Carlton Vogt's

Enterprise Ethics

Volume 3 Number 32 December 14, 2005

Big Brother, Big Pharma, and Big Insurance

Wrongheaded proposals could prove to be a financial boon for drug and insurance companies

A spoonful of sugar, as Mary Poppins reminded us, helps the medicine go down. Unfortunately, Ms. Poppins forgot to mention that enough sugar coating can also mask the bitter taste of a poison pill.

While entertaining visions of sugarplums myself, as I prepared for the variety of holidays and holy days that have piggybacked on the solstice celebrations, I sat bolt upright when I read two stories that I saw as major threats to our privacy -- or what's left of it. Both had some superficial rationality to them, but faltered under more intense scrutiny. And both could end up being more detrimental than anything else.

The first story was the news that New York City was adopting a health regulation that would make diabetes -- or at least high blood sugar -- a reportable disease, requiring testing laboratories to report anyone whose test result indicate high blood sugar.

The second story was that the US Congress is considering legislation that would effectively make some over-the-counter (OTC) cold remedies controlled substances. While you wouldn't need a prescription, you would need to show identification, you would be restricted in how much you could buy in a certain time period, and the store would be required to keep a registry of who bought what and when.

I'll talk about the New York City proposal first because I think it has the flimsiest attempt at justification -- and the greatest potential for harm. Ostensibly, the idea behind the registry is so that the city could send out gentle little reminders to people with high blood sugar to take care of themselves.

Now, I don't intend to minimize the threat to individuals that diabetes poses. It is a serious problem and can have devastating consequences, even when the individual manages it properly. As many of you do, I'm sure, I have both friends and family members who have had to deal with diabetes, some more successfully than others.

What my experience tells me, however, is that most diagnosed diabetics are aware of their situation and what they need to do about it. Any lapse on their part in managing the disease isn't due to ignorance as much as it's due to differing priorities. As a group, diabetics are probably the most educated and have the most available resources of any similar group with a particular condition. This isn't to say there aren't some who remain in ignorance. But if anyone can maintain their ignorance in the face of what's now available to them, it's not clear how another piece of junk mail from a city agency is going to change their behavior.

With state and municipal budgets at the breaking point, it just seems to me that the city could better spend its public-health resources on combating infectious and contagious diseases, rather than keeping track of diabetics, who pose a threat to no one other than themselves.

The proposed restrictions on OTC cold remedies has a more appealing (at least to some) justification, but, on scrutiny, it collapses even harder and faster.

The idea is that some of these cold remedies are used in the manufacture of methamphetamines, which, at least in my neck of the woods, is a thriving cottage industry -- so I have some familiarity. By restricting the availability of these medications, the claim goes, we will put a serious dent in the methamphetamine problem.

The so-called "War On Drugs" is now running neck-and-neck with the so-called "War On Terror" as a wedge to get people to willingly -- nay, gleefully -- surrender one civil liberty after another, without providing any added security, and, in fact, often making things worse.

As with economics, a "supply-side" approach to the "drug problem" usually ends in failure or an escalation of the problem. Again, I don't want to minimize the adverse and devastating effects that drug use can have on individuals and families. What I do take issue with is the tendency to see it as a criminal matter rather than a public-health matter, and the tendency to think that restricting availability of a certain drug will make the problems go away.

There may be a few people among my readers who are old enough to remember the last great "War on Drugs" in the US. We had gang wars, smuggling, drive-by shootings, citizens manufacturing drugs in their basements and garages, rampant police and political corruption, and deaths from impure substances. That all ended abruptly on December 5, 1933, when the country decriminalized alcohol. We apparently learned nothing from that experience.

What can we expect if cold remedies are put under lock and key? I think the effects are pretty far-reaching.

First, these remedies will be much harder to come by. Many stores --especially smaller retail operations and convenience stores -- are simply not set up either to keep the drugs under lock and key or to maintain a registry of who buys what, not to mention monitoring how much a person has bought within the last week or month. Even the larger chains would have a hard time tracking how much a person bought over time.

So, right off the bat, the whole enterprise would be a colossal failure because stores would simply keep cursory records or dummy ones. An additional question is who would enforce the registry and why we couldn't use that money and those resources to do something that might actually do some good.

But beyond the flawed concept, the whole idea might fall firmly within the grasp of the Law of Unintended Consequences.

Talk to any retailer and you'll learn that these cold remedies are already a prime target for shoplifters and pilferers. If we restrict access even more, the drugs will become prime targets for more daring thefts of larger quantities, meaning probably breaking and entering -- which could have more damaging effects on the store than shoplifting.

You might want to say that this will reduce the incidence of theft by raising the ante from simple shoplifting to breaking and entering, a more serious crime. However, two things work against that. The first is that most criminals are really lousy at doing precise cost-benefit analyses. If they could do that sort of thing, they probably wouldn't be criminals, as the risk is rarely worth the perceived benefit. The second is that, even if they do consider cost and benefit, restricting the availability of these products will increase their value on the street, making the risk more worthwhile.

The increased value of the cold remedies on the street would also create a business opportunity for people inclined to hijack truckloads of the product, burglarize warehouses, or simply smuggle them in from another country. The "coyotes" who smuggle Mexicans across the border, might find it more profitable -- as the railroads did years ago -- to carry freight, in this case the cold remedies, rather than pesky people.

"AHA," I can hear you say. "But if we raise the price of methamphetamines, that will drive some users out of the market, and we'll see some success there." Maybe, maybe not. Undoubtedly, some people would find higher-priced meth too expensive and would simply stop using drugs. History tells us that wouldn't be very many. The criminally inclined would simply find new and exciting ways to finance their habit. Others, looking for a cheap thrill, would simply turn to whatever came along to replace meth -- rest assured that something will -- and that could be worse.

Remember paraquat? It started with Richard Nixon and found a new life under Ronald Reagan. Paraquat, a highly toxic agent, was sprayed on marijuana fields in Mexico under Nixon. Despite the fact that paraquat has serious health effects from inhalation, Reagan had it sprayed on fields in the US in an attempt to battle the domestic marijuana production. While it did reduce the amount of available marijuana in the country and made it extremely expensive, it also threatened the health of anyone who might smoke it, a possibility that Reagan's drug czar dismissed by saying that anyone who smoked marijuana "deserved to die."

However, it didn't end the "drug problem." Within weeks of the decline of the marijuana crop and the subsequent increase in price, the street corner dealers who previously offered a "nickel bag" (actually a five-dollar bag) of marijuana were offering a five-dollar vial of crack cocaine. Not everyone who was priced out of the marijuana market made the switch, but many did

Now, instead of a bunch of "mellowed out" people buying their occasional nickel bags of marijuana, we had legions of "crack heads," doing whatever it took to find enough money for the next hit of the highly addictive and seriously destructive drug. And the problem persists to this very day. I'm not sure it was a good bargain.

But beyond the inherent flaws in both proposals, I think there is something more sinister that looms over them, and that is the creation of databases that could prove to be gold mines for Big Pharma -- among others.

I'm not saying the pharmaceutical companies are behind these proposals, but I'm also not saying they're not. I just don't know. But I do know that the databases that will be created will be too tempting to ignore.

Imagine for a moment that you are a giant pharmaceutical corporation -- and by that I mean that you sell drugs, have no moral motivation, no conscience, and an insatiable thirst for more money -- and you develop a new drug that can be used by diabetics. You've invested millions in the product and you need to get it into the hands of people with diabetes to start making money. How do you get the word out?

Well, you could advertise in print and electronic media, but that's a scattershot approach, and people tend to ignore printed ads and they Tivo through television commercials (at least I do), and not everyone is a potential customer. To reach your intended audience, you'd have to spend a lot of money on a variety of media to market to many people who have no need of your product.

But what if you knew that somewhere there was a database with the names and addresses of everyone who had tested positive for high blood sugar? What would you pay to get your hands on that database? What political pressure would you have your lobbyists put on politicians to make sure that this list was available to you? What skullduggery would you contemplate? (Remember, you have no moral motivation; just an insatiable need for more money.)

The same goes for a list of people who regularly buy cold medications or buy them in large quantities. While not as potentially profitable as the diabetes market, there is money to be made in direct marketing to people who are the likely users of your product.

Both databases would become giant, juicy, low-hanging plums. And if we know anything about Big Pharma, it's that it doesn’t like to leave fruit unplucked, especially giant, juicy, lucrative, low-hanging fruit. Did I mention lucrative? Prepare to be plucked.

There are also other interested parties, and one of them would be insurance companies. Possessing these lists could allow them to raise their current "cherry picking" to a higher level. Have high blood sugar, whether you are an officially diagnosed diabetic or not, and you will not get private health-care insurance, or be offered it at a price that is beyond prohibitive. Buy too much cold medicine, and you'll be on the black list too.

Those faced with the prospect of buying private health insurance already know how that cherry-picking works. Had the sniffles once? You can forget about the low-cost policy. And, believe me, I'm not exaggerating. If you are perfectly healthy -- and I mean that in the very narrowest sense -- you may qualify for a reasonably priced policy. Have any medical condition, even something as benign as hay fever, and you're looking at spending up to 50 percent of your net income for health insurance. Databases such as the ones I'm discussing will make the insurance companies' fine-tooth comb even finer.

Ordinarily, attempts to erode our privacy at least dangle some promise of a wonderful benefit in front of us. These two are so lame as to be laughable. The problem is that in the current climate they may just succeed. If they do, we all lose..

© Copyright 2005 Carlton Vogt