#14. The Case for a Public Pharmaceutical System

by Project Censored
Published: Updated:

A September 2019 report by the Democracy Collaborative outlined a model for a democratic public pharmaceutical system, as Fran Quigley reported for Common Dreams. According to the report, the existing pharmaceutical industry, which depends on government-granted patent monopolies, “operates on an extractive model that contributes to inequality and increasingly produces drug shortages, inefficiency, lagging innovation, misinformation and misuse of medications, and most famously, the world’s highest drug prices.” Instead of piecemeal reform of existing patent and anti-trust laws or government provisions of health insurance—any of which could later be repealed—public ownership of pharmaceutical development, production, and distribution offers a systemic approach to fixing Big Pharma’s most fundamental flaws, according to “Medicine for All,” the Democracy Collaborative’s report.

The Democracy Collaborative model includes plans for a national public pharmaceutical research and development institute for developing new drugs to meet public health needs; state, local, and regional public pharmaceutical manufacturers; regionally owned and operated public wholesale distributors; and engaging the US Postal Service as a partner for pharmaceutical distribution.

As Fran Quigley wrote for Common Dreams, the foundation for these changes is “already in place” because public funding “has long been the bedrock of pharmaceutical research and development.” From 2010 to 2016, “every single one” of 210 newly approved drugs traced their origins back to taxpayer-sponsored research, Quigley reported, based on a study published by PNAS in March 2018.

In almost every case, Dean Baker wrote in Truthout in July 2019, drugs are “cheap to manufacture,” but government-granted patent monopolies make them expensive for consumers. Both Baker’s Truthout article and a report for MintPress News by Alan MacLeod addressed the explanations for high drug prices typically made by defenders of the current system. In the existing model, “it is expensive to develop new drugs” and patent monopolies provide companies incentives to take the risks necessary to do so, Baker related. But, he wrote, there is “nothing natural” about a patent-based system for financing drug research and development. Instead, patent monopolies give drug companies “an enormous incentive to push their drugs as widely as possible.” The opioid crisis, he noted, is an extreme case of how drug companies exaggerate their drugs’ benefits and conceal their negative side effects. But, Baker wrote, “Purdue Pharma would not have been pushing OxyContin so vigorously if it were selling at generic prices.” [Note: On Big Pharma’s “documented history” of dangerous and illegal misbranding, and its multi-billion dollar expenditures to influence doctors’ prescribing decisions, also see Brown, “Medicine for All,” 19.]

The current system also leads to lost government revenues—which could otherwise be directed to healthcare and public services—through tax evasion: As revealed by the Panama Papers, in 2015 ten of the thirty US companies holding the most money offshore were pharmaceutical companies, which together held more than $506 billion in offshore accounts not subject to US taxes.

Publicly-owned pharmaceuticals, freed from the financial demand to appease profit-hungry shareholders, would be able to focus on public health priorities, working hand-in-hand with public health departments, as they do in other countries, to assure an adequate supply of medications, priced to be accessible to the broadest array of Americans. As Fran Quigley reported for Common Dreams, Sweden, Brazil, Cuba, Thailand, and China (among others) “embrace public ownership in key components of their medicines systems,” offering working examples of what could be achieved in the United States. 

Although the United States has a reputation for being “politically and culturally suspicious of public systems replacing markets,” two-thirds of Americans “support making prescription drugs public goods paid for by the federal government,” and eight in ten support “breaking patent monopolies to reduce drug prices,” Quigley reported. [Note: A September 2019 New Republic article noted that the public is “mad as hell about drug prices” and cited the results of March 2019 Kaiser Family Foundation poll, which found that 79 percent of respondents believed drug prices were unreasonable, 80 percent attributed that partly to drug company profits, and 89 percent—including 85 percent of Republicans—favored making it easier for generics to come to market. See Libby Watson, “Democrats’ Drug Price Bill May be Dead on Arrival,” New Republic, September 20, 2019, https://newrepublic.com/article/155140/democrats-drug-price-bill-may-dead-arrival.]

In February 2020, Public Citizen published a report showing how the COVID-19 pandemic has exposed the limits of Big Pharma’s monopoly model. Public Citizen’s “Blind Spot” report determined that, since the 2002 severe acute respiratory syndrome (SARS) outbreak, the National Institutes of Health have invested “nearly $700 million [in taxpayer funding] on coronavirus R&D.” Indeed, all six of the coronavirus clinical trials active in 2019 “depended crucially on public funding.” Although “more sustained interest in coronaviruses could have provided greater scientific understanding, and a stronger toolkit to inform the latest response,” Zain Rizvi wrote, the private sector has lagged behind in developing treatments for infectious diseases because they are “less lucrative” than medicines for chronic conditions and rare diseases. As Rizvi’s Public Citizen report concluded, the COVID-19 crisis highlights the “urgent need” for an alternative to the existing “monopoly-based model,” which prioritizes short-term corporate profits over public health. 

While consistently covering partisan political disputes over prescription drug prices, corporate news media have been relatively mute in reporting on proposals to develop a public pharmaceutical alternative to Big Pharma. In particular, as of May 2020 no corporate news outlets appear to have covered the Democracy Collaborative’s “Medicine for All” report.

Fran Quigley, “Removing the Profit from Our Pills: The Case for a Public Pharma System,” Common Dreams, September 18, 2019, https://www.commondreams.org/views/2019/09/18/removing-profit-our-pills-case-public-pharma-system.

Dean Baker, “Replace Patent Monopolies with Direct Public Funding for Drug Research,” Truthout, July 1, 2019, https://truthout.org/articles/replace-patent-monopolies-with-direct-public-funding-for-drug-research/.

Alan MacLeod, “Economist Dean Baker: Systemic Change Needed to Fight Big Pharma Price Gouging,” MintPress News, December 12, 2019, https://www.mintpressnews.com/dean-baker-gilead-hiv-pofits-drug-prices/263412/.

Zain Rizvi, “Blind Spot: How the COVID-19 Outbreak Shows the Limits of Pharma’s Monopoly Model,” Public Citizen, February 19, 2020, https://www.citizen.org/article/blind-spot/.

Student Researchers: Jennifer Pope (San Francisco State University) and Amber Yang (Sonoma State University)

Faculty Evaluator: Kenn Burrows (San Francisco State University)