Saturday, December 26, 2009

The Looting of Taxpayers by Big Pharma and Big Government

An excellent review of how the Pharmaceutical industry is committing suicide by giving up its principles for illusory gains by collaborating with the government to extort money from the taxpayers and how it inevitably will lead to the death of this industry and jobs.

Pharmaceutical industry executives are frequently accused of greedily putting “profits before patients” (as if drug companies could profit by means other than serving patients). This accusation would be unjust if these executives were after profits. Unfortunately, however, today’s pharmaceutical executives are not after profits. They are after loot. They seek to gain, through legislation, money coercively taken by the government from American citizens. But, unbeknownst to these executives, their looting is self-destructive. In fact, by aiding and abetting the government in its violation of individual rights, the pharmaceutical industry is committing suicide. To see why, let us begin by examining some of the ways in which the industry calls for the violation of rights and receives loot as a result. Then we will turn to the reasons why this practice is killing the pharmaceutical industry.

Consider the industry’s support for the Medicare Modernization Act of 2003 (MMA).
The MMA expanded Medicare to include coverage of prescription drugs for Americans over the age of 65 and was the largest expansion of welfare in America since the creation of Medicare itself.1 When the Act took effect in 2006, it made the U.S. federal government the single largest purchaser of prescription drugs in America.2

In 1999, years before this bill had been conceived, Alan Holmer, then president of Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s lobby group, made clear in a trade journal the industry’s view that “the question is not whether, but how, to expand Medicare coverage of prescription drugs.”3 In 2000, Holmer testified before the Senate Finance Committee that at “some point in the not-too-distant future, a Congress will pass, and a President will sign, legislation to expand drug coverage for Medicare beneficiaries. . . . Expanded drug coverage for seniors will be a positive development.” Holmer emphasized:

The pharmaceutical industry strongly supports . . . expanding Medicare coverage of prescription medicines. . . . Medicare beneficiaries need high-quality health care, and prescription medicines often offer the most effective therapy for them. We believe that the best way to expand prescription drug coverage for Medicare beneficiaries is through comprehensive Medicare reform.4

The pharmaceutical industry got its desired “reform,” and when the MMA became law, the government not only began dictating the terms by which private insurers would provide prescription drug coverage to Medicare beneficiaries, it also began spending tens of billions of dollars annually to subsidize that coverage.

From where does the U.S. government get this money? The government does not create wealth; it does not produce anything. Every penny the government spends on drugs (or anything else) comes from taxpayers. The government gets this money by taking it under threat of force from hard-working Americans (or by printing or borrowing it, which is deferred taxation). This is legalized theft; the money taken by force is loot. And when the government spends this loot on prescription drugs for the elderly, the loot is passed on to the pharmaceutical industry.

Now, merely receiving loot from the government does not in and of itself constitute the moral crime of complicity in the government’s coercion. But the pharmaceutical industry is not merely receiving money from the government as a result of the MMA. The industry advocated this socialist scheme of forced wealth redistribution from the start, supported it at every stage of development, and is now receiving the loot as planned. Although the industry exchanges drugs for the loot, the entire arrangement on the part of taxpayers whose money is taken by force to buy the drugs is involuntary. Taxpayers do not choose to fund the industry in this way; they are forced to do so—by a law that the pharmaceutical industry enthusiastically helped to create.

When Congress and President George W. Bush—with the eager support of the pharmaceutical industry—expanded Medicare to include prescription drugs, the pharmaceutical industry gained millions of new customers, customers whose payments are made with loot. And we are talking about a lot of loot:... In 1999—before the MMA was made law—this age group composed 13 percent of the population but consumed 30 percent of all prescription drugs sold in the country.5 Thus, the pharmaceutical industry stood to increase its revenues immensely when taxpayers were forced to fund expanded drug coverage for seniors. By 2008, the federal government was spending $44 billion annually on Medicare prescription drug coverage.6

In supporting the MMA, the pharmaceutical industry supported a massive violation of individual rights. It aided and abetted the U.S. government in a scheme that forcibly and continually transfers wealth from American taxpayers to pharmaceutical companies.

Not content with the billions in annual loot that it gains through the MMA, the pharmaceutical industry is now after more... READ at The Objectivist Standard: "Pharmacide: The Pharmaceutical Industry's Self-Destructive Effort to Loot America" by Cassandra Clark.

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