Could The Purdue Settlement Set The Stage For A Public Pharma System?

By Kelly Burch 09/18/19

“A United States public option for pharmaceutical production would address a range of problems in an industry rife with market failure.”   

purdue settlement money and pill bottles
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After Purdue Pharma settles its bankruptcy cases, the company will be disbanded and reformed, according to settlement plans. Rather than selling its drugs for profit, the new spin-off company will sell drugs to benefit cities and states devastated by the opioid crisis.

Purdue will be no more, and a “public beneficiary company” will take its place. 

Writing for The New Republic, Dana Brown and Isaiah J. Poole of The Democracy Collaborative, argue that this should be a first step in transforming the pharmaceutical industry from public to private. 

“A United States public option for pharmaceutical production would address a range of problems in an industry rife with market failure,” Brown and Poole write.  

The Case For Public Pharma

Unscrupulous tactics like those undertaken by Purdue, the company behind OxyContin, and other opioid manufacturers are just the tip of the iceberg when it comes to the industry’s problems, they write. There’s the fact that some medications are too expensive for the people who need them the most (including insulin, which has been in the news for high prices). Or, the fact that companies only research drugs that they believe can generate profit. 

“The case for a public option is simple,” the authors write. “First, publicly owned pharmaceuticals are free of the structural need to appease profit-hungry shareholders and are thus able to focus on public health priorities.”

Other Countries Have Public Options

Sweden, Brazil, China and India all have some sort of public pharmaceutical industry and those countries have contributed to global drug development. 

“These examples expose the emptiness of industry arguments that public involvement in the drug industry will stifle innovation,” Poole and Brown write. In fact, with no need to spend on advertising or to direct profits to investors, a public pharmaceutical company would be better able to invest in research and thus make new innovations, they write. 

The authors point out that controlling diabetes currently costs about $6,000 per person annually, a cost that has tripled in the past 10 years. A public pharmaceutical company could cut that cost to about $70, according to some analysis. 

“Coupled with reforms such as a national pharmaceutical institute—which would ensure public investments in medical research can be harnessed for public benefit instead of co-opted exclusively for private profit—these public enterprises would produce both new medications and generics, and could offer them at or even below cost,” Poole and Brown write. 

Learning From the Big Tobacco Settlement

The authors point out that little lasting change came from the massive settlement with Big Tobacco in 1998. However, the opioid settlement could be different, if it sparked interest in public pharmaceuticals. 

Poole and Brown conclude, “The U.S. could once and for all move beyond having to tolerate an industry that subordinates public health to shareholder greed."

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Kelly Burch writes about addiction and mental health issues, particularly as they affect families. Follow her on TwitterFacebook, and LinkedIn.