This week, the Internet’s object of hate was Martin Shkreli, the 32-year-old hedge-funder turned CEO of Turing Pharmaceuticals who jacked up the price of Daraprim, an old drug used to treat parasitic infections in the immunosuppressed, from $13.50 to $750 per pill. At first, Shkreli seemed to relish the controversy, taking to Twitter and various talk shows to defend his actions. But his tone-deaf justifications and brash, antagonistic tweets only fueled the backlash. Shkreli was denounced on Twitter as “human garbage,” “a monster,” and “a sociopath.” Politicians from Hillary Clinton and Bernie Sanders to Donald Trump called him out, and even the Pharmaceutical Research and Manufacturers Association of America (PhRMA) disassociated itself from him. Within a few days, Shkreli vowed to reduce the price of the drug—although that did not stop Internet activists from doxing Shkreli by posting his OK Cupid profile, home address, and phone number.
It’s tempting to declare that the Internet triumphed over Shkreli and, in turn, the pharmaceutical industry, but in reality the whole episode is only a tiny skirmish in a long-running battle that drug companies have been waging against the American people. Sadly, the American people are losing the fight—badly—and haven’t paid much attention to the hosing they are getting.
I am alive today because of drugs developed by US pharmaceutical companies. Since 1996, I’ve been taking antiretroviral therapy to keep HIV in check and will likely live to die a few decades from now from something other than AIDS. I understand the benefits—in a deep, personal sense—of research and development on new medical products. But being grateful for the pills that keep me alive doesn’t mean I owe the industry unquestioning allegiance. For all the good they do, the US pharmaceutical industry is shafting the American public in two ways: with costly consequences and with potentially deadly effects.
The United States pays the highest drug prices in the world. According to Valerie Paris, an economist with the Organization for Economic Co-operation and Development (OECD), we spend about $1,000 per person per year on drugs, which is about 30 percent higher than Canada. We spend over 50 percent more than what European countries like France and Germany spend per person. These inflated costs are passed on to consumers, in the form of co-pays and healthcare premiums, and to taxpayers, who subsidize healthcare through public programs like Medicaid and Medicare, the Veterans Administration, and the Indian Health Service.
The justification for these high prices is always that this is the cost of innovation, something Shkreli also cited in defense of his 5,000 percent price hike. New drugs tomorrow require private investment today. However, this claim is almost entirely unverified. Most companies refuse to disclose their research-and-development costs to the public and ask that we take it on faith that the massive profits they receive (between 10 and 43 percent for the largest pharmaceutical companies) are being plowed back into generating new medicines. It’s high time to call the companies’ bluff—let them show us the data on the investments in all their drugs on the market and let us make a judgment based on the evidence. In fact, one California state assemblyman, David Chiu, tried to pass a bill to require this kind of transparency. The industry killed the bill in Sacramento.