Friday, December 18, 2015

The Altruistic Assault on Gilead Sciences

In 2014, Gilead Sciences, a leading company in the revolutionary medical biotechnology industry, launched Sovaldi. Sovaldi is the first-ever cure for Hepatitis C, a chronic disease that can be debilitating, deadly, and life-long. But the price Gilead set for Sovaldi, though much cheaper long term than standard treatments, are—at $1,000 a pill, or $84,000 for a typical 12-week course, according to BloombergBusiness—controversial. The result: Congress launched an investigation into Gilead’s Sovaldi pricing and marketing strategy. The results were released on December 1, 2015.

The Wyden-Grassley Sovaldi Investigation was not supportive of Gilead, to say the least. Senator Ron Wyden said “Gilead pursued a calculated scheme for pricing and marketing its Hepatitis C drug based on one primary goal, maximizing revenue, regardless of the human consequences.”—reports Ron Wyden is a Democrat, Chuck Grassley a Republican—both members of the Senate Finance Committee. By “human consequences,” the report means “Concern for Access or Affordability.”

This is an accusation that only a moral cannibal would make. Gilead is being demonized for daring to profit from its heroic advance that cures up to 90% of cases of the often tortuous, previously incurable disease, Hepatitis C. These “investigators” are essentially calling for the ancient evil of human sacrifice in expecting Gilead to subordinate its own interests and the interests of its employees and investors to the interests of those who did not create this valuable drug. This, despite the fact that the cost of the drug is far, far less than the previous way of treating Hep-C—interminable, lifelong treatments for a chronic condition often requiring a liver transplant, which is not a cure and itself can cost up to $300,000.

What’s fundamentally behind this congressional attack on what should be hailed as a great and heroic company whose product offers human consequences of tremendous value? As Senator Wyden said, in typical politicians’ short-term thinking:

If Gilead’s approach to pricing is the future of how blockbuster drugs are launched, it will cost billions and billions of dollars to treat just a fraction of patients. America needs cures for cancer, Alzheimer’s, diabetes and HIV. If those cures are unaffordable and out of reach to millions who need them, Congress will not have met its responsibilities to the American people. [Emphasis added.]

Senator Grassley, demonstrating once again that “He who pays the piper calls the tune”—i.e., When government pays, the government will eventually commandeer control—concurs:

“The Finance Committee has tremendous responsibility in overseeing the federal programs paying for prescription drug coverage. With that responsibility, the committee should know how the costs to the public programs and private insurance companies of a single innovative drug entering the market without competition can have major effects on which patients get the new drug and when.

In other words, Gilead, which produced the life-saving drug, must justify its “approach to pricing” to politicians, who produced nothing. Politicians, not the voluntary consent of free individuals, should decide “which patients get the new drug and when.”

What justifies putting non-producers in charge of dictating to producers? This moral inversion is made possible by the morality of altruism. Altruism holds that self-sacrifice for the needs of others is the essence of being moral. Its corollary is that need supersedes justice. All you have to do is need something, and you automatically become the master of those who have achieved the capabilities to satisfy your needs. In effect, need makes you the master, and your benefactors your slaves. Altruism is the anti-morality that essentially embodies the Law of the Jungle—if you need it, you are automatically entitled to it by any means—by hook, crook, or force. The producers become slaves, because of their achievements, and the needy become the producers’ masters, by virtue of the fact that they didn’t achieve.

To an altruist, nothing—not even logic or facts—warrants consideration. Need, and only need, matters, regardless of consequences or victimization forced on the needy’s productive benefactors. One Hep-C sufferer who was told that his insurer would not cover the drug at this stage of his illness, said “Pricing obviously is the problem at the heart of all this. Money seems to be trumping the moral aspects.” What about Gilead’s financial interests? Gilead’s investors? That it takes almost $3 billion in high-risk investment to bring drugs like Sovaldi to market? That without that investment, this man would not even have the hope for, and eventual access to, a cure? Don’t these deserve any moral consideration? Not by altruism’s standards. Morality means self-sacrificially serving the needs of others, and nothing else—not justice, not fairness, not the interests of the benefactors. Altruism does not embody good will. It does not embody justice or fairness. It does not tolerate balanced evaluation. Altruism, properly understood, is evil. Altruism is a cannibalistic, inverted morality whose sole purpose is to enslave virtue and achievement to others’ needs.

Gilead is a hero for developing a drug so valuable that it can cure 90% of a previously lifelong disease, Hepatitis C, in only a few months! Patients win and Gilead wins. True, not everyone has access to Sovaldi or its faster acting, slightly more pricey Harvoni. But these folks aren’t hurt by the fact that others do have access. What they do have is something they didn’t have before—hope. Gilead offers cures and hope at a profit to itself and its investors. Only the slave morality of altruism—the worship of the God of Need—can turn heroes into villains. (Full disclosure: I’m a long-time investor in the biotech industry, including Gilead. I’m proud to be profiting from Biotech’s burgeoning success and its even more burgeoning promise for the future. Profiting by doing good is the ultimate in win-win, which is people getting better together.)

The economics of drug development back up the moral virtue of Gilead’s pricing. High priced innovative drugs, patent-protected for a limited time, eventually become cheap generics when the patent expires, spreading their accessibility to all people. Even before patent expiration, new drugs tend to become cheaper as developers look to expand their markets or competition enters the market (as has already started happening regarding Sovaldi). In a free market, where producers can price their cutting-edge innovations for maximum profit, the consumers who can afford the high price get early access. These early consumers, by paying the high initial cutting edge prices rather than wait for lower prices, end up covering the enormous cost of development and regulatory approval, feed the profits that fund and incentivize the development of still newer drugs, and ultimately make it possible for less wealthy and poorer consumers to get access to treatments and cures that would otherwise have never become available. Put another way, free markets naturally and non-coercively pave the way for the wealthy to subsidize the healthcare of the non-wealthy, in a moral way—i.e., without forced government redistribution of wealth. No high-priced innovations, no cheap, widely affordable generics. Only an altruist would want to stifle this progressive process.

Imagine if drug pioneers like Gilead were forced to price their drugs not based on maximizing revenues but based on making them immediately available to the neediest, poorest consumer? America is the only country that doesn’t control drug prices, which forces Americans to subsidize drug development for the entire world. That should make every American angry. But if America joined other countries in tailoring drug prices based on need, no one who needs the drug would have it, because it wouldn’t exist. (If investigators really wanted to address high drug prices, which are probably higher than they would be in a fully free market, it shouldn’t be demonizing the creators like Gilead. It should investigate the FDA, which makes drugs super-expensive to develop and stifles competition; the patent system, which protects innovators’ property rights but leaves little time for drug companies to recoup investment costs; and the freeloading countries around the world, which forcibly depress drug prices for the benefit of their socialized healthcare systems, thus avoiding their fair share of the responsibility for financing research and development.)

Why shouldn’t Gilead seek to price its Sovaldi—a human-created miracle—to maximize revenues and profits (which, by definition, involves making the drug as widely available as possible)? It’s properly pursuing its own interests, just like everybody else does (or should do). Why shouldn't it? According to altruism, because Gilead offers tremendous value. Gilead is being punished for doing good, not bad. That’s altruism, which fosters inverted moral priorities.

The moral is the practical, and altruism isn’t practical. An altruistic Gilead could not have produced Sovaldi. The Hep-C sufferer quoted above has it wrong. There is no dichotomy between the pursuit of money and the moral aspects. If not for Gilead's pursuit of money by productive means, he would not now face a future with a cure.

Morally, Gilead is doing what it should do. Gilead invested the money. Gilead took the risks. Kudos to profit-seeking Gilead Sciences for its drug Sovaldi—a medicine that has cured many and ultimately will cure almost all Hep-C sufferers—and ultimately contribute mightily to a lower cost of healthcare in America. Reject the demonizers on the Left. Don’t fall into their trap. They’re not concerned with patients. They’re concerned with power. Altruism is the tool of the power-luster, not the person of good will. The statists hate the selfish profit motive. But without it, progress stops.

This battle between Gilead and the politicians will have ramifications far beyond Sovaldi. As Wyden says, Gilead’s pricing of Sovaldi has ramifications for “the future of how blockbuster drugs are launched.” If the statists win on their bid to control drug pricing, we will no longer be “victimized” by the great medicines offered by greedy drug companies. Instead, we’ll be at the mercy of non-productive, power-mad government officials, without the future Sovaldi miracle drugs.

Related Reading:

Related Listening:

Radical Capitalist Episode 20: The Moral Defense for High Drug Prices—Rituparna Basu

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