Conflicting Assumptions: The Meaning of Price in the Pharmaceutical Economy

My Commentary article “Conflicting Assumptions: The Meaning of Price in the Pharmaceutical Economy” was published in August 2017 in the journal Science As Culture. An excerpt is below. Reach out for the final version.

In August 2016, a healthcare scandal was brewing in the USA. A device called EpiPen, an epinephrine auto-injector used to treat serious allergic reactions, had rapidly increased in price. Patients, parents, and the press were suddenly clamoring for answers from the generic drug company that sold the device, Mylan N.V. Why did a drug-delivery device that cost $100 in 2009 cost $600 or more in 2016 when few apparent changes had been made (Ramsey, 2016a)? Where was the money going? Who was benefitting? What were people who couldn’t afford it supposed to do?

This episode rose to the level of a scandal in part because it brought two very different assumptions about the purpose of pharmaceutical companies into conflict. On the one hand, public responses to the rising price demonstrated that the food allergy patient community and media observers assumed that the cost of medical interventions related to some underlying medical, technical, or social value. However, drug companies are increasingly run according to financial industry logics built on a very different set of assumptions about what value is and to whom it is owed. Pharmaceutical companies are first and foremost treated as investments by their owners and executives, and they assume that the value of their investments will increase quarter after quarter and year after year. This gap between industry insider and patient and observer assumptions about the purpose of pharmaceutical companies contributes to the proliferation of controversies about the rising cost of medicine in the twenty-first century USA.

In this commentary, I unpack these conflicting assumptions by considering some details concerning the recent history of Mylan’s EpiPen (Figure 1). My intent is to complicate the common assumption that the price of a drug is a reflection of some real or objective value in order to open up a new avenue of inquiry for Science and Technology Studies (STS) scholars. Roitman (2014) has pointed out that this genre of economic assumption is not restricted only to actors who benefit from economic punditry or the finance industry, but also afflicts social theorists of many stripes. I propose instead that price in the pharmaceutical industry today is a highly orchestrated accomplishment with no natural referent. Instead, price communicates assumptions on the part of company executives and investors about the future economic success of the company and its products. Attending to how price is constructed and used offers one way to understand how economic assumptions are built into the pharmaceutical economy and why the price of health care is so often contested on the public stage.

Featured image from Business Insider.

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