Pills, Power, Policy Part III

I started reading about the last seventy years of pharmaceutical regulation because I wanted to understand something about how the current system of drug pricing—oriented toward a value-based model in which price is (theoretically) based on the value of the additional (quality of) life the drug provides—came to be.

That led me into what the pharmaceutical 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 would become a repeated pattern of failure.

This is all from Dominique Tobbell’s Pills, Power, and Policy. The final chunk of the book covers the mid-60s to the present, and covers drug company alliances with academic medicine, regulatory reform efforts of the 1970s, and finishes with an epilogue that touches on the Hatch-Waxman (1984) and the Medicare Prescription Drug Act (2003), both of which illustrate how the same politics continued to play out.

The whole book is just terrific if this is up your alley. Here I want to highlight two more things that stood out for me. (Increasingly, I find that I’m reading this through the lens of a potential next project—not about the pharmaceutical industry specifically, but about how our ideas about the appropriate way to govern markets have evolved, of which this is one very interesting case.)

1. The importance of the states. One of the repeated struggles in drug regulation has been over substitution of generics for brand-names: should it be allowed; if so, by whom; and under what conditions. What tipped the balance toward permitting substitution—which for a long time, was not permissible—was state action. Out of concern with Medicare costs, state legislatures started acting on their own, and by 1979 40 states had permitted it.

Similarly, in the 2000s, states started using comparative effectiveness research to create preferred drug lists as a way to control costs—and drove new support for such research effectiveness research at the federal level. I’ve written a lot about policymaking, but little about state-level policy (one exception: state efforts to encourage university-industry research centers).

This is an important reminder of how central states are in setting the rules governing business. It brings to mind other examples: the role played by state attorneys general in shaping antitrust, for instance, or the state-level regulatory competition that helped credit cards take off. As I’m thinking more about “what is this a case of,” I want to keep this in mind.

2. The ACA as turning point—or not. The book focuses mostly on the 1950s to 70s. But it closes with a long and fairly detailed epilogue on the 1980 to 2010 decades. It uses the Hatch-Waxman Act and the Medicare Prescription Drug Act to show continuities in political alignment, even as the healthcare system grows and changes: brand-name drug manufacturers aligned with physicians, especially academic physicians, and against consumer groups and generic drug manufacturers.

Tobbell highlights how these politics were changing by the time the ACA was passed in 2010, just before her book was published. In addition to the growing role of the states, insurers had become a much bigger player in prescription drug politics (where they had historically been less central), patient groups had become more important (though their interests were not always unified), and there was more fracture within the medical community (with academic physicians remaining most aligned with drug companies).

In some ways, the development of the ACA played out in ways not so different from the past. Pharmaceutical companies threw their support behind a version in which they made some concessions, but also got access to many new customers. Most critically, they avoided any government-negotiated prices that could have served as a form of price control.

What is interesting is that while Tobbell paints this moment as one in which the politics of pharmaceutical regulation might be at a turning point (though she certainly is cautious about this possibility), in which more interests might be aligning against pharma, it’s been over the last decade that prices have really exploded. As I learned recently from Laura Halcomb, who is writing a dissertation on the topic, today pharma justifies these essentially unjustifiable prices mainly through the massive patient assistance programs it has created to help those who cannot access five- and six-figure drugs.

I’ve learned a lot from this sporadic exploration; I am not yet sure whether I’m going to return to the question of pricing in the present or to move in another direction. One thing this book reminded me is the extent to which the past is really my wheelhouse. I started exploring this less because I wanted to start a project on the pharmaceutical industry, and more because I was trying to start from a very unpleasant firsthand experience and use it to meander back into engagement with academic research.

What I really got from this book is a reminder that there was a very different way of thinking about the governance of business in the 1950s—one that was gradually denaturalized during the 1960s and 70s—and that I am really drawn to better understanding that “before” and what happened to it, with an eye toward thinking about the present moment, in which our current model of thinking about governing business appears (to me at least) to be a failure, yet it’s not clear what would replace it. Writing through some of these thoughts—which are not necessarily about pharmaceuticals, or healthcare, at all—may be my next step.

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