Public Policy and Governance – Page 211

Pills and Profits

One of the many aspects of America’s mess of a healthcare landscape–a mess that the Senate GOP is trying to make much worse– is the issue of drug prices. Pharmaceutical companies defend that pricing by pointing to the significant costs of research and development.

That argument seems persuasive–if we ignore the inconvenient fact that taxpayers fund a considerable amount of that research. As Fran Quigley recently wrote in the New York Times,

How’s this for a great deal? The United States government funded research and development of a new vaccine against Zika. But the Army, which paid a French pharmaceutical manufacturer for its development, is planning to grant exclusive rights to the vaccine to the manufacturer, Sanofi Pasteur, along with paying Sanofi up to $173 million.

Sanofi will be free to charge the United States American health care providers and patients any price it wishes. Although American tax dollars funded the vaccine, and the United States took the economic risks, history suggests that many Americans would not be able to afford it.

This is a negotiating strategy of unconditional surrender. Although President Trump said before taking office that drug companies were “getting away with murder” and had campaigned on lowering drug prices, his administration is doing the opposite. A draft order on drug pricing that became public in June would grant pharmaceutical companies even more power to charge exorbitantly. For example, it could shrink a federal program that requires companies to sell at a discount to clinics and hospitals serving low-income patients.

Another major problem is the fact that for-profit drug manufacturers have little incentive to produce medications for which there are no markets, so diseases that are widespread in poorer countries get little attention. Quigley notes that, of the 756 new drugs approved between 2001 and 2011, fewer than 4 percent targeted so-called “neglected” diseases, despite the fact that those diseases afflict one out of every six people in the world.

A new drug company intends to change that reality.

Pécoul and Doctors Without Borders decided to tackle the diseases that were killing the global poor. Doctors Without Borders dedicated its 1999 Nobel Peace Prize award money to providing seed funding for the Drugs for Neglected Disease Initiative, known as D.N.D.I. The aim was to see what could be accomplished when research priorities ignore questions of profitability, and the price of medicines is “delinked” from research costs, which are instead shouldered by public financing or philanthropy.

An immediate challenge was that D.N.D.I. possessed none of the required hardware for the expensive drug research and development process: It had no labs, no manufacturing facilities, and no distribution process. It fell to Pécoul to recruit partners, including private pharmaceutical companies he persuaded to share drug compounds that had been uncovered but abandoned because of lack of profitability…

D.N.D.I. has already delivered seven new patent-free, low-cost treatments for neglected diseases.

Interestingly, D.N.D.I. has created these seven drugs, with 30 more in testing, at a cost of $290 million to date. For-profit pharmaceutical manufacturers have long claimed that it costs them $2.5 billion to develop a single drug, although critics insist that the figure is an exaggeration intended to justify higher-than-necessary prices.

D.N.D.I. conducts “open source” research, and does not patent its drugs.

Pécoul and his D.N.D.I. colleagues say their biggest challenge now is securing sustainable funding for research — another illustration of the limits of a model with no profits to invest in research. But the government funds research all the time — it’s just often turned over to for-profit companies. The Zika vaccine is one example. The prostate cancer drug pacilataxel, the leukemia medicine imatinib and many mental health and H.I.V. medicines and vaccines can all trace their origins to government-funded research — only to be handed over to industry to charge what they want.

As the article makes clear, this model cannot replace for-profit drug manufacture. But if governments provide more resources to nonprofit companies modeled after D.N.D.I, their products, at least, would be available and affordable to everyone.

Some economists have argued that since Medicare and Medicaid are the leading purchasers of drugs (and Medicare is forbidden by law from negotiating on price), the money saved by buying from nonprofit drugmakers could easily replace all privately funded research and development. The increased public research dollars could then be applied, D.N.D.I.-like, to develop the medicines that would have the most significant public health impact.

Focusing tax dollars on the public good…what a concept!

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Democracy Vouchers

The outrage that followed the Supreme Court’s decision in Citizens United focused national attention on a problem that has long preceded that unfortunate ruling: the influence of money on democratic deliberation.

Even if we ignore the armies of lobbyists and the corrupting influence of “big money” campaign donations in Washington and our state capitals, anyone who is at all familiar with the way in which policy is made understands that our elected representatives respond to the constituents from whom they hear, and those constituents are highly unlikely to be poor people.

People who are struggling to make ends meet rarely have time or energy to visit legislative bodies, testify in hearings or participate in grass-roots lobbying efforts. And it goes without saying that they are not numbered among the donors to legislative campaigns. As a result, even the most conscientious lawmakers (and they do exist) simply do not hear the voices and perspectives of working class Americans.

Seattle has recently embarked upon an effort to change that dynamic, at least to a degree.

If money amplifies the voices of wealthy Americans in politics, Seattle is trying something that aims to give low-income and middle-class voters a signal boost.

The city’s new “Democracy Voucher” program, the first of its kind in the US, provides every eligible Seattle resident with $100 in taxpayer-funded vouchers to donate to the candidates of their choice. The goal is to incentivize candidates to take heed of a broad range of residents – homeless people, minimum-wage workers, seniors on fixed incomes – as well as the big-dollar donors who often dictate the political conversation.

This August’s primary is the trial run for the program. But before Seattle can crow about having re-enfranchised long-overlooked voters, it must contend with conservative opposition.

A Libertarian law firm has sued the city to stop the program, alleging that democracy vouchers violate the first amendment rights of homeowners because their taxes are funding vouchers that will be contributed to candidates they oppose. That case is pending, but constitutional lawyers consider its prospects dubious.

The program opponents appear to be in the minority; the voucher program and its funding mechanism (a 10-year, $30m property tax levy) were approved by voters in a ballot measure in November 2015. All registered voters are sent the vouchers automatically. Residents who are not registered or who lack a permanent address – such as homeless people – can apply by mail or in person.

Seattle’s proposal joins other efforts that have emerged in the wake of the Obama and Sanders campaigns, both of which demonstrated that significant funds could be raised through appeals to small donors–no one of whom, presumably, would have the same ability to influence policy as individuals contributing large sums.

Last fall, South Dakota voters approved a program similar to Seattle’s, joining more than a dozen other states with some form of public financing, usually a matching fund for small campaign donations. Cities such as Portland, Oregon, and Berkeley, California, also followed the public-financing trend last year.

Democracy Vouchers are unlikely to make much of a dent in current levels of inequality of political influence, but the effort is encouraging. It represents an acknowledgment of the disparity in political influence between the rich and the rest, and to the extent it encourages candidates to focus fundraising strategies on vouchers/small donors, it should add a (currently absent) perspective to the political conversation.

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Me and Thee…

One of most persistent–and pernicious–beliefs about inequality is the conviction that people “deserve” financial success or failure. If you are poor, the logic goes, that probably reflects some poor choices you made along the way, or your unwillingness to work hard, or perhaps a lack of innate capacity.

America’s approach to poverty owes a lot to the Fifteenth-century English poor laws that made it illegal to “give alms to the sturdy beggar.” Those laws, and subsequent policy approaches, categorized poor folks either as “deserving” (the widow and orphan) and “undeserving” (the sturdy beggar); that framework is ultimately responsible for the establishment and maintenance of a bureaucracy devoted to ferreting out the “undeserving,” and a political reluctance to provide an adequate social safety net since it might inadvertently benefit undeserving folks.

The Guardian recently reported on a group of scholars who are researching the basis of our very human tendency to see our own misfortune as just that–misfortune–while attributing other people’s situations to their character flaws. They are studying how rich and poor people alike justify inequality.

What these academics are finding is that the American dream is being used to rationalize a national nightmare.

It all starts with the psychology concept known as the “fundamental attribution error”. This is a natural tendency to see the behavior of others as being determined by their character – while excusing our own behavior based on circumstances.

For example, if an unexpected medical emergency bankrupts you, you view yourself as a victim of bad fortune – while seeing other bankruptcy court clients as spendthrifts who carelessly had too many lattes. Or, if you’re unemployed, you recognize the hard effort you put into seeking work – but view others in the same situation as useless slackers. Their history and circumstances are invisible from your perspective.

This belief is closely related to the myth that America is a meritocracy, and that with hard work, education and some “moxie,” anyone can get ahead. That perception was never really accurate (ask African-Americans or women), but America did once have much greater social mobility than it does today.

The research notes a widespread suspicion that “they” are abusing/misusing social welfare programs that “my” taxes support, and a corresponding resentment of “them.” (The article notes that this attitude was a prominent characteristic of Trump voters.)

Another aspect of this phenomenon is known as “actor-observer bias”. When we watch others, we tend to see them as being driven by intrinsic personality traits, while in our own case we know that, for example, we acted angrily because we’d just been fired, not because we’re naturally angry people….

In other words, other poor people are poor because they make bad choices – but if I’m poor, it’s because of an unfair system. As a result of this phenomenon, Pimpare says, poor people tend to be hardest on each other. He gives the example of a large literature in anthropology and sociology about women on welfare published since the 1980s. “It finds over and over again that some of nastiest things you ever hear about women on welfare come out of the mouths of women on welfare.”

Wealthier folks, of course, embrace the “deserving/undeserving” dichotomy because it justifies their more comfortable status.

The political consequences of this phenomenon are obvious: if even the people who stand to benefit most from a more equitable and generous safety net are convinced that it mainly rewards the non-deserving, we aren’t likely to see systemic reforms any time soon.

Breaking down these misconceptions won’t be easy, either, because the research underlines the importance of human contact. As we have learned with racial and religious stereotyping, integration and interaction are powerful weapons against demonization.

Intimate contact – such as the experience of teaching in the inner city, mentoring, other types of services that allow people to connect despite class difference – builds empathy. The more you engage with with people unlike you and learn about their lives and stories, the harder it is to see them as stereotypes or to dismiss their challenges as trivial.

In a society characterized by significant inequality, exclusionary zoning, gated communities and our voluntary segregation into enclaves inhabited by the like-minded–what Bill Bishop has dubbed “the Big Sort”–it is going to be very difficult to encourage that “intimate contact.”

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Deconstructing The Rhetoric

A week or so ago, an Indiana legislator–a Republican– posted a comment to Facebook about the current effort to “repeal and replace” the Affordable Care Act. I know this particular Republican to be thoughtful and well-intentioned; he’s not one of the mean-spirited or rigidly ideological partisans who populate our Statehouse.

His “logic,” however, defied reality.

He began by saying that we are not debating healthcare–we are debating access to health care via insurance coverage and that government should “let the insurance market work.” (Why he thought the distinction significant mystifies me, but okay.)

I am a huge proponent of markets–in areas of the economy where they work. Most people recognize that healthcare is an area where markets do not work; market transactions require a willing buyer and a willing seller both of whom are in possession of all information relevant to the transaction. That definition doesn’t characterize doctor-patient interactions, and it also doesn’t characterize the health insurance “marketplace.”

Even if you assume that all citizens understand the complexities and “fine print” of the policies offered by health insurers, that they all understand the technical terminology employed and are able to make considered opinions about the nature and extent of their desired coverage, you are left with several major problems that cannot be solved by “market magic.”

First of all, most Americans get their health insurance through their employers. They don’t get to participate in the choices involved. (This coupling of insurance and employment is problematic for lots of reasons unrelated to the subject of this post; for one thing, it makes American businesses less competitive in the global economy. But that’s a subject for another day.)

Second, significant numbers of people who do not get their insurance through their jobs–either because they don’t have jobs or their employer doesn’t offer it–cannot afford the coverage they need. (That’s why we have Medicare and Medicaid.) In the U.S., non-governmental health insurance policies are priced to cover expenses that include not just the expected payouts to providers, but the costs of marketing, profits and taxes. Private insurance overhead also includes very substantial salaries paid to insurance companies’ management, costs not incurred by Medicare and Medicaid. Last time I looked, Medicare overhead averaged around 3% while private insurance overhead averaged around 24%.

Third, and most important: markets, by definition, are voluntary. (That “willing” buyer and seller…). Insurance works by spreading risk. If younger, healthier people decide they aren’t “willing” buyers–if only the elderly and sick and people with pre-existing conditions participate in the market–the whole system comes crashing down. Insurers have to charge higher and higher premiums, and policies become more and more unaffordable. That’s why the ACA’s mandate was an essential part of the law.

If we accept the premise that access to healthcare is a human right–and I am well aware that most Republicans do not accept that premise–then people who cannot afford insurance must be subsidized. For the reasons I’ve listed, providing access through “market forces” would add enormously to the costs of the insurance and thus to the amount of the subsidies.

There is a reason other developed nations have pursued a variety of ways to nationalize health insurance; it’s the only way to make universal access cost-effective.

When you deconstruct Paul Ryan’s rhetoric about giving people the “freedom” to go uninsured, and the GOP’s reverential references to “market economics,” what you get is what the Congressional Budget Office described: millions of Americans losing insurance entirely, and millions of others paying much more for much less coverage.

Eventually, Americans are going to have to decide between a system like “Medicare for All,” that pays for actual healthcare, and our current, unsustainable and immensely more expensive insistence upon subsidizing the bottom lines of Big Insurance and Big Pharma in the name of “the market.”

The purchase and sale of health insurance in today’s U.S. can be called many things, but a genuine market isn’t one of them.

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Bleeding Expertise

Drip, drip, drip…

No, I’m not alluding to the daily emergence of new evidence confirming the Trump campaign’s collusion with Russia. I’m talking about the accelerating rate at which people who actually know what they are doing are abandoning this bizarre administration.

When the CEO of your company, or the Executive of your political subdivision, or the President of the United States is intellectually and emotionally unfit to lead, the people who work for that company or city or branch of the federal government face an uncomfortable choice: do they hang in there and try to make things work despite the dysfunction at the top? Or do they weigh their ability to do their jobs against the likelihood that their continued employment is simply enabling dangerous incompetence?

One long-time American diplomat who concluded that he had to resign wrote a column in which he explained his decision. David Rank had been a member of the U.S. Foreign Service since 1990. Most recently, he ran the U.S. Embassy in China.

This month, I resigned from the State Department’s Foreign Service, stepping down as the senior U.S. diplomat in China and ending a 27-year career. I served five presidents — three Republicans and two Democrats — and, like my colleagues throughout the Foreign Service, took pride in the tradition of loyal, nonpartisan service. I also took seriously my oath to defend the Constitution against all enemies, foreign and domestic, and the obligations that came with representing the American people.

When the administration decided to withdraw from the Paris agreement on climate change, however, I concluded that, as a parent, patriot and Christian, I could not in good conscience be involved in any way, no matter how small, with the implementation of that decision.

The job he held all those years was hardly what you’d call “cushy:” Rank had his close calls with bombs, guns and grenades; his father died when he was on assignment in Taiwan. His mother died while he was in Afghanistan. He missed both the birth of his first child and his only son’s senior year of high school.

Government workers make those sacrifices because they believe in the importance of the service they are rendering.

Rank says he leaves with gratitude for his experiences, for his colleagues and for the opportunity to serve his country. But he also leaves with deep-seated concerns.

I worry about the impact my departure will have on colleagues who remain. Many of these colleagues, some with decades of contributions ahead of them, share my dismay not just at the decision to withdraw from the Paris agreement but also at the unraveling of 70 years of bipartisan foreign policy that has made the world and the United States safer and more prosperous. Rather than encourage them to follow my example, I hope my departure will send a message on their behalf so that they can continue to work within the system to make things a little bit better, a little bit at a time. That work will always be honorable work and, I suspect, will be more important than ever in the coming years.

I worry about the frequently politically motivated portrayal of those who work for the American people as members of some mythical elite, separate and suspicious. Such false characterizations drive talented Americans away from public service or discourage them from entering it in the first place. My experience has been that those who work for America look like America. For my part, I certainly never felt particularly “bicoastal.” I was raised in a decidedly working-class town south of Chicago. My wife grew up showing hogs and cutting corn out of beans. Like many of my colleagues, I am a product of a public education, from grade school to grad school.

I worry about the denigration of expertise at a time when a complex world demands it more than ever.

For my part, I worry about the loss of people like David Rank. And I especially worry, as he does, about the future of a country that sneers at knowledge and education as elitism, competence as snobbery, and uncongenial facts as “fake news.”

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