HEALTH CARE/Joan Retsinas

Death by a Thousand Cuts

Our president has morphed into the Slasher-in-Chief, intent on killing the social welfare apparatus that has been constructed over 50 years, throughout the administrations of Republican and Democratic presidents. As he seeks to obliterate traces of President Obama, he is obliterating traces of all progressive legislation, slash by slash by slash.

Consider his wish list. He wants to relax nursing home regulations. President Nixon instituted those regulations. He wants to cut the budget for the National Institutes of Health, a program started in 1887. He wants to eviscerate Medicare, the legacy of Lyndon Johnson. He is cutting Medicaid, which first started as Kerr-Mills, a bipartisan program. The Children’s Health Insurance Program, started under President Clinton, is in limbo. His immigration fiats have stanched the flow of foreign medical graduates to our hospitals, even though our hospitals need them.

Now his administration, eager to pay for tax cuts that benefit the wealthy, has taken aim at the subsidy for orphan drugs.

“Orphan” drugs are a misnomer. They are not truly orphans because since 1983 Uncle Sam has been their godparent.

Millions of Americans suffer from a panoply of diseases that few physicians will see: Job Syndrome, Lou Gehrig’s Disease, Tourette’s syndrome, Hamburger disease. Each claims fewer than 200,000 Americans.

These diseases have no cure, or sure-fire treatments.

Pharmaceutical companies are not generally interested in these diseases. With so few patients, such a tiny market, these “orphan diseases” are a rebuke to libertarians’ love affair with capitalism. Ordinarily, the capitalist mantra is simple: give us a chance for profit, we will rush in. But for-profit companies see no profit here. A drug to treat multiple sclerosis will draw investors; a drug to treat Job Syndrome will not pay for itself, will show up as red ink on a year-end tally. Pharmaceutical companies expect to make a profit, as do all publicly traded companies. Shareholders, employees, and investors expect no less. A non-profit pharmaceutical company is an oxymoron.

Yet while the tiny markets of consumers do not justify a company’s investment, those small markets of patients do justify a nation’s concern. Overall, one-tenth of the American population suffers from one of the 7,000 diseases dubbed “rare.”

Enter the federal government. In 1983 Congress recognized that, without federal subsidies, companies would not enter these markets. Sen. Orrin Hatch (R-Utah) was a sponsor of the Orphan Drug Act. Governments in Australia, the European Union, Japan, and Singapore similarly subsidize development of “orphan drugs.”

For more than 30 years we taxpayers have given companies a tax credit for half the cost of the drug’s clinical trials. Furthermore, we let the company retain a protected market for seven years. The subsidies have gone to 450 drugs.

The Orphan Drug Act has drawn critics. They complain that companies skillfully manipulate these subsidies. To date, more than 70 of the ”orphan drugs” that the FDA has approved were first approved by the FDA for “non-orphan” diseases, drugs like Cerebrex and Humira. Now more than half the applicants will treat not just orphan diseases, but others. For some drugs, moreover, the companies charge exorbitant prices.

Even proponents concede the loopholes. Nobody, though, has claimed that without the subsidies, the companies would consider these statistically minor diseases worthy of their attention – until this Congress.

This Congress weighed the patients against the costs – the hard-nosed accounting only hard-nosed accountants can do, especially ones keen to save billions. As part of its tax-cutting frenzy, Congress initially elected to ax the orphan drug subsidy. Only the people suffering from the diseases would care; and there are not that many of them, at least not as many as there are millionaires avid for tax relief. The projected savings: $54 billion over the next ten years.

Not surprisingly, the “orphan disease” community rose up, to plead that Uncle Sam stand firm in his role as godfather. Their fury tamped down the subsidy, from 50% to 25%. Since the disease-community feared the ax, this is presumably a mini-victory. And large pharmaceutical companies will find some goodies in the overall tax reform package, like a drop in the corporate tax rate from 35% to 21%.

The question of course remains whether the reduced subsidy will work – whether companies will take up the gauntlet to research treatments for orphan diseases.

The more pressing question, though, is whether we as a nation care.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, Febuary 2, 2018

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