Saturday, November 21, 2015

The hole in the evening news that is financed by drug patents

A few months ago, we bought an HD antenna for our TV. We didn't want cable but wanted to watch a few local channels to stay on top of the weather, some local news and to let our kids watch Sesame Street. Honestly, I hated that cable subscription when we had it. We only watched a few hours of TV a week and I didn't like feeling like I had to watch TV to justify the expense.

So my wife did some research and found a great antenna that works very well indoors. Maybe later we'll spring for a rooftop antenna, too.

Since we got the antenna, we sort of fell into the habit of watching the news again, mostly for the weather. But last night was a real eye-opener. We were watching the national news on CBS with Scott Pelley while we ate dinner. How I miss Walter Cronkite, but it is what it is.

As we watched the news, we saw the commercials. Every other commercial was for some sort of drug. I take interest in the commercials not for any desire to buy what is advertised. I watch them to see what demographic is getting the pitch.

For the evening news, it's baby boomers and beyond. These are the people who sat at the dinner table with their parents to eat dinner in the 50s, 60s and 70s. They watched the evening news with their parents to see stories about segregation, the Vietnam War, Watergate and the Civil Rights marches. They're just one generation behind me.

But they're getting older and they need help as their bodies age. Pick your ailment and there is a drug for you. From heart disease to erectile dysfunction, it's all there.

As I reflected upon my observations later last night, I recalled what I saw in the news during the debates on Obamacare, before it became law. Most of the debate was about how it would socialize medicine and how it would be a government takeover of healthcare.

This thing with drug advertising on TV has been going on for decades. It's really kind of sickening to see so much of it on the evening news. But the thing I notice is what is missing from the news, not just what is said. Now that we have the internet to do research and select our news sources, I don't have to take the news at face value. I can look for holes in the news.

One of them is this: I never saw a newscaster talk about how drug patents cost us at least $300 billion a year. Patents socialize medicine alright, but the money goes up, not down.

Noted economist Dean Baker has done extensive research on the costs of drugs and found that patents provide a markup of up to several thousand percent over the nominal cost of production. One example he cites often is Sovaldi:
"Sovaldi sells in the United States for $84,000 per treatment. A generic version is available in Bangladesh for less than $1,000."
Sovaldi is a Hepatitis C drug that can actually cure one form of Hepatitis. As you can see above, patents have a huge bearing on how much we pay for drugs here. Baker has also pointed out that the motivation for drug research can have a bearing on the efficiency of the research.

In this article, he notes that difference by comparing private drug company research and Drugs for Neglected Diseases Initiative (DNDI). Here, we can clearly see that private drug companies are motivated by the money more than the desire to help people. DNDI, a part of Doctors Without Borders, takes another view. They work out of a genuine concern to help people. The results are startling, and offer a clear contrast in efficiencies (from the article):
"As the figure shows, DNDI was able to develop ASAQ, a combination drug for treating Malaria, for $17 million. More than 250 million dosages have been distributed since 2007. It developed Fexinidazole, a new drug candidate and new chemical entity, intended to treat sleeping sickness, at a cost of $38 million. DNDI developed SSG&PM, a combination therapy for visceral leishmaniasis at a cost of $17 million. DNDI's entire budget for its first 10 years of existence was $242 million, less than one-tenth of what DiMasi estimates it costs the pharmaceutical industry to develop a single new drug."
Of course, there are differences that have a bearing on total costs, and Baker notes them further on. But what we are looking at is cutting the cost of drug research by roughly 90%. Baker has also noted that we are on track to spend $400 billion a year on drugs this year alone. Hmm. 90% of $400 billion is about $360 billion. That is a lot of money, honey.

Oddly, we don't see any conservatives jumping on this story to adopt DNDI methods nationwide for drug research. If another means were found to cut Medicare spending by $360 billion a year, people like Paul Ryan would be on Meet the Press to crow about it. But I don't see any conservatives on this one. Why not?

DNDI isn't after patents and patents are pretended to be part of the free market, so their story doesn't fit the conservative narrative. Patents are government intervention in the free market, not a part of it. I suspect that fact to be irksome to some conservatives in Congress. Not only is DNDI using a free market approach, they are a non-profit supported by donations and some government funding. Yet they are far more efficient than rent-seekers working in the drug industry.

I suspect that fact would be in the news somewhere, but it's not unless you read "Beat the Press". I had to dig around for this one as most anyone else would. And God forbid that an anchorman on nationally televised news should ever cover something like this. We're not going to see it on a nationally televised show like 60 Minutes, either. But you can rest assured that other countries, with governments that are cognizant of this issue, will have citizens that pay less for drugs than we do.
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