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Big Pharma & Price Gouging

Price Gouging in pharmaceutical industry

In 2015, the US-based company Turing Pharmaceuticals jacked up the price of the toxoplasmosis treatment called Daraprim from $ 13,50 a pill to $ 750. In that same year Canada based Valeant increased their prices of two rare heart disease drugs with 212 and 525 percent.

Europe has the same experience, the British have enjoyed a 1227 percent price rise for the leukemia drug Busulfan in the period between 2011-2016. And even in 2019, the Swiss pharmaceutical company Novartis has announced a fivefold price hike of the cancer drug called lutetium-octreotaat.
 
When we talk about massive price increases in a particular drug, it’s easy to think ‘I don’t have that rare heart disease’ and to move on. But not just the people who might endure personal higher costs are the victims, these people generally are insured. They may have the same healthcare insurance provider like yourself. Usually there would tend to be at least a contribution from the victim’s insurance company.

Price coins

This otherwise great concept gets ruined by hyper capitalist pharmaceutical companies who choose to exploit not only the sick, but the healthy too. When Big Pharma gouges prices, we all pay for it eventually through our insurance premiums. The worst part about these significant indirect costs is that they generally create low direct costs for other insured people. A consumer who directly payed the full price for this drug would notice such a huge increase instantly, but the people who co-pay for these outrageous increases are not aware. This enables these companies to pursue these tactics since there is little to no opposition.
   
Not just pharmaceutical companies who develop their own drugs jack up the prices. Some pharmaceutical companies excel in registering or buying over patents of rare drugs for which there are no alternatives, only to gradually start raising prices. The patients and customers of these companies have nowhere to go since not taking the drug usually isn’t an option.

These type of practices tend to be legal across the West. Although there are vast differences between Europe and the US in regulation, it seems to be legal in one form or another. While ideally one would imagine the leaders of a pharmaceutical company to be passionately involved in helping humanity, they in reality are public traded global companies who need to create value for their shareholders.

Herein lies the root cause of the problem. When we have a too deregulated system where the goal in the pharmaceutical industry is to create value for the shareholders, we as patients and customers do not come first.

Price
Profits…

While the US and especially the EU have done a lot against these practices, they are still prevalent in both. Pharmaceutical industry lobbying happens to be significant in both as well. It is highly unlikely that the majority of Western voters approve of the price gouging on essential drugs. It either seems our elected unofficials are incapable or unwilling to address this problem in a serious sustainable way.

They could for instance enact lower limits on maximum increases and the amount of years they can be done consecutively. There however are some lawmakers who do pick up the glove, and sometimes they book a small victory. We must be aware that Big Pharma can threaten with pulling a drug, because they claim it is not commercially viable anymore. They use this argument in the US where prices are generally higher, and in Europe where they are lower.

While in some cases this can be a fair argument, a company of course simply can’t only lose money. However with the enormous revenues and profits these kind of companies are generating, the idea of maximizing it even further seems obscene. In the capitalist Western countries some moral introspection might be the solution.

Are pharmaceutical companies there just to maximize profits for the shareholders? Or can we find a way where profits might be lower, but we at least have a decent system? 

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