This is a convenient story for the pharmaceutical giants, who can claim that any assault on their profit margins is an assault on the free market system itself, the source, in their minds, of all innovation. But this story is largely false. It owes much to the rise of neoliberal ideas in the 1970s and to decades of concerted industry propaganda in the years since.
In truth, the pharmaceutical industry in the United States is largely socialized, especially upstream in the drug development process, when basic research cuts the first pathways to medical breakthroughs. Of the 210 medicines approved for market by the FDA between 2010 and 2016, every one originated in research conducted in government laboratories or in university labs funded in large part by the National Institutes of Health. Since 1938, the government has spent more than $1 trillion on biomedical research, and at least since the 1980s, a growing proportion of the primary beneficiaries have been industry executives and major shareholders. Between 2006 and 2015, these two groups received 99 percent of the profits, totaling more than $500 billion, generated by 18 of the largest drug companies. This is not a “business” functioning in some imaginary free market. It’s a system built by and for Wall Street, resting on a foundation of $33 billion in annual taxpayer-funded research.
Generations of lawmakers from both parties bear responsibility for allowing the drug economy to become a racket controlled by hedge funds and the Martin Shkrelis of the smaller firms. The current crisis in drug prices and access—as well as a quieter but no less serious crisis in drug innovation—is the result of decades of regulatory dereliction and corporate capture. History shows there is nothing inevitable or natural about these crises. Just as the current disaster was made in Washington, it can be unmade in Washington, and rather quickly, simply by enforcing the existing U.S. Code on patents, government science, and the public interest.
In 1846, a Boston dentist named William Morton discovered that sulfuric ether could safely suppress consciousness during surgery. The breakthrough revolutionized medicine, but when Morton filed a patent claim on the first general anesthesia, one doctor huffed to a Boston medical journal, “Why must I now purchase the right to use [ether] as a patent medicine? It would seem to me like patent sun-light.”
The response reflected a longstanding belief that individuals shouldn’t be able to claim monopolies on medical science. Breakthrough discoveries, unlike the technologies inventors would design to apply those discoveries, should remain open and free to a global community of doctors and researchers, with the backing of the government if necessary.