact that the average drug spend for Americans in recent years has been almost $1000, and that pharmaceuticals is the most politically involved industry based on campaign donations, we start to recognize that in reality, Shkreli was an easy scapegoat for decades-long corruption within the industry.
One of the more major issues comes when drugs are approved by the FDA. They can be explored with special interest at heart, but once approved, the drug manufacturer has absolutely no obligation to base its pricing on any appropriate or reasonable measures such as comparable costs in other regions or cost of production.
When we hear about various companies “raising the prices on life-saving drugs”, what they are doing is entirely legal and, to the individuals selecting these prices, justifiable, as they are only made responsible for such a decision as financial advisors, not industry or medical experts, in order to garner a profit. There are many branches of decision-making to the pricing and gauging process that remove sole responsibility from the investors, the pharmaceutical company, and everyone in between.
Another feat of the pharmaceutical industry has been to take advantage of an environment in which the federal government is responsible for paying all of the drug costs for Medicare consumers using any given medication. Medicare does not have the power to negotiate these prices, which means that the same freedom in pricing impacting the average insured consumer is also coming directly out of our pockets.
Finally, when we look at pharmaceuticals, we look at the people consuming the goods. Taking into account the baby boomer generation moving into Medicare or similar circumstances, we get that costs will go up, but we are still consuming more than any other country. We have a great market for pharmaceuticals with quicker access to drugs with less gatekeeping, and we pay more for each one. Commercial insurers are forced to accept the cost of drugs with no competitors (usually newer medications), and they respond by raising out of pocket expenses on their insureds.
This is a rampant issue with decades of precedent that is on the forefront of the presidential races. We can manage our drug spending by avoiding overmedication or dual-treating single conditions, as well as by sticking with generics wherever possible, but our options are limited. Something’s gotta give.