Tag Archives: drug costs

A Different Drug War

A recent post at Daily Kos considered a different and less recognized “drug war.”

Let’s talk about the other drug war: The one being waged against the American consumer by the pharmaceutical companies who benefit from our tax dollars that fund basic scientific research and make up the difference in the tax relief they receive for their own research and development.

The post was prompted by the recent steep increase in the price of the Epi-Pen. Among other disclosures, it turns out that the company that manufactures the pen had moved its headquarters to the Netherlands in 2014, a move that allowed its tax rate to fall from 14 percent to its current 7 percent.

The fact that the company and its well-connected management are making out like bandits by stiffing those who need the devices is bad enough, but as the post points out, it isn’t even recovering its own costs of research and development.

The mechanical device in the EpiPen to deliver epinephrine was developed in the 1970s by a NASA engineer. It was designed for the rapid self-injection of antidotes to chemical warfare agents in battle, and in 1987 it was approved by the FDA for use with epinephrine. Epinephrine itself is a human hormone, first isolated by Japanese scientists in 1901. So the drug couldn’t be patented, although the device itself, the same one created by a government employee, was. The logical assumption, of course, is that a technology developed by a NASA engineer would be owned by all Americans. But it is not.

This is an excellent example of the Achilles heel of arguments advanced by drug companies defending exorbitant prices.

Big Pharma makes the case–correct as far as it goes–that the development of new therapies is expensive. Many promising avenues of research fail to pan out; testing and the regulatory process for vetting drugs is expensive and time consuming. If companies are to continue to sink money into the development of life-saving drugs, they need a financial incentive to do so–a promise that they will recoup their costs and make a reasonable profit.

What they don’t mention is that significant percentages of drug development costs are paid for by government grants–by the many millions of taxpayer dollars that support medical research. (They also don’t mention that, by some calculations, Big Pharma spends more on those interminable television ads than on research. Purple pill, anyone?)

It is especially galling that American consumers are charged more for drugs developed with substantial taxpayer support than consumers of those same drugs in other countries. It would be one thing if our tax dollars subsidized the cost of medications across the board, but it is really unconscionable that the same people whose taxes helped pay for the development of medications are also being charged more for those medications.

Lobbyists for the drug companies have managed to get laws passed that prohibit U.S. government agencies from negotiating drug prices as other countries do. At a bare minimum, those laws need to be repealed.