Cronyism and the Healthcare Crisis

Something has to be done about the outrageous cost of healthcare. People are spending their life savings, even going bankrupt just to stay alive. The US has the highest per capita health care cost in the world. Yes, we ARE number one at something! All joking aside, the question has to be, why? Why is healthcare so outrageously expensive in the first place? In this article, I will discuss the real reason for the outrageous cost of healthcare, and why big government really isn’t all that interested in making healthcare less expensive.

This is no simple argument or discussion. There is no easy answer to our healthcare crisis. My attempt here in this article is only the tip of the iceberg. However, we can be sure that there is one huge, self-serving behemoth that has, way before Obamacare came around, greatly influenced the cost of our healthcare; our federal government (should I use a capital “F’ to accentuate its greatness?).

Yes that’s right. Don’t just blame those greedy pharmaceutical companies for our ridiculous healthcare costs. They are only playing the game set forth by the FDA, CMS and other governmental regulatory bodies. I will admit that, yes, there is greed in the healthcare system as well. But that is a whole other can of worms, how about just one at a time?

In an article put out by “Scientific American” in 2014, it was concluded that the average cost for a pharmaceutical company to develop a new drug was $2.5 billion. Let that sink in for a bit. We all know that companies are not charities, even pharmaceuticals and medical devices must turn a profit. With that in mind, do we really think it would make business sense for a pharmaceutical company to turn around and sell their new $2.5 billion investment for pennies? No. We must ask, Why is it so expensive to develop a new drug? Well, that is where our trusty, life-saving FDA comes in to play.

Thanks to expensive clinical trials and other FDA regulations, it takes an average of 10-12 years for a new drug to hit the market, during which time the high price tag of $2.5 billion is incurred. Keep in mind, this is pre-market cost! That means that the company does not make any money from the drug during this time. Not to mention, there is an additional $312 million price tag for said drug in post-approval research.

Now, don’t get me wrong: having worked in the healthcare field for the past eight years, I understand the importance of research and development and its link to patient safety. But, come on! With this much money on the table you cannot tell me that corruption does not occur. Not only is the FDA a major road block for life-saving drugs, but the FDA has also completely blocked drugs from being available in the US on numerous occasions, costing people their health, even their lives. Some say that one reason the FDA blocks certain drugs, even though they have been proven safe and effective in other countries, is to keep their wallets fat and their cronies happy.

Jimmy Fallon should write the FDA one of his sarcastic “thank you” notes on behalf of all of America. I can just hear him now. “Thank you…..FDA….for stalling the US market release of drugs that have been saving lives in other countries for years, because…‘safety.’”

“What about the cronyism?” I’m glad you asked. Most of us have heard about the recent story about Mylan’s EpiPen®. For those of you who haven’t, it’s the life-saving injectable drug for anaphylactic shock whose price skyrocketed from $57 to over $600 in 10 years. Thanks to the good ol’ FDA’s impedance of two competitors (as mentioned in the previously referenced article), Mylan enjoys a comfortable 98% market share in the anaphylactic drug industry. Economics 101: an absence in competition yields increase in price. In this case, a 1000% mark-up over ten years. Don’t worry though, our government came to the rescue and forced Mylan to pay a $465 million fine to make it all better. Oh wait, that was actually because the government determined that Mylan had underpaid Medicare and Medicaid, not overcharged its customers, my bad. Don’t worry though, I am sure that money will be well-spent just like our hard-earned tax dollars.

Did I mention that in 2013, Mylan successfully lobbied Congress to enact a law requiring the purchase of (albeit discounted) EpiPens in public schools? There’s only one catch: the school system is not allowed to purchase EpiPens from any of Mylan’s competitors. The referenced article does state that that stipulation has since been removed, but how was an illegal anticompetitive practice allowed to be there in the first place if our trustworthy government was involved in the deal to begin with?

In the words of Rand Paul, the EpiPen scandal is a perfect example of crony capitalism. This is but a single example of government regulation and cronyism stifling any hope for a free market in the healthcare industry. What’s even more concerning is the fact that all of this had been going on long before Obamacare, which only exacerbates government regulation in the industry and opens doors for more cronyism.

What can be done? First, term limits. The longer these people are in power, the hungrier and more invincible they become. Second, vote out the duopoly. The same two parties have been in power for far too long. Third, greatly reduce or eliminate most governmental agencies. I understand, there is a time and place for the FDA, but in its current state it has overgrown its usefulness to the American people. Whatever it takes to abolish this influx of crony capitalism and return to a true free market capitalistic economy, that’s what needs to be done.

In conclusion, the rising cost of healthcare is a joint effort not just by greedy pharmaceutical CEOs, but more so the very same entity that claims to be helping protect all of us poor helpless Americans from the big bad “capitalistic crooks.” Don’t let them fool you, the current government is NOT here to help anyone but themselves and their own bottom line which is all too often shared with their cronies in the industries they are claiming to protect us from. Finally, in the words of the great American economist, Milton Friedman, “The government solution to a problem is usually as bad as the problem.” I would add that in the case of healthcare, the government solution is far worse than the problem itself.

* Luke Carter is a libertarian who could be described in part as a classical liberal. He resides in Oklahoma City, Oklahoma and has a love and respect for the outdoors, freedom, and liberty.

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