Prescription drug prices in the United States are insane. It’s such an endemic problem that both Bernie Sanders and Donald Trump have vowed to address it, albeit in different ways. And as illustrated by Congressional superstar Alexandria Ocasio-Cortez (D-New York), those drug prices are paired with cheating taxpayers on research investments.
Ocasio-Cortez likened taxpayers to an early investor in pharmaceutical research through grants from the National Institutes of Health.
Aaron Kesselheim, associate professor of medicine at Harvard Medical School, explained responded to that comparison by explaining the NIH does not receive any licensing fees that would act as a “return” on that investment. Instead, the product of NIH research is just handed off to for-profit companies that then produce high-profit prescription medicine.
The public is acting as early investor, putting tons of money in the development of drugs that then become privatized.
— SocialSecurityWorks (@SSWorks) January 31, 2019
“So the public is acting as early investor, putting tons of money in the development of drugs that then become privatized and then they receive no return on the investment that they have made,” Ocasio-Cortez clarified.
“Right,” confirmed Kesselheim.
In an exchange that clocked in at just under a minute, Ocasio-Cortez highlighted how the taxes-as-investments framework (which Grit Post has explored in the past) has failed in the arena of pharmaceutical pricing. Or, more accurately, how pharmaceutical companies have taken advantage of tax investments.
If we compare tax investment in drug research to venture capital investing in a startup, taxpayers would reap great rewards from the risk taken by conducting the research in the first place. Like startups, a lot of research doesn’t pan out, but the research that does generates massive profits.
The NIH funds clinical trials, which could stand as a loose analogue comparison to funding a tech startup’s initial rollout.
Even those who argue that pharmaceutical companies deserve to post record profits for taking record risks admit that companies will engage in unscrupulous actions to delay generic drugs from entering the market at much lower price points than name-brand products.
And applied more broadly, Rep. Ocasio-Cortez’s argument helps make the case for Democratic presidential long-shot Andrew Yang’s signature proposal for a “Freedom Dividend” that would use the return on investments made with taxpayer dollars in things like pharmaceutical research to fund universal basic income.
The exchange between Ocasio-Cortez and Kesselhiem happened in a House Oversight hearing on prescription drug prices, which was held in parallel to a Senate Finance Committee hearing on the same subject. Reported Gritpost