Medicine Is Not a Business

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It seems to me that statists can be divided into two general groups. First, there are the few arch-villains of statism. These are the folks who want a state simply because they want one. Most of them desire to rule the state, while others, perhaps the vilest of all, wish to escape responsibility for their own decisions by being ruled, along with everyone else. I once worked for a physician who was of this type. Having learned that I supported freedom, she responded "Oh, heavens no, people have to be controlled." I at least appreciated her honesty. It was refreshing after hearing so many people say "I favor freedom, but…"

The larger class of statists, I think, doesn’t think much about power. The evil statists worship power, but most statists don’t think in those terms. Instead, most believe that the existence of the state brings about desirable consequences, usually economic. These are the statists who can be convinced through economic education. If someone favors state interference in the name of prosperity, and can be shown that prosperity best results without state interference, we have a potential convert. As an example of this mindset, I present today another physician, Robin Cook.

Robin Cook is only secondarily famous as a statist. Primarily, he is famous as a novelist, and not a particularly bad one either. It is an odd irony that, among ideological fiction, statist novels are more often still entertaining than libertarian ones (I don’t think I need to say who this is a jab at (anyway, she’s dead)). Cook writes medical fiction featuring evil doctors, evil drug companies, and evil researchers. His government regulators, while not evil, at least are not heroic. Generally, they are inept bureaucrats who are told repeatedly of a barbaric and insane plot, and presented with clear evidence, and respond with disbelief. This continues until the evil plot affects the bureaucrat’s offspring, at which point they spring into action.

A good example is Mindbend, which I have just finished reading. In this novel, a drug company finds an interesting way to get their drugs prescribed. They send doctors on fancy cruises, drug them, and then drag them down to an on-board operating room where they implant electrodes into their brains. The electrodes, of course, order them to prescribe the appropriate medications (and to indicate DAW, presumably) but also have some untoward side effects.

The storyline isn’t bad, although I was unable to identify with the main characters. The hero is a bully to his wife from the book’s start, and while it is frustrating that his wife never trusts him, it should be noted that he never gives her any reason to.

More important, though, is the sermon with which Cook ends the novel. After concluding the story, he addresses the reader directly, and tells the reader also what to think of the story. He writes that this story is supposed to illustrate that medicine has become a business, and is not operating altruistically. While we all would respond with wild cheers, Cook apparently thinks this is a major crisis for medicine. In an inversion of Smith, he seems to be saying that we get our life-saving care from a doctor who is pursuing a profit, rather than depending on the doctor’s generosity — and this is very bad.

More to the point, how exactly is this story an illustration of that claim? Drug companies, in point of fact, do not implant electrodes in the brains of doctors. If they did, it is likely that when that news got out, people would stop using that brand of drugs. Business could never behave like that with impunity. The only organization that could get away with that would be government — the agency which Cook thinks should compel medicine to behave more altruistically!

To highlight the absurdity of this claim, consider Wal-Mart. Wal-Mart operates like a business — in fact, it is one. Nonetheless, Wal-Mart does not implant chips in the brains of its customers, causing them to shop there. Rather, it encourages business in a low-tech manner — by having lower prices and offering customers more!

Cook’s solution, naturally, is to outlaw and ban various things. Direct-to-consumer drug advertising is an easy example, although based on the story, it would seem that he would also like to restrict or ban drug advertising addressed to physicians too. He points out that drug companies spend more on advertising and lobbying costs than on research. Lobbying is largely necessary due to the government interference we already have, and in any case, would go away with the abolition of government. So it is hard to see how this statistic, without a further breakdown, helps Cook’s case at all. Suppose we left lobbying out of it, though, and drug companies spent more on advertising alone than on research. What of it? Companies don’t enjoy spending money for the heck of it — the research to advertising ratio is dictated by the concern for profitability. If massive amounts are spent on advertising, then these costs are necessary for the business to earn profits. How long, exactly, does Cook expect a drug company to continue to conduct research while not profiting off of new drugs?

It might be responded that drugs aren’t like other products. Drugs, after all, massively affect the body. If a drug is necessary, doctors should already know about it and prescribe it. Such a claim might be bolstered by referring to the increased number of doctor visits following the innovation of direct-to-consumer drug ads. With massive advertising, might drug companies not be luring people into taking drugs they don’t need?

To respond, let us first point out that some drugs aren’t necessary, but are quite helpful. It isn’t necessary to use medications to improve one’s sexual stamina, or regrow a head of hair, but it isn’t harmful either. Without advertising, people might not know that such drugs exist. They will then not mention to their doctor that they can’t keep it up, and not receive medical treatment.

Regarding the claim that physicians should know about necessary drugs, it must be pointed out that we aren’t living in a neoclassical costless information world. If doctors are to know such things, they need to be told them. A doctor who finished his residency 40 years ago might not be quite up to date on the newest medications, particularly if he has a busy practice. For drug reps to inform him of new medications, and to buy him lunch, isn’t a nefarious practice, it’s a means of spreading information.

Even if drug companies pay doctors to prescribe medications, or implant electrodes in their heads, or whatever, last I checked, prescription pads didn’t come packaged with bullets. Admittedly, I haven’t worked in a medical office in over a year, but I doubt that this has changed. Patients are not required to take dangerous medications simply because they have been prescribed. The exception is psychoactive medications. Importantly, though, the enforcement doesn’t come from the drug company or the doctor, but rather from the state. So in the only case in which drugs are really forced on consumers, the villain is again the organization which Cook suggests should solve problems.

Suppose we grant that consumers are helpless, stupid automatons who cannot question a doctor’s judgment. The obvious question is then why we should care to protect them, but we’ll set that aside. Competition between doctors should, even in this case, put out of practice the bad doctors. If we suppose that the drug company pays more to the doctor than the costs of lost patients, it becomes reasonable to ask why the company will continue to pay so much to this doctor while his patients die or unsubscribe. As he loses patients, his prescription pad loses value, and so the drug company will not be willing to continue to pay such high fees. What prevents this mechanism from working? Why, our good friend the state! By ensuring uniformity of medical practice through the litigation system, and by granting the AMA a cartel on doctor training and approval, the government has brought about a situation in which doctors need not compete. So the concerns Cook raises are only conceivable to the extent that medicine does not operate like a business! For instance, why does the AMA allow medical schools to have drug reps teach classes, as long as the drug companies pay the AMA? Simple, the AMA allows this practice because it can get away with it. If there were alternative accrediting agencies, this practice would put the AMA out of business.

The only real competition to the medical establishment today is the rise of non-physician healthcare providers. This is very limited competition, however. Mid-level providers, for one thing, must be supervised by a physician, and receive orders from a physician. When you get paid for every dollar your competition bills, there is little need to fear your competitor. For another, the general impression is that while NPs and Pas can handle routine cases, for complicated medical problems, a doctor is needed. This means that, effectively, there is no competition for doctors. This ensures the continued threat of exactly the problems Cook cites.

If Cook understood the economics of the situation, would he continue to advocate for enhanced government oversight? It seems far more likely that he would immediately begin to campaign for the reduction of medical regulations. Therefore, what it would take to convert Cook to the libertarian cause would not be ideological campaigns, which in fact wouldn’t work at all. It would take an understanding of praxeology, and of how to reason logically and economically. This firmly puts Cook in the second, non-evil class of statists.

Joshua Katz [send him mail] was Chief of EMS at the Town of Hempstead Park and Recreation for the past three summers. He has studied philosophy of mind, logic, and epistemology of economics from an Austrian perspective, and is a former graduate student in philosophy at Texas A&M, as well as holding a bachelor’s degree in mathematics. He is presently tutoring and volunteering, as well as reading voluminously, while waiting for Texas bureaucrats to renew his EMS certification. He enjoys a glass of port and a wedge of Brie as a way to safeguard his health, lest he need treatment by a doctor.

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