COMMENTARY: You’re paying twice for your high-priced drugs

I’m staring at a bottle of Humalog. It’s a small glass vial with 10 ml of clear liquid inside. If you are familiar with Type I diabetes, you know that Humalog is one of the most common insulins used to manage that condition. For diabetics with Type I Humalog is a daily necessity. It is life-extending and life-saving.

If you’ve been paying attention to the news recently, you may recognize Humalog as Exhibit A in the debate over soaring prescription drug prices. When Humalog first went on sale in 1996 those 10 ml cost about $21. Had that price risen to keep pace with inflation, you’d pay about $34 for a bottle now.

So it might surprise you to learn that a vial of Humalog now retails for a staggering $275. And it’s exactly the same stuff in 2019 as it was in 1996. Same molecule, same amount, even the same packaging. Just to be clear: for $275 you don’t get a home health aide to inject the insulin for you.

If you look a little more deeply at this situation, however, things aren’t as bad as they seem. They’re even more galling. The reason for that says a great deal about the way American capitalism works these days.

Humalog is a synthetic insulin. It is made in a lab using something called recombinant DNA technology. I won’t pretend to understand exactly how that works, but I do know it was invented by two scientists – Herbert Boyer and Stanley Cohen — in 1973. The entire field of biotechnology, and the industry that has grown up using it, dates to the pioneering work of Boyer and Cohen.

But here’s the important point. Boyer and Cohen were university researchers – at University of California/San Francisco and Stanford, respectively – and university-based research is funded largely by the federal government through the National Institutes of Health and the National Science Foundation, among other entities. Boyer and Cohen did their path-breaking research using a grant from the NIH.

In other words, the very technology that makes Humalog possible, and every other product manufactured through genetic engineering, was paid for by you, and not just if you were paying taxes back in 1973. The same could be said of almost every drug for which Big Pharma is gouging patients. The basic research, plus the FDA trials and approvals, have been publicly funded while the huge profits that have resulted have been entirely private. Welcome to the American free-enterprise system.

Drug companies continue to insist they need to extort patients because that money pays for vital research for new therapies. But that isn’t really true. Most of the major drug companies spend more on sales and marketing than they do on research. Johnson & Johnson spends twice as much, according to figures from 2015.

Would Eli Lilly, the maker of Humilog, have done that research to invent recombinant DNA technology in its own labs? Probably not. That kind of foundational research often doesn’t yield marketable products right away. Certainly not fast enough to satisfy the quarterly earnings demands of Lilly’s shareholders.

There’s nothing necessarily wrong with a system where basic research is funded by the federal government, which then spurs the development of new products. In fact, in 1980 Congress passed the Bayh-Dole Act to facilitate exactly this kind of transfer. Nobody, however, anticipated that Big Pharma would get so big and squeeze patients so tightly.

So unless Congress acts to rein in these prices, we will all keep paying for our prescriptions twice over.

Steve Conn is a professor of history at Miami University.

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