An unintended consequence -- and tragedy-- of single payer

Sometime recently I was IMing with my buddy ‘bs,’ a contributor here, lamenting the fact that my otherwise quite intelligent nephew had told me in an e-mail that, having lived in Britain for awhile, he thought a system like theirs would be a good thing for us. I’d point out that he’s 35 and probably never been sick a day in his life so he actually has little– probably no– idea what he’s actually recommending. However, he does have a newborn at home and I told bs that he’d be in favor of that right up until the moment that she was denied a life-saving treatment due to its expense or scarcity or, yet more sinister, couldn’t be cured because the treatment to save her had never been invented. As I explained myself, bs suggested it might make a good diary entry so having been goaded into it, here goes …

As bs knows, I spent about six years on the technical support team for our IT industry employer, working every day on site at “a major international pharmaceutical company.” I worked primarily with people in their systems area that collected and validated the data around clinical trials, another that analyzed the data, another that wrote and published the docs required by the FDA at various stages of product development and sale, as well as with their marketing organization. I even installed a point of sale system in their cafeteria at one point so you could pretty much say, I saw it all at one time or another. I was in it but not of it you might say.

I learned an awful lot about the drug business but before I explain my comment to bs I’d like to point out, the folks that I worked with there every day were no different than any other group of people you find in an American corporation. By this I mean, and I know I don’t need to explain this to most of you, they’re neither saints nor sinners, just folks trying to do a job and make a living. Many of them believed they were performing a public service and I would not be one to disagree with them too much. At least around me, I never saw anyone not adhering to very high ethical standards.

My comment to bs was that a move to a single payer system in this country would pretty much destroy the pharmaceutical industry and along with it, prevent the invention, development and exploitation of cures which today are undiscovered. The point I was making in regard to my nephew and his newborn daughter was that one day she might unnecessarily die for want of these discoveries. The man in the street, so to speak, has no conception of how many thousands of formerly painful and dangerous operations have been replaced by rather more benign drug treatments; how many hopeless, terminal illnesses have been prevented; how much pain and suffering has been avoided. Yes, call them tragedies. But without a business cycle to support all that goes into their discovery and creation, without a profit to return to the business and share with the stockholders, that goes right down the memory hole.

How do I know this? Simple. Count the number of independent companies doing such research and development in Canada before and after single payer. Look at the number of discoveries made outside the US.

Look also at the absurd cost of development and how it relates to pricing. I won’t bother to do a riff here about unnecessary litigation as most of you can probably fill in the blanks. I’ll also make the point that all of it is *not* unnecessary, but certainly protection against the legal system is part of the cost. As we’ve recently seen, bribing the government to leave you alone to conduct business is part of it. The fact that thousands of compounds are thrown out before finding one that might have value is discovered is part of it. The cost of running trials in petrie dishes, rats, and dogs and analyzing all that data is part of it. The cost of finding willing human participants in trials is part of it. That mountain of data won’t analyze itself of course. And last but certainly not least, the cost then of developing the marketing materials is sky high (consider — I know of one product this company developed where a bunch of talented people quibbled for nearly a year over the wording of a packaging insert; it wasn’t their idea, it was Uncle Sam’s) and the cost of making an application to the FDA for approval to sell the product is somewhere beyond stratospheric. If you’ve ever wondered why a new product is so expensive, you have to consider the cost and know that once the discovery is registered, the countdown clock to having it become a generic– which has benefits to the consumer in price only– is running and all the costs for all the necessary failures have to be recovered to fund the development of the next useful product before the income stream dries up.

It’s a tough business. Don’t let anyone tell you different.

Before I move on, one last tidbit that many don’t know. We frequently hear that we’ll control drug costs by reimporting product from Canada or the EU. I have two words for that and they aren’t ‘great idea,’ they’re ‘fat chance.’ The reason is simple. Canada and other countries negotiate a per pill price for pharmaceuticals; I think (but do not know for sure) that occasionally more ‘popular’ drugs are sold below cost with the hopes of making up the loss on less frequently prescribed products. So, when Canada’s 50 million aspirin bought in the US at one cent apiece are gone, they’re gone. There’s no spigot of cheap drugs to turn on in Canada that we can take a drink from. If they can’t cover their own needs needs, distorted by rationing, it’s a cinch they won’t be taking care of us, either.