WASHINGTON -- The crowds always love the line. If they haven't heard it at a Feel The Bern rally before, they've seen it on TV. It's scripted and predictable, but the faithful love the script.
"Are you guys ready for a radical idea?" Sen. Bernie Sanders (I-Vt.) shouts. The audience screams in exultation. Sanders beams at the lectern … and says something in no way radical.
"Together we are gonna create an economy that works for all of us, not just the 1 percent," Sanders said in his New Hampshire primary victory speech. Sounds cool, but even Speaker Paul Ryan could sign off on the sentiment.
"We're gonna invest in jobs and education, not more jails and incarceration," he said on Twitter.
At an MSNBC town hall, it's raising the minimum wage to $15 an hour.
Whatever Sanders says after his "radical" set up always, always gets an ovation.
But for all the branding, most of his economic policy platform is a prescription for the United States to do the things it already does to help working people -- just more. We've had a minimum wage since 1938. Raising it to $15 is ambitious, but not a radical change to the way the labor market is structured. Free tuition at state universities? We already have 13 years of free education and reduced tuition for in-state college. The corporate lobbyists at the U.S. Chamber of Commerce want the United States to spend more money on infrastructure, too. They don't want to break up Wall Street banks and reinstate Glass-Steagall, but even this reform is essentially conservative in nature. The banking system did pretty well from 1940 to 1990. Let's quit screwing around and go with that.
He's not radical in the sense of Bolivian president Evo Morales or the late Marxist Chilean leader Salvador Allende. But Sanders does have one truly radical idea -- and he almost never talks about it.
If you think he is hard on Wall Street, you should see his plan for Big Pharma. He has spent more than a decade collaborating with an obscure think tank on a plan to remake the entire pharmaceutical industry by ending patent protection for new drugs. Sanders says his plan would slash prescription drug spending by two thirds without cutting benefits or rationing care. The proposal has enraged drug company lobbyists and top officials in both the Bush and Obama administrations. Democratic presidential rival Hillary Clinton has no plan like it. And although Sanders doesn't often talk about it specifically, it's still part of his platform. Here's how it got there.
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In 2004, the Pharmaceutical Research and Manufacturers of America -- better known as PhRMA -- was on a roll. It had just secured a new Medicare prescription drug benefit that would let medicine makers charge the government whatever prices they wanted. Sanders had voted against the deal and was looking for ways to protect Medicare from ballooning costs.
So he started talking to someone who had actually beaten PhRMA: James Love, who heads the nongovernmental organization Knowledge Ecology International. At the time, Love was on a hot streak of his own. His first big win as a public interest advocate was a reversal of Reagan administration policies that had privatized government data. In the early 1990s, it could cost $25 to access a single annual report filed with the Securities and Exchange Commission. That's chump change for major corporations, but a massive expense for environmental activists and public interest groups attempting to do serious research. Thanks to Love, every bill in Congress and every corporate filing is now available online for free.
After the government data win, Love spearheaded an effort to bring antitrust charges against Microsoft. He won that one, too: the Department of Justice eventually reached a settlement with the company that likely prevented it from controlling the emerging online sector of the tech industry. But Love caught Sanders' attention with his work on AIDS in Africa. In the late 1990s, HIV drugs in Africa cost about $10,000 a year, per patient -- obviously unaffordable for pandemic-hit developing countries. PhRMA had convinced then-President Bill Clinton that lower prices were simply impossible.
Love negotiated a deal with the CEO of Indian generic drugmaker Cipla to provide AIDS treatments in Africa at a "humanitarian price" of $1 a day. With the price barrier broken, legal walls tumbled (with some help from AIDS activists, including a young Rachel Maddow). The result was a revolution in access to AIDS and HIV treatment that saved millions of lives.
But Love recognized that the pricing insanity for AIDS drugs in Africa -- and the pharmaceutical industry's capture of ostensibly liberal American politicians -- was just one example of a nakedly predatory business model. He didn't want to tweak prices. He wanted to reshape the entire industry.
"We knew it would be perceived as a nuclear option, because it would really blow up the existing pharma business model," Love said. "So we talked to Bernie because we thought he'd have the guts to put it out, but also because we really liked working with his staff. They were willing to go with it."
Prescription drug profits are predicated on what might be called the Martin Shkreli problem: If you have a monopoly on a life-saving medicine, you can charge whatever you want. Shkreli is the infamous "Pharma Bro" who bought the regulatory approval rights to an AIDS drug and jacked the price from $13.50 a pill to $750. When confronted about the obvious price-gouging at a health care conference in December, he used words that would make pharma PR professionals cringe.
"I could have raised it higher and made more profits for our shareholders," Shkreli said. "Which is my primary duty. Again, no one wants to say it. No one's proud of it. But this is a capitalist society, capitalist system and capitalist rules. My investors expect me to maximize profits."
Since relatively few patients needed Shkreli's drug, he could buy the regulatory rights, confident that other competitors wouldn't jump through the Food and Drug Administration's hoops to get into a small treatment market. Big pharmaceutical companies typically secure monopolies through more conventional means. A straightforward patent gives firms 20 years of competition-free pricing. A host of other intellectual property maneuvers -- blocking access to scientific test data, filing for fresh patents when a new use or slight improvement is discovered -- can allow companies to stretch this period out even longer. A dominant goal of U.S. trade policy since Bill Clinton's presidency has been to extend pharmaceutical monopolies abroad. It's why Doctors Without Borders and other humanitarian trade groups, including the Public Citizen's Access to Medicines, opposed President Barack Obama's Trans-Pacific Partnership.
"Families will pay almost any price to take care of the people we love, and pharmaceutical companies are in fact willing to charge almost any price," Public Citizen's Access to Medicines director Peter Maybarduk said. "That's untenable."
“A prize system could ... inject the government into decisions about research priorities.”
- PhRMA senior vice Ken Johnson
In 2004, Love and Sanders began drafting the Medical Innovation Prize Act, which the Vermont senator formally introduced in January of the following year. At the time, the problems in the American pharmaceutical markets were clear. Today, they are even worse. The "findings" section of Sanders' 2005 bill states that Americans were paying over $179 billion a year for prescription drugs. In 2014, they spent $374 billion -- an increase of nearly 110 percent in a decade, and over $140 billion in excess of ordinary inflation. It's enough to make the pharmaceutical industry the most profitable industry in the world -- more than Big Oil, Big Media, and only slightly ahead of banking, Sanders' other top-targeted industry on the campaign trail.
There are glaring problems with the existing system. Minor afflictions that plague large numbers of wealthy Americans -- say, hair loss -- have no shortage of research. But research into antibiotic-resistant pathogens, for instance, is plummeting, even as the problem escalates. And it's not that hard to understand why. If you figure out a great way to kill a super-bacteria, patients only need the pill for a few weeks. It's much more profitable to treat long-term conditions like HIV or cancer, offering to extend life without a quick cure. New cancer drugs frequently cost well over $100,000 a year. A new cystic fibrosis drug carries an annual price tag of over $300,000 per patient.
Drug companies have defended these prices -- and profits -- arguing they are necessary to finance research and development into new medicines. Love and Sander's solution is to replace drug patents -- which grant pharma companies years of monopoly profits -- with simple financial prizes. Got a cool innovation?You get a prize. How much depends on how many other innovations are out there and how much therapeutic value your new drug has. Since the market value for curing rare diseases is low, you also qualify for a prize boost if you can kill off an obscure affliction.
Under the Sanders plan, once an inventor creates a new drug, any company could manufacture and market it at whatever price the market demands. Competition would dramatically lower the costs to consumers -- and the government, putting Medicare and Medicaid on stronger financial footing. The program would be funded by a new fee on health insurance companies. Insurers, of course, would also be primary beneficiaries of the program, since ending the current drug patent system would dramatically reduce the prices of prescription drugs, saving insurers (and patients) lots of money.
After deliberating with Love, Sanders set the total prize fund amount at 0.5 percent of total U.S. economic output -- about $60 billion in 2005 (he has since raised it to 0.55 percent of economic output -- about $86 billion). The prize fund is a lot of money, roughly equal to what the government spent on food stamps in the deepest depths of the Great Recession. But it's a huge pay cut for pharmaceutical shareholders and executives. The companies argue that absent the big payouts on patent monopolies and other intellectual property incentives, they just wouldn't have the drive to develop new drugs.
"A prize system could interrupt the flow of funding needed to guarantee research success and could inject the government into decisions about research priorities," PhRMA senior vice Ken Johnson told Fortune in 2007.
And indeed, the prize board is in fact a government panel. But it's more market-friendly than the blunt caps on drug prices other developed nations have imposed. Other governments allow patents, but literally dictate drug prices. Sanders just wants to make the private sector compete to improve public health.
Elite Washington isn't interested in reforming the pharmaceutical industry. As part of the Affordable Care Act, Obama cut a deal promising not to threaten drug companies' sources of public profit so long as they didn't oppose Obamacare. Hillary Clinton has shown no interest in reforming the drug patent system.
But neither Love nor Sanders fits in with elite Washington. Still, Love's successes -- and, now, Sanders' -- means that elite Washington can't quite dismiss them. When major trade deals are being negotiated, White House officials bring their tailored suits and Ferragamo shoes to Love's office for pow-wows with top economists and humanitarian groups. And although Sanders faces an uphill battle for the Democratic nomination, he has commanded the attention of party elites and forced them to grapple with the New Deal zeal bubbling up among the progressive base.
Love and Sanders' 2005 bill never really died. Sanders reintroduced different versions of it in every Congress since its debut, winning plaudits from public health advocates in the process. He scored a hearing on prizes for AIDS medication in 2012, and the United Nations is scheduled to hold a high-profile international conference on alternatives to the existing drug patent system. Changing the business model of the most profitable industry in the world is still part of Sanders' campaign platform. Maybe it's just too radical for a stump speech.
Zach Carter is a co-host of the HuffPost Politics podcast "So, That Happened." Subscribe here or listen to the latest episode below: