The Grotesque Effects of the Profit Motive on American Healthcare

“Capitalism breeds innovation!” is a common argument made by those who defend the market economy. They claim that the capitalists, motivated by profit, will necessarily be compelled to invest in inventing new and useful products, or more effective or affordable ones. This goes hand in hand with the argument that the “free market” is the best system to provide for human needs, and that the capitalists profit only by producing to meet those needs.

On planet earth, however, it is far from that neat and simple. As we will see, each of these arguments can easily be refuted, not on the chalkboard of an economics 101 class, but in the real world, in an industry encompassing four of the ten most profitable sectors of the US economy. The giant pharmaceutical corporations show, in a particularly blatant way, the real nature of the capitalist system. This multibillion-dollar industry demonstrates in practice how the blind forces of the market are incapable of meeting human needs, and how capitalism does not breed, but rather delays or outright prevents, innovation. This, in a sector that is essential to modern society for the survival of millions of people around the world.

The dead end of market-driven research into Alzheimer’s

A glaring example of the active harm caused by the capitalist system can be seen in the stymied efforts to defeat Alzheimer’s. Despite being discovered over a century ago, and affecting 5.8 million people in the US alone, this devastating and fatal disease is still poorly understood and difficult to treat. But rather than driving a race to innovate the best possible treatments, the pursuit of profit has instead led to scandals and scientific stagnation, as well as absurdly expensive and often ineffective drugs.

The medications that exist today are believed to only temporarily improve or slow symptoms, without impeding the progression of the disease itself. Despite this, costs continue to skyrocket. Such was the case with Biogen’s drug Aduhelm, which received FDA approval last year despite considerable doubt among many scientists regarding its effectiveness. The cost? $28,200 per year—down from the original asking price of $56,000!

One of the reasons for the lack of effective treatments is that much of the Alzheimer’s research done over the last 16 years was based on a “landmark study” which was likely fraudulent. In 2006, Nature published a study which appeared to have isolated the cause of Alzheimer’s to a particular protein. But it turns out that in this study—as well as over 20 other studies involving one of the authors, Sylvain Lesné—images of tests of these proteins appear to have been replaced or altered.

According to a 2014 study, clinical trials aimed at identifying an effective treatment for Alzheimer’s failed 99.6% of the time, as they were mainly based on this sham hypothesis. In fact, some doubt that the protein in question even exists in the human brain. This is a perfect example of the kind of cynical behavior encouraged by the individualist, dog-eat-dog world of scientific academia under capitalism.

But the blame does not rest solely with an individual “bad” scientist. How did the pharmaceutical companies react to this scandalous waste of resources and lies? If capitalism were a rational system, this should have led to redoubled efforts to discover the real cause of Alzheimer’s. Instead, these costly failures meant the exact opposite: a defunding of research into the disease, with some companies like Pfizer abandoning Alzheimer’s research entirely.

And why should they have done otherwise? The driving force of capitalism is the pursuit of profit. Even the most fervent defenders of the free market admit that capitalists only invest when they expect to turn a profit, which leads to divestment from non-profitable sectors of the economy. For this reason, regardless of how many lives might be saved, no corporation will invest into research that they do not expect to generate a profit.

The recent spread of Lyme disease could have been avoided

An old saying goes: “an ounce of prevention is worth a pound of cure.” Unless there is a reasonable expectation of a quick return, however, there is no reason to invest in either prevention or cures. An example of the devastation this can mean is the worsening crisis of Lyme disease, a tick-borne disease affecting humans and animals causing symptoms ranging from arthritis to facial paralysis, and even death.

Lyme disease was first discovered in rural Connecticut in 1975. A study from 2021 found that as much as 14% of the world population today may have had Lyme disease at some point in their lives. In the coming years, infection rates are expected to worsen, as tick populations rise due to climate change.

Yet this did not have to happen. A vaccine for Lyme disease has existed since 1998—but rather than being used to protect the public, after three years of poor sales, it was simply taken off the market and locked behind intellectual property laws.

With no incentive for the patent holders to produce the vaccine, no incentive to share their trade secrets, and no foreseeable profit for any other company that might buy them, Lyme disease has had two decades to spread unchecked.

Price gouging by the insulin monopolies

The negative consequences of the profit motive do not stop at suppressing new innovations or keeping them off the market. Even century-old discoveries can be kept out of reach by increasing costs. According to the defenders of capitalism, competition compels each capitalist to produce more efficiently, thus lowering prices over time. Yet even a glance at the pharmaceutical industry, and drug prices in America, makes clear that this is far from true in practice.

The history of insulin provides a particularly stark example. When the first method for preparing usable insulin was discovered in 1923, its inventors intended to make it publicly available, and so they sold the patent for $1. Today, American diabetics often pay as much as $1,000 a month for a drug many need to survive.

Working-class diabetics are hit particularly hard. A 2020 study found that a fifth of American diabetics ration their insulin, risking serious complications or even death, while 14% of diabetics spent 40% of their remaining income after food and rent on insulin alone.

Safe insulin products have been available for decades, and a study by BMJ Global Health estimated the cost to manufacture a vial of human insulin to be between $2.28 and $3.42. If capitalism worked the way its defenders claim, these low costs of production should mean low prices for consumers. Instead, prices have continually risen.

Why has this happened? It is because we live in the era of monopoly capitalism. A US government study found that just 25 companies accounted for 73% of all pharmaceutical sales in America, with just three of these—Eli Lilly, Sanofi, and Novo Nordisk—having the exclusive right to manufacture insulin. With this level of concentration of capital, it becomes possible and rather profitable to collude to keep prices high.

This is exactly what we see today, with these companies often raising their prices by similar amounts within hours of each other. On top of this, they frequently engage in a practice called “evergreening” where they make insignificant “improvements” to their insulin products, often as minor as changing the kind of container they come in, in order to obtain a new patent—allowing them to suppress competition and justify further price hikes.

This kind of price gouging and financial scheming is not unique to insulin. Last year, Mylan settled a lawsuit for $264 million after being accused of gouging the price of Epipen, a drug used to treat severe allergic reactions. After bribing pharmacy representatives and settling with the drugmaker Teva to prevent them from releasing a generic Epipen, they raised the price to $600 per dose. In a 2016 lawsuit, these companies were also alleged to be part of a cartel of six pharmaceutical giants that used steak dinners and “girls’ nights out” to disguise meetings to simultaneously raise generic drug prices by as much as 2,000%.

When global markets are dominated by a handful of multinational corporations, there is little incentive to develop cheaper drugs or any other socially necessary product. Rather than compete, it is far more profitable for these giants to cooperate with each other to drive up prices and use their vast resources to crush competition, while also influencing politicians in their own favor.

Bourgeois law cannot solve the problem

Many of the issues described above have been unfolding for decades, which begs the question for some: why has the US government not intervened in the interest of public health? To understand this, we must first recognize that the state and its legal system are not a neutral force acting in the interest of “society,” but rather, a tool of capitalist rule. As such, when it has acted, the American state and its legal system have reliably defended the interests of the capitalist system.

In 1979, the two bourgeois parties “came together” to ensure that American workers would foot the bill for corporate profits. Named for a senator from each party, the bipartisan Bayh-Dole Act, was passed through a lame-duck Congress to make it legal for private corporations to purchase patents on inventions created with public funding.

The pharmaceutical capitalists defend their astronomically high prices by claiming they need lots of money for “research.” But in reality, many of these drugs were developed, not by the corporations profiting from them, but with public funding. This includes every single drug approved by the FDA between 2010 and 2019.

Meanwhile, both parties demagogically attempt to pin blame on each other for today’s drug prices. Despite 83% of Americans supporting policies to lower prices, most legislative initiatives tending in this direction have been defeated.

None of this is an accident. Rather, it is a perfect illustration of the normal functioning of bourgeois democracy. On top of the often-massive investments many of these politicians have in the corporations themselves, two-thirds of the members of Congress accepted campaign contributions from the pharmaceutical industry in 2020. Millions of dollars in legal bribery ensure that affordable prescriptions remain a pipe dream for millions of American workers.

Socialism is the way forward!

The case of smallpox eradication provides a sharp contrast to capitalist healthcare in America today. Beginning in the late 1950s, the Soviet Union proposed and led a global campaign to eradicate the disease, culminating in 1977. Despite being a bureaucratically deformed workers’ state, the absence of the profit motive in the Soviet Union allowed for this kind of far-reaching public health campaign.

This was made possible due to the utter superiority of a planned economy as opposed to an anarchic market economy. For instance, while the recent Covid-19 crisis was marked by vaccine shortages around the world, back in 1958, when the Soviet campaign against smallpox began, it was able to contribute 25 million doses of vaccine in just that year alone, having already effectively eradicated the disease within its own borders by 1936.

The Soviet Union also developed the world’s first artificial heart in 1936, and Soviet doctors performed the first coronary artery bypass in 1953. And in the past few years, on the basis of its planned economy, Cuba developed the first lung cancer vaccine as well as the first-ever successful prevention of HIV transmission from mother to child.

These examples offer an inspiring glimpse at what a healthy and democratic socialist society could achieve in the fields of medicine and public health. We do not have to accept the irrational chaos and greed of capitalism. The IMT calls for the nationalization of the health insurance, medical equipment, and pharmaceutical industries, the hospital networks and related clinics, to be integrated into a unified, democratically administered public health provider. On this basis, a workers’ government would be able to take bold measures to protect public health, with research prioritized by human need rather than profit.

Under genuine socialism, it will be possible to achieve new revolutions in the fields of science and medicine. On the basis of an economy consciously and democratically administered by and for the vast majority of society, it will be possible for everyone to have access to world-class medical care, free at the point of service. But for this, we must fight for the revolutionary transformation of society.