After Martin Shkreli raised the price of Daraprim, which costs one dollar to produce, from $13.50 per pill to $750 per pill, the public and media roundly panned the Turing Pharmaceuticals CEO for gouging patients in need of life-saving medicine.
While Shkrelis move may have been extremely ostentatious, and drawn the publics attention, the issue of overpriced drugs in America is one that is not confined to Shkreli and Turing Pharmaceuticals.
Drug prices in the U.S. have been skyrocketing for years. The latest data indicates that drug prices in the United States are often up to 10 times more expensive than in almost all other developed countries.
While some contend that this is a problem with the market itself, they are incorrect. Its the government, not the market that is to blame for this situation.
The main reason why this situation exists is because of patents and intellectual property rights, a government granted monopoly privilege that has allowed these companies to claim a monopoly over a recipe for a particular medication.
In a truly free market someone like him may be able to develop a product and gouge the price, but his competitors would be free to reverse engineer and replicate that product, and offer it for a lower price.
Currently, the government is standing in the way of that happening, not just in the pharmaceutical industry, but across the economy as a whole. Often those who benefit most from the privilege of monopoly are individuals who are capable of buying the rights to a product, essentially forcing those with less resources out of the marketplace.
While Shkreli and Turing Pharmaceutical caved to public pressure and have stated that they will lower the price of Daraprim, the overall problem continues unabated. Its important to point out that even in this controlled economic environment, it was not rules and regulations that ultimately forced him to lower the price again. It was public pressure and the threat of boycott, both of which are entirely acceptable in a free market scenario.
The reality is that Americans are being price gouged for healthcare compared to the rest of the industrialized world. The reason for the exponentially high price of healthcare in the U.S. has little to do with capitalism and free markets, and everything to do with government interference in the marketplace.
Enbrel (for autoimmune disease)
Enbrel is similar to Daraprim the drug Martin Shkrelis company prices at $750 per pill in that doctors prescribe it for HIV/AIDS patients. While the drug is $1,117 per month under the UKs National Health System (NHS), but the average health plan in the US charges between $1,946 and $4,006 per month for the drug.
Celebrex (for pain)
According to the IFHP, Celebrex is commonly prescribed for pain around the world. The drug costs just $51 in Canada, but between $139 and $431 per month in the US.
Copaxone (for multiple sclerosis)
Over 400,000 people in the US have multiple sclerosis (MS), a debilitating condition that affects the bodys central nervous system. Copaxone one of the drugs used to treat it costs between $862 and $1,357 per month in Europe. But in the US, Copaxone costs between $3,900 and $4,018 each month, which is roughly the median monthly income in the US.
Cymbalta (for anxiety and depression)
According to the Anxiety and Depression Association of America (ADAA), 18 percent of US adults suffer from anxiety and depression in a given year, and Cymbalta is one of the most common prescriptions for anxiety and depression. The ADAA also estimates that those conditions cost the US approximately $42 billion each year. While the drug only costs $46 per month under an NHS health plan, Cymbalta costs at least 4 times as much in the US between $161 and $349 on most plans.
Gleevec (for leukemia)
Gleevec, which is used to treat several types of cancers including leukemia is astronomically more expensive in the US than in similar nations. The average US health plan charges between $5,482 and $11,007 for the drug, but the same drug is available for $989 per month in New Zealand, and $1,141 in Canada.
Humira (for rheumatoid arthritis)
The Centers for Disease Control estimates that 1.5 million people across the US have rheumatoid arthritis (RA). Humira, which the IFHP says is commonly prescribed for RA, costs as little as $881 per month in Switzerland, and as much as $1,950 in Canada. But under US health plans, Humira costs up to $4,089 per month.
Nexium (for acid reflux)
Nexium is prescribed for gastroesophageal diseases (GERDs), which affect nearly 60 percent of the US adult population in a given year. 20 to 30 percent of Americans suffer weekly symptoms of GERDs, like acid reflux. While Nexium costs just $42 per month in the UK, the drug costs between $200 and $400 in the US.
While Martin Shkreli certainly deserves his reputation as a greedy, ruthless capitalist, gouging of US drug prices has been and remains a serious problem across the entire US pharmaceutical industry.