Posted on 08/12/2025 2:28:30 PM PDT by nickcarraway
Binary thinking won't promote progress
This piece is the first in a series exploring the foundational players in the U.S. healthcare system: payers, providers, policymakers, and the pharmaceutical industry.
Ever since Bill and Hillary Clinton advanced healthcare reform in the first term of the Clinton administration, the debate about how to improve access and affordability has been politically fraught and full of pejoratives. Everyone comes to the table with opinions and preconceived notions, many of which go unchallenged.
In my classroom, I encourage my business school students to look beyond headlines, rhetoric, and reductive soundbites. Tropes like "All that insurance companies care about is profits" and "Doctors don't understand business" are simplistic and do a disservice to patients trying to navigate a profoundly complex system while maintaining their health, dignity, and humanity.
In my nearly 30 years in healthcare -- as a physician, executive, educator, and founder -- I have worked in almost every corner of the system. Here is what I have found: most people who work in the healthcare industry, from the well-compensated insurance exec to the pharma salesperson, are mission-oriented. They want to positively affect people's lives; they care deeply about finding and facilitating cures, and they certainly do not want to keep patients from accessing preventive or life-saving care.
It is the system in which these individuals operate that is flawed, not the people themselves.
In this editorial and those that follow in the series, I will look at the four p's -- providers, payers, policymakers, and pharma – and their place within the system. My goal is to uncover solutions that will improve the U.S. healthcare marketplace for all the players in it, especially for that fifth "p": patients.
Let's start with the pharmaceutical industry.
Fact: The U.S. Pharma Industry Is a Global Engine of Innovation
"Pharma is evil."
Have you heard this trope? I cannot tell you how many times I have heard it. And, I will admit that when reading stories about the cost of insulinopens in a new tab or window or other drugs, there have been times when I thought it as well.
But here is the truth: the U.S. leads the world in clinical researchopens in a new tab or window and healthcare innovation. This outcome is not an accident. It is because these companies work hard to advance cures.
According to a study released last yearopens in a new tab or window by Amitabh Chandra, PhD, a professor at Harvard Business School and the Harvard Kennedy School of Government, global biopharma research and development (R&D) investment totaled $276 billion in 2021, including a significant portion from the U.S. Over time, these investments have yielded transformative therapies, from immunotherapies in cancer to mRNA vaccines for COVID-19, to cures for hepatitis C, to groundbreaking treatments for rare genetic diseases. They have turned once-fatal diagnoses into manageable chronic conditions and extended, even saved, millions of lives.
For example, in the early days of the COVID-19 pandemic, we witnessed the industry's capacity for rapid innovation in the U.S. Vaccines that would traditionally take a decade to develop were researched, tested, and distributed within a year due to unprecedented partnerships between industry, government, and academia. This example illustrates the best of what pharma can offer: coordinated action, rigorous science, and life-saving solutions.
Beyond innovation, the pharmaceutical industry also makes a substantial economic contribution. It supports more than 4 million U.S. jobs opens in a new tab or windowand contributes hundreds of billions to the national GDP. Entire communities depend on it -- not just for medication, but for employment, research opportunities, and economic stability.
Given their work and ingenuity, Chandra emphasizes that pharma companies are, by and large, not exactly raking in the dough. In a webinar mentioned by R&D Insightopens in a new tab or window, Chandra argued, "This is not some super-profitable industry," and pointed out that net income margins are around 15%, comparable to public utilities.
The Darker Side: Cost, Complexity, and Mistrust
I believe the pharma industry, and the vast majority of players in it, are not evil. But criticisms of the industry also are not baseless.
In the U.S., drug prices are much higher than in other countries. Essential medications, from the aforementioned insulin to asthma inhalers, are unaffordable for many Americans, leading to skipped doses, delayed treatments, or worse.
If that outcome is not due, as Chandra says, to exorbitant profits, why is it?
The complexity of the system is to blame. Pharmaceutical companies set the initial list price of their drugs, but then a byzantine system of rebates, discounts, pharmacy benefit managers, wholesalers, and insurers kicks in. Most of these policies are set by entities operating behind closed doors. This opacity makes it nearly impossible to understand the true cost of a drug, much less who is responsible for it. Pharma is often the easiest-to-explain scapegoat.
That said, the pharma industry engages in some questionable practices of its own that, while legally permissible, do raise ethical concerns. "Evergreeningopens in a new tab or window" strategies -- making small, incremental changes to existing drugs in order to extend patent life -- can delay the introduction of cheaper generics. "Pay-for-delayopens in a new tab or window" deals, in which brand-name companies pay generic manufacturers to postpone launching a competitor drug, do prioritize profits over patient access.
And of course, the role of certain companies in fueling the opioid crisis cannot be overlooked. Aggressive marketing tactics, suppression of addiction risk data, and relentless sales targets contributed to a public health emergency that we are still trying to contain. These practices erode public trust and obscure the very real and positive contributions of the industry.
Toward a More Balanced Future
So, is pharma the problem or the solution? The answer, as with most things in healthcare, is both.
The U.S. pharmaceutical industry is part of the problem in that it contributes to unsustainable drug pricing, exploits regulatory loopholes, and sometimes prioritizes shareholder value over public health. But it is also an essential part of the solution, leading the world in life-saving innovation and powering the next generation of therapeutics. Binary thinking -- pharma is evil or pharma is our savior -- prevents policymakers from addressing real issues: a fragmented payment system, regulatory lag, lack of transparency, and misaligned incentives across the ecosystem.
Innovation should be rewarded, but not at the expense of access. And profit motives can drive breakthroughs but should be balanced with public accountability.
What does a more balanced future look like?
*Transparency in pricing: Patients, providers, and policymakers should be able to understand how drug prices are set and where the money goes.
*Regulatory reform: Closing loopholes that delay generic drugs and revisiting patent laws would help improve access while preserving innovation.
*Value-based pricing models: Paying for drugs based on outcomes, rather than volume or exclusivity, could better align incentives.
*Continued investment in neglected areas: Antibiotics, maternal health drugs, and global health medications are hungry for attention and funding, even if the profit margins are lower. Pharma companies could go a long way in repairing mistrust by investing in underserved areas.
*Better public-private partnerships: COVID-19 showed us what is possible when government and industry collaborate with urgency and purpose.
*When it comes to solving the problem of high drug prices, we need to elevate the conversation. If we reduce entire sectors of healthcare to villains, we stop looking for solutions.
And we all suffer.
Do they use gov’t research then profit off it?
Yes
Do they sell drugs cheaper to other nations that didn’t fund the research?
Yes
Are they screwing over Americans?
Yes
Yes. Ignore the pill mills. The incessant hawking of pills for every malady. The revolving foor where FDA and USDA bureaucrats get nice fat retirement jobs from Pharma. Ignore the carnage from the users of psych meds. Ignore the drugs that get approved that are no better than placebo. Ignore the disastrous covid vaxxes. “Elevate the conversation.”
The fact that pharma does come up with beneficial treatments doesn’t alleviate the corruption in the system. They are regulated by themselves.
BS! Pharmaceutical companies work hard to advace treatments. Why sell you a cure once when they can repeatedly sell you a treatment over a lifefetime? My gut tells me they probably bury research that begins approaching a cure. They have zero interest in curing anything.
Yes.
Yeah ... a complete disaster is possible. Warp Speed and vaccine mandates are prime examples of what NOT to do.
Neither will putting your trust and healthcare into the hands of man and his gov't.
The best healthcare system in the world is the voluntary cooperation DIRECTLY between doctor and patient without the gov't telling either what to do, with their hand out for additional expense.
Since when did politicians and bureaucrats become doctors and health experts????
How stupid.
Not to mention the Constitution delegates NO healthcare authority to the feds.
Yes.
The Powerful Middlemen Inflating Drug Costs and Squeezing Main Street Pharmacies
Big pharma likes to blame everyone but themselves. They claim its all about the big R&D expenses.
But they cannot do direct-to-the-consumer advertising in either the EU or Japan, yet they sell about $500 billion worth of drugs there, while spending $10 billion here on TV advertising alone.
We have a population about 110 million less than the EU, but we spend about $200 billion more annually on medicinal drugs than they do. Is it medically worth it?? How much of it is waste generated by all the direct-to-the-consumer tv ads??
Basically, yes.
They chose profits over ethics and cooperated with government to create those profits.
People like to complain about “Big Pharma.”
When faced with a potentially terminal disease and the only known “curative” treatment is from Big Pharma…you embrace them.
I love Big Pharma.
List of Defective Drugs:
Accutane
AlloDerm
Avandia
Bextra
Byetta
Chantix
Cipro
Cox-2 Inhibitors
Crestor
Depo-Provera
Digitek
Ephedra
Erythropoiesis Stimulating Agents
Fosamax
Gadolinium
Gardasil
Heparin
Hormone Replacement Therapy (HRT)
Hydroxycut
Kugel Hernia Patch
Lotronex
Ortho Evra Birth Control Patch
OxyContin
Paxil
Permax and Dostinex
PPA
Premarin
Prempro
Propulsid
Provera
Raptiva
Reglan
Rezulin
Serzone
Thimerosal
Trasylol
Vioxx
Vytorin
Yasmin
Yaz
Zelnorm
Zetia
Zicam
Zithromax
Zyprexa
From my just modified profile page:
DRUG APPROVAL
Drugs approved by the European Union/Health Canada would be deemed eligible for import, sale and use in the USA six/eighteen months after such approval unless Congress acts otherwise.
NEW DRUG PLANS
Federal PPACA exchanges would offer Interstate Class Drug Plans,
exempt from state control, that to be fully federally subsidy eligible must cover at least:
1. 80% of all recombinant drugs by key active entity
(or 100% less the percentages held by the top three domestic rights holders by percentage),
2. 80% of all FDA breakthrough drugs by key active entity
(or 100% less the percentages held by the top three domestic rights holders by percentage),
3. 80% of all drugs covered by a key active entity patent
(or 100% less the percentages held by the top three domestic rights holders by percentage),
4. 90% of all WHO “essential” drugs
Any percentage shortfalls would result in twice the percentage reduction in the federal subsidy amount and must have the word ‘Substandard’ in the drug plan name to be at all federal subsidy eligible.
This system would allow for genuine negotiation between drug plans and drug companies. Drug plans would have an incentive to try to buy drugs from drug companies and drug companies would have an incentive to make deals to make sales.
Plan in-network drugs would be supplied at on an all-the doctors prescribe basis. The co-pays would be roughly equal to mere manufacturing cost.
Some plans might provide 30-day/one treatment purchase order vouchers for out-of-network drugs. Such plans might set purchase order voucher amounts based on known foreign pricing, type of drug [biologic, patented chemical], or by a plan specified amount by drug. Patients would have to try to get the purchase order voucher accepted at the pharmacy or online. Drug makers would have the right to refuse such vouchers, but few would probably do so.
The baseline federal drug subsidy would be the average policy holder age (as of the beginning of the policy period) divided by 3 taken as a percent of PPACA baseline subsidy amount for the PPACA household.
EXAMPLE A: For a PPACA household with a 34-year-old, a 36-year-old, and a two-year-old, the baseline federal drug subsidy would be 8% ((34+36+2)/(3*3))% of the PPACA household’s baseline subsidy amount.
EXAMPLE B: For a single PPACA policy of age 60, the baseline federal drug subsidy would be 20% (60/3)% of the PPACA household’s baseline subsidy amount.
A&B Medical Service Plans
A&B Medical Service Plans would have the same medical service coverage as Medicare Parts A & B. They would not have built-in drug coverage that Medicare Part B currently has. They would be PPACA subsidy eligible up to the PPACA baseline subsidy amount for the PPACA household less the household’s federal drug subsidy.
A&B Medical Service Plan coverage providers would have to continue to offer PPACA coverage plans unless the provider’s PPACA plan(s) would have less than 10,000 subscribers in total.
A&B Medical Service Plans would have to keep their funds in federally regulated financial institutions.
A lot of the drugs are for simple maladies that can be handled with over the counter medicine.
What about Fen-Phen and Thalidomide?
100%. And the medical establishment isn’t far behind.
My wife just had to have a mastectomy. Now they want her to take an estrogen blocker for five years.
According to our research, the medication blocks estrogen and is suspected in causing cancer in about ten years.
However, for oncologists, 5 years cancer free is their magic number.
She’s seeing her naturopath oncologist next week. We trust her. Partly because we pay her out of pocket, not laundered through pharma kickbacks
Yes. They deserve all the hate, and probably more. They push their drugs with lies and hidden information. They lobby for immunity from their experiments on humans and animals. They blatantly lie when there are cheaper options and things to do, so they can reap more profit.
For what good they may do, the evil they do more than offsets it.
And more.
A lot of the drugs are for “lifestyle” induced maladies that changes in lifestyle can fix. But, in the U.S. instead of kicking their overweight kid out to the park every day, they’ll get a doctor to prescribe a “weight loss” drug. Or they’ll wait till the kid develops type 2 diabetes and then they’ll spend even more on drugs.
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