All Commentary
Monday, October 19, 2015

Big Pharma and the Opposite of Science

The Seen and Unseen of Daraprim

Can we all agree that no reasonable and compassionate person would want to force people to choose between food and medicine?

Unfortunately, too many people across the ideological spectrum assume that by opposing or favoring certain measures — greater regulation of the pharmaceutical industry, for example — you forfeit your reason and compassion.

Politics Is the Opposite of Science

The question of effective means to achieve a particular end is often a question of science — physics or economics, for example — rather than of politics. Determining whether it’s technically feasible or economically worthwhile to explore Mars is a matter of science; trying to gather sufficient popular backing to do so is a matter of politics.

Strictly speaking, pure science is about the search for the genuine causes of observable phenomena; politics is about gaining the authority to pursue favored outcomes. The method of science entails tolerance of and relentless but reasoned criticism of all views, including one’s own; the tools of politics include what urbanist Jane Jacobs calls “deception for the sake of the task.” Real science is about critically examining premises; pure politics is about defeating your opponent.

In politics, you focus on that part of what is seen that supports your position, while in science, you try to get at the part of reality that is often not seen.

There’s no denying that there’s some science in practical politics and some — perhaps a lot — of politicking in the practice of science. But when it comes to the pursuit of truth versus winning or principle versus expediency, politics is the opposite of science.

What Is Seen about Daraprim

A rich entrepreneur named Martin Shkreli recently bought the rights to Daraprim — a drug used mainly to treat life-threatening, parasitic infections in babies — and almost overnight raised its price from $13.50 to $750 per tablet. That’s over a 5,000 percent increase! What we see is a wealthy man profiting, or at least trying to profit, from the misfortunes of the ill and less well-off.

The rush to political judgment typically overcomes the necessity for scientific analysis. Those who condemn Shrkeli and call for regulation believe they have the moral (and perhaps intellectual) high ground.

Such a case is far too complex to analyze in detail here — and that’s really my point. But you can get some idea of that complexity when we consider the less obvious parts of this story.

What Is Unseen about Big Pharma

In a free market, the cure for high prices tends to be … high prices. In other words, high prices tend to attract competitors, increase supply, and, other things equal, eventually decrease prices.

But in the pharmaceutical industry, everything else is not equal. Drug companies don’t want to invest in new drugs for rare diseases because the cost of development tends to be very high. Part of those development costs may be inherent in the R&D process (up-front costs, low production volume). But a very large part is attributable to FDA regulations that greatly increase the cost of bringing a new drug to market, which typically takes years and thus further drives up the market price.

Daraprim, however, has been around for decades and is a generic drug, so Big Pharma doesn’t have a legal monopoly on it. So how can Shkreli get away with such an enormous price increase?

What’s invisible to some are the government restrictions on the import of Daraprim from abroad. Economist Alex Tabarrok reports that “a single pill costs about 5 cents in India,” and it is also available more cheaply in Europe. But the FDA in most cases requires that drugs approved by regulators abroad go through the entire approval process here in the United States — even generics such as Daraprim.

With competitive barriers enforced by political power, it’s no wonder that, in this case, high prices may not be a cure for high prices, at least not in the short term.

The solution here lies in less regulation, not more.

Time to Simmer Down

The venom and hostility typical of public-policy debates stem from the failure to understand that someone can strongly disagree with you about what is a reasonable and compassionate means to attain a common end.

Looking beyond greed for the source of high pharmaceutical prices doesn’t make us bad people. Resisting the urge to address the negative consequences of prior interventions with political solutions isn’t irrational.

On the contrary, taking the time to think more scientifically and less politically empowers us to be more reasonable and compassionate advocates for those we wish to help.

  • Sanford Ikeda is a Professor and the Coordinator of the Economics Program at Purchase College of the State University of New York and a Visiting Scholar and Research Associate at New York University. He is a member of the FEE Faculty Network.