A Look at Pharma Industry Alternatives

Recently the Democracy Collaborative, a United States based nonprofit organization centered on addressing economic inequality at local levels, published a report outlining the case for a publicly-owned pharmaceutical industry in America. The report is entitled Medicine for All: The Case for a Public Option in the Pharmaceutical Industry. 

Communities entrust protection to police and fire services that are public. Schools, critical infrastructure, courts and electoral-systems are accessible to all. Should countries do the same with essential medicines? 

The paper explores one systemic alternative to the current model - a public option - designed to meet the needs not only of health systems but of society, the economy, and democracy. It presents a compelling examination of the current state of the U.S. drug industry and alternative models that could better serve the population and economy at large. It builds on the argument that vital safety and health services should be entrusted to institutions that are publicly accountable and publicly funded.

A pharmaceutical system without patent mark-ups would save taxpayers more than enough to replace every penny of privately-funded R&D — several times over. 

The report postulates that the drug industry in the U.S. presently operates with financial success at the fore, and at the expense of patient access and interest, resulting in a myriad of economic and societal problems. These problems are categorized in the report as “harmful effects on public health,” “economic exploitation,” and “distortion of democracy”. 

Some harmful effects on ‘public health’ include FDA approval of drugs with documented safety issues, divestment from the development of antibiotics or tropical-disease treatments due to profitability, bio-piracy (wherein corporations trademark traditional medicines and effectively barr their use from the very communities who have historically employed them as treatments), and industry influence over medical practice (exemplified by the recent opioid crisis where manufacturers admitted they were aware of and downplayed risks of opioid use).

‘Economic exploitation’ happens in a phenomenon known as “double taxation”. The public pays into pharmaceutical research and development (through both direct-funding and tax-breaks) and then are charged for that development a second time by way of prescription expenses, and taxes that go to public health programs - and when drug companies dodge taxes (U.S. drug-maker Eli Lilly was found to have paid no federal income tax in 2018, receiving instead a rebate of 54 million dollars). 

With the publication of the Panama Papers, 10 American pharmaceutical companies were found to be holding a combined 506 billion dollars in offshore funds. 

‘Distortion of democracy’ is built into a system that is profit-driven: examples are obfuscation of pricing, which makes voters unable to make informed decisions, and the intertwining of government regulatory bodies and industry. Take, for example, Alex Azar, who is now Secretary of Health and Human Services, and was once president of the U.S. division of pharmaceutical giant Eli Lilly. 

The public ownership model is comprised of three main components: a national public pharmaceutical innovation institute for research and development, state and municipal production and manufacturing, and regional distribution. As outlined in the report, the national public pharmaceutical institute would be situated within the Department of Health and Human Services and would center its research on developing drugs based on public health needs. 

The United States would not be the first country to create a national drug company. Brazil, India, China, Cuba, South Africa, and Sweden all have publicly owned drug companies. This report posits that public ownership would usher in “a new economy oriented toward the long-term health and well-being of communities” by aligning research and development, manufacturing, and distribution with public health needs and democratic principles. 

Pharmaceutical products are essential to human health and society. The political, health, and economic ramifications of the current model can only be remedied through a re-imagining of the system’s functioning and end goals. The model set out in the Medicine For All report is significant and worthy of consideration.