EpiPen price gouge proves pharma needs stringent controls

The news has been chock full of outrage over the prices Mylan Pharmaceuticals is charging for EpiPens. It has even become a campaign issue, with Democratic nominee Hillary Clinton announcing plans to increase protection from unjustified price increases. But while such price gouging is immoral, it isn’t terribly surprising when one considers that the industry in question is behaving as any company seeking to maximize profits might in the free market.

Yet, despite the hue and cry, we are unwilling to regulate, support, or Heaven forfend, socialize that which we consider a human right. Short of these, do we have a right to complain?

{mosads}EpiPens are compact, single-use injectors used to deliver lifesaving epinephrine to people having life-threatening allergic reactions. But while the explosive, and unjustified, price increase of EpiPens is just another in a long line of similar stories, we barely remember last February when Congress dragged Martin Shkreli in to defend his 50-fold jacking up of the price of Daraprim, an important but rarely used drug for parasitic infections.

Shkreli garnered more headlines than other pharmaceutical price-gougers because he had already been arrested for fraud in an unrelated Ponzi-like scheme. But Rodelis Therapeutics tried to increase the cost of Cycloserine 22-fold. Cycloserine is an important drug for resistant tuberculosis that has been on the market for decades, and was being purchased by Rodelis from a nonprofit. Fortunately, Congress got wind of this, the deal was quashed, and the drug returned to its former owner. And Mylan has also been at this before; they hiked the cost of Doxycycline 90-fold last fall. Doxycycline is an important antibiotic for treating such things as Lyme disease, and has also been on the market for decades.

The list of other such misbehavior is long and the justification short.

Many, if not most, of the prior outrageous price increases were in drugs that were used in smaller, less vocal populations. But Mylan has messed with the scariest and most politically effective demographic: parents. Maybe now something can be done. Unfortunately, in order to be a pragmatic compromise that we can stomach, it is likely to be inadequate.

One of humankind’s greatest inventions was the formation of societies. A social structure serves to protect us from our own baser instincts. Within limits, societies tend to encourage cooperative behavior, and discourage behavior that is detrimental to the community.

In our country, and those for which we Americans feel kinship, we extend this further and depend on government as a proxy for society to protect the rights of those less able to fend for themselves. This includes guaranteeing basic rights such as an education, clean water and safe borders. But it should also extend much more effectively than it does to such things as consumer protections and healthcare.

In the free market, profit is a strong motivator for the owners and investors who capitalize the companies and demand return on their investments. Greed is the sole motivator when supply and demand justify stratospheric price increases that threaten lives.

However, the free market, unregulated, will create exactly this kind of usurious behavior. In fact, in our economic model, not raising prices as high as possible might even be seen as irresponsible, especially from the investor’s perspective. And one needs look no further than the $35 billion dietary supplement industry and all its unsubstantiated and often fraudulent claims of health benefits to see how an unregulated healthcare industry looks.

Even without the anomalous and exaggerated inflations of prices of the drugs that are in the news, we have been hearing for years of how all drug prices are unsustainably high. Drug development is extremely expensive, and while profits are also high, there are those who would argue that the prices are justified by the research and development costs.

But there are consequences, beyond ridiculous costs, to having drugs in the free market. When healthcare innovation is driven mostly by potential profit, and innovation unsupported by mechanisms to lower risk, such as grants from the National Institutes of Health, industry becomes extremely risk averse, and creativity and out-of-the-box thinking are stymied, or focused on squeezing the last drop of value out of existing therapeutic. Government funding for basic research in academic medical centers has been gutted, and dependence on industry or foundation money for funding for exploratory study has often left academic research high and dry, or motivated by these same conflicts of interest.

The current tug of war between our political extremes has not helped. The right has made “regulation” and “strong federal government” into obscenities. The left has vilified deregulation and the 1 percent. Attempts to find compromise have been few, and often find no solid footing.

But the argument to end all arguments is that we have no other means to protect human rights other than regulation, or, at the extreme, socialization. Mind you, I am not delusional about how well government is at getting things done, and fixing government is at the core of the problem.

But if healthcare is a right, as America and most of the Western world has declared it to be, then pharma has no business operating without stringent controls. Or, better yet, a torrent of federal funding for medical research should be something we brag about, not vilify. With healthcare expenditures approaching 20 percent of the gross domestic product, how can we justify penny pinching at the NIH on the one hand — the budget for which amounts to less than 1 percent of the federal budget — and complain about drug costs on the other?

Seres, M.D., is director of medical nutrition, associate professor of medicine and an associate clinical ethicist at Columbia University Medical Center, New York Presbyterian Hospital.

The views expressed by contributors are their own and not the views of The Hill.