Policy 14.2: Pharma Bro vs Big Pharma: Is Shkreli a villain or a scapegoat for the gigantic price-gouging pharmaceutical companies?

Policy:

No one is permitted to prohibit the buyer of a product from using it in a manner that the new owner sees fit – within the confines of what is allowed.  This applies to all things, including physical goods, such as books, CDs, medication, machinery, vehicles, etc., as well as digitized goods such as audiobooks, software, and the like. As a result, the owner is free to reverse engineer the product they purchased and use that knowledge for making improvements (e.g. be it cars or medicine), fix or for other research purposes. Additionally, individuals that buy digitized goods can copy and distribute those items without requiring to remunerate the individual or company they purchased the digital good from. However, if the purchaser is renting something from an individual or company, then they cannot harm the property of the owner because it does not belong to them. Also, no one can claim authorship of digital or physical works when it originated from someone else, and they must attribute it to the actual author, scientist, researcher and the like.

Proofs

 As noted in the previous post, for a sale to be Islamically valid, the buyer cannot be restricted from enjoying the property that they have purchased. For example, when someone buys a chair, they can sit on whenever they like – not on the days specified by the seller. As a result, in an Islamic Society the brand name drug companies couldn’t stop generic drug companies from copying their drug formulas and then manufacturing those drugs for sale.

So how would companies make money on medicine? Who would do medical research?

This gets into the more significant topic of healthcare. In Islam, healthcare is considered a basic need that the State must provide it to all its citizens. We will, in sha Allah, touch on this in the next post and again when we look at the topic of healthcare more broadly.

Propaganda: How do drug companies defend killer drug prices?

Drug companies justify high drug prices in the name of research, for example:

 “We have an obligation to ensure that the sale of our medicines provides us with the necessary resources to invest in R&D to address serious, unmet medical needs.”

What it seems that they are trying to say is that the high drug prices are necessary to ensure the companies can continue to provide a ‘service to humanity.' Well, at least that's what they want us to believe. 

How do we challenge the propaganda?

Leigh Purvis, American Association of Retired Persons (AARP) director of health services research, puts it this way:

“companies often say the price is to recover the cost of research and development. However, "the numbers that they use aren't really verifiable and/or potentially valid." 

And just how much more expensive are brand name drugs over their generic counterparts?

According to the AARP, brand name drugs are 18 times more expensive than generic drugs. Now that’s a gouge.

Drug research: Costs are socialized, but profits are privatized 

To add insult to injury, it turns out that big pharma gets big government subsidies. As noted in the Washington Post:

“What is remarkable about Taxol is this: It was discovered and developed by the federal government at substantial taxpayer expense. Yet it is now produced and priced exclusively by a private pharmaceutical company, Bristol-Myers Squibb, which has made millions on the drug.”

So not only is big pharma opaque when it comes to their pricing, but they also get government funding. 

About that propaganda… 

Big pharma does have a large item that they need to spend on, but it’s not R&D.  

According to a BBC journal article, the R&D spend for the top drug companies is $65.8 billion.

That seems like a lot until you realize that they spend $98.3 billion on sales & marketing. That’s right. They spend nearly spend $33 billion more on marketing than R&D. And so it’s no surprise that we collectively believe that brand name drugs are better when we are just overwhelmed by these billion-dollar marketing budgets to think the way they want us to think.

When looking at the numbers, being an accountant all, Johnson & Johnson, Pfizer, Novartis, and GSK each had marketing spend the exceeded their R&D spend by at least $4 billion. For example, Johnson & Johnson spent $17.5 billion on sales and marketing, while only spending $8.2 billion on R&D. 

But the main point here is that $98 billion sent big pharma's way has zero direct contribution "to address serious, unmet medical needs."

Points to Consider

Capitalist model to medicines: people are less important than profits

When arguing against the idea of intellectual property, drug patents illustrate the undeniable reality that Capitalism cares more about profits than people.

Should people die for the sake of profits? According to Islam, the answer is no, but according to Capitalism the answer is yes.

In 2011, Wolf Blitzer asked Ron Paul, a Republican presidential candidate, whether society should allow a sick person to die. Ron Paul’s answer was “That’s what freedom is all about: taking your own risks."  His response was cut short by cheers from the audience.

Keep in mind such thinking – despite its contradiction with human decency – is entirely in line with the Capitalist economics that is taught in school: the price-mechanism is what drives distribution of resources. Meaning medication (or any other resource) is allocated to only those that can afford to pay for it. Such an approach implies that those who can't afford such medications will die.  For example, Dr. Nicky J. Mehtani explains how a patient of hers had to choose between feeding her grand-kids or paying $200 for heart medication. She decided to feed her grandchildren and ended up dying from a heart attack.

'Pharma Bro' vs Big Pharma: Is Shkreli a villain or a scapegoat for big pharma?

Martin Shkreli, also known as "Pharma bro," was the mastermind behind his company buying Daraprim for $55 million.

Why?

Shkreli, who seems to have paid attention in his economics classes, probably realized that this drug (Daraprim is the only approved treatment for toxoplasmosis) has an inelastic demand. Consequently, he  “raised its price by over 5,000 percent, from $13.50 a pill to $750.00”. Shkreli defended his actions on the basis that “this is a capitalist society, a capitalist system and capitalist rules." He should also have mentioned that this is freedom of ownership at work – he bought the patents freely and used his freedom to raise the prices. 

Did Shkreli also raise the price of insulin and 1,000 other medications?

No, he didn’t. According to CBS, over 1,000 medications had “average increase amounts to about 6 percent" at the start of 2019. The article noted a 9.5% increase in the cost of the opioid OxyContin and an 8% increase in the blood thinner Pradaxa.

Concerning insulin, its cost of rose 97% (from $2,900 in 2012 to $5,700 in 2016). Fox Business put that at 500%, linking the price hike to “Eli Lilly, Novo Nordisk and Sanofi” who were “under new federal scrutiny."

To be sure, these are not just some faceless statistics.

Consider the tragic death of Alec Smith who couldn’t afford to pay the $1,300 a month cost for his insulin. He started rationing it out, went into a diabetic coma, and then died. And that’s what a free society is all about; letting people who can’t afford insulin to die from diabetes. 

What else do drug companies do to gouge patients?

The AARP also found that the brand name companies use a “pay to delay” tactic, where these companies pay the generic drug companies to delay the release of their drug, so the brand name companies can continue to extort monopolistic prices out of sick people. They found this “strategy” costs patients $3.5 billion.

ABC who was reporting on this story also noted that “brand-name drug makers take legal action to block generics from getting FDA approval.” 

Figures why they want us to focus our outrage at Shkreli instead of them.

Should we celebrate Shkreli going to jail?

The Capitalists really got this propaganda thing down to a science.

Shkreli’s incarceration has nothing do with raising the prices on Daraprim. The charges he went to jail have to do with “white on white” crime aka committing crimes impacting “shareholder value” of his fellow Capitalists.

The problem is not with Shkreli as much as it is with the university economics courses that taught him, me and others these incorrect ideas about reality and how to deal with other human beings.  Sure, the guy is a jerk and a villain. But the research noted above proves him right that he’s not the only jacking up drug prices to destroy the lives of people. He’s just not as smooth as the other drug companies that avoid attracting this type of attention.

Like all Muslims, I’m aware the media has a bias: the media likes to vilify the token ‘bad guy,' tar and feather’ him, so we all feel as if somehow justice is served. The reality, however, is that drug companies keep on destroying the lives of people – for the same reasons that the media skewered Shkreli.

And unfortunately, the stats show that people are vulnerable to price shocks that come from the drug companies who they buy their medication from. According to Harvard, 14% of people who have no health insurance chose to skip on their medications. Also, Dr. Mehtani, whose patient died from a heart attack, noted that “one in four Americans report difficulty affording their prescription drugs, and one in eight say they or a family member have rationed doses due to high costs."

So, no we shouldn’t celebrate Shkreli’s demise because there is nothing to celebrate.

As long as drug patents are legal, people will have to choose to feed their grand-kids or buy that life-saving medicine they need. Some will be okay, but others will unfortunately die as a result of this Capitalist economic policy.