Thursday, February 09, 2017

Pushing drugs, American style

Watching the news makes people sick

At the outset I must confess to being addicted to watching the news on television. Although my favorite televised news sources are on PBS, on most nights I supplement the PBS News Hour with the news on one of the traditional network stations or a cable news channel. Something that has repeatedly struck me in watching the evening news on traditional network stations is that advertisers have obviously learned that the vast majority of people who watch the evening news are suffering from indigestion, irritable bowel syndrome, erectile dysfunction, atrial fibrillation not caused by a heart-valve problem, moderate to severe psoriasis, rheumatoid arthritis, osteoporosis, depression, insomnia, restless leg syndrome or dry eye disease. If not afflicted by one of those conditions, they are being assaulted by meatballs or chicken wings.

Not all the commercials are pushing drugs, of course. Interspersed with all the pharmaceutical products are commercials featuring lawyers who are prepared to sue pharmaceutical companies for offering products that have life-changing side effects, and health insurance plans that complement Medicare to provide coverage to pay for all those pharmaceuticals that TV viewers are urged to ask their doctors about. Given the evidence of television commercials, remarkably few of the people who watch the televised news are under the age of sixty-five and have sound minds in sound bodies. 

An often-heard claim of those who are convinced that the Affordable Care and Patient Protection Act has all but destroyed the health-care system in the United States is that the ACA (which they persist in calling Obamacare) has driven insurance premiums through the ceiling, thus bringing financial ruin to small businesses and confronting hard-working Americans with having to choose between health insurance and sending their children to overpriced universities. What is missed in this analysis, of course, is that health insurance is expensive because medical care and pharmaceuticals are expensive. Also left out of consideration is that almost every pharmaceutical product sold in the United States is available in Canada for a fraction of the cost.

Why don’t Canadians pay their share of the cost of drugs?

A claim I have heard many American make, clearly a claim that they have learned from the pharmaceutical companies themselves, is that the prices of pharmaceutical products are so high in the United States because it costs pharmaceutical companies a great deal of money to do the research necessary to develop new products. Some American friends have even showed indignation that Americans are subsidizing Canadians, who derive all the benefits of expensive medical research but pay none of the cost. Once, when I was still living in Canada, I received an email from a (former) friend in the United States who accused me, in language unsuitable for anyone not in either the navy or a motorcycle gang, of being a freeloader who was enjoying good health at the expense of poor Americans. That claim was false for two reasons. First, I have almost never been prescribed a pharmaceutical product and tend to avoid over-the-counter medical products. Second, there are better explanations for why pharmaceutical prices are outrageously high in the United States. So the answer to the question “Why don’t Canadians pay their share of the cost of drugs?” is that they in fact do pay their fair share. Americans pay more, not because they are subsidizing freeloading Canadians, but because Americans pay far more for products than it costs to develop and manufacture those products.

Why do Americans pay for overpriced pharmaceuticals?

The pharmaceutical companies typically claim that they must charge high prices for their products because of the high cost of developing them. It cannot be denied that running controlled tests on new products and making sure the products meet safety standards is costly. It should also be pointed out, however, that advertising the products once they are developed is also costly. To that can be added that pharmaceutical companies also tend to pay shareholders rather high dividends. When health care products are manufactured by for-profit corporations that have investors to reward with high dividends, then costs naturally rise. While the claim of many advocates of free-market capitalism is that competition keeps costs down, the opposite is often the case. If two companies are competing for a share of the market, the cost of the competition—the advertising of products to potential consumers of the products and to potential prescribers of those products—can be quite high. 

Neither of those kinds of advertising is necessary. There is no justification whatsoever for running expensive advertisements on television that end with the line “As you doctor whether…is right for you.” There is no need to make the patient into a sales representative for a product that the patient may end up buying. If someone has, say, osteoporosis, then it should be sufficient for the physician to suggest a range of possible treatments, and to tell the patient the desired effects and the likely side effects of each of the possible treatments. And that information should be given directly to the physician in the form of the results of clinical trials, not in the form of slick presentations delivered in the context of work-vacations at expensive resorts. The cost of disseminating objective information is relatively low, whereas the cost of trying to persuade a physician to prescribe product A rather than the almost-identical product B is much higher. 

One way to bring medical costs down is to make advertising of medical products illegal, as it is in some countries that have lower costs for pharmaceuticals and hands-on medical care. Another way is to have government-imposed limits on the amount of profit a company can make on a product, as is also the case in some countries that have reasonable consumer-costs for health-related products. A third way is to have a government-run insurance plan that negotiates prices with pharmaceutical companies and imposes a cap on how much a pharmaceutical company can receive for its products. There is no need for a government-run plan to be managed by the central government. In Canada each province has its own plan, and no two provinces have exactly the same setup.

Health care is far too important to be left to the vagaries of markets in a for-profit corporate scheme. The good health of the entire citizenry is far more important than the bank accounts of capitalist shareholders. There are plenty of other markets in which investors can make or lose their money. Pharmaceutical companies, manufacturers of medical devices, clinics, hospitals and retirement homes for the elderly should not be in the private investment sector of the economy. (Neither should correctional facilities, but that is a matter for another day.)

Americans desiring affordable health insurance should first advocate for more affordable treatments, and that is best achieved by a not-for-profit health-care system. They should be asking for, in fact demanding, more government involvement and less private-sector investment in products designed for health. Such a change in outlook would, however, require that Americans first seek a cure for their addiction to free-market capitalism and the delusion that the best way to keep costs down is to let the market determine prices. That strategy has been tried again and again, and it has failed again and again. It is time for Americans to considered an alternative system (not to be confused with “alternative facts”).

Next time you see a television commercial for an expensive treatment that you have seen a hundred times before, instead of simply reaching for the mute button on the remote control, ask your doctor whether socialized medicine is right for you. If you doctor says No, then consider seeking a second opinion. 

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