Tuesday, March 20, 2018
Mrs. Smith Goes to Washington
Newly-appointed Minnesota Senator Tina Smith is off to an energetic start, challenging the powers-that-be in Washington, starting with Big Pharma. She recently wrote to the CEOs of five drug companies, noting the gigantic tax windfalls reaped by their companies after the fall passage of the tax cut bill, and enquiring whether any of that money might enable them to reduce the skyrocketing prices of prescription drugs.
I am sure every one of the five CEOs privately gave a big horse laugh at the very thought. Each of them believes that their duty to the shareholders is precisely to exact the maximum possible amount from the public for their products, so lowering drug prices never entered their tiny minds. Instead, they announced stock buybacks and in some cases dividends, after the size of the windfall became apparent. Senator Smith also enquired whether they had made increases to research and development investments after the tax changes, as well as asking about stock buybacks and monetary bonuses to company officials.
Tina Smith can’t possibly be so naïve as not to understand the actual priorities of the CEOs (her husband of many years is an investment manager). Nonetheless, her letters make an excellent point. Pharma’s frequently-invoked rationale for high drug prices – that they need to swell their profits to afford research – is utterly bogus. And every step that gets the public to understand that is valuable.
Although informed people do understand that, a lot of pretty intelligent members of the public who haven’t thought about it too deeply are still buying the falsehood, as I’ve found from talking to co-workers. So, thanks, Senator Smith!