Pills, Power, and Policy, Part 1

This week I’m reading about the history of the U.S. pharmaceutical industry: Pills, Power and Policy: The Struggle for Drug Reform in Cold War America and Its Consequences, by Dominique Tobbell. It’s really fascinating, and I can’t believe I haven’t run into the book before given how closely it overlaps with various topics I’ve worked on (industry funding of academic science, regulatory and antitrust debates around healthcare, etc.).

I’m about halfway through, but am trying to stay committed to my “write as much as read” strategy. So here are some takeaways so far:

1. Drug pricing debates now echo drug pricing debates in the past

Public outrage over the price of drugs goes way back—to the 1950s, at least. (Before that, people were just getting used to the idea that drugs, especially antibiotics, really had the power to save lives.) In this period, there were concerns that prices weren’t declining with competition, that drugs were unaffordable for lower- and middle-income families, that drug companies were colluding to keep prices high, and that there was too much spending on marketing and advertising (to physicians, not the public). All this led government to take up the issue—in debates over greater regulation of the industry, FTC investigations into price fixing, and a congressional subcommittee investigation into pricing.

2. Antitrust is a theme to come back to

Drug pricing was understood at least in part as an antitrust problem. Estes Kefauver, cosponsor of the Celler-Kefauver Act that limited mergers in the 1950s, was a key critics of prices and lack of competition in the pharmaceutical industry, and led a congressional investigation into it. The FTC also played an important role in drawing attention to the issue.

In both of these cases, the investigation was tied to a pre-consumer-welfare conception of antitrust, that understood its purpose broadly and sought to use it to ensure markets were competitive in a variety of ways. The Kefauver hearings are covered more in the next chapter, but I was not anticipating this much overlap between 1950s drug pricing and my interests in antitrust.

3. Pharma invented the “fund academics” strategy.

According to Tobbell, drug companies basically invented the strategy of funding academics—not only to develop a research pipeline but to create political allies and promote the creation of knowledge that would align with their interests. During the 1950s, the industry not only funded postdocs and fellowships for foreign researchers, but supported the creation of clinical pharmacology programs.

It didn’t stop with medical science, though. Concerned that government had “at its command many more facts about the industry,” one firm also funded a Harvard Business School researcher to conduct an “independent” study of pricing in the industry. In fact, drug companies apparently became so good at funding academics to advance their interests that in the 1960s, the tobacco industry explicitly copied their approach.

4. Vannevar Bush is everywhere.

There are a handful of people who pop up over and over in the postwar U.S. at the intersection of academia and policy. One is Carl Kaysen. Another is Vannevar Bush.

Vannevar Bush — the guy got around.

It’s commonly known that Bush framed much of postwar science policy with Science—The Endless Frontier. But what I did not know is that as a board member, he apparently also helped Merck take its modern form. He advocated that the company increase its internal R&D capacity, and create a central planning group to estimate markets, prices, and so on for drugs early in the development pipeline. The guy got around.

In the next chapter we’ll get into Kefauver’s 1959 investigation into drug pricing. I am way too excited about this.

One response to “Pills, Power, and Policy, Part 1”

  1. […] industry was like before the current era—up to the 1990s or so. I learned a lot about regulatory debates over drugs in the postwar era, and the (failed) Kefauver-era effort to lower the price of drugs, which set the stage for what […]

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