Americans pay the highest prescription drug prices in the world, amounting to an estimated $460 billion this year for medications that would sell for less than $80 billion in a true free market. Differential pricing further impacts the nation’s most at-risk patients and communities. The current system also entails loss of tax revenues—which could be used for healthcare and public services—through tax evasion: In 2015, ten of the thirty largest US pharmaceutical companies held over $506 billion in un-taxable offshore accounts.
Public ownership of pharmaceutical development, production, and distribution in the US would combat the destructive impacts of Big Pharma—including:
- Public Health Catastrophes: Big Pharma’s well-documented history of illegal misbranding and distortions of evidence-based medicine has led to tragedies like the opioid epidemic, which has claimed over 400,000 lives so far.
- Exploitive Economics: The government gives drug companies patent monopolies that make it illegal for competitors to sell a comparable drug at lower prices. Patent monopolies allow companies to charge prices hundreds to thousands of times the free market price. Big Pharma profits are a form of double-taxation, with the public paying a first time, as tax-payers, to fund federally-supported pharmaceutical research and development, and the public paying a second time, as individual consumers, through out-of-pocket prescription costs, Medicare and Medicaid contributions, and rising insurance premiums.
- Threats to Democracy: Big Pharma invests lavish amounts in lobbying members of Congress and other government officials, leaving the public with an industry that has effectively immunized itself to regulation.
Publicly-owned pharmaceuticals, free of 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. Countries including Sweden, Brazil, Cuba, and China have successful public models from which we can learn. Furthermore, Americans from across the political spectrum already support the public production of essential medications.
A Public Pharma System model could include: a national public pharmaceutical research and development institute focused on developing new drugs according to public health needs; state, local, and/or regional public pharmaceutical manufacturers; and regionally owned and operated public wholesale distributors; with the US Postal Service providing affordable home delivery of prescriptions.
Such a system could contribute to increased lifespans, earnings, and reduced disabilities due to access to essential medications; reduced economic inequality as profits are returned to public balance sheets and differential pricing is reduced, and, as the public sector expands, women and people of color could enjoy higher employment rates than in the private sector;
Instead of continuing to push for regulation of Big Pharma in hopes that improved oversight and management will somehow prove effective, we could create a democratic, publicly-owned pharmaceutical sector, that responds to public health needs and delivers better health outcomes at lower costs. Corporate media have covered Big Pharma and its profit-hungry ways, yet have not offered detailed coverage of a Public Pharma model that could transform our current system.
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/.
Dana Brown, “Medicine for All: The Case for a Public Option in the Pharmaceutical Industry,” The Next System Project, September 10, 2019, https://thenextsystem.org/medicineforall#infographic-why-we-need-a-public-option-in-pharma.
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/.
Dean Baker, “Why Aren’t the Democrats Talking About Ending Patent-Financed Drug Research?” LA Progressive, July 8, 2019, https://www.laprogressive.com/patent-financed-drug-research/.
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.
Student Researchers: Jennifer Pope (San Francisco State University) and Amber Yang (Sonoma State University)
Faculty Evaluator: Kenn Burrows (San Francisco State University)