Recently, pharmaceutical companies have gained much media attention, due to an epidemic of price hiking. In his recent address to congress, US President Donald Trump stated that Americans must ‘work to bring down the artificially high price of drugs and bring them down immediately’. Are these dramatic cost rises an attempt to remain in business or simply another exercise in corporate greed?
Capitalist Common Sense
Unknown to most, the production of innovative medicines is unquestionably expensive and laden with risk. The going rate for each successful new drug is between $1.5-2.5 billion, through 12 years of research, clinical studies, and FDA ‘hoop jumping’. With only 1 new compound in every 5000 receiving regulatory approval, one can appreciate why investors may think twice about the drug development business. But then this is the problem. How can the creation of, often lifesaving drugs, be sustainable if the time and expense invested is met with considerable losses? Neither big nor small pharmaceutical companies receive special dispensation based on the moral imperative to heal the ill, as such, realistic price points have to be set. If you pick and choose Kantian principles in a capitalist world, then you are destined to fail.
For companies that produce rare Orphan drugs, the reality of business failure is all too real. Treatments for rare illnesses are an incredibly small market, one that could not be serviced unless suitable return on investments can be made. Despite the financial incentives provided by the Orphan Drug Act, the reality is that rare diseases are especially uneconomical. This is why high prices are obligatory. High prices equal higher profits which equal long term, secured investments for better, safer and more effective treatments. This is consequentialism in the flesh; it should not matter the price paid, when the result is lives saved.
Once a drug has entered the market and started to generate profits, it could be considered foolish not to capitalize on the opportunity to increase prices, given that the increased revenue can then be poured back into research and development. This allows the production of innovative new drugs which will ultimately benefit vast quantities of people. From a utilitarianism standpoint, this is without a doubt morally justifiable.
The US government backed patent systems allows a 20-year monopoly on the production of a new drug. By the time it hits the shelves after years of research there is on average only 8 years left for profits to be reaped. Given that price hikes in this period are perfectly legal, the action must be morally correct and so according to duty ethics is justifiable.
From a hedonistic point of view increasing the price of pharmaceuticals allows the top players in a company to enjoy a lavish lifestyle. As they have undoubtedly worked extremely hard to reach the position that they are in, like bankers and businessmen, are they not entitled to enjoy the spoils of their labour? Moreover, there is no incentive to have low prices in such a market. This would result in a loss of competitive advantage and hence lower profits for shareholders.
Culling the poor
While it is easy to consider the act of raising the price of pharmaceuticals in terms of profit, the fact should not be forgotten that this simultaneously raises the price of survival for many vulnerable and potentially terminally ill people. It is too easy to detach the act of drug price hikes from people’s suffering. If there is a potential cure or treatment available that will improve a person’s quality of life, should it not be a basic human right that everyone has access to it? Deontologically speaking, the act of refusing a potentially life changing medicine to a person for the sake of money is morally abhorrent and therefore unjustifiable.
Many price increases are sudden after the drug has been in circulation for a long time. The period in between the drug entering the market and the price inflation is generally long enough to ensure a captive audience of consumers, who are reliant on the drug for their quality of life. It is this captive market that allows the big pharmaceutical companies to exploit the sickest and most vulnerable people for profit. This is particularly true in countries like the US where there is no welfare state. The increasing drug cost leaves people with terminal, genetic or long term conditions with very few options, as they are unlikely to be able to find insurance and are forced into somehow footing the extortionate bill for treatment themselves.
In the same year that Heather Bresch, CEO of Mylan, took home $18.9m, the company hiked the price of their EpiPens by an equally staggering 600%. Whilst Bresch defends the right of her company to make a profit, the freedom principle states that this can’t be morally justified at the expense of others. EpiPens are life saving drugs for those with severe allergies, and harsh price hikes lead to thousands having to go without or needing to find extreme ways to meet the costs. As is often the case with more specific drugs, Mylan has a monopoly over the market leaving consumers no choice but to pay up or play Russian roulette with their health. Does this not leave pharmaceutical companies with a moral obligation to protect their customer’s quality of life?
These hikes don’t just affect the minority either. In 2016 the cost of an anti-epilepsy drug taken by 48,000 in the UK was raised by an eye watering 2600%, at a cost of £48m to the NHS. At a time when there is such scrutiny on the running of the health service in the UK, every extra penny paid into the pockets of pharmaceutical companies is money deprived from other services that would benefit millions. These cuts are detrimental to the vast majority of people who rely on the NHS every day. With the sole purpose of lining the pockets of the select few, they are morally indefensible. This is not utilitarianism, this is extortion.
Group 54: Joshua Sanders, Zhendong Li, Eleanor Smith, Kathleen Sandman