The Moment of Truth — May 20, 2006

This is Your Libertarian on Drugs

Welcome to the Moment of Truth: a poke in the eye with a vision stick.

Under the Bush Administration, free-market extremists finally have the government of their dreams. The government should be run like a business, they say, and the Bush Administration takes this admonition seriously, following a few simple, common business rules: Advertise your products falsely, exaggerating their benefits to the consumer, or just outright lie about them. Charge arbitrary fees and penalties. Channel customer complaints around an endless carousel of bureaucratic buffers to protect policy-makers from having to answer for their decisions. Let your chief executives squander stockholders’ money while protecting and rewarding themselves. Resist public demands to act responsibly, even within the community in which you’re located. Pollute, especially where poor people live. Withhold your goods and services from those without economic power. Track any and all customers and potential customers by accumulating all personal information you can acquire by any means necessary. And follow the Peter Principle of promoting each of your executives to his or her most hilarious level of incompetence.

Medicare Part D is a great example of the free-market extremist government at work. Monday, May 15, 2006 was the last day for befuddled, hectored, sick old people to choose from between a multitude of plans—they had to decide THAT DAY or be financially penalized FOR LIFE. (The term “for life” is a legal one denoting a variable amount of time, to be considerably shortened by participation in the program.)

Why the deadline? In order to spank dithering old folks into making up their goddam minds! Talk about a nanny state. But it’s the kind of nanny free-marketeers like: a wetnurse for corporations that spanks the pestering public.

A spokesman who had certainly risen to his perfect level of incompetence at the Wall Street Journal was on the radio the day of the deadline. He was there to defend the plan against a spokesman from a patients’ advocacy organization. That the Wall Street Journal, rather than, say, a medical professional, was a voice in a pro/con discussion of the new Medicare plan says a lot about whose interest is really at stake in the argument. That they were taking the “pro” side says the rest.

Most important to any free-market sociopath regarding this so-called plan is the freedom of the pharmaceutical industry to charge outrageous prices to the government, as they do to the private US consumer. Since the US consumer pays both high drug prices and the taxes that will pay for Medicare paying high drug prices, you might call this “double taxation.” But here’s the Wall Street Journal’s take on it: if the Medicare program could bargain for lower or bulk prices, the way the Veteran’s Administration does, that would amount to the government SETTING a low price. “Let’s face it,” said this douche-bag, “That’s what it would be.” And we can’t have the government telling corporations what they can charge. That’s socialism! We can have government overpay for stuff, that’s fine. And it can set fees and penalties for poor hectored sick old people missing deadlines. But if government should touch the price a capitalist entity puts on something, it’s like letting Karl Marxzilla loose. The industry will be destroyed, and the USA will lose all its juicy goodness.

Government price controls are an offense against nature because, in actuality, says libertarian logic, the industry doesn’t “put” a price on anything. The naturally fair and disinterested marketplace does it. That’s why drugs are so much more expensive in the USA than in any other country—because the USA is where the fairness is!

I once had one of those young, up-and-coming, historically ignorant supply-side voodoo Reaganites, early on in the voodoo Reaganite era, say to me: “Pharmaceutical companies deserve huge profits because they take a huge risk.” See how fair that is? If it’s fair to pharmaceutical companies, then it’s fair! If I had been that guy’s doctor I would have prescribed chemical castration.

The Wall Street Journal tool said, “Listen, if Medicare was able to buy drugs at cheaper than market price, then research and development would drastically decline.” Drastically decline, really? Oh yes, drastically! He goes, “I guess we could make that choice, to give up the possibility of curing Alzheimer’s and cancer and AIDS so some old people can afford their medications and taxpayers can save some money.” Wow, thanks for the warning. That’s not hysterical anti-socialist alarmism or anything. That’s what I call asking for a punch in the face. Maybe his doctor heard him and will prescribe him a chemical punch in the face.

It must be acknowledged that pharmaceutical profit growth has slowed down. They’re still making huge profits, but it ain’t like it used to be. An article in Product Management Today explains why the old strategies for engulfing the wealth of the unhealthy aren’t paying off like they once did. There are just too many drug reps taking doctors out to dinner for one company to decisively snatch marketshare from another. It’s hard to stand out in the crowd. Plus, from 1990 to 2000, the share of the worldwide total drug market represented by the top ten pharmaceutical companies increased from 28% to almost 50% and climbing. That kind of consolidation stagnates competition, predictably. But the authors of the article, Gerald Gallivan and Taryn Foniri, reveal something both telling and depressing in their industry-oriented reading of those figures. They state, tautologically, that increased consolidation has “rapidly decreas[ed] the opportunities for consolidation and its potential cost savings.” Man, that’s the kind of industry analysis I like, because it’s funny, and easy to understand. Consolidation has diminished the possibility of consolidation. Eating all the pie made there be no more pie to eat.

But more pathetic is how we don’t even measure growth in actual product exchange anymore. You don’t have to sell more product to more people. Acquiring another company and firing their employees to titillate market analysts will do just fine.

Another problem, according to the article, is that new products aren’t coming fast enough. Hmm, I wonder if increased research and development would help. Not if Medicare can negotiate a good price—then the pharmaceuticals are just going to give up. And we’ll never cure AIDS. And all the work Gerald and Taryn did advising the industry will have been for naught.

Oh, wait. We already have price controls. Let me quote Gerald and Taryn again: “Tight controls by managed care and public scrutiny of pricing actions have taken increasing price off the table as a driver of growth.” We’ve already ruined the pharmaceutical industry, apparently. Since they can’t raise prices, and can’t merge, and can’t increase marketshare, maybe they’ll divert some of the tens of millions they spend on advertising and marketing into research and development. It seems like one of their best options. In fact, it sounds like price controls are actually a stimulus to R and D. If your only option for profit growth is to make new drugs, rather than just hike the prices of the old ones, hmm, what will you do? Give up? Stop looking for a cure for Alzheimer’s? I doubt it.

Economic researchers have found that putting new drugs on the market increases public and private spending on medication. That’s called growth, for you libertarians out there. Golly, think the industry knows this? Not if they’re as incompetent as the guy from the Wall Street Journal.

To recap: The solution to the problem of slowing growth of the pharmaceutical industry? Higher prices? Consolidation? How about making and selling more drugs? That’s their secret plan, crazy as it sounds, but the Wall Street Journal thinks price shopping by Medicare would to put an end to that.

If there’s one tactic that is total BS, of all the crap the free-market fanatics try to bury us under, it’s the claim that prosperity will grind to a halt if consumers are protected in any way. What has believing that lie got us? Stagnant wages, from giving up our collective bargaining strength; jobs shipped overseas; a higher cost of living for working people, which you damn well know if you are one; tax giveaways to lure corporations into our states; limits on consumer rights to sue for injury or shady business practices; the Bush tax cuts and concomitant record budget deficit; basically, the US public is like a victim of abuse who protects her abuser and thinks she deserves what she gets.

Meanwhile, the industry literature touts new markets for pharmaceutical industry expansion. The biggest ones: China, Mexico, Brazil, and India.

You think any of those countries are going to pay top dollar for drugs? India? Brazil? Who’s going to buy expensive drugs there? Their governments will be buying the drugs—and getting a better deal than we are, that’s for sure. China? As an emerging market its people will need to be cultivated as consumers, not abused and taken for granted right away. That can come later. Mexico? Pesos? I don’t know, maybe the drug companies can get Bush to push the value of the dollar further down with some more of his trademark fiscal ineptitude. If the peso got strong enough against the dollar, hey, the drug companies might just move their entire operations down there.

How did we in the USA get so damn lucky when it comes to drug prices? It must be because of all the fairness. The market, which is innately fair, gets what it wants here more than in any other country—besides maybe Burma and such places, where the government helps companies enslave and murder people. But that’s fair, too. It must be, because it’s what the market will bear.

Let’s face it, USA. We have a drug problem: since the eighties, when EVERYONE became cool, the MBAs have dropped way too much acid.