Why drugs cost so much, 101: Medicine monopolies

We’re always asking: Why do drugs cost so freaking much? 

And it’s a complicated question. There are a bunch of reasons — to be sure. But in our reporting over the years, like our stories on insulin and tuberculosis drugs, experts cited one big reason over and over again: 

The pharmaceutical industry wages sophisticated legal battles to keep monopoly control over their best selling, most lucrative drugs — blocking generic competition, and increasing their prices along the way. 

How did it come to be this way? 

In this first episode of a new series – what we’re calling An Arm and a Leg 101 – we’re doing a crash course in the history of the drug patent system.

And the rags-to-riches story of one amazing guy is going to help us do it. 

Al Engelberg got schooled in the Art of the Hustle at a young age, collecting dimes at an illegal bingo game on the Atlantic City boardwalk. 

Later, he’d put those street smarts to use as he sat at the negotiation table in Washington D.C., hashing out the details of a law that would usher in the generic drug industry as we know it. Then made millions from the rules he helped write.

And as he admits, his legacy is mixed. 

On the one hand: The rules Al Engelberg helped write — a grand bargain between generic drugmakers and patent-holding brand pharma companies— unleashed the power of generic drugs to save Americans money. 

Nine out of ten prescriptions written today get filled with a generic.

On the other hand: In the process of making his fortune, Al Engelberg discovered loopholes, gaps, and perverse incentives in that grand bargain. 

Gaps that allowed brand and generic drugmakers to profit by keeping generics for many hit drugs off the market.  

So we now spend more than ever on medicine — and more than 20 percent of Americans report skipping their medication because they can’t afford it. 

Al Engelberg, now 86, has spent the last 30 years — and millions of his own dollars — trying to close those gaps. 

“I live in a world — a pharma world — where half the people think I’m dead, and the other half wish I was,” he tells us. 

You can read more of Al’s story — plus his prescription for fixing the crisis of high drug prices — in his book, Breaking the Medicine Monopolies: Reflections of a Generic Drug Pioneer.

And you can hear our earlier reporting on drug patents here:

John Green vs. Johnson & Johnson (part 1)

John Green vs. Johnson & Johnson (part 2)

The surprising history behind insulin's absurd price (and some hopeful signs in the wild)

Here's a copy of this episode's transcript. 

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An Arm and a Leg 101 is made possible in part by support from Arnold Ventures.