The Great American Drug Deal

April 15, 2020
In this authoritative survey of the biopharmaceutical industry, a scientist and investor diagnoses current problems and prescribes solutions. Kolchinsky initially trained as a virologist, but he joined the biotechnology industry later on, and ever since, he says, he's been on the "receiving end of a fire hose of knowledge." He sees his current work as a biotech investor as providing a valuable contribution, but part of his book's agenda is to state a mea culpa: "For too long my utopian view of the biotechnology industry omitted the perspective of patients who couldn't afford their medications." He then articulates what he calls the "Biotech Social Contract," describing the relationship between the pharmaceutical industry and society. This contract would have the drug industry strive to make affordable versions of drugs (as generics) and have a health insurance industry providing universal coverage to keep costs down for patients. The author then enumerates the ways in which the contract has been breached by looking at the cryptic world of drug patents; how health insurance has the overburdened sick subsidize the more fortunate healthy; and the predatory practices of pharmacy benefit managers, who, according to the author, run "a complex shell game." His main point is that although the biotech industry gets a bad rap for hunting big profits, it's the insurance industry that's the real problem; "drug companies must charge temporarily high prices for new drugs," he argues, as long as their drugs go generic in a timely manner--but insurers, not patients, should bear that cost.This meticulously organized and extensively supported book offers a thorough introduction to the factors and politics of drug pricing. In clear, deliberate prose, the author engages with and explains a range of concepts to lay readers. Even when Kolchinsky details rather elementary principles--one subsection is titled "How Insurance Is Supposed to Work"--he never strikes a condescending or pedantic tone. It's hard not to share his ire toward insurance companies, although many readers may see his transfer of blame from the biotech industry and pharmaceutical companies to insurance providers as a self-serving maneuver. Still, his frustration with a dysfunctional system that allows patients to slip through a "patchwork of gaps" is unquestionably warranted. In the final chapter, he calls upon the biotech industry to continue linking revenue to innovation. This lacks the righteous punch of simply stating, "Let's be ethical actors," but the writer clearly knows that his industry has to uphold its end of the bargain. Kolchinsky stocks his pages with evidence, explanatory sidebars, and clarifications in regular footnotes. Sometimes, the most interesting point gets buried in the fine print. For instance, in one footnote, the author addresses a hot-button issue of the feasibility of a single-payer system. In the main text, he states that the single-payer model is "beyond the scope of this book," but he expresses a firmer opinion in the footnote: "Basically, for a country the size of America, a single-payer system is likely only appealing in theory...but would be a tragedy of human incompetence in practice." A serious, impassioned, and informed call for change.

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