This post is part of a series on the corporate consolidation and financialization of health care. Read the rest of the posts here.
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If you take them at their word, drug companies, medical device and software companies, hospitals, and their investors are committed to providing “value” to patients and the public. Gilead, the infectious disease giant, claims its medication prices “reflect the value they deliver to patients, healthcare systems and society.” Novartis offers a nearly identical statement and asserts that “[a] value-based approach to healthcare incentivizes the healthcare sector to focus on the interventions that deliver the most effective, efficient and sustainable outcomes.” Similarly, to defend quadrupling the price of its COVID-19 vaccine, Moderna claimed the new price reflected the vaccine’s “impact” on “patients and healthcare systems.”
But how exactly is value being measured? There’s reason for skepticism. These powerful institutions are inconsistent crusaders for value.
“Duh,” you might say; companies exist to maximize profits and shareholder returns, not patient value. But there’s another layer here. Powerful health care companies don’t just overcharge us for the care we need—they distort our perception of value to increase demand for care we might not need. That is, they wield their market power to make unnecessary or ineffective care enticing and profitable. As part of this playbook, companies avoid or thwart the generation and dissemination of accurate information on the true value of their products and services. Americans spend too much on health care with dubious or even negative value because it is difficult to ascertain what care is truly valuable.
“Value” is a complex term, as readers of classical political economy know, but here I use the word broadly, as others have, to encompass both therapeutic or clinical value to individual patients (e.g., longer life, pain relief) and systemic value to public health and payers (e.g., reduced spread of disease, reduced spending). Of course, value-based pricing isn’t always benign, as Doctors Without Borders and others have argued (including me, with Reshma Ramachandran and Amy Kapczynski). For the most genuinely valuable products, such as breakthrough vaccines, pricing that reflects their enormous value may break public health budgets, increase market concentration, and exacerbate already unconscionable distributive inequalities. Value-based pricing also raises thorny questions about defining “health” and measuring the value of life itself; disability rights activists, for example, have criticized certain cost-effectiveness analyses for systematically undervaluing disabled lives. In much of my writing and legal practice, I advocate for removing market thinking from health care altogether, and finding other ways to incentivize breakthroughs.
In a vicious cycle, as overall spending increases, existing high prices are used to justify new, higher prices. Witness Gilead pointing to the outrageous cost of a night in an American hospital to justify high prices for a drug to keep COVID patients out of the hospital, or justifying high prices for pharmaceutical cures for hepatitis C because they’re cheaper than a liver transplant. Or witness bariatric surgeons pointing to the cost of GLP-1 drugs to make surgery look cheap.
In this post, I’ll first detail how health care companies build and maintain market position by controlling the generation and dissemination of information about their products. Over the years, my clinic, clients, and students have sparred with various drug companies over access to such information. Section two explores how this status quo came to be. Finally, I’ll offer some thoughts on how to move forward.
Shaping the Informational Environments
Given how much drug companies emphasize “value,” you may be surprised to learn that the trend at the Food & Drug Administration (FDA) is to approve new medicines on ever smaller evidence bases, with flimsier proof of safety, efficacy, and value. Increasingly, questions of value are not answered until after drugs are widely used, if ever.
In 2024, then-FDA Commissioner Robert Califf and other FDA scientists acknowledged the problem. They wrote that premarket trials are “not usually designed to answer questions of cost-effectiveness and value that are important to payers and health systems” and that “the ability to generate evidence to inform clinical practice in postmarket settings needs improvement.”
For example, the drug company Sarepta has obtained FDA approval to sell several therapies that allegedly treat devastating and deadly Duchenne muscular dystrophy. Its first-in-class drugs can cost over $1 million per patient per year, prompting fights over insurance coverage. Yet Sarepta has produced no clinical trial results to show that its products confer any measurable, therapeutic benefit on patients. Sarepta has not shown that patients live longer, remain able to walk longer, or otherwise benefit measurably. Instead, its clinical trials have met only surrogate and secondary endpoints that supposedly suggest real benefits. For example, one trial of a Sarepta drug showed patients taking the drug could walk 10 meters slightly faster than patients on a placebo. The FDA ordered Sarepta to complete a series of postmarket trials to confirm therapeutic benefit to patients, but Sarepta started these late, and the postmarket “confirmatory” trials Sarepta completed have shown no evidence of benefit. Meanwhile, two patient deaths have been linked to one of Sarepta’s drugs.
Furthermore, Sarepta has worked to hide some of the (presumably unflattering) data that does exist on its products. It litigated for years against journalist Charles Seife who filed Freedom of Information Act requests to the FDA seeking clinical trial data. (Disclosure: Clinic students and I represented Seife.) Meanwhile, Sarepta made almost $2 billion in revenue from its muscular dystrophy drugs in 2024, driven by demand from desperate patients and their families.
Upon approving one of Sarepta’s drugs in 2016, an FDA official observed that if Sarepta were denied approval in light of negligible evidence of value, the company “would have insufficient funding to continue to study” Duchenne muscular dystrophy drugs. In other words, because Sarepta is one of a tiny handful of companies developing muscular dystrophy drugs, some FDA officials seemingly feel beholden to bend the rules to create a market, despite the drugs’ dubious value.
Sarepta is not alone in getting big-selling drugs to market on meager evidence of value. The majority of cancer drugs and around half of all novel drugs now win FDA approval based on surrogate endpoints rather than proof of a real clinical benefit.
Other companies appear to withhold data or avoid data collection to conceal potential safety risks. The blockbuster Alzheimer’s drug Leqembi was initially approved by the FDA solely on the basis of surrogate endpoints. A confirmatory trial later showed some efficacy versus a placebo, but trials and case reports from doctors suggest the drug also has a dangerous, sometimes deadly side effect: brain swelling and bleeding. Independent researchers have urged Leqembi’s manufacturer, Eisai, to share safety data it holds, but the company has declined. One independent researcher has speculated that Eisai has intentionally avoided generating trial data that could reveal a separate side effect—memory loss. Based on the (incomplete) data available, the UK’s cost-effectiveness review body, the National Institute for Health and Care Excellence, recently concluded that Leqembi’s benefit/risk ratio does not justify its costs. The European Union’s drug regulator hesitated for months before approving the drug. But that hasn’t stopped American Alzheimer’s patients and their families from seeking it—demand fueled by Eisai’s massive marketing campaign. (Of course, I don’t fault Alzheimer’s patients for seeking a drug they’ve been led to believe will help; I reserve my disdain for Eisai.)
Finally, even when the true value of ineffective and unsafe devices and drugs becomes clear, the FDA has struggled to force them off the market. Some sophisticated companies have funded and marshaled patient groups and doctors to dispute unfavorable evidence and pressure the FDA to keep bad products on the market.
Though this post focuses on pharmaceuticals, my sense is that the same phenomena afflict the entire health care system. Evidence generation for medical devices is today arguably even worse than on drugs. For example, in 2017, the FDA formally approved a new indication for use of a medical device (a heart valve) relying solely on evidence of safety and effectiveness generated from “real world” postmarket use, without a single randomized, controlled clinical trial. Expedited reviews of medical devices, like those for drugs, fail to generate good evidence of value and may function more as giveaways to industry.
How Did We Get Here?
Information production in health care is difficult, full of confounding factors. As Amy Kapczynski has written, “it is, quite simply, extraordinarily hard to know whether something is or is not a cure.” Kapczynski and Rebecca Eisenberg have argued that the key function of the FDA is to structure, mandate, and review the production of information on medical products. Without information production, the FDA can’t play referee—and, more fundamentally, patients and health care workers can’t make informed decisions. This reality—we depend on regulators to structure information production—belies the familiar caricature of the private sector as engine of innovation and regulation as drag on that engine.
Why is the FDA approving drugs, vaccines, and medical devices based on less evidence? In part because Congress has required, via statute, creation of “accelerated approval” and other “expedited” pathways. These pathways are not inherently bad. Indeed, accelerated approval was initially designed and advocated for by ACT UP and other HIV/AIDS patient groups who grew outraged, in the midst of a plague, with the FDA’s traditional multi-year timetable for drug approval. The idea is to allow faster approval on thinner evidence, on the condition that there will be rigorous evidence generation after approval. However, that promise often goes unfulfilled. Separately, the Medicare Modernization Act, Affordable Care Act, and other major federal health legislation repeatedly promised to invest in the production and dissemination of information on value, but all have delivered underwhelming results.
The FDA and other regulators share some blame. Under federal statute, the FDA has obligations and discretion to require drug and device companies to run large, expensive post-approval trials, to generate high-quality evidence of safety and effectiveness. Instead, it often lets companies start trials late and leave them unfinished, seemingly indefinitely.
Moreover, to varying degrees in different administrations, the FDA has assented to a push by regulated industries to abandon reliance on randomized, controlled clinical trials for so-called “real-world evidence.” Randomized, controlled trials are not always necessary or appropriate. For example, the Rwandan government recently elected to distribute widely a thinly tested experimental vaccine in hopes of protecting citizens against the deadly Marburg virus, prioritizing access over evidence generation. But expensive, complex, randomized, controlled trials remain the gold standard of evidence generation. By contrast, real-world evidence can be cobbled together from lower-cost information sources, such as patient registries, patients’ electronic health records, and data collected by patients’ at-home medical devices (and then packaged and sold by the device manufacturers). Real-world evidence has real value, but as a complement to clinical trials, not a substitute. Perhaps most worrisome, industry is pushing the FDA to accept real-world evidence generated with untested, “artificial intelligence” tools, which risk introducing new errors (and invasions of privacy, to boot).
Secrecy is its own problem. Industry shares clinical trial data and other evidence of value with regulators but not always patients. As I’ve argued, the FDA and other regulators have legal authority to share much of the information they hold, but they choose secrecy, partly because industry threatens litigation over alleged trade secret violations. The FDA’s unnecessary secrecy has caused mistrust and conspiracy theories to fester.
The FDA, National Institutes of Health (NIH), Center for Medicare and Medicaid Services (CMS), and other federal health regulators operate within a constrained political economy. Regulated industries and their allies, including think tanks like the Heritage Foundation, consistently hail new products as “innovative” “breakthroughs,” while criticizing robust information production as “rationing,” infringement of “individual freedom of choice,” and even (shamelessly) a driver of inequity and marginalization. According to their lobbyists, we must revere the innovative work of health care companies and incentivize that work with ever-greater rewards but must not ask too many questions about the true value of this “innovation.”
Where To Go From Here?
How to generate better information on the value of health care so patients, practitioners, and payers can make good care decisions? How to focus spending and incentives on the most valuable care?
Some small but positive changes began under President Biden. The Inflation Reduction Act, signed into law in 2022, finally authorizes CMS to negotiate the prices of certain drugs paid for by Medicare. The Act requires CMS to measure and weigh value in these negotiations, mandating consideration of evidence of therapeutic benefits and comparative effectiveness. Consequently, both the Biden and Trump administrations have made “clinical benefit” a key factor in determining a fair price. As the program slowly expands to cover more drugs (15 will be negotiated this year), CMS is publishing short explanations of its negotiated prices, including summaries of its perception of value. (However, CMS is withholding much of the data it reviews, despite protestations from Public Citizen and other groups that transparency is both legal and wise.) Over time, CMS will force more medications into the price negotiation program, slashing prices of drugs with lower clinical value.
Clearly, though, more changes are needed. At minimum, the FDA and other health regulators must hold regulated industries to their promises and obligations to produce and disseminate information. The FDA and other regulators should also stop acquiescing to unjustified assertions of trade secrecy and “confidential commercial information” and begin disclosing more information.
Better yet, we should stop relying on private actors to generate information on the value of their own products. Instead, we should have a public infrastructure of information production—such as NIH and NIH-funded public universities—generating evidence of value in health care. Impartial public agencies are best positioned to generate reliable, high-quality evidence most useful to patients and practitioners, like head-to-head trials of competing products. We may also want public bodies conducting more careful “real-world” surveillance of patient outcomes, though we will need to protect patients’ data, especially given the Trump administration’s violations of the federal Privacy Act and breaches of longstanding firewalls.
We might build this public infrastructure of information to better govern the existing private infrastructure of health care. Or we might integrate a public infrastructure of information into a public infrastructure of care—nonprofit, publicly accountable, government-run health clinics, pharmacies, insurance programs, drug companies, and more.
Health care is in crisis in the U.S. and abroad. Trump and Congress threaten apocalyptic cuts to Medicaid. Apocalyptic cuts to PEPFAR and NIH’s research have already happened. Secretary Kennedy of Health & Human Services is deleting data from public health websites and peddling misinformation on vaccines. We are moving backward on information production. Trump’s new FDA leadership just announced “An Evidence-Based Approach to Covid-19 Vaccination” that ostensibly promises to require more evidence of COVID-19 booster shots’ value in healthy adults and children (sounds good!), but the proposed approach short-circuits normal FDA processes, demands unethical placebo controls, and seems designed to punish vaccine manufacturers and restrict insurance coverage, not protect patients. FDA leadership also just announced frightening “Priorities for a New FDA” that resemble an industry wish list for cheaper, weaker information production, including “unleashing AI,” greater reliance on real-world evidence, and more drug approvals based on just one pivotal clinical trial rather than two.
In the face of these crises, we must fight two fights at once—fight for an affirmative vision of more valuable and affordable health care, and fight to preserve what works in a broken system. Milton Friedman wrote, infamously, that when a crisis occurs, “the actions that are taken depend on the ideas that are lying around.” Per Friedman, we imagine alternative realities to have them ready for the moment when “the politically impossible becomes the politically inevitable.” In this moment, we must necessarily spend much energy on defense. However, we must also continue to imagine and articulate an affirmative vision of health care as a human right—one that includes not just a public infrastructure of care but a public infrastructure of information.
