To Negotiate or Not to Negotiate

While I certainly found it interesting to learn about why prescription drugs are extremely expensive in the U.S., what I found most interesting about the discussion Professor Nicholson led was the debate it sparked among attendees. I think the debate that emerged was very reflective of the tensions that emerge when trying to solve many policy dilemmas in the U.S. Professor Nicholson, for example, explained that, in other countries with national health care systems, there is effectively one insurance company that can negotiate with pharmaceutical companies and get them to bring down their prices. In the U.S., in contrast, Congress prevents Medicare and Medicaid from fiercely negotiating with pharmaceutical companies to bring down drug prices for the reason that reducing the financial benefits that pharmaceutical companies reap may reduce the incentive they have to invest substantial funds in developing innovative drugs and treatments. In the heated debates that emerge about whether the government should more heavily tax the rich and corporations and redistribute the wealth to those who are denied opportunities for economic advancement, a similar concern emerges about the consequences of diminishing financial incentives. The concern is raised that if the government were to reduce the financial rewards that accompany success, fewer people would be motivated to be successful, and society would not reap the benefits that accompany success—from new products that improve our quality of life to the creation of jobs. Thus far, just as America has decided to protect the financial incentives that motivate pharmaceutical companies to develop new drugs, America has decided to protect the financial incentives that motivate people to strive for corporate success. Something that I noticed as I was sitting at this week’s Rose Café, taking in the debate, and thinking about how this tension between financial incentive and corporate regulation that seems to arise in so many policy debates is that America seems to operate from the assumption that financial motivations are the driving factor behind individuals’ behavior. As many Café attendees pointed out that because the government prioritizes protecting pharmaceutical companies’ financial incentive over making drugs affordable for all Americans, many Americans who do not have jobs that offer private insurance must go without treatment they need, I started to question the assumption that humans are motivated solely by financial considerations. Are there not any pharmaceutical executives who are motivated not just by financial gain but by the desire to improve the lives of individuals afflicted with debilitating diseases? Given that it seems likely that there are at least some individuals who are driven by a variety of motivations, perhaps calling the bluff of pharmaceutical companies who claim that they will stop developing innovative drugs if they cannot charge high prices for them, as Professor Nicholson and one Café attendee put it, is easier than many Americans think.

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