Another reason for soaring drug prescription costs

Published 2:20 pm Friday, February 3, 2012

In his column of Jan. 20, entitled “Why prescription drugs cost so much,” Mr. D.B. Gray wrote the following:

“I believe the price increases were a result of greed and fear. We already know that greed is a basic tenant (sic) of capitalism, so greed will always be a part of the cause.”

One wonders whether Mr. Gray seriously considered his use of the word “greed” here, but since he used the same word again later, we must assume that he means exactly what he’s writing. For serious fans of the free-market system, this is an egregious affront.

Greed is an excessive desire to possess wealth, goods or abstract things of value with the intention to keep them for one’s self. Greed is not a basic tenet of capitalism!

There is an enormous difference between greed, which is generally considered to be a negative characteristic, and self-interest, which is a good and necessary component of the work ethic. Without self-interest, we would not be motivated to get out of bed, go to work, and produce a good or a service of value.

Historically it has been understood that if one does not produce something of value, eventually one will be without the basic necessities of life, although in America today that concept has been so diluted that it’s nearly been forgotten by many.

Without self-interest, we would not be compelled to save for future needs, or to provide for our families. Self-interest is definitely a component of the free-market system — without it, there would be no compulsion to create, to manufacture, or to provide services to others.

The compulsion is found in the profit motive, which is the basis of the entire system, and that’s a good thing, for the very same reasons. Self-interest and the profit motive combined to propel the United States from an unsettled wilderness to an economic superpower in less than two centuries, elevating us above nations which had already been in existence for hundreds or thousands of years.

Perhaps Mr. Gray used this word purposefully, and perhaps not; however, we must be very cautious in the use of these types of terms. The public mentality has changed over the last several years regarding the concepts of capitalism and Socialism, with the net result that many now believe that Socialism is the better way.

When both systems are compared objectively and factually throughout history, it becomes obvious that the free-market system to varying degrees elevates all who operate within it, while a Socialistic or Marxist system continually demeans and degrades everyone except for those who control and administer the system, until it eventually collapses and fails.

This fact is evidenced in the recent passing of the Soviet Union, in the financial difficulties being experienced presently by the European Union, and in the ever-increasing economic challenges faced by the United States as we steadily march away from a free-market system and into an increasingly Socialistic arrangement.

Mr. Gray correctly deduces that “The overriding cause of the increase was due to the fear of governmental price controls,” and herein lies the truth.

Publicly traded companies have a fiduciary responsibility to return the best possible profit to their shareholders. When corporations sense a threat, they react to protect and enhance those profits, which are eventually returned to the shareholders in the form of dividends in the 401Ks and mutual fund portfolios of teachers, policemen, firefighters, municipal employees and other stockholders; therefore, the rising tide of profitability lifts all boats within that system.

When a non-market actor such as the federal government intervenes into the system, as it did with the threat of Hillary-Care, the “free market” becomes skewed and behaves unpredictably, causing the results earlier decried by Mr. Gray, namely the price increases for prescription drugs, instituted by the drug manufacturers as a method of self-preservation.

When the initial threat of Hillary-Care had passed, the drug companies kept their prices inflated, knowing that this was only the first attempt at government intrusion. Their assumptions have been proven to be correct with the passage of Obama-Care.

Mr. Gray finishes his column with these words: “the industry had grown to $1.2 trillion — a 50 percent increase. That’s capitalism and greed working at its finest hour.”

I would rephrase that to say “that’s the net effect of government intrusion into a free-market system.” The moral of the story is very simple — let’s force our government officials to abide by the Constitution, which they made an oath to uphold; if they remain faithful to that document, they will not intervene in the free market. Keep government out of the marketplace!

TOM FRETTS has lived in the Courtland area for 25 years. A former Franklin teacher, he owns Fretts Construction and is vice chairman of the Western Tidewater Tea Party. He can be reached at