Open Letter to Congresswoman Angie Craig on the need to treat medicine like any other vital utility

by Glen Wallace

My central premise is that relying on the market to deliver healthcare without price gouging or shortages is an exercise in futility.  Even so, what I have seen from you and Minnesota's two current Senators is a continued belief that we could rely on the market for optimal healthcare delivery of pharmaceuticals and medical devices if only competition could be increased for generics.  But such a belief is based on the premise held by freemarket proponents that everything will somehow work out whereby for every want or need of a customer, a manufacturer will always be present to meet that want or need and do so at a reasonable price due to competition from other producers of the same product.  But history has shown that such a freemarket ideology is often naive, and rarely works out as envisioned when any sort of monopoly can be achieved by the manufacturer.  

As a result of the failure of markets in the case of utilities, government officials have wisely required the implementation of a Public Utilities Commission or PUC to carefully regulate utility providers of such basic necessities as natural gas and electricity.  The PUC then proceeds to direct the energy provider to provide the vital commodity to the customer at a maximum price at a minimum supply.  In the case of utilities there is an understanding that the marketplace cannot be relied upon to provide the utility to the customer at a reasonable price and at an adequate supply.  I believe the same principle holds true for drugs and medical devices; and yet there is a continual dependence on the marketplace to deliver the vital medicines to the patients that need them.  As a result there is regular price gouging and drug shortages across the country.  

We are seeing in medicine much the same scenario as was seen while Enron was in control of the deregulated electricity supply to the people of California where the citizens saw price gouging and electricity blackouts as a result of depending on the marketplace to deliver the vital utility of electricity.  Almost everyone now realizes what a huge mistake it was to deregulate the supply of electricity to the people of California, but for some reason few have come to the same conclusion about the continued lack of price and supply regulation with the vital utility that is drugs and medical devices.  I however have come to the conclusion that the government needs to dictate, not merely negotiate, drug prices and medical device prices and supply levels regardless of whether patent protection exists.  

If eliminating patent protection is what would be required to engage in that sort of regulation, then that should be done as well.  We need a medical system that is patient based rather than continuing the current market based model that should be scrapped as a proven failed model of healthcare delivery.  In response to the inevitable claim that eliminating patent protection would suppress innovation with drugs and medical devices, I would counter that, if anything, it would improve innovation.  Innovation could be improved if there was a nationalization of any drug and medical device manufacture shortfall not met by a capitalist manufacturer who might be discouraged by the prospect of no longer being able to price gouge by way of monopoly profits ensured by patent protection.  

In a public manufacture scenario that is patient based, the government manufacturer would be directed by the goal of providing the best medicine or medical device according to the needs of the patients instead of the current market based model where the capitalist manufacturer, typically a corporation, is directed by the goal of maximizing shareholder value.  It is, after all, the scientists and engineers that are doing any innovating and not the corporate executives.  And it is also typical that a scientist or engineer of a corporation will give up any remunerative patent rights in exchange for a regular paycheck from their employer.  Therefore, those innovators were never motivated by the prospect of enjoying the monopoly profits that can come from a patent, as they never got to cash in on those patents since their paychecks would remain the same even after the patent was awarded.  Therefore, if those same scientists and engineers were employed by the government they wouldn't have any different motivation to innovate as they would still be getting that same regular paycheck.  But the important difference is that those employees would directed to direct their research and development according to the needs of patients and not according to the needs of corporate shareholders.  

Therefore, I hereby propose a Federal Public Medicine Commision whose directive would be to ensure both adequate supply of drugs and medical devices and set a maximum price manufactures could charge.  Additionally, the Federal Government should open a US Government Pharmaceuticals and Medical Devices Office that would be responsible for the research, development, manufacture and distribution of any drug or medical device that a private manufacturer is either unwilling or unable to make at the price or supply the Commission deems necessary and appropriate.