In 2011, Gilead Sciences, a major biotech firm, purchased
another company called Pharmasset for over $10 billion. Pharmasset had been losing money, as
its experimental drug for hepatitis C was still in late-stage testing and had
not yet been approved by the Food and Drug Administration (FDA).
For such a large amount of money, this acquisition seemed
really risky for Gilead Sciences.
But in our world of politicized healthcare, it is not so much about
serving customers as it is about hiring good lobbyists with political
Gilead hired Joseph Grogan, who previously lobbied for
another biotech firm. He also was
a senior policy advisor for an FDA commissioner during the previous
administration. Grogan was also
the executive director of an advisory council that included the CEO of
Gilead. It is amazing how almost
everyone and everything seems to be connected in Washington DC.
In addition to Grogan, Gilead also hired several lobbying
firms with strong connections in DC.
The lobbyists went to work quickly.
Not only did Gilead need to get FDA approval for its drug,
but they also needed a recommendation from the U.S. Preventive Services Task
Force so that the federal government and insurers would pay for screenings. Gilead needs to find a good customer
base for a drug that costs about $1,000 per pill. (And we wonder why healthcare and insurance are so
Playing Politics With
Unfortunately, the government – and this would include
government at all levels – is completely entrenched in our healthcare system
today. There is very little left
in the way of a true free market.
It is not a completely socialist system, but it is a mostly
fascist system. The federal
government is the main insurer for most people over 65. For everyone else, it dictates most of
The U.S. healthcare system was already a mess before
Obamacare. It is just an even
bigger mess now, with one more layer of rules and bureaucracy.
For these big pharmaceutical companies to survive, they
basically have little choice but to lobby Congress, FDA officials, and anyone
else that matters. They can spend
a few million dollars in lobbying in order to make billions. This isn’t really a matter of defending
what they’re doing, or even condemning it.
It is a matter of pointing out this is a corrupt
system. Unless the political power
is significantly reduced, the corruption and favor trading is going to
continue. If Gilead Sciences
doesn’t do it, then another company will.
The FDA should be abolished. The private marketplace can do the job of testing and
certifying the safety of drugs more effectively and far cheaper. At the very least, a step in the right
direction would be to make the FDA advisory instead of mandatory. People should be able to make their own
choices on whether to take a drug.
They can take into account the possible risks and the possible benefits.
Of course, government needs to get out of the healthcare
business altogether. It should not
serve as an insurer and it should not dictate what insurance companies should
and shouldn’t cover.
The reason that healthcare and the associated insurance are
so expensive is because there is almost no element of the free market
left. While the 1950s was far from
perfect, the healthcare system in the U.S. was far superior to what we have now
in terms of cost and service. The
technology is obviously better now, but everything else is far worse.
As long as there is great political power in the healthcare
industry, we should expect to see lobbyists and political favors dictate
profits and losses far more than voluntary consumers.