We Need a Public Option for Prescription Drugs

Kara Eastman, the Democratic nominee in Nebraska's Second Congressional District, tells a story while campaigning about visiting her mother while she was dying from cancer. Her mother's medicals bills were stacked so high on the kitchen table, Eastman says, that when she visited, they couldn't see each other through the piles. Just one of her mother's pills cost $2,500 a month.

Eastman decided to run for Congress to offer alternatives to the skyrocketing cost of health care. She campaigns calling for Medicare for All and further solutions to the crisis of unaffordable prescription drugs. Her message is resonating. She beat a well-known opponent in her primary by a few hundred votes.

Spending on prescription drugs is growing faster than any other sector of our health-care system. Drug companies, meanwhile, are raking in record profits, far higher than those in other industries--and they are spending considerably more of it on buybacks and dividends than on research and development. Most importantly for their bottom line, they are breaking records with their spending to influence Congress to protect their monopolies.

Drug company revenues soared from $534 billion in 2006 to $775 billion in 2015. That's billion with a "b."

According to a study by researcher Adam Gaffney, Americans spend more on outpatient drugs than the residents of any other industrialized nation--$1,026 per capita annually. The average in advanced industrial nations is $515; in Denmark, it's just $240. The problem isn't that Americans use four times the drugs that Danes do; it's that drug prices are much higher in the United States than anyplace else. In 2014, a daily 50-unit dose of insulin glargine cost $186 a month, after applicable discounts, in the United States--but only $63 in the United Kingdom and $46 in France.

In fact, U.S. taxpayers are paying twice. First, their taxes fund the research and development of new drugs: Federally funded studies contributed to the science behind every single one of the 210 drugs approved between 2010 and 2016. Taxpayers, for example, funded the development of Crestor, a popular medication to lower cholesterol. Now Crestor is sold by the private pharmaceutical giant AstraZeneca, which made over $16 billion in profits on Crestor alone during a three-year period.

It's clear that simply strengthening regulations on pharmaceutical corporations is not enough. Such corporations will prioritize lining their pockets over saving the lives of everyone who needs their medications, when the laws permit that--as they do in the United States. And when they do invest, they will always invest where there is the greatest potential for profit, not where there is the greater potential benefit to the public health.

One way to address that dilemma is to create a taxpayer-owned drug company to produce and distribute medications at affordable prices--especially drugs that have been developed with U.S. taxpayer dollars. Unlike private corporations, this public drug company would focus on developing drugs based on public need rather than perceived profitability. The company could use private contractors to develop and manufacture the drugs, but it would own the patents and therefore ensure that everybody has access to them. Economist Dean Baker has pointed out that this type of model is how the Department of Defense operates to create many weapons of war.

The United States would not be the first country to create a national drug company. Brazil, Cuba, South Africa, and Sweden all have publicly owned drug companies. While there would be a cost to setting up a public drug company, Baker and others have shown that the savings on drug prices in the United States could fully offset the added costs of a such a company. Depending on the scope of that company, Baker has shown savings of hundreds of billions of dollars per year.

This is not just good policy. It's good politics, too.

The Progressive Change Campaign Committee (co-founded by one of the authors) recently polled a cross-section of Republicans, independents, and Democrats in swing and Republican-leaning congressional districts on support for the idea of creating "a publicly-owned not-for-profit pharmaceutical company to compete against private drug companies, to create more competition in the marketplace and stop big drug companies from jacking up prices for our seniors."

In the Third Congressional District in Kansas, currently represented by Republican Kevin Yoder, 61 percent said they support the idea, 23 percent are opposed, and 16 percent are not sure.

In the First Congressional District in Wisconsin, currently represented by Republican Speaker Paul Ryan, 69 percent support the idea, 20 percent oppose it, and 11 percent are not sure.

In the Third Congressional District of New Jersey, currently represented by Republican Tom McArthur (who introduced the bill that gutted much of the Affordable Care Act), 66 percent support the idea, 19 percent oppose it, and 14 percent are not sure.

These are overwhelming bipartisan numbers that reflect the impact that big pharma's greed is having on Americans across the country. Families everywhere are struggling to absorb the skyrocketing cost of prescription drugs--drugs that were often developed with public money in the first place.

There is no good reason or justification for continuing with business as usual. We're calling for a public drug company that allows us to keep life-saving technologies developed with our dollars in the public domain--and get them into the hands of everyone who needs them.