Friday, December 18, 2009

America's drug lords

About fifteen years ago, when I was still living in Canada, I took a railway trip from Seattle to Denver. The person in the seat next to me was a Japanese American. Somehow as we talked through the night, he happened to mentioned that a neighbor of his had recently gone into bankruptcy as a result of medical expenses. The man in the family had had a heart attack, which led to a short stay in hospital. By the time he was released and had had all the interventions his physicians recommended, his hospital bill was considerably higher than all the money he had put into his retirement plan. After losing all his savings, he sold his house, and even then did not have enough to pay all his medical expenses. As I listened to this story, the thought crossed my mind that I was having a conversation with a lunatic who entertained himself by making up unbelievable stories. Surely, I thought, no country could be so primitive and backwards that it would not provide for the medical needs of all its citizens. Since moving to the United States, I have learned that such stories are not uncommon, and that the United States is indeed a country so primitive and backwards that it does not provide for the medical needs of all its citizens.

Recently I had a first-hand experience that demonstrated to me just how dysfunctional the health-care system in the United States is. I was prescribed a medication called Lovenox (enoxaparin sodium), an anti-coagulant that helps the body deal with blood clots. When I went to the pharmacy to pick up my prescription, the pharmacist told me it cost $171. My first thought was that for some reason my insurance plan did not cover this medication. The reality, however, was that my prescription drug insurance plan does cover the cost of this medication. The dosage I was prescribed costs $1300, all but $171 of which was covered by my health insurance. A search on the Internet showed me that the same dosage in a Canadian pharmacy costs $292.

For years I have known about the difference between the costs of prescription drugs in the United States and in Canada. It is not unusual for name-brand prescription drugs to retail for a fraction of the retail price in the United States. (In the case of Lovenox, the Canadian price is 22% of the price in the United States.) What accounts for such a discrepancy? The answer is simple: government regulation. Canadian regulations allow for pharmaceutical manufacturers to make a reasonable profit; they do not allow pharmaceuticals to be sold at a price several times the cost of production. As a consequence, name-brand pharmaceuticals typically cost only slightly more than their generic counterparts.

Pharmaceutical companies in the United States have taken advantage of (and helped promote) the widespread paranoia in American culture about “big government.” By pinning the emotive label “government interference” on all attempts to protect consumers from the kinds of inflated prices that merge in a “free market economy” dominated by a few giant corporations that have squeezed small players out of the game, those with a vested interest in maximizing their profits have managed to convince much of the American public that it is in the interest of all Americans to have unregulated markets. The results of the blind prejudice for free-market capitalism—a prejudice that has prevailed since at least the end of the Second World War—have been escalating medical costs, housing bubbles, and massive personal credit-card debt exacerbated by exorbitant interest rates. In the war on the public being waged by unregulated capitalists, the capitalists have won one campaign after another, and all but a tiny percentage of the public has suffered constant defeat and humiliation.

A friend of mine from Vietnam told me once than in his village there was a proverb that went something like this: “By ridding the village of bandits, we make room for the pirates.” He reported that where he grew up there was a sense of fatalism that no matter what one does to try to eliminate rogues, charlatans and crooks, the dishonest are always a step ahead and ready to bend every law to their own advantage. Ordinary people, and especially honest people, were thought not to stand a chance against those who were determined to take advantage of them. Perhaps that comes close to being a universal story of the world. What people often fail to recognize is that the sense of fatalism constantly works to the advantage of those who are out to take care of only their own interests, no matter what the consequences for everone else. Failing to be outraged by outrageous circumstances only serves to perpetuate them.

In my enounter with outrageously high pharmaceutical prices, I more or less got off the hook. I had an insurance plan that absorbed the costs. People without such insurance plans face either a life of untreated medical conditions that shorten their lives or make their lives less comfortable, or a life of financial hardship. And those of us who are fortunate enough to have insurance plans that pay the unnecessarily high medical costs face having to pay higher and higher premiums. Insurance companies are no less interested in making high profits than pharmaceutical companies. And they are no better regulated.

If America were a democracy with an informed electorate, people might be better protected from the drug lords and insurance moguls. Unfortunately, America has not been a representative democracy for quite some time. No candidate who is not backed by big finances has a chance to be elected. This means that almost everyone who is elected is at least as indebted to those who have financially backed their campaigns as they are to the citizens who voted for them. Hardly anyone has an interest in looking after the welfare of ordinary people. There is no money to be made in caring for people and maintaining a compassioante society. Being shameful and dishonorable in our society carries with it no penalty more severe than having to endure the scorn of an occasional blogger.


Anonymous said...

A few things you may not have considered, from a fairly unbiased source: Drug Costs

Anonymous said...

Hi Richard,
Your insurance coverage isn't nearly as outrageous as mine is because of the treatment I must have every 8 weeks. It's the only treatment for RA that's effective, and each treatment is billed to Medicare and to my supplementary ins. outfit at $4500+. My supplementary monthly premium is now $200 per month and I expect it to go higher. Other big pharma companies have similar meds for the same treatment, at similar or higher scandalous costs. When I asked my doc. about if I'd go into remission on this med, he advised that if I seemed to, eventually it would revert to symptoms again. I try not to think about the cost to the US citizens for, say, 8-10 more years of this before I kick. Makes me feel terrible--that our government allows big pharma to lay such outrageous charges for their meds. The research necessary to develop these is paid back fairly quickly, but the scandalous charges go on indefinitely. They will also fight to keep these meds from going generic.
Clever bombardments of propaganda perpetrated mostly by radio (even TV isn't as outrageously political as Talk Radio--TV just provides bread & circuses) has convinced the frustrated, outraged and deprived citizenry that government is evil.

Dayamati said...

There is a commonly believed myth, probably originating in the board rooms of pharmaceutical companies, that the high prices Americans are paying for medications are subsidizing the Canadian health care system. The claim is that the high costs of medications in the USA provides money that goes into medical research from which Canadians benefit but for which they do not pay.

That argument overlooks the fact that in the United States the pharmaceutical industry spends $100 million a year in campaign contributions and lobbying expenses to protect its profits. It also pays for advertising its products. Why should medications be advertised at all to the general public? Why should people be encouraged to "ask you doctor about Formula X"? Why should people be encouraged to believe that they may have a condition (such as restless leg syndrome) that requires pharmaceutical treatment? It is the lobbying and the advertising in the USA that Americans are paying for with exorbitant drug prices. It is not Canadians (or Europeans or Japanese or Cubans or anyone else with reasonable medical costs) that Americans are subsidizing.

Dayamati said...

I am aware that my $1300 Lovenox subscription is not especially high by American pharmaceutical standards. A friend of mine has been prescribed a cancer treatment that costs $16,000 a month.

Someone else I know was a government employee for his entire life. Many government employees are not eligible for medicare when they retire. As his age keeps increasing, so do his insurance premiums. Last he told me, they were now at $24,000 a year. If he had not inherited a substantial amount of money when his father died, he would be unable to pay such high premiums and would either be dead or among the growing number of Americans who are alive but bankrupt. (A recent study showed that 62% of all bankruptices in the USA stem from medical costs, a figure that has risen 50% since 2001.) See