Yes, imperfect capitalism is better than socialism any day. Left-wing ideologues hate Pharma companies which is unwarranted. They are not evil as portrayed by these people. Most of the Pharma companies have programs for helping patients who are too poor to afford even well established treatments. One example that comes to mind is Gilead, which has a drug to treat existing HIV-1 infection and as pre-exposure prophylaxis has a program that reduces the cost to few dollars per month for poor individuals.
As a scientist working in university settings, our research group routinely collaborates with Pharma companies and often times we are awarded grants for research. As an example, Novartis funds the X-ray crystallography beamline at our research institute. It is useful for Novartis as they can use the beamline to study structures of proteins which is important for the drug discovery. However, the beamline is also used by researchers and other industry users, which has driven a lot of innovation and progress. Everybody can win with market oriented solutions.
I mean, OK, this is definitely a success story. You got your medical problem resolved and paid nothing extra on top of whatever your insurance costs you.
But you almost certainly didn't get $100,000 "worth" of medicine, or anywhere close to it. The "sticker price" of most medication in the US that you supposedly pay OOP is almost totally fictional. Basically no-one ever pays it; it's probably several orders of magnitude above the cost of production and distribution of your dose; and quite probably at least one order of magnitude over the total cost of everything to do with the drug, even including marketing, research, approval, and allowance for research for failed drugs.
It depends a bit what you're optimising for. The US system is almost certainly not optimal overall, and it *definitely* isn't optimally efficient (the US spends a lot on healthcare relative to outcomes, even allowing for it being wealthy overall and arguably subsidising drug-research for the rest of the world).
The UK has a basically simpler, and more "efficient" system, in that it spends dramatically less and doesn't get outcomes proportionally worse. But it allocates scarce resources essentially by queueing and hassle, which generates deadweight loss. This isn't great, and is particularly bad if you're rich, since you presumably value your time more highly in money terms. But of course, in the UK you can still get private healthcare, and unlike in the US, they won't present you with the choice of an insurance beauracracy or ludicrous list prices and risk you having to pay 10x the actual value of the treatment. On the other, other hand, the existence of the NHS means there's a lot less private healthcare around, so your options are more limited.
I'm convinced that healthcare is a particularly hard part of the economy to make work in any remotely sane way. Somehow we seem to muddle along anyway.
The point being if US had a UK like system, we would not get new drugs as fast as we get now. Take for example, Zolgensma, a gene therapy which is used to treat muscle function loss in children. This condition is very rare, only 1 in 10,000 children are affected by it. Given less than 100 children per year are diagnosed with this condition in UK, because of socialized healthcare there would be no incentive for a company to fund research for this condition as the government normally pays very little for the drug. While in US, this drug was developed by a startup. UK like healthcare will not be able to push progress when it comes to rare diseases.
Let's avoid the Marxist theory of value, in which a medication is only worth the cost of the proletariat labor that went into producing it.
It sounds like he would have been willing to pay $16k a year indefinitely for this treatment. So if he stays on this medication for six or more years, he's going to be getting more than $100,000 worth of value out of this medicine.
The marginal cost of the drug is much less than 20k/dose, but pharma companies rely on the American market to recoup r&d costs. They won't make it back for a few years, most likely.
I should say that my employer sells a therapy that *did* have a marginal cost around 20k/dose (4 times a year), and there was a lot of work to try and get that down.
Its kinda comforting to know that we are basically providing subsidized healthcare to the rest of the world by paying more. Its like cumpulsory philanthropy on a grand scale
It's less "thefty" than taxation. And it's not *exactly* a subsidy: pharma companies aren't selling to other countries below the marginal cost (except in special cases). If those other countries didn't exist, or if the drugs weren't sold there at all, American drugs, developed in America and sold only to Americans would cost about the same.
The reason drugs are so much more expensive in the USA is that all the other big, rich countries have public healthcare and/or regulated markets and so can negotiate prices with the companies at a national level. America could get better prices if it changed its strategy, and actually does to some extent with Medicare/aid.
but it would be the case that if the US switched to the European model, drug discovery and innovation would be greatly decreased right? So we are subsidizing the new drugs for the rest of the world.
To be fair, yes. America couldn't bring down drug prices unilaterally without serious damage to pharma r&d as it exists now. I work in the r&d side of the company so I don't really know the market side well enough to see a solution, if there is one.
If I ever become president I will order a parade be held every month to honor big pharma and housing developers, who do more than anyone to solve our biggest problems (curing diseases and building big houses). Sadly I think my idea is very popular.
While this worked out well for you, this strikes me as a failure of capitalism more generally (though the failure is at least partly due to regulation). You have a situation where a pharma company is charging a ton for a medication, and seemingly one with an alternative (the pills). You would never pay that price yourself, meaning your revealed preference is to not use the drug, but you are, of course, happy to take it if it's free to you.
Pharma knows this, so they give out free samples to get you interested, provide representatives to sweet-talk you, and (presumably) to argue with regulatory agencies to force your insurer to provide it. When your insurer throws up its last safeguard against people from taking overpriced, potentially unnecessary drugs - a copay - Phamra gets around that too, by comping the copay. The end result is that you got the medication for free, but everyone's insurance premiums go up.
This is a classic agency problem. It's the equivalent of wining and dining the procurement officer to convince them to buy something the company doesn't really need, which leads to significant inefficiencies in the system. It's why healthcare in the US is so expensive.
I wouldn't totally place the blame on capitalism, as we're dealing with an area of significant regulation. Everything from patents creating monopolies on drugs, to FDA drug approvals, to laws governing what insurance companies can charge in premiums, to regulators having a role in deciding what insurers have to pay for, distorts the system. But this story is really more evidence of a broken system than capitalism working in the end. Had capitalism worked, you wouldn't have wound up using something that cost way more than your revealed preference.
I'll just add that, while there's definitely room for tweaks (I'd ban comping co-pays, or at least let insurers do so), that doesn't mean there's an obvious better system. Both "Medicare for all" and anarcho-capitalist medicine have their own problems.
This is true; the failure here is that this cost (of a useful but not lifesaving treatment) is being carried by everyone else’s insurance premiums. But it does seem like a world where Skyrizi exists is better than one where it doesn’t. How can we incentivize that innovation without bearing this socialized cost? Or is, perhaps, the socialized cost worth it?
Maybe? I mean, it doesn't seem like it would be worth $100k/dose was worth it to Richard, and it doesn't make it more "worth it" if that $100k is socialized. That's actually the problem with socializing costs - it's easy to choose inefficient options when you are foisting the costs on other people.
If we didn't socialize the cost, then maybe we'd be left w/o Skyrizi, but that seems like a good outcome if the cost of Skyrizi is higher than its benefit. Alternatively, there'd be pressure on Skyrizi to lower its costs to the point where it does pass a real cost/benefit analysis.
Note: I'm assuming Skyrizi is the medicine Richard took.
I wouldn't assume this. My wife has trouble swallowing pills, and often the liquid form of roughly the same medicine can be dramatically more expensive.
The pills and injections are very different. The injections are biologic drugs that contain monoclonal antibodies, which are antibodies grown in a lab specifically to target the signaling molecules that drive psoriasis. The pills are chemicals that have much broader affinity to different parts of the body, which can lead to deeply unpleasant side effects.
"Socialized medicine is a marshmallow test. It can provide advantages in the short run, yet it ensures that there will be fewer innovations for future generations. Even the supposed benefits are usually exaggerated and often have drawbacks, such as longer wait times for specialists and lower rates of cancer survival. "
The hyperlink to the study on cancer survival doesn't show lower rates of cancer survival in the US. It appears to be on par with Canada, on par or lower that Western Europe (lower in some cases) and lower than New Zealand and Australia.
The article dresses up what is essentially a heavily subsidized transfer scheme as “bad capitalism,” then uses that to argue against socialism—when in fact, the structure he benefited from is indistinguishable from backdoor socialism. Let me unpack why.
---
1. The “Free” Drugs Are Not Free
Skyrizi lists at ~$20,000 per dose. That sticker price is deliberately inflated so that:
Insurers can “negotiate” discounts and still be paying absurdly high sums.
Pharma reps can justify giving away samples, which are then absorbed as marketing expenses.
Patients are made dependent on insurance subsidies and copay assistance programs, which shift costs elsewhere.
Hanania never paid the actual price. Instead, his costs were socialized through:
Insurance risk pooling → higher premiums for other customers.
Manufacturer copay assistance → covered by raising prices elsewhere.
Federal and state subsidies (Medicare, Medicaid, ACA plans) → taxpayer money indirectly props up demand.
---
2. “Bad Capitalism” Is Functionally Cronyism
What he describes is not free-market capitalism. It’s a cartelized medical system where:
Patents, exclusivity rules, and FDA barriers artificially prevent generic competition.
Big Pharma inflates prices in the U.S. specifically, while selling cheaper abroad, because our system allows it.
Insurance companies pass costs back to the public through premiums, deductibles, and taxes.
That’s not capitalism in the sense of voluntary exchange—it’s a state-backed racket where corporations capture policy.
---
3. The Hidden Socialism
Hanania praises this system because it got him his medicine. But the mechanics are textbook redistribution:
Wealthier and healthier policyholders (or taxpayers) subsidize expensive treatments for those who need them.
Government regulations guarantee market exclusivity so pharma can extract rents without normal market pressure.
Copay elimination programs sound like charity but are actually a way to hook patients into long-term, insurance-funded consumption.
It’s not “bad capitalism > good socialism.” It’s corporate socialism: profits privatized, costs collectivized.
---
4. Why His Framing Is Dishonest
He benefits directly from other people’s money, but instead of acknowledging redistribution, he calls it “capitalism.”
He ignores that the same innovation pipeline could exist at far lower cost if intellectual property laws and regulatory capture weren’t designed to guarantee monopolistic pricing.
His conclusion (“this proves capitalism is better than socialism”) sidesteps the reality that his personal miracle cure depended on a hybrid of monopoly rents and socialized costs.
---
In short: Hanania’s argument works only if you confuse cartelized rent-seeking with “capitalism” and if you pretend the redistributed costs don’t exist. What happened wasn’t capitalism saving him—it was a corporatist system where the costs were shifted onto everyone else.
My understanding is that drug companies often have some weird deals with insurance companies to show consumers fake prices so the insurance company looks heroic when they get you the drug. But the insurance company is actually getting like 95% off sticker price.
This isn't wrong, but it isn't exactly right either. Insurance companies negotiate down prices by threatening to refuse to pay for a drug or allow a medical practice to be in-network if they charge too much. The pharma companies and medical practices will sometimes drop their prices in order to access the insurer's customers, but there are limits on this. Insurers can't be too strict about what they give customers access to or the customers will revolt and go to other insurers. Regulators will also make insurers pay for even expensive medication if there's no good alternative for the customers.
This means that, while the insurer probably isn't paying 100% of the price of these drugs, they often aren't paying 5% either. It also means that it isn't just some scam to make insurance companies "look heroic," it's an important role that insurers play as essentially "buyer's clubs" to exert downward pressure on health costs on behalf of their insureds.
I also take Skyrizi, and its basically magic. Its really hard to argue with the pharma industry when they develop things like this.
One overlooked thing about modern pharma discourse is antibiotic resistance and other doom and gloom stories get too much airtime.
Humanity / pharma companies have basically cured a whole bunch of skin conditions. They are often painful, or stop people from working. I used to leave a trail of skin flakes everywhere I went as skin peeled off my hands. Now they look completely normal. We really should be celebrating this more!
I live in Australia so pay $30 a dose, the government pays the rest. Although I did have to try a few other cheaper treatments that didn't work first.
I really think a company that develops medicine that would be considered magic by people 150 years ago deserves to make some profits on it, and when it becomes a generic everyone will be able to benefit forever
How does this post say anything about capitalism vs socialism? It just says that a medicine priced exorbitantly was covered by equally exorbitant insurance costs. Is your point that the insane price helped drive innovation? If so, the essay needs to prove that this innovation wasn't possible in a socialist system. I don't see this essay proving what its title says in any way whatsoever. Forget proving - I don't see it make even one point in that direction
My dog gets a similar medication (monoclonal antibody shot) for itching called cytopoint for $100 per dose. The pricing on this seems strange. I'd guess the approval process is the biggest difference?
Second, for this line of reasoning to really work, Skyrizi would have to be unavailable elsewhere. But that’s not the case. Taiwan has a single-payer healthcare system, and it seems like you can get it there, too. It looks like you can also get it in the UK, and in other places usually held up as paradigmatic of “inefficient,” socialized medicine. Even the “bad” socialism has Skyrim. What we can say here is that the US system didn’t fail you, and that’s good. But it does fail enough people to produce, year after year, the majority of US personal bankruptcies. Under the Taiwanese model, you’d still have the benefits, but without that downside.
Skyrizi is arguably available in countries because the US is has free market (or really "free market," because it is quite socialized) medicine. The thing with phrama is most of the costs are in the development - the marginal costs of selling a single dose is usually relatively small (though that isn't always true). As a result, it makes sense to sell your medication everywhere, even if it means cutting the price in some places, at least so long as cutting your price in those places doesn't cut into your profit margin in other places.
This means that a pharma company isn't going to not sell in Taiwan just because Taiwan is refusing to pay full price (unless they think that, by holding out, Taiwan will give in and pay full price). If the marginal cost of a dose is small, you're still making more of a profit selling in Taiwan at 10% of the market price if the alternative is not selling in Taiwan.
The flip side of this, though, is that if the US started doing this, it would cut into the upside of drug development. If you don't think you can sell your drug for $100k in the US, it may not be worth trying to develop it in the first place. This all gets a little mushy, and maybe Skyrizi would have still be developed, even if the US limited pharma costs, but its likely some drugs would not.
There are other models of drug development people have proposed, most notably prizes, where the incentive doesn't come from selling the drug at a high markup, but those have their own downsides.
“Patient support program”, or whatever euphemism you want, is standard for any “expensive” therapy.
And samples are the cost of doing business.
What really stands apart in a capitalist system is that it is worth the while of pharma to invest in R & D in the first place. Without that R & D, there would never be any “new treatments”.
That is a strange article. Too little information, and the suggestion that reality doesn't exist. Someone is paying an unknown amount for it. This is, contrary to the article's theme, the problem with healthcare. It's a shell game, made possible by the absense of a free market. And with Medicare and Medicaid as the second largest federal expenditure, in the end- no pun intended- the taxpayer is taking it in their end. Hello $37 trillion in debt. And in 30 years that number is $200 trillion. But few Americans seem good enough to care....RIP America.
I argue that this situation is far more complicated than a "capitalism vs. socialism" dichotomy. The only fact in hand is that innovation created a drug that helped you a great deal. The machinery involved does have a large market component, but it also has a lot of other components, many of which involve government in one way or another: biomedical research, drug regulation, insurance regulation. Also patent protection, which allows the pharma company to extract a high price in enough instances to pay for their part of the R&D. All we can deduce is that the current insane system actually does deliver miracles like this and that there's no obvious alternative that would work better.
One of your commenters says "if US had a UK like system, we would not get new drugs as fast as we get now". Likely that is true. OTOH, the Brits don't seem to object to that difference enough to change their system. I do remember reading something about medicine written by a Brit who said something like "I've never understood American's fascination with the new and shiny. We Brits want the tried and true." So it's not at all clear how important it is that the US system delivers the new and shiny, even when the tried and true doesn't work that well.
Indeed, thinking about it, the situation is weirder than that. The pharma company has a monopoly, so there's not really a "market" in the economists' sense. The pharma company is careful to exercise extreme price discrimination, so there isn't a "market price". Indeed, it seems that the pharma company is trying to ensure everybody who can use the drug gets it at the maximum price that their insurance will pay. ... The weird thing is that it is "From each according to whatever we can extract from their insurance, to each who needs it." It ways it resembles socialism a lot more than it does a proper market system.
As you said, it's complicated, but I don't think you can look at the UK and say that they seem ok with the slower pace of advance, since, if the US had a UK-like system, ~the UK~ would not get new drugs as fast as they do now.
I think too much can be made of this, but it's also true that other countries essentially free ride off how much the US pays for medical advancements, while they limit pharma profit, since once a medicine is developed, it's usually cost effective for the producer to sell it everywhere, even if it has to sell it at a lower price in some places.
Oh, yeah, I phrase it "The first pill costs $1 billion. All the pills after that cost 50 cents. The critical question is, Who buys the first pill?" (Though some of the modern medicines cost considerably more to manufacture.)
Yes, it's quite true "that other countries essentially free ride off how much the US pays for medical advancements". Though the first time I looked at that, it didn't seem so unfair -- the US was about 1/3 of the GDP of the "developed" countries, it wasn't so unfair that we're paying for all the medical R&D. Though that balance has changed over the past few decades ...
Indeed, I gather that Chinese companies are doing some significant pharma development ... and the Trump administration is doing some sort of ham-handed protectionism over it. Which seems to be causing a bunch of trouble, as rising pharma R&D from China is a negative for the US investors who invest in US pharma R&D but a positive for US pharma companies which buy and market Chinese developments ...
Yes, imperfect capitalism is better than socialism any day. Left-wing ideologues hate Pharma companies which is unwarranted. They are not evil as portrayed by these people. Most of the Pharma companies have programs for helping patients who are too poor to afford even well established treatments. One example that comes to mind is Gilead, which has a drug to treat existing HIV-1 infection and as pre-exposure prophylaxis has a program that reduces the cost to few dollars per month for poor individuals.
As a scientist working in university settings, our research group routinely collaborates with Pharma companies and often times we are awarded grants for research. As an example, Novartis funds the X-ray crystallography beamline at our research institute. It is useful for Novartis as they can use the beamline to study structures of proteins which is important for the drug discovery. However, the beamline is also used by researchers and other industry users, which has driven a lot of innovation and progress. Everybody can win with market oriented solutions.
I mean, OK, this is definitely a success story. You got your medical problem resolved and paid nothing extra on top of whatever your insurance costs you.
But you almost certainly didn't get $100,000 "worth" of medicine, or anywhere close to it. The "sticker price" of most medication in the US that you supposedly pay OOP is almost totally fictional. Basically no-one ever pays it; it's probably several orders of magnitude above the cost of production and distribution of your dose; and quite probably at least one order of magnitude over the total cost of everything to do with the drug, even including marketing, research, approval, and allowance for research for failed drugs.
It depends a bit what you're optimising for. The US system is almost certainly not optimal overall, and it *definitely* isn't optimally efficient (the US spends a lot on healthcare relative to outcomes, even allowing for it being wealthy overall and arguably subsidising drug-research for the rest of the world).
The UK has a basically simpler, and more "efficient" system, in that it spends dramatically less and doesn't get outcomes proportionally worse. But it allocates scarce resources essentially by queueing and hassle, which generates deadweight loss. This isn't great, and is particularly bad if you're rich, since you presumably value your time more highly in money terms. But of course, in the UK you can still get private healthcare, and unlike in the US, they won't present you with the choice of an insurance beauracracy or ludicrous list prices and risk you having to pay 10x the actual value of the treatment. On the other, other hand, the existence of the NHS means there's a lot less private healthcare around, so your options are more limited.
I'm convinced that healthcare is a particularly hard part of the economy to make work in any remotely sane way. Somehow we seem to muddle along anyway.
The point being if US had a UK like system, we would not get new drugs as fast as we get now. Take for example, Zolgensma, a gene therapy which is used to treat muscle function loss in children. This condition is very rare, only 1 in 10,000 children are affected by it. Given less than 100 children per year are diagnosed with this condition in UK, because of socialized healthcare there would be no incentive for a company to fund research for this condition as the government normally pays very little for the drug. While in US, this drug was developed by a startup. UK like healthcare will not be able to push progress when it comes to rare diseases.
Let's avoid the Marxist theory of value, in which a medication is only worth the cost of the proletariat labor that went into producing it.
It sounds like he would have been willing to pay $16k a year indefinitely for this treatment. So if he stays on this medication for six or more years, he's going to be getting more than $100,000 worth of value out of this medicine.
The marginal cost of the drug is much less than 20k/dose, but pharma companies rely on the American market to recoup r&d costs. They won't make it back for a few years, most likely.
I should say that my employer sells a therapy that *did* have a marginal cost around 20k/dose (4 times a year), and there was a lot of work to try and get that down.
Its kinda comforting to know that we are basically providing subsidized healthcare to the rest of the world by paying more. Its like cumpulsory philanthropy on a grand scale
It's less "thefty" than taxation. And it's not *exactly* a subsidy: pharma companies aren't selling to other countries below the marginal cost (except in special cases). If those other countries didn't exist, or if the drugs weren't sold there at all, American drugs, developed in America and sold only to Americans would cost about the same.
The reason drugs are so much more expensive in the USA is that all the other big, rich countries have public healthcare and/or regulated markets and so can negotiate prices with the companies at a national level. America could get better prices if it changed its strategy, and actually does to some extent with Medicare/aid.
but it would be the case that if the US switched to the European model, drug discovery and innovation would be greatly decreased right? So we are subsidizing the new drugs for the rest of the world.
To be fair, yes. America couldn't bring down drug prices unilaterally without serious damage to pharma r&d as it exists now. I work in the r&d side of the company so I don't really know the market side well enough to see a solution, if there is one.
Kind of, though most of costs are not discovery and innovation but testing, where requirements are often set with no regard for benefits or costs.
So effectively US chooses to make drug testing very expensive, and then US customers pay for that.
It’s less than a quarter of that price in the uk https://www.nice.org.uk/guidance/ta803/documents/final-appraisal-determination-document#:~:text=2.3%20The%20cost%20of%20a,online%2C%20accessed%20May%202022).
If I ever become president I will order a parade be held every month to honor big pharma and housing developers, who do more than anyone to solve our biggest problems (curing diseases and building big houses). Sadly I think my idea is very popular.
While this worked out well for you, this strikes me as a failure of capitalism more generally (though the failure is at least partly due to regulation). You have a situation where a pharma company is charging a ton for a medication, and seemingly one with an alternative (the pills). You would never pay that price yourself, meaning your revealed preference is to not use the drug, but you are, of course, happy to take it if it's free to you.
Pharma knows this, so they give out free samples to get you interested, provide representatives to sweet-talk you, and (presumably) to argue with regulatory agencies to force your insurer to provide it. When your insurer throws up its last safeguard against people from taking overpriced, potentially unnecessary drugs - a copay - Phamra gets around that too, by comping the copay. The end result is that you got the medication for free, but everyone's insurance premiums go up.
This is a classic agency problem. It's the equivalent of wining and dining the procurement officer to convince them to buy something the company doesn't really need, which leads to significant inefficiencies in the system. It's why healthcare in the US is so expensive.
I wouldn't totally place the blame on capitalism, as we're dealing with an area of significant regulation. Everything from patents creating monopolies on drugs, to FDA drug approvals, to laws governing what insurance companies can charge in premiums, to regulators having a role in deciding what insurers have to pay for, distorts the system. But this story is really more evidence of a broken system than capitalism working in the end. Had capitalism worked, you wouldn't have wound up using something that cost way more than your revealed preference.
I'll just add that, while there's definitely room for tweaks (I'd ban comping co-pays, or at least let insurers do so), that doesn't mean there's an obvious better system. Both "Medicare for all" and anarcho-capitalist medicine have their own problems.
This is true; the failure here is that this cost (of a useful but not lifesaving treatment) is being carried by everyone else’s insurance premiums. But it does seem like a world where Skyrizi exists is better than one where it doesn’t. How can we incentivize that innovation without bearing this socialized cost? Or is, perhaps, the socialized cost worth it?
Maybe? I mean, it doesn't seem like it would be worth $100k/dose was worth it to Richard, and it doesn't make it more "worth it" if that $100k is socialized. That's actually the problem with socializing costs - it's easy to choose inefficient options when you are foisting the costs on other people.
If we didn't socialize the cost, then maybe we'd be left w/o Skyrizi, but that seems like a good outcome if the cost of Skyrizi is higher than its benefit. Alternatively, there'd be pressure on Skyrizi to lower its costs to the point where it does pass a real cost/benefit analysis.
Note: I'm assuming Skyrizi is the medicine Richard took.
The payoff is it starts at 100k and then it goes down over time (look at the cost of Hepatitis C cures over time as one example of this)
Presumably the pills are just an alternative route of administration, made by the same company, costing about the same.
I wouldn't assume this. My wife has trouble swallowing pills, and often the liquid form of roughly the same medicine can be dramatically more expensive.
The pills and injections are very different. The injections are biologic drugs that contain monoclonal antibodies, which are antibodies grown in a lab specifically to target the signaling molecules that drive psoriasis. The pills are chemicals that have much broader affinity to different parts of the body, which can lead to deeply unpleasant side effects.
From the Human Progress article:
"Socialized medicine is a marshmallow test. It can provide advantages in the short run, yet it ensures that there will be fewer innovations for future generations. Even the supposed benefits are usually exaggerated and often have drawbacks, such as longer wait times for specialists and lower rates of cancer survival. "
The hyperlink to the study on cancer survival doesn't show lower rates of cancer survival in the US. It appears to be on par with Canada, on par or lower that Western Europe (lower in some cases) and lower than New Zealand and Australia.
The article dresses up what is essentially a heavily subsidized transfer scheme as “bad capitalism,” then uses that to argue against socialism—when in fact, the structure he benefited from is indistinguishable from backdoor socialism. Let me unpack why.
---
1. The “Free” Drugs Are Not Free
Skyrizi lists at ~$20,000 per dose. That sticker price is deliberately inflated so that:
Insurers can “negotiate” discounts and still be paying absurdly high sums.
Pharma reps can justify giving away samples, which are then absorbed as marketing expenses.
Patients are made dependent on insurance subsidies and copay assistance programs, which shift costs elsewhere.
Hanania never paid the actual price. Instead, his costs were socialized through:
Insurance risk pooling → higher premiums for other customers.
Manufacturer copay assistance → covered by raising prices elsewhere.
Federal and state subsidies (Medicare, Medicaid, ACA plans) → taxpayer money indirectly props up demand.
---
2. “Bad Capitalism” Is Functionally Cronyism
What he describes is not free-market capitalism. It’s a cartelized medical system where:
Patents, exclusivity rules, and FDA barriers artificially prevent generic competition.
Big Pharma inflates prices in the U.S. specifically, while selling cheaper abroad, because our system allows it.
Insurance companies pass costs back to the public through premiums, deductibles, and taxes.
That’s not capitalism in the sense of voluntary exchange—it’s a state-backed racket where corporations capture policy.
---
3. The Hidden Socialism
Hanania praises this system because it got him his medicine. But the mechanics are textbook redistribution:
Wealthier and healthier policyholders (or taxpayers) subsidize expensive treatments for those who need them.
Government regulations guarantee market exclusivity so pharma can extract rents without normal market pressure.
Copay elimination programs sound like charity but are actually a way to hook patients into long-term, insurance-funded consumption.
It’s not “bad capitalism > good socialism.” It’s corporate socialism: profits privatized, costs collectivized.
---
4. Why His Framing Is Dishonest
He benefits directly from other people’s money, but instead of acknowledging redistribution, he calls it “capitalism.”
He ignores that the same innovation pipeline could exist at far lower cost if intellectual property laws and regulatory capture weren’t designed to guarantee monopolistic pricing.
His conclusion (“this proves capitalism is better than socialism”) sidesteps the reality that his personal miracle cure depended on a hybrid of monopoly rents and socialized costs.
---
In short: Hanania’s argument works only if you confuse cartelized rent-seeking with “capitalism” and if you pretend the redistributed costs don’t exist. What happened wasn’t capitalism saving him—it was a corporatist system where the costs were shifted onto everyone else.
My understanding is that drug companies often have some weird deals with insurance companies to show consumers fake prices so the insurance company looks heroic when they get you the drug. But the insurance company is actually getting like 95% off sticker price.
This isn't wrong, but it isn't exactly right either. Insurance companies negotiate down prices by threatening to refuse to pay for a drug or allow a medical practice to be in-network if they charge too much. The pharma companies and medical practices will sometimes drop their prices in order to access the insurer's customers, but there are limits on this. Insurers can't be too strict about what they give customers access to or the customers will revolt and go to other insurers. Regulators will also make insurers pay for even expensive medication if there's no good alternative for the customers.
This means that, while the insurer probably isn't paying 100% of the price of these drugs, they often aren't paying 5% either. It also means that it isn't just some scam to make insurance companies "look heroic," it's an important role that insurers play as essentially "buyer's clubs" to exert downward pressure on health costs on behalf of their insureds.
I also take Skyrizi, and its basically magic. Its really hard to argue with the pharma industry when they develop things like this.
One overlooked thing about modern pharma discourse is antibiotic resistance and other doom and gloom stories get too much airtime.
Humanity / pharma companies have basically cured a whole bunch of skin conditions. They are often painful, or stop people from working. I used to leave a trail of skin flakes everywhere I went as skin peeled off my hands. Now they look completely normal. We really should be celebrating this more!
I live in Australia so pay $30 a dose, the government pays the rest. Although I did have to try a few other cheaper treatments that didn't work first.
I really think a company that develops medicine that would be considered magic by people 150 years ago deserves to make some profits on it, and when it becomes a generic everyone will be able to benefit forever
How does this post say anything about capitalism vs socialism? It just says that a medicine priced exorbitantly was covered by equally exorbitant insurance costs. Is your point that the insane price helped drive innovation? If so, the essay needs to prove that this innovation wasn't possible in a socialist system. I don't see this essay proving what its title says in any way whatsoever. Forget proving - I don't see it make even one point in that direction
My dog gets a similar medication (monoclonal antibody shot) for itching called cytopoint for $100 per dose. The pricing on this seems strange. I'd guess the approval process is the biggest difference?
First, I’m glad this worked for you.
Second, for this line of reasoning to really work, Skyrizi would have to be unavailable elsewhere. But that’s not the case. Taiwan has a single-payer healthcare system, and it seems like you can get it there, too. It looks like you can also get it in the UK, and in other places usually held up as paradigmatic of “inefficient,” socialized medicine. Even the “bad” socialism has Skyrim. What we can say here is that the US system didn’t fail you, and that’s good. But it does fail enough people to produce, year after year, the majority of US personal bankruptcies. Under the Taiwanese model, you’d still have the benefits, but without that downside.
You missed the point. It exists because it was made by an American company, like most new medications.
Skyrizi is arguably available in countries because the US is has free market (or really "free market," because it is quite socialized) medicine. The thing with phrama is most of the costs are in the development - the marginal costs of selling a single dose is usually relatively small (though that isn't always true). As a result, it makes sense to sell your medication everywhere, even if it means cutting the price in some places, at least so long as cutting your price in those places doesn't cut into your profit margin in other places.
This means that a pharma company isn't going to not sell in Taiwan just because Taiwan is refusing to pay full price (unless they think that, by holding out, Taiwan will give in and pay full price). If the marginal cost of a dose is small, you're still making more of a profit selling in Taiwan at 10% of the market price if the alternative is not selling in Taiwan.
The flip side of this, though, is that if the US started doing this, it would cut into the upside of drug development. If you don't think you can sell your drug for $100k in the US, it may not be worth trying to develop it in the first place. This all gets a little mushy, and maybe Skyrizi would have still be developed, even if the US limited pharma costs, but its likely some drugs would not.
There are other models of drug development people have proposed, most notably prizes, where the incentive doesn't come from selling the drug at a high markup, but those have their own downsides.
“Patient support program”, or whatever euphemism you want, is standard for any “expensive” therapy.
And samples are the cost of doing business.
What really stands apart in a capitalist system is that it is worth the while of pharma to invest in R & D in the first place. Without that R & D, there would never be any “new treatments”.
That is a strange article. Too little information, and the suggestion that reality doesn't exist. Someone is paying an unknown amount for it. This is, contrary to the article's theme, the problem with healthcare. It's a shell game, made possible by the absense of a free market. And with Medicare and Medicaid as the second largest federal expenditure, in the end- no pun intended- the taxpayer is taking it in their end. Hello $37 trillion in debt. And in 30 years that number is $200 trillion. But few Americans seem good enough to care....RIP America.
I argue that this situation is far more complicated than a "capitalism vs. socialism" dichotomy. The only fact in hand is that innovation created a drug that helped you a great deal. The machinery involved does have a large market component, but it also has a lot of other components, many of which involve government in one way or another: biomedical research, drug regulation, insurance regulation. Also patent protection, which allows the pharma company to extract a high price in enough instances to pay for their part of the R&D. All we can deduce is that the current insane system actually does deliver miracles like this and that there's no obvious alternative that would work better.
One of your commenters says "if US had a UK like system, we would not get new drugs as fast as we get now". Likely that is true. OTOH, the Brits don't seem to object to that difference enough to change their system. I do remember reading something about medicine written by a Brit who said something like "I've never understood American's fascination with the new and shiny. We Brits want the tried and true." So it's not at all clear how important it is that the US system delivers the new and shiny, even when the tried and true doesn't work that well.
Indeed, thinking about it, the situation is weirder than that. The pharma company has a monopoly, so there's not really a "market" in the economists' sense. The pharma company is careful to exercise extreme price discrimination, so there isn't a "market price". Indeed, it seems that the pharma company is trying to ensure everybody who can use the drug gets it at the maximum price that their insurance will pay. ... The weird thing is that it is "From each according to whatever we can extract from their insurance, to each who needs it." It ways it resembles socialism a lot more than it does a proper market system.
As you said, it's complicated, but I don't think you can look at the UK and say that they seem ok with the slower pace of advance, since, if the US had a UK-like system, ~the UK~ would not get new drugs as fast as they do now.
I think too much can be made of this, but it's also true that other countries essentially free ride off how much the US pays for medical advancements, while they limit pharma profit, since once a medicine is developed, it's usually cost effective for the producer to sell it everywhere, even if it has to sell it at a lower price in some places.
Oh, yeah, I phrase it "The first pill costs $1 billion. All the pills after that cost 50 cents. The critical question is, Who buys the first pill?" (Though some of the modern medicines cost considerably more to manufacture.)
Yes, it's quite true "that other countries essentially free ride off how much the US pays for medical advancements". Though the first time I looked at that, it didn't seem so unfair -- the US was about 1/3 of the GDP of the "developed" countries, it wasn't so unfair that we're paying for all the medical R&D. Though that balance has changed over the past few decades ...
Indeed, I gather that Chinese companies are doing some significant pharma development ... and the Trump administration is doing some sort of ham-handed protectionism over it. Which seems to be causing a bunch of trouble, as rising pharma R&D from China is a negative for the US investors who invest in US pharma R&D but a positive for US pharma companies which buy and market Chinese developments ...