Harvard Review Author ignores the very real—and serious—situation of Americans’ being denied their vital medicines because they are unaffordable

In a recent article in The Harvard Business Review, an author, who is ‘ a pricing strategy specialist’, exhibits an astounding example of ‘begging the question’ when he states a conclusion and then seeks a justification of his claim.

He says that ‘cheap drugs’ from Canada won’t reduce U.S. drug prices simply because no one believes that Pharma will “lean back”, and allow personal importation of safe, affordable, brand-name medicines simply because they are “selling drugs at a terrific discount to Canada.”

Admittedly, Dr. Rafi Mohammed, the author of the article, has also written an apparently successful book, “The 1% Windfall”, a guide on how to increase profitability.  He is also a contributor to journals, and is mentioned regularly in articles about the costs of prescription medicines in the U.S.

Unfortunately, Dr. Mohammed has only a clinical perspective of profits and company decision-making. He fails to understand the totality of the potential of the harmful effects upon the society when ‘profitability’ far exceeds the basic requirements that will earn a business the funds that are necessary to guarantee its ability to maintain its operations, and to enter into new products and markets, choosing instead to do as Pharma has done by charging what the traffic will bear.

He also places a great emphasis upon pricing success based on the ‘value’ of the products or services offered. 

That should cause some to wonder if the timing of the article is only coincidence, or if it was strategic timing, as it comes on the heels of an announcement of PhRMA, the trade group of Pharmaceutical manufacturers, of the launching of a PR/lobbying campaign about  the value of the contribution of that its members’ products of vital medicines makes to American health. 

Additionally, The Biotechnology Innovation Organization , whose members make the $1,000 pills and $100,000 ‘cures’, launched its own “time is precious” campaign touting that its members provide “up to a decade” more of life because of the ability of their costly bio-specialty medicines t0 cure a number of life-threatening diseases.

Or, have both just discovered Dr. Mohammed’s book and thesis.

Irrespective of the timing of the industry campaigns—and that of Mr. Mohammed-- all ignore a basic economic fact that affects ordinary, real-life Americans who are not hypothetical situations in abstract ‘what if?’ theories--simply, that if  you can’t afford a medicine it is in and of itself unavailable, and therefore of no benefit because it is  available to only a limited number of patients.

There are other problems with Dr. Mohammed’s premise  when applied to the costs of pharmaceuticals.  They include, but are not limited to:

•          No one, not even the most fervent supporters of personal importation of safe, affordable prescription medicines from licensed, registered pharmacies in Tier One Countries (not just Canada) has ever suggested that ‘cheap’ personally drugs were the sole answer to lower medicine prices in the U.S.’
•      As to his timing of the article, one must wonder if it is in response HR 2228, a bi-partisan bill that would allow personal importation, at this time only from Canada;
•      He ignores the fact that the control of personal importation prescription medicines is not an inherent authority of the Food and Drug Administration (FDA), but is within the province of the U.S. Congress to establish the direction of prescription medicine policy, including but not limited to personal importation;
•      He gives no credence to either the ‘right’ or the ability of Americans to make responsible, personal decisions to determine the safety and efficacy of brand-name medicines from Tier One Countries (as Bernie Sanders has said, “Show me the dead Canadians”;
•       He talks about pricing restrictions of many countries, but fails to note that Health Canada and many other industrialized countries also have Memorandums of Understanding (MOU) in which many they accept the oversight of participating countries to safety and efficacy; 
•      He does admit that it is unlikely that Pharma will curtail its Research and Development, but fails to note that much of the cost of that R&D is borne by the U.S. Taxpayer, whom, after supporting such R&D, is subject to the highest prices in the industrialized world for their medicines;
•      He fails to note that up to 24 percent of Americans fail to purchase their medicines prescribed by their physicians simply because they cannot afford them;
•      He attempts to make the issue on of a problem for Seniors, completely ignoring the cost of the denial of vital medicines to Americans of all ages, not just the elderly.
•       His ‘profit-driven’ one percent strategy does not take into account they historical reaction of Americans to the abuse of public policy, in this case, the health and well-being of untold numbers of Americans.
•      He shows a complete lack of understanding of the American political process, leading to his assumed absolutes based on the one percent theory complete being tossed askew
•       Americans have traditionally expressed their dissatisfaction with the status quo at the ballot box, leading to historic changes in national policies (i.e., social security, anti-trust legislation, Medicare);

o   It is only the extensive and excessive contributions made to politicians of both major parties, that has allow Pharma to gain it position of dictating much of America’s health policies;

o   As noted above, Dr. Mohammed fails to acknowledge the ‘totality’ of the challenge and the steps that need to be and likely will be taken after the 2016 elections.  He does acknowledge but dismisses the plans approached by a number of elected officials or candidates to change direction of the U.S. policy to halt the pricing strategies of Pharma that make the cost of prescription medicines—or their unavailability because of Pharma pricing practices—as being major drivers of our spiraling healthcare costs;

o   This includes, but is not limited to:

1.       Price negotiation;

2.       A ‘stakeholder’ role for the American public that supports so much of Pharma R&D,by an increased presence of consumer advocates and private citizen in policy development, hearings, and opportunities for public comment;

3.       A  revised patent policy that ensures the public investment in R&D is protected in legislation that will provide penalties if Pharma is abusive in its pricing practices;

4.       Reciprocal Memorandums of Understanding between regulatory agencies of Tier One Countries as validation of          the safety and efficacy of the oversight of personally imported medicines from those countries;

5.       Criminal penalties for abuse of pricing practices based on a ‘what the traffic will bear’ philosophy;

6.       Greater transparency in Pharma pricing practices;

7.       An end to direct to consumer advertising for prescription medicines.

If this long list is not enough to cause Pharma pause, consider his reference/explanation of  ‘differential pricing’ tactics using the model of a movie theater which, instead of having ‘the same price for everyone,’ has different and lower prices, in his example, for students and Seniors.

In his model, the goal is to ‘’tailor the ‘right’ price to various segments, thereby offering targeted discounts that will be profitable, with moviegoers who have often paid different prices seated next to each other.  

He further suggests that if the students started selling their movie tickets at a lower price to those paying a higher cost, the owners of the theater would suddenly stop offering the discounts.  He claims this would be the same if personal importation is enacted in the U.S , causing Pharma to end discounts or to impose restrictions upon medicines.

Mr. Mohammed’s ‘leap of faith’ from a health care crisis caused by unaffordable prescription medicines and  pricing abuses by Pharma leading to Americans’ health being threatened, with the cost of movie tickets as an example of how and why Pharma employs its pricing practices is , at least to me, incomprehensible and inexcusable.

So, when you see the extensive, million-dollar advertising/lobbying/public relations being unveiled by Pharma, enjoy the show. Just make sure what the cost of your ticket might be.