Hey everyone! My name is Peyton Miles (she/her), and I am the co-chair of the Health Policy Lab here at Generation Patient. This past week, we read Amy Kapczynski of Yale University's article, ‘The Political Economy of Market Power in Pharmaceuticals.’
Kapczynski overviews why the pharmaceutical industry is viewed as one of the most politically powerful industries in the U.S. Pharma deals with prescription drug production, manufacturing, advertisement, and pricing. According to Kapczynski, the pharmaceutical industry has so much influence and power in the U.S. because of an idea called political entrenchment, which means that political changes are difficult to undo, creating many barriers when trying to implement legislative reform.
The entrenched power in the pharmaceutical industry is broken down into four types of power: property power, vertical power, ideational power, and material power. All four types of power reinforce each other, creating significant barriers to legislative reform and controlling prescription drug prices.
Property power:
Kapczynski states that property power, including intellectual property (IP), is used to generate profit and be a source of authority and control. Property is protected by federal statutes and international law.
The pharmaceutical industry in the US has three types of government-granted exclusivity/property power: patents, data or marketing exclusivities, and trade secrecy. A patent is a property right granted by the U.S. Patent and Trademark Office that gives the inventor the exclusive right to make, use, and sell an invention for a specified period, typically 20 years from the filing date. Data exclusivity laws allow up to 12 years of protection for biologic drugs (with 5 years for small molecule drugs) to block generic competitors from using clinical trial data. Trade secrecy law allows companies to protect proprietary information, though these protections derive from statutes like the Defend Trade Secrets Act rather than constitutional provisions. Patents, data exclusivity, and trade secrecy often weave an intricate web of barriers that work together to inhibit efforts for the government to reform legislation.
Vertical power:
Vertical power is the power over the process of legal change. In the American democratic system, we use a majority rule system. Any effort to reform parts of the political process is met with challenges enabling industry to maintain control and power. The features that are often used by the pharmaceutical industry for self-benefit include “the Electoral College, the design of the Senate, parliamentary rules (e.g., the filibuster), judicial review, and the role of money in politics.” Industry can use financial influence to maintain its power in the healthcare reform landscape. A well-known example of this is how procedural rules shaped the 2003 Medicare Part D legislation, which prohibits Medicare from negotiating drug prices. Industry can use its financial influence to support certain political candidates that align with their agendas, which makes it incredibly difficult for smaller patient groups to counterbalance this influence.
Ideational power:
Ideational power stems from industry’s ability to promote narratives about innovation and market efficiency to justify high prices, while fostering skepticism about government-led solutions. Industry influences public opinion by arguing that regulations would reduce access to life-saving medications. Kapczynski explains that industry “benefits from popular ideas about innovation and markets [...] that help justify its power and profits.” Ideational power allows big pharma to frame high prices as essential for funding research, despite evidence that pricing often reflects monopoly power rather than research and development costs .
Material Power:
Material power is the control that industry has over specialized expertise and infrastructure. The pharmaceutical industry employs researchers, lobbyists, and regulatory experts who shape drug development and policy. The government rarely develops drugs independently, relying on industry for clinical trial design, manufacturing, and distribution. This dependency allows industry to leverage its technical dominance as a form of political power.
Why does this matter?
Many members of our community have witnessed the rapid increase of drug prices in the U.S. “Three in ten Americans report that they did not take their medicines as prescribed in the last year because of the drugs’ cost (Kirzinger et al. 2019).”