Froma Harrop: U.S. addicted to abusive drug pricing

Consider what got Martin Shkreli in trouble with the law. Shrkeli is the infamous “pharma bro” who bought patents to lifesaving drugs then hiked their prices to obscene levels. In one egregious example, he raised the price of a 62-year-old drug crucial to AIDS patients by over 5,000 percent.

But this money-or-your-life extortion racket isn’t the root of the case against him. It’s whether he lied to investors.

Defrauding investors is illegal. Charging outrageous prices to desperate patients is not (a point that Shkreli himself repeatedly makes). This is the only advanced country that puts its people’s lives at the mercy of corporate barracudas.

For those who think they can stop these gougers through shaming or otherwise showing them the error of their ways, I wish them luck. Better to pitch a harder ball and get government on the side of the public.

Louisiana is plagued by obesity, opioid addiction and other health crises. It has 35,000 residents with hepatitis C who are on Medicaid or uninsured. Hepatitis C destroys the liver, but the drugs to treat it cost $85,000 for a 12-week regimen. Thus, the state decided to cover only 324 patients already suffering severe liver damage. It was that or have little money left for schools and roads.

But Louisiana’s health secretary has landed on a novel approach that other states are watching. Rebekah Gee has dusted off an old federal law that lets Washington regulators sidestep drug patents in the interests of the public good. A panel has advised Gee to ask Secretary of Health and Human Services Tom Price to let Louisiana use the patents at more earthly prices. Just the possibility of taking such measures could get drug makers to the negotiating table.

Gilead Sciences makes the hepatitis C drugs – Sovaldi and Harvoni – but $85,000 is an only-in-America price. Sovaldi sells for about $1,000 a pill in the U.S. while a generic version costs only $4 a pill in India. Canada pays $55,000 for a course of treatment. France recently got Gilead down to a price of about $33,000.

Gilead adopts the Big Pharma line that drug companies must charge huge sums to pay for the research and development of their pathbreaking products. And Sovaldi is undeniably a fabulous drug. But actually, it’s not Gilead’s invention. The developer was Pharmasset, a company that Gilead bought some years ago. Pharmasset, interestingly, had planned to charge only $36,000 for a course of treatment.

Good capitalists can agree that those who develop cutting-edge drugs deserve to be richly rewarded for their efforts. But then Americans must ask why they alone must bear the costs of bestowing the rewards.

The difference is that our government refuses to intervene meaningfully on the people’s behalf. Even our taxpayers don’t seem to matter. General revenues cover 74 percent of the Medicare drug benefit, yet Congress has forbid the government to negotiate the program’s drug prices.

Clearly, the industry needs a new business model in which costs of development are fairly shared. The same goes for breaks on price.

The real problem in American health care is not that we can’t afford what we need. Other countries with far less resources provide as good or better health care than we do. The problem is that, by international standards, we pay inflated prices for just about everything.

Overpaying has become almost an addiction. We don’t think we can kick it, and the default has been to not even try. Until we move the emphasis from “How do we pay?” to “What are we paying?” we will never stop the abusive pricing of essential drugs.