The staggering waste and inefficiency of capitalist health care

Capitalism is a hostile and unfriendly system of production.  It is a permanent state of war.  In some creations of the great capitalist revolutions, the modern nation states, that other capitalist creation, the working class, has managed to curb some of the systems’ excesses.  But these curbs have only been temporary as the austerity measures imposed on the populations of the advanced capitalist world show. Like a contract between the organized workers and the employer, before the ink is dry, the bosses violate it.

The evidence as to the inherent hostility and contempt capitalism has for humanity is all around us.  Someone once said that GM was not in the business of making cars but of making money.  We can say the same about the health industry, it is not about making people well---it is about making money. Lets take the drug industry as one example.  The drug industry is a major part of the so-called health care business. 

A major problem for the drug industry is the loss of patent protection. It’s a “problem that’s long stumped drug industry veterans” writes Business Week, “How to manage the patent cliff” as the industry experts call it.  Once the patent for a drug expires then much cheaper generics can replace it. Given that the 2010 sales of 6 drugs whose patents expire this year and 2012 total $37.5 billion, were talking big profits here. An estimated $250 billion in sales is at stake between now and 2015, according to data from EvaluatePharma.

The Business Week piece that motivated this commentary is about the CEO of drug maker Novartis and his plan to save the company from falling off the patent cliff.  The patent on Novartis’ blood pressure drug, Diovan is expiring in 2012 and another Novartis drug, a cancer medicine called Gleevec is losing patent protection in 2014. These two drugs alone were a combined $10 billion in sales in 2010.  The CEO’s plan is to market the drugs aggressively in “emerging markets” in Latin America and Asia where they “compete largely without patent protection”.  The main point is to maintain a drug’s “blockbuster status” B.W. adds. As I pointed out in an earlier blog, on the drug industry, we could just as easily be talking about movies.  Movie producers are not in the business of making movies either, they’re also in the business of making money.

The reason these drugs can compete with generic versions in the underdeveloped world AKA, the former colonial world or the third world or the emerging markets, (they have tended to use “fast growing world” but the global economic crisis is putting a stop to that) is due to the widespread practice of drug counterfeiting.  The Novartis CEO’s hope is that he can sell enough of a drug losing patent protection in these markets long enough to get the new drugs they are developing in to the marketplace with a new patent protection and years of good profits; the new blockbuster to replace the old just like this years car model.

This business is highly profitable accounting for one-third of Fortune 500 company profits in 2002.  but also highly competitive.  Canada alone spent more than $2 billion on advertising in 2004.  The US doesn't ban the advertising of drugs on television aimed at convincing Americans how sick they are and that they need to buy this or that drug for that "syndrome" of theirs. One study claims that the US pharmaceutical industry spent a total amount of $57.5 billion on pharmaceutical promotion in 2004. and approximately US$61,000 in promotion per physician in the same year. If anywhere near correct, these figures are a staggering waste of valuable social resources..

Many industry experts think that the era of big profits is coming to an end which is why many drug companies are diversifying, “That’s one of the major reasons Big Pharma has been turning to both acquisitions and partnerships with numerous upstart biotech companies. As always, it’s about sales, sales, sales.” Says one critic.  Novartis is diversifying its business after buying eye care company Alcon for $50 billion and wants to integrate this device making company with the drug making so that its management team can get what it wants from Novartis to “maximize the value of their business for shareholders.” , says the Novartis CEO. Such language should not exist when discussing such human needs as health care.

For the coupon clippers of all types that choose to profit from the drug making industry it has brought immense wealth.  This comes at great cost to humanity though.  The rapacious quest for profits affects how medical science and the public’s general health care is developed and provided.  It’s much more profitable to hand someone a pill than spend time with them.  It is much more profitable to deal with the symptoms of a disease or ailment rather than remove the cause if doing so eats in to profits.  Most of the millions of deaths in places like Africa or other underdeveloped areas of the world are due to capitalism’s inability to provide basic social infrastructure like clean water or sewage systems rather than these diseases that we eliminated centuries ago.Over the past few years more “syndromes” and “disorders” have been discovered just in time for the drug that cures them to enter the market. Excessive shyness syndrome, depression, erection problems, there’s a drug for it all.  Depression is a natural human response to the alienation of living in a 24-hour marketplace and a world ravaged by an economic system that makes a commodity out of everything. As Marx once commented of capitalism, “It has pitilessly torn asunder the motley feudal ties that bound man to his “natural superiors”, and has left remaining no other nexus between man and man than naked self-interest, than callous cash payment”

In the US, the high cost of drugs hurts the elderly who tend to depend on them most for obvious reasons. “Sadly, the frailest are the least likely to have supplementary insurance.”, writes Marcia Angell, “At an average cost of $1,500 a year for each drug, someone without supplementary insurance who takes six different prescription drugs—and this is not rare—would have to spend $9,000 out of pocket. Not many among the old and frail have such deep pockets.”

The drug companies’ propaganda perpetuates the myth that the high cost of drugs is due to the high cost of developing them, the research and development of the drug.  But one study quoted in the New England Journal of Medicine found that that “at least 80% of 35 major drugs that they studied were based on scientific discoveries made by PSRIs” (Public sector research institutions). In 1980, the US Congress passed legislation that enabled the private sector to appropriate the rights to taxpayer funded research and profit from it.  It's the same old story, socialze risk, privatize profit.  The New England Journal of Medicine: 

In 1980, Congress passed two pieces of legislation that transformed the ownership, management, and transfer of intellectual property that is created by PSRIs. First, the Bayh–Dole Act (Public Law 96-517) allowed universities, nonprofit research institutes, and teaching hospitals to own the intellectual property resulting from federally funded research and to license it according to terms of their choosing. Second, the Stevenson–Wydler Technology Innovation Act (Public Law 96-480), as amended by the Federal Technology Transfer Act of 1986 (Public Law 99-502), provided a corresponding authority to federal laboratories.

Under this new approach, inventions that arose from PSRIs, in addition to being freely published in the scientific literature, could also be converted into intellectual property and transferred through license agreements to the private sector for commercialization and public use. The new approach is thought to be considerably more effective than government ownership of academic inventions and was introduced just as the fruits of the biotechnology revolution started to emerge.

"Big government" is good for big business.

The cost to humanity in the form of drugs that we don’t need being sold to us and drugs that we do need being denied us, and the general negative effect this business has on the health of the people’s of the world is staggering.  A huge percentage of this profit goes to US and to a lesser extent, European corporations and individuals.  The children of the underdeveloped world need infrastructure development more than drugs and that capitalism cannot provide.  The pharmaceutical industry like the production of all basic human needs has to be liberated from the private sector and the limitations of the profit motive for real advances in health care to reach all the people’s of the world.