Scarcity, Greed, and Drug Pricing in an Election Year

For many of us, it’s just too painful to think about. But a rerun of the 2020 presidential election is coming and drug pricing is likely to be a big talking point for both of the major candidates. President Biden is talking about corporate greed while former President Trump is talking about reviving an executive order to bring drug pricing into line with other countries. The Wall Street Journal says both candidates “hate pharma.”

Meanwhile, two breakthrough drugs for metabolic health – semaglutide and tirzepatide – are in short supply, and we’re getting an object lesson in how scarcity and greed go hand in hand.

Obesity drug prices put them out of reach for most of the people who need them.

A Maxim of Human Behavior

In his 2022 paper, Rob Nelissen describes a long line of academic work describing the tight link between scarcity and greed:

“Scarcity causes greed. It does so as it increases competition for common resources and as a result causes their depletion. This notion can almost be considered as a behavioural law as it is manifested in all scientific disciplines dealing with human behaviour. It inspired early political philosophers and underlies the principle of natural selection. It is central to economic and game-theoretic models of behaviour, and it has received empirical support from psychological research on social dilemma’s, consumer behaviour and sociological as well as socio-ecological population studies.”

Nelissen goes on to present research showing that, under some circumstances, abundance can lead to greedy behaviors, too. He offers a great deal to think about.

Drug Pricing Politics

In a fiesty State of the Union speech this week, Biden made it clear that corporate greed will be one of his key talking points throughout this election year. Excessively high drug pricing, he says, is nothing but a manifestation of corporate greed.

Trump, meanwhile has promised to resurrect a mandate for the federal government to pay no more for pharmaceuticals than other countries do. A federal judge struck down his executive order to do this in 2020. Some Republicans have supported legislation to address drug pricing by curbing abuses of pharmacy benefit managers. But more recently, that effort seems to have faltered.

A Hot Issue

At present, the U.S. pays some of the highest drug prices in the world. Prices for GLP-1 agonists used for diabetes and obesity range from three to ten times higher in the U.S. So healthcare costs in general and prescription drug costs specifically are hot issues in the minds of voters.

Scarcity, greed, and high prices are conspicuous issues with obesity medicines. They command high prices and profitability, remain in short supply, and, yet, the need for them will only grow as it becomes apparent that they can be both life changing and life saving. You can be sure that public pressure on pricing for these medicines will grow, too.

Click here for Nelissen’s paper, here, here, and here for further perspective

Death and the Miser, painting by Hieronymus Bosch / National Gallery of Art

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March 10, 2024