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 connections.
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 the company 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 expensive?)
Playing Politics With Medicine
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 rules.
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.