Pharmacide: The Pharmaceutical Industry’s Self-Destructive Effort to Loot America

Pharmaceutical industry executives are frequently accused of greedily putting “profits before patients” (as if drug companies could profit by means other than serving patients). This accusation would be unjust if these executives were after profits. Unfortunately, however, today’s pharmaceutical executives are not after profits. They are after loot. They seek to gain, through legislation, money coercively taken by the government from American citizens. But, unbeknownst to these executives, their looting is self-destructive. In fact, by aiding and abetting the government in its violation of individual rights, the pharmaceutical industry is committing suicide. To see why, let us begin by examining some of the ways in which the industry calls for the violation of rights and receives loot as a result. Then we will turn to the reasons why this practice is killing the pharmaceutical industry.

Consider the industry’s support for the Medicare Modernization Act of 2003 (MMA). The MMA expanded Medicare to include coverage of prescription drugs for Americans over the age of 65 and was the largest expansion of welfare in America since the creation of Medicare itself.1 When the Act took effect in 2006, it made the U.S. federal government the single largest purchaser of prescription drugs in America.2

In 1999, years before this bill had been conceived, Alan Holmer, then president of Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s lobby group, made clear in a trade journal the industry’s view that “the question is not whether, but how, to expand Medicare coverage of prescription drugs.”3 In 2000, Holmer testified before the Senate Finance Committee that at “some point in the not-too-distant future, a Congress will pass, and a President will sign, legislation to expand drug coverage for Medicare beneficiaries. . . . Expanded drug coverage for seniors will be a positive development.” Holmer emphasized:

The pharmaceutical industry strongly supports . . . expanding Medicare coverage of prescription medicines. . . . Medicare beneficiaries need high-quality health care, and prescription medicines often offer the most effective therapy for them. We believe that the best way to expand prescription drug coverage for Medicare beneficiaries is through comprehensive Medicare reform.4

The pharmaceutical industry got its desired “reform,” and when the MMA became law, the government not only began dictating the terms by which private insurers would provide prescription drug coverage to Medicare beneficiaries, it also began spending tens of billions of dollars annually to subsidize that coverage.

From where does the U.S. government get this money? The government does not create wealth; it does not produce anything. Every penny the government spends on drugs (or anything else) comes from taxpayers. The government gets this money by taking it under threat of force from hard-working Americans (or by printing or borrowing it, which is deferred taxation). This is legalized theft; the money taken by force is loot. And when the government spends this loot on prescription drugs for the elderly, the loot is passed on to the pharmaceutical industry.

Now, merely receiving loot from the government does not in and of itself constitute the moral crime of complicity in the government’s coercion. But the pharmaceutical industry is not merely receiving money from the government as a result of the MMA. The industry advocated this socialist scheme of forced wealth redistribution from the start, supported it at every stage of development, and is now receiving the loot as planned. Although the industry exchanges drugs for the loot, the entire arrangement on the part of taxpayers whose money is taken by force to buy the drugs is involuntary. Taxpayers do not choose to fund the industry in this way; they are forced to do so—by a law that the pharmaceutical industry enthusiastically helped to create. . . .


1 Joseph R. Antos, “Medicare and the Prescription Drug Benefit: Increased Pressure for Reform,” Accessed October 18, 2009.

2 Benjamin Zycher, “The Human Cost of Federal Price Negotiations: The Medicare Prescription Drug Benefit and Pharmaceutical Innovation,” Manhattan Medical Institute Medical Progress Report, no. 3, November 2006, Accessed October 18, 2009.

3 Alan F. Holmer, “Covering Prescription Drugs under Medicare: For the Good of the Patients,” Health Affairs, vol. 18, no. 4, July/August 1999, p. 23.

4 Alan F. Holmer, Statement before the Committee of Finance of the U.S. Senate, March 22, 2000, Accessed October 3, 2009.

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