At Last! A Workable Government Solution to our Pension Problem

Put drug companies out of business so patients die untreated.

Our government has finally taken an effective step to deal with our ever-expanding pension liabilities.

As is now widely recognized, essentially all American pension systems are grossly under-funded, even state pension systems whose contributions are required by law.

When Social Security and other pension systems were started, people didn't live much beyond 65.  Most pensioners died before collecting at all, and the country could easily afford the handful who didn't die on schedule.

Unfortunately for the assumptions behind Social Security, it's no longer unusual for retirees to collect.  In fact, it's not unheard of for retirees to get a pension check for as long as they got a paycheck.

A friend's dad retired from the University of Chicago at age 60 after teaching 30 years.  He's now 96 and still collects his pension every month, just like clockwork.  He's collected a pension longer than he worked.  That clearly can't work on a national scale.

We've known about the pension time bomb for years.  Every President since Nixon has talked about Social Security, for example, but nothing much has been done, until now.

A Good Try, But Not Enough

Our public servants figured out that the problem was people living far too long and that people lived too long because modern medicines kept them alive.

Bureaucrats don't think the way the rest of us think.  An article "Why Can't a Woman Be More Like a Man?" published in the American provides a telling example.

The well-known "Title IX" law, which outlawed discrimination between man and women students in athletic programs, resulted in many colleges canceling men's sports programs when there weren't enough women interested in sport.  Colleges would lose federal funding unless they had proportional participation of both men and women; if they couldn't find enough interested women, an unlucky men's team had to be shut down.

That's a perfect bureaucratic solution to the problem of unbalanced sports programs - shut 'em down.  If there's no athletic program, nobody can argue that it's not fair.  Equality in poverty is now preferred over inequality of wealth.

In the same vein, the bureaucratic response to the problem of modern drug research making people live long enough to bankrupt the pension system is simplicity itself - make drug research more difficult.

As you can see from the accompanying graph, that's what the FDA has already begun to do. The amount of money spent researching and getting drugs approved has gone up, creating jobs for bureaucrats, while the number of new drugs actually getting into the hands of sick people is going down.  With fewer life-saving drugs coming out, strain on the pension system will be relieved as people die instead of being cured.

This strategy is working - companies are abandoning drug research.  The Wall Street Journal reports:

New drugs are the lifeblood of pharmaceutical companies, but that hasn't stopped a small Orange County, Calif., drug maker from cutting its budget for research and development in half.

Valeant has decided that research is so risky it is best left to small biotechnology companies - which it can buy later if they succeed. [emphasis added]

Early returns from the strategy are impressive: Amid the stock-market wreckage, Valeant shares surged 60% on the New York Stock Exchange during 2008, although they've since shed some of those gains.

The FDA has made drug research so expensive and so risky that drug company stock goes up when they abandon drug research.  That will stop new drugs coming on the market.

Stopping the flow of new drugs isn't enough, however.  What about all those life-saving drugs that are already approved?  How do we get them off the market so people will die soon enough that we can fund our pension system?

The Supreme Court Comes Through

The FDA can't take a drug off the market unless it causes a lot of harm, but our Supreme Court met the challenge.  By a 6-3 decision, they let stand an award of $6.7 million in Wyeth Pharmaceuticals vs Levine.

This case - let's face it - is exceptionally sad.  Ms. Levine went to an emergency room complaining of a migraine.  An assistant injected Wyeth's drug Phenergan improperly - that is, contrary to the FDA-approved directions printed clearly on the FDA-approved drug packaging.  The resulting infection cost Ms. Levine her hand and part of her arm, even more unfortunate as it put an end to her career as a professional violinist.  She settled with the hospital and sued Wyeth.

PharmaManufacturing reports:

Ms. Levine conceded that, in 1988, Wyeth proposed a label change that "if followed, would have prevented the inadvertent administration of Phenergan into an artery," but the FDA rejected that language.

You have to admire the creativity the Supreme Court used in discouraging the manufacture and sale of life-saving drugs.  The drug had always carried a warning against being injected into arteries.  In 1988, Wyeth wanted to strengthen the warning label but the FDA refused permission.  That seems like an ironclad defense - we wanted to make the label safer but the government wouldn't let us - but no.

The Supremes let the verdict stand and said that patients could sue in state courts.  The bottom line: any jury can override the FDA's approval process and decide that the label isn't strict enough or that a drug shouldn't be used in the way it was approved.  All the billions of dollars spent on FDA tests and approval are no defense whatsoever against a greedy trial lawyer with a sad story to tell.

There are some 11,000 drugs on the American market.  How many useful drugs will be taken off the market by the time our previously unemployed lawyers finish picking through them all?

The suspense mounts.  The FDA is working to squeeze off the supply of new drugs by boosting costs and by getting drug firms to stop doing research.  The Supremes are trying to drive drug manufacturers out of business.

Although this case did not address medical devices such as pacemakers and stents, it's thought that devices will soon be subject to lawsuits.  Will the government be able to halt medical innovation?  Will enough people die soon enough to save the pension system?  Only time will tell.

Our government has not only addressed pension costs, it's also struck a blow against growing health care costs.  The cheapest diseases to treat are diseases which can't be cured - send the patient home and wait 'til you can stop sending pension checks.  If you or I get sick and we're so selfish that we'd rather be cured than relieve strain on the pension system by dying, we'd better pick a disease for which there's already a cure - and stock up now, before the manufacturer stops making it.

Will Offensicht is a staff writer for and an internationally published author by a different name.  Read other articles by Will Offensicht or other articles on Bureaucracy.
Reader Comments
Reminders on Health Reform
The only way to solve the fiscal problems of the big
entitlement programs is to slow the relentless rise in the underlying health care costs.

Yep. What they don't tell you is that the ONLY way to cut costs is to keep people out of the system by making them wait or to simply deny treatment if they don't think the person has enough years left to make treatment worthwhile.
May 13, 2009 8:35 AM
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