Good scientists are by definition anarchists.

–Theo Wallimann, ETH Zurich

Abstract

Although profitable, cancer therapy has failed to live up to the promises of the War on Cancer waged since 1971. Modern chemotherapy can exceed $100,000 annually for patients prescribed patented medications of dubious long-term benefit. R&D costs, thought to justify high prices, are in fact far less than claimed. The present intellectual “property” regime has impelled researchers like Dr. Isaac Yonemoto to seek crowdsourced funding to develop a promising unpatentable molecule as an open-source cancer drug (9DS, 9-deoxysibiromycin). While fully supportive of this effort, we wish to call attention to longstanding Corporation-State erected barriers to entry for disruptive therapies and funding models.

The Palliative Machine: Medical Monopoly under the Corporation-State by Sebastian A. Stern, is strongly recommended as a prerequisite to this article.

Open Source Drug Development – Rescuing 9DS from Oblivion

The Project Marilyn/indysci.org team should be applauded. As of this writing, they have reached their initial $50,000 goal, and finished about $8,000 over, to fund the project.

We won’t analyze their scientific prospects (though we will say that DNA-alkylating agents are passé and targeting cancer-specific metabolism and cell surface markers is the future of chemotherapy), but sincerely hope that progress is made.

However, as with Wikileaks, Bitcoin, or Anonymous, whether this particular project succeeds is secondary. The truly disruptive event is the model, the idea. Many copycats have replicated cryptocurrency, hacktivism and anonymous leaks and, at times, doing it better.

Should indysci.org or Project Marilyn stumble, let that not be evidence of futility, but a clue for the next iteration of the stigmergic model of science funding. The imperative force to fix the medical system is too great for concerned parties to resign.

The cat is out of the bag. 

Corporation-State Barriers Still to be Overcome

By no means is victory inevitable — quite the contrary. There is a veritable Library of Alexandria of preclinical evidence supporting medicines that never come to market. The problem isn’t curing disease in mice; cancer and other diseases are said to have been cured in mice many times over. The problem is higher up: at the level of the FDA and pharma.

How do we reconcile the irrepressible deluge of preclinical findings for promising drugs with the truly devastating paucity of FDA-approved chemical entities? It’s not that mice and men are so different, but the fatal flaw is in the incentive structure of the centralized, corrupt corporate-regulatory nexus.

There are two major problems faced by Project Marilyn et al and those who will follow in their footsteps: If the drug works too well, it might be tabled by the FDA on behalf of pharma. Secondly, pharma may patent a “me-too” drug analogue, establish it as the standard of care and any doctor deviating from their product will be liable for malpractice. Welcome to patent medicine under corporate capitalism, brought to you by humanitarian John D. Rockefeller and his cartelizing Flexner Report of 1911.

Emerging Alternatives to Centralized Medical Decision-making

The People need a way to conduct clinical trials and distribute medicine that routs around the FDA. For example, quantified self and cheap biomarkers would enable patients to upload their data.

Adverse effect reporting can be conducted by a third party regulator like the Environmental Working Group, which already tests cosmetics and water supplies. This way, desperate patients won’t have to wait 7 years for the FDA to approve a drug showing low toxicity (and regardless of efficacy, after all, “First, Do No Harm” said Hippocrates).

Synthetic biology and distributed biosynthetically-engineered microbial factories (yeast, bacteria, algae) could manufacture the drugs. This is how Genentech makes the recombinant insulin peptide or how Evolva SA makes natural products like resveratrol and vanillin — these can be distributed P2P at low marginal cost per unit.

Forget 3D printer chemistry — evolution has crafted enzymes that are far more efficient than any chemist’s reaction, with no expertise required other than some nutrient broth to culture the cells. The remaining puzzle piece is actually designing the (modified) natural product biosynthetic pathways: it’s not always known which enzymes do which reactions and in what order.

The roadmap to open-source data-driven medicine is coming into view, but we should expect resistance from biopharma and the state going forward.

The Cure: Just Around the Corner Since 1971

Everyone should know that most cancer research is largely a fraud and that the major cancer research organizations are derelict in their duties to the people who support them. –Linus Pauling, PhD, winner of both the Nobel Peace Prize and Nobel Prize in Chemistry, link to original document.

Cancer is big business. It is the second leading cause of death in the U.S. (576,961 in 2010, after heart disease) and War on Cancer is worth over $125 Billion annually according to the National Cancer Institute. Biopharma elites consider illness a cash cow rather than a blight to be eradicated. This is illustrated most recently by Memorial Sloan-Kettering Cancer Center whistleblower Ralph Moss, PhD in the documentary “Second Opinion” (2014).

The goal of the industry is to indefinitely “manage” disease — curing it would destroy the market. (Talk about a perverse incentive structure.) Recall how the “defense” industry seeks to initiate armed conflict, Gen. Smedley Butler’s “war is a racket” and Gen. President Eisenhower’s military-industrial complex.

The prime directive of any individual or institution is self-preservation (and corporations seek indefinite expansion at all externalized costs).

The economic idea behind this suppression is akin to reverse planned-obsolescence: call it planned-permanence, a form of retarding progress in order to extract economic rents.

The same dynamic prevails with new energy, transport, finance, and less violent forms of governance. (Government-imposed invention secrecy is on the rise, and applies especially to high efficiency energy systems).

The legal magic that keeps disruptive technology under-wraps is called intellectual “property.” (See “Against Intellectual Monopoly” PDF by Boldrin and Levine 2008).

There are many examples of government-pharma suppression of disruptive therapy (a few are discussed in The Palliative Machine: Medical Monopoly under the Corporation-State).

Regardless of whether any one of them works: shouldn’t free individuals be allowed to chose their own therapy, especially when the standard of “care” has failed them? Shouldn’t the same logic apply to the consumption of any chemical? Or any behavior that doesn’t violate the negative rights of others?

For those skeptical that the politburo would conspire to conceal any medically relevant information: Never forget that, for half a century, Big Tobacco and the State successfully convinced doctors and the public that cigarettes were not harmful. (The film “Thank You For Smoking” (2005), executive producer Elon Musk, is a witty modern take on tobacco lobbying).

Today, we recognize cigarettes as the world’s leading cause of preventable death.

Next we’ll be hearing about how sugar and non-ionizing electromagnetic radiation (cell phones, wi-fi) cause cancer, or some such quackery that threatens profits. There is little financial incentive to uncover the causes of illness, because discovering hexavalent chromium 6 (see Erin Brockovich and PG&E) in the water supply doesn’t make money for shareholders (and that the development of cancer does generate new business).

Furthermore, many plant-derived natural products (like curcumenoids, compounds found in turmeric) show high efficacy against cancer with low toxicity (in addition to a litany of other benefits, including augmenting adult neurogenesis). Natural products don’t interest pharma because they cannot be patented without modification. Furthermore, most modern disease, including cancer, arises due to improper diet, lifestyle and the scourge of biological aging.

Creative Accounting and Overstated R&D Costs by Big Pharma

It is simply no longer possible to believe much of the clinical research that is published, or to rely on the judgment of trusted physicians or authoritative medical guidelines. I take no pleasure in this conclusion, which I reached slowly and reluctantly over my two decades as an editor of The New England Journal of Medicine. –Marcia Angell, M.D.

Pharma attempts to justify its exorbitant drug prices by claiming high R&D and regulatory costs. This is a huge lie: Pharma spends double on marketing than R&D; half the price tag is an estimate of the profits a drug company might have made, over the course of bringing a product to market, if it had, instead, invested its capital elsewhere; and they include the cost of failed research on other drug candidates (which simply reflects the inefficiency and bloat of a cartelized industry). GAAP accounting is not a great concern for pharma’s PR department.

Take the example of the canonical 21st century wonderdrug: imatinib (Gleevec). It allegedly works well for highly specific mutations (targeting the tyrosine kinase fusion protein Brc-Abl, a.k.a. the Philadelphia chromosome of chronic myelogenous leukemia), but pharma extorts over $100,000 per year for the treatment, despite protests like the recent letter in Blood (the leading hematology journal) from dozens of the physicians who actually ran the clinical trials for Novartis in the first place. The more advanced “me too” iterations of imatinib cost even more.

Nearly all research is funded by taxation via the NIH. It costed Novartis relatively little to develop imatinib, but the company knows they can literally extort patients for their lives (and by proxy tax cattle).

Genentech attempted the same tactic with Avastin, declaring that it would charge whatever the market would bear (until being recalled because it was shown to be ineffective — serves Genentech right for stealing the plasmid for recombinant insulin from UC San Francisco, culminating in a $200M settlement in which Genentech admits no wrongdoing).

Pharma claims about $1B costs per drug. This meme is extremely pervasive in medicine, apparently justifying their exorbitant drug prices despite very low marginal costs per unit. (Pharma is historically among the most profitable business sectors). Anyone familiar with the cost of automated drug assays, animal studies and clinical trials must question this astronomical figure. FDA user fees are in the $5-10M range. Where is this money going? The funny thing is, these costs are not itemized, even by studies claiming these inflated numbers.

“The US$802-million figure was based on the research-and-development costs of 68 drugs at 10 companies. The data, however, were not made available to other researchers, and drug-industry watchdogs say this lack of transparency is typical. …[I]t is in the best interests of drug companies — who often lobby governments to loosen price regulations and increase patent protection — to overstate costs.”

“These high estimates are all from industry-supported studies done by industry-supported economists who, as far as I can tell, compete to see who can come up with the higher number.” Donald Light, professor of comparative health care at the University of Medicine and Dentistry of New Jersey and coauthor of an article challenging the validity of the 2003 study (J Health Econ2005;24[5]:1030-3).

…Another criticism of studies that produce numbers in the billion-dollar range is that large portions of those estimates aren’t out-of-pocket expenses. About half of the 10-figure price tag is an estimate of the profits a drug company might have made, over the course of bringing a product to market, if it had instead invested its capital elsewhere. Calculating forgone profits is, according to Light, a reasonable way for a company to determine if it should go ahead with a project. “What is not reasonable,” he says, “is to then take that estimate, which is a calculation of investment, and claim it as a cost against society.”

The cost estimate of successful drug development also includes the cost of research that fails to net new products. Again, this is a common practice. But critics claim the pharmaceutical industry misleads the public by claiming it costs more than a billion dollars to overcome the 1-in-5000 odds of a new chemical compound making it to market. About two-thirds of true research and development costs, Light says, are incurred in phase III trials, where the odds of success are about 3 in 5. Earlier trials are relatively inexpensive, and most compounds don’t even make it to the trial stage. –Collier, R. 2009. “Drug development cost estimate hard to swallow.” CMAJ.

We have had some insight into the expenditures of the companies overall. Lo and behold, pharma spends roughly double on marketing what it does on R&D.

A Minefield of Patents Driving Up The Costs of Basic Research

Although drug development costs are far lower than claimed, biomedical R&D is indeed too expensive. Not because labor is expensive — God knows there is a gross oversupply of grad students and PhDs, fomenting the Postdoc-opalypse. (NIH finding is only $30B annually and funds almost all the medical research in the U.S. Meanwhile, DARPA’s official budget is $90B and the DoD is $600B. The problem is not too many scientists, but not enough funding, and most of it paying rents on instruments and reagents).

Scientists, of course, are not stupid like economists. They know full well that half their grant is being eaten by inflated costs (and academics don’t even bear the full brunt of IP because of the Safe Harbor Clause).

In a survey published in Nature Biotechnology, biologists overwhelmingly felt that IP restricted their progress.

“[B]iologists’ accounts of recent instances of delayed or blocked access to research tools recognize this negative net effect of the proliferation of university IP protection after the Bayh-Dole Act of 1980.” –Lei et al. (2009) Patents versus patenting: implications of intellectual property protection for biological research. Nature Biotechnology.

Invitrogen almost succeeded in patenting the antibody — a fundamental tool in molecular biology. The whole field of antibody-based therapeutics would not exist if everyone had to license the very idea of an antibody — produced by all higher organisms — from Invitrogen. Similarly, 70% of the human genome has patent claims by industry. They charge thousands of dollars to conduct very cheap tests for genetic variants. Scams like these are why the U.S. medical system is the most expensive yet broken medical system in the developed world.

The reason basic research is so expensive is due to IP, which leads to high capital costs, a barrier to entry protecting the cartelized market. Small biopharma companies almost always sell out to a bigger fish — they’re the ones who can afford the next steps to commercialization. Thus, rarely does a drug come to market without big pharma sponsorship.

Case Study on Trusting the Government: The Food and Drug Administration

“The thing that bugs me is that the people think the FDA is protecting them. It isn’t. What the FDA is doing and what the public thinks its doing are as different as day and night.” –Dr. Herbert Ley, former commissioner of the FDA (1968-9).

The current head of the Food Divison of the FDA is Michael R. Taylor, former Vice President of Public Policy for Monsanto. Monsanto is that corporation that is trying to monopolize global seed reserves via genetic modification, sells BT corn, Round-Up (highly toxic glyphosate herbicide poisoning the food and water), aspartame and MSG, and is best known for suing farmers when their GMO pollen fertilizes crops by blowing many miles down the road. Notable alumni include Hillary Clinton and Clarence Thomas. It has been this way since the very beginning, as the FDA began as the Division of Chemistry of the Department of Agriculture at the turn of the 20th century, ushering in the new era of patent medicine (and pushing out unpatentable plant extracts as the dominant form of medicine).

Rest assured, the FDA, just like the SEC, Federal Reserve, EPA, NLRB, FCC, CIA, NSA (and whatever agency put over 100,000 innocent Japanese Americans in concentration camps) have your best interests at heart. They mean well, they really do. It’s just that the executives are revolving-door psychopaths. Salt-of-the-earth types, frankly.

“[A]s a chemist trained to interpret data, it is incomprehensible to me that physicians can ignore the clear evidence that chemotherapy does much, much more harm than good.” –Alan C Nixon, PhD, former president of the American Chemical Society.

“In regard to surgery, no relationship between intensity of surgical treatment and duration of survival has been found in verified malignancies [for breast cancer]. […] Although there is a dearth of untreated cases for statistical comparison with the treated, it is surprising that the death risks of the two groups remain so similar. […]

The evidence for greater survival of treated groups in comparison with untreated is biased by the method of defining the groups. All reported studies pick up cases at the time of origin of the disease and follow them to death or end of the study interval. If persons in the untreated or central group die at any time in the study interval, they are reported as deaths in the control group.

In the treated group, however, deaths which occur before completion of the treatment are rejected from the data, since these patients do not then meet the criteria established by definition of the term “treated.” The longer it takes for completion of the treatment, as in multiple step therapy, for example, the worse the error…. With this effect stripped out, the common malignancies show a remarkably similar rate of demise, whether treated or untreated.

The apparent life expectancy of untreated cases of cancer after such adjustment in the table seems to be greater than that of the treated cases.

–Hardin B. Jones, Ph.D., professor emeritus of medical physics and physiology at the University of California at Berkeley. “A Report on Cancer,” paper delivered to the ACS’s 11th Annual Science Writers Conference, New Orleans, Mar. 7, 1969

Today, there is a revolving door of public policy, lobbying, academia and corporate influence. The FDA was once funded entirely by the federal government (perhaps a time when corporate co-optation was less blatant).

In 1992, George H.W. Bush changed the rules, and the FDA now derives over 40% of revenue from fees charged to pharmaceutical companies. Britain’s version of the FDA derives 70% of revenues from drug companies, thanks to Margaret Thatcher’s earlier reforms in the ’80s. The FDA having a monopoly on regulation is bad enough, and the aforementioned mercantilist conservatives simply required bold-faced bribery.

There are a of myriad methods employed to misrepresent the research. Not all of it is published—only about 40% of research finds its way to a journal. Of those that do, there is a “publication bias,” where studies that find positive results (that the drugs work) are more often published than those that show the drugs don’t work or are toxic.

Another technique is “Salami slicing”—Big Pharma will cite the same data multiple times in numerous studies. There is no profit motive for independently funded research that seeks to take dangerous drugs off the market. Further, independent research is not published in the major journals like The Lancet or NEJM. Finally, standard cooking of the books, or fun with numbers: anyone along the chain of command can, with a keystroke, corrupt the data. Industry-supported research must be taken with colossal, hypertension-inducing grains of salt.

See the documentary “The War on Health” (2012) for more on the FDA.

The Emperor of All Maladies? Cancer as a Discrete, Tractable Metabolic Cellular Dysfunction

Let us end with some good news.

A common refrain in medicine is that cancer is many diseases, each tissue-type of cancer being distinct. As such, they each require a different drug! Fortunately, over 60% of cancerous cells share the same phenotype: a form of fermentation known as aerobic glycolysis, or the Warburg Effect.

Discovered by Nobelist Otto Warburg in the 1920s, this common metabolic feature makes cancer tractable broadly. Cancer cells burn a lot of sugar and without using oxygen, even when oxygen is present. This is why tumors are hotter on thermograms. It is hypothesized that the effect occurs because tumor microenvironments are oxygen-poor because cells form a dense ball into which oxygen cannot diffuse.

The drug 3-bromopyruvate, developed by Peter Pedersen at Johns Hopkins, and others like it under development, take advantage of the Warburg effect as “metabolic poisons.” Whether they see the light of the open market remains to be seen.

A sincere wish for the best of luck to Project Marilyn, but I am more hopeful about medical research elsewhere in the world, further from the reach of the US medical establishment.

Further reading:

The Cancer Industry by Ralph Moss, PhD

“Dying to Have Known” (2006), “The Beautiful Truth” (2008), “Cut, Poison, Burn” (2010); documentaries covering suppressed therapy and the overhyped safety and efficacy of conventional cancer treatment.

This excerpt in UTNE from book “Malignant,” on the cancer industry.

Here is the perspective of a cancer survivor who dug into big pharma corruption.

Bad Pharma by Ben Goldacre.

That’s not stopping the politicians from using all this as an excuse for more government control, of course — airport “screenings” by Customs and Border Protection personnel, proposed travel bans from African countries with Ebola outbreaks, formation of a “rapid response” military team, etc.

I’m surprised that libertarians haven’t been smeared with more “see how much we need government?” propaganda than usual over this. But thinking about it, I can see why. It’s not like the governmental response inspires much confidence, and there are obvious ways in which even the current not-very-free market could respond far more effectively. Two potential panic points revealed over the last couple of weeks provide great examples:

Amber Vinson, a nurse who contracted the Ebola virus from Duncan, flew from Dallas to Cleveland and back before her diagnosis, with the approval of the Centers for Disease Control even though she was running a low-grade fever the whole time.

Another unidentified healthcare worker (a lab supervisor who had handled Duncan’s blood samples) and her husband voluntarily quarantined themselves on board a cruise ship, but turned out to be free of the infection.

Left to their own devices, airlines and cruise ship lines would likely handle the potential problem with ease. Unfortunately, they’re literally NOT left to one specific device: A stick test for Ebola that’s “under development.”

The fine print on “under development” is “already in use by the military but hung up in the US Food and Drug Administration’s approval process for everyone else.”

Shipping blood to a lab for Ebola analysis takes several days. The stick test takes minutes and while not yet perfected is probably much more reliable than the current government “screening” procedure of taking passengers’ temperatures.

Suppose you ran a $35 billion company like Carnival Cruise Lines or even a $150 million company like Frontier Airlines. Do you think you’d be willing to fork over during an outbreak for a quick and easy test to protect your passengers from Ebola (and yourself from negligence lawsuits should one passenger infect others)? My guess is that you’d be very willing to do that. In fact, I’m sure the cruise lines wish there was a similarly quick, inexpensive and reliable pre-boarding test for norovirus, aka “stomach flu,” as right now the only way they can respond to outbreaks (there have been a couple) is to quarantine symptomatic passengers and offer those whose trips are affected refunds and discounts.

A truly freed market, completely absent state power plays, would likely look a lot different than the current system. We don’t have any way of knowing how people would travel and to where in a free society (or free world!) but it’s safe to predict that if even the current hobbled market offers better solutions for outbreaks than political government does, a freed market would be better yet.

Translations for this article:

• Spanish, Dejemos que el mercado contenga el Ébola.

Moreover, the Affordable Care Act is merely the latest in a century-long line of legislation ostensibly aimed at increasing the affordability of health care, but which by subsidy have locked in a status quo of needlessly high levels of costly treatment required in order to receive any level of health care, crowding out innovations in the lower-cost methods and self-help advocated by Dr. Gordon.

As Ivan Illich observed in 1975 in Medical Nemesis:

“Awe-inspiring medical technology has combined with egalitarian rhetoric to create the impression that contemporary medicine is highly effective. Undoubtedly, during the last generation, a limited number of specific procedures have become extremely useful. But where they are not monopolized by professionals as tools of their trade, those which are applicable to widespread diseases are usually very inexpensive and require a minimum of personal skills, materials, and custodial services from hospitals. In contrast, most of today’s skyrocketing medical expenditures are destined for the kind of diagnosis and treatment whose effectiveness at best is doubtful.”

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“Many economists believe that health care costs will continue to rise. Even more distressing, the Affordable Care Act will likely reinforce current practice, which dictates surgical and pharmacological interventions that can be expensive, inappropriate, burdened by side effects and, often, ineffective.”

Moreover, the Affordable Care Act is merely the latest in a century-long line of legislation ostensibly aimed at increasing the affordability of health care, but which by subsidy have locked in a status quo of needlessly high levels of costly treatment required in order to receive any level of health care, crowding out innovations in the lower-cost methods and self-help advocated by Dr. Gordon. As Ivan Illich observed in 1975 in Medical Nemesis:

“Awe-inspiring medical technology has combined with egalitarian rhetoric to create the impression that contemporary medicine is highly effective. Undoubtedly, during the last generation, a limited number of specific procedures have become extremely useful. But where they are not monopolized by professionals as tools of their trade, those which are applicable to widespread diseases are usually very inexpensive and require a minimum of personal skills, materials, and custodial services from hospitals. In contrast, most of today’s skyrocketing medical expenditures are destined for the kind of diagnosis and treatment whose effectiveness at best is doubtful.”

Such will be the inevitable result as long as the necessity of bailing out the capital-intensive, mass-production model of delivery of uniform service by a favored professional elite to passive recipients — the bête noire in all of Illich’s work, from health care to education to energy — is assumed necessary to guarantee a modern standard of quality. Which it is not. In the same year’s Neighborhood Power, David Morris and Karl Hess observed: “We are most dependent upon outside experts when we are ignorant — and we are probably most ignorant about our own bodies. Even our cars are more open to common-sense knowledge than our bodies.” In surveying the simpler forms of health care, Morris and Hess conclude: “Surely such service could be administered by less than fully trained M.D.’s.”

Historian David T. Beito, in summarizing his extensive research on the lodge practice which provided low-cost health care to millions of members of early twentieth century fraternal societies before the model was deliberately crowded out, notes that they “opened up rare opportunities for many working-class Americans to compare and experiment and empowered them with the necessary economic clout to break free from the confining view that health care was merely a generic good.”

The ephemeralization of twenty-first century technology would only make a revival of lodge-style cooperative, nonprofit, red-tape-free provision of basic health care even more feasible. Just like Morris and Hess’s urban farming and solar power, as the perverse effects of the current model become too widespread to prevent its crumbling, such current overlooked successes as the Ithaca Health Alliance could spread from isolated exceptions to a burgeoning essential in a post-industrial society.

As Dr. Gordon notes, legislation ostensibly aimed at increasing the affordability of health care has had the effects of locking in a status quo of needlessly high levels of costly treatment required to receive any health care and of crowding out self-help and innovations in lower-cost methods. This will be the inevitable result as long as the necessity of subsidizing the capital-intensive, mass-production model of delivery of uniform service by a favored professional elite to passive recipients is assumed necessary to guarantee a modern standard of quality.

Historian David T. Beito notes that the lodge practice system which provided low-cost health care to the members of early twentieth century fraternal societies “opened up rare opportunities for many working-class Americans to compare and experiment and empowered them with the necessary economic clout to break free from the confining view that health care was merely a generic good.” A modernized revival of the lodge model of cooperative, nonprofit provision of basic health care, along the lines of the Ithaca Health Alliance, would avoid the perverse effects of the current mass-industrial model.

Michael Levy, an inmate at Arizona State Prison, arguably faced even worse neglect from prison healthcare providers. After 15 days of headaches and chest pains, he was only given ibuprofen. Fourteen days later he complained that these symptoms persisted in excruciating ways, and requested an MRI. Officials ignored the request, and he continued to file requests over several months. Eventually, Levy experienced an aneurysm and a stroke. According to Tucson News 4, “Doctors recommended the inmate do aggressive physical therapy, but Levy’s health care provider Corizon stepped in. … Corizon denied his rehab with St. Joseph Hospital and Medical Center in Phoenix ‘due to the cost of rehab.'”

These recent incidents of prison healthcare neglect are not unique. In her book Resistance Behind Bars, Victoria Law describes the case of Michelle Everett, a prisoner in Oregon who repeatedly requested medical care but was ignored. “She was given medical attention only after turning yellow,” Law writes. “After both hepatitis and cirrhosis of the liver were ruled out, she was told that a bile duct was obstructed, but that the prison could do nothing about it.”

For-profit companies often contract with prisons to provide healthcare. Yet their incentives differ substantially from what we would see from healthcare providers in a free market. While these companies are cost-sensitive due to the impact of costs on their profits, their clients are not prisoners, but the state. These contractors have a state-secured monopoly within the prison, so prisoners are not free to seek services from competing firms.  These incentives predictably produce abysmal care. Victoria Law describes two companies that engaged in particularly egregious forms of neglect. One is Prison Health Services (PHS). Writes Law:

A yearlong investigation by the New York Times found that the care provided by PHS was often deficient, flawed, and/or lethal. According to the Times, state investigators scrutinizing ten prisoner deaths came to the same conclusions after finding the same circumstances in each case: to cut expenses, PHS trimmed medical staffs, hired underqualified doctors, had nurses doing tasks beyond their training and withheld prescription drugs. The investigators also found that PHS allowed patient records remain unread and employee misconduct to go unpunished.

Similar neglect has been perpetrated by Correctional Medical Services (CMS). “An investigative article in Harper’s revealed that CMS stymies those seeking treatment for hepatitis C, requiring them to fulfill a long list of conditions, known as ‘the protocol pathway,’ before they can receive any care,” writes Law. This reprehensible behavior is predictable given the incentives prison medical contractors are given.

Problems in prison and jail healthcare are systemic. Prison healthcare services are often understaffed. Moreover, prison is characterized by cruel, austere, and punitive conditions, such as hard and uncomfortable beds and inadequate or unappetizing food rations. The only way to get more bedding or better food is typically a medical exemption, which means that understaffed medical services find themselves swamped with inmates who are simply seeking better accommodations. This makes it harder to detect serious medical issues and respond to them in time.

The mentally ill, the poor, drug users, and sex workers all face increased risks of health problems. Yet our society warehouses members of these groups in institutions where healthcare access is systematically denied. Problems with prison healthcare are not isolated incidents; they’re signs of a structural problem.

The state, the giant corporation, and large institutions of all other kinds are part of an interlocking culture designed to extract as much money from us as possible while delivering as little as possible in return. That’s why political agendas centered on guaranteeing our ability to pay for services, without touching the institutional culture that makes them so expensive, are a dead end.

Our whole economy is governed by a set of metrics equating the consumption of inputs to the creation of value. The greater the cost of inputs consumed to produce a given good or service, and the higher its resulting final price, the more value is perceived. This is the opposite of the commonsense approach we take in our daily lives: When we find a way to meet our needs at lower cost and with less effort, we consider ourselves better off.

Not so with the GDP, in which increased efficiency — meeting our needs more cheaply and with fewer material inputs — results in a reduction in national income. The less efficient things are, the more damage resulting from our daily activities to meet our needs, and the more resulting expenditure of inputs, the higher the GDP. A massive auto pileup results — via the costs of repairing and replacing cars, treating victims in Emergency Rooms, etc. — in the addition of untold thousands to the national income. On the other hand, the widespread substitution of the free and open-source Wikipedia for the expensive Britannica, the destruction of newspaper advertising revenues by Craigslist, the replacement of travel agents by online booking services, etc., count as radical reductions in economic output, and hence prosperity on paper — despite the fact that actual individuals and families can now meet needs for free that would once have required them to work hundreds of hours to pay for.

The same is true of the standard corporate accounting system, in which capital expenditures, management salaries and administrative costs, are counted as general overhead, and — through “overhead absorption” — incorporated into the arbitrarily set internal transfer prices assigned to goods “sold” to inventory. The more such inputs wasted in making a finished product, the higher its price, and the higher the resulting book value of the inventory sitting in the warehouse — despite the fact that there’s more inventory than customers are willing to buy at that bloated price. The large corporations that follow this accounting method are generally in oligopoly markets with price leader systems, in which three or four firms in an industry control a majority of sales in a given market and can pass their costs directly on to the consumer via administered pricing.

It works this way in regulated utilities, where rates are set politically so as to guarantee a defined rate of return on expenditure, and in military contracts (the reason it’s in contractors’ interest to come up with those $600 toilet seats). It’s also the way the old Soviet-model planned economies assigned prices to unfinished and finished goods within their systems: So many refrigerators or microwaves produced were so much value, regardless of whether they worked or were destroyed by careless handling during shipping.

In every case, the incentive is to maximize production costs and do things in the most inefficient manner possible, because the measure of value (and standard of reimbursement!) is the cost of the inputs consumed. This is what Paul Goodman called “the great domain of cost-plus.”

This is the reason for most of the cost inflation in higher education. A major part of the industry’s revenues are guaranteed by third parties (for example government aid to higher education and banks that get guaranteed returns on student loans). Since tuition is set through the same administered pricing to the third parties that govern the corporate economy, there’s every incentive in the world to maximize overhead costs through utterly stupid and wasteful construction projects, ever-rising administrator salaries and the like. As a result, inflation in college tuition is even higher than that in healthcare, with a dwindling share of the price going to cover actual delivery of services.

The state, the giant corporation, and large institutions of all other kinds are part of an interlocking culture designed to extract as much money from us as possible while delivering as little as possible in return. That’s why political agendas centered on guaranteeing our ability to pay for services, without touching the institutional culture that makes them so expensive, are a dead end.

In response, Professor Uwe Reinhardt of Princeton added that a single-payer system wouldn’t work in the U.S. because it would be controlled by the corrupt culture of the service deliverers (“Is the U.S. too corrupt for single-payer healthcare?” Washington Post, January 16). “Medicare is a large insurance company whose board of directors (Ways and Means and Senate Finance) accept payments from vendors to the company. In the private market, that would get you into trouble.” Basically, the prices Medicare-for-all paid for healthcare services would be set by the healthcare providers and reflect their institutionalized monopoly culture.

All too often, when well-meaning people say a particular need should be a “basic human right,” what that means is that the average person gets that need for “free” — but they get it as defined by the authoritarian institutions and professional priesthoods that deliver that service. The nationalization and public financing serve mainly to lock in that institutional culture permanently, and make it difficult at best for the individual to escape that institutional model of service whether they actually want it or not.

A common theme in the work of Ivan Illich was the provision of services in all aspects of life by bureaucratic, hierarchical institutions with high overhead business models and the delivery of actual services by authoritarian professional priesthoods.

“Many students … intuitively know what the schools do for them. They school them to confuse process and substance ….  [T]he more treatment there is, the better are the results …. The student is thereby ‘schooled’ to confuse teaching with learning, grade advancement with education, a diploma with competence, and fluency with the ability to say something new …. Health, learning, dignity, independence, and creative endeavor are defined as little more than the performance of the institutions which claim to serve these ends, and their improvement is made to depend on allocating more resources to the management of hospitals, schools, and other agencies in question.”

If you want an illustration of the total gestalt of the kinds of services delivered by such institutions, with their mission statements, Weberian work rules and accounting systems which define the consumption of resources as “value,” just compare the proprietary, institutionally designed “office productivity software” the IT department makes you use at work with platforms and utilities like Open Office that people willingly choose for themselves at home.

I once saw an activist critic of agribusiness on C-SPAN describing the process by which the USDA created the “Food Pyramid”; it was basically negotiated by a committee made up of representatives of Big Cereal Grains, Big Meat, Big Dairy, ad nauseam.

We have “free” education through grade 12 as a basic human right in the U.S. And what is it? A system set up for processing, grading and sorting human raw material into an input for corporate HR departments. The first statewide public school systems were set up in New England because  mill owners needed hands who’d been taught to be punctual, line up on command, eat and pee at the sound of a bell, and cheerfully obey instructions from an authority figure behind a desk. As a majority of people moved into white collar jobs, this basic function persisted — with the additional task of schooling students to prioritize tasks set for them by an authority figure over their own self-directed interests, and to regard as a trivial “hobby” anything not assigned by a boss.

The proper solution to the crisis resulting from enormously expensive healthcare is not to leave the expensive business model in place and then finance it with tax money, but to cause its price to implode to affordable levels by removing all the state-enforced monopolies and institutional frameworks that make it so expensive. Imagine a society where one of Pfizer’s $10 pills cost fifty cents, an MRI was $250, outpatient treatments and tests were covered by $70/month dues at a cooperative clinic, and catastrophic insurance was $50/month. That’s what we’d have if corporate-state collusion and monopoly were replaced by competitive markets and horizontal cooperation.

Before you make something “free,” think long and hard; you may also be making it compulsory.

The first problem with the White House’s argument is that it is logically impossible for a third party (the American state in this scenario) to “objectively” declare a scarce resource (the health insurance policy in this scenario), transferred from a seller to a buyer via a legal contract, “substandard.” Why? It is impossible because, as libertarian economists like Carl Menger, Ludwig von Mises and Robert Higgs have indisputably shown, value is subjective or, in lay terms, beauty is in the eye of the beholder. The buyer of a “substandard” health insurance plan demonstrates, by the very act of purchasing the product, that the plan meets or exceeds her subjective minimum quality standard. If the policy had not met or exceeded that standard, she would not have purchased the “substandard” product; instead, she would have purchased an alternative policy that did meet or exceed it. In contrast, when the American state decrees that a particular plan is “substandard,” the state is evaluating the plan based on its own subjective minimum quality standard rather than the consumer’s. These two subjective minimum quality standards are at variance because all subjective standards are different. Aesop’s fable, “The Town Mouse and the Country Mouse,” succinctly illustrates this ancient human truth.

The second problem with the White House’s argument is that it does not accurately specify who deems the canceled health insurance policies “substandard.”. A fundamental mistake of the typical non-libertarian consumer, based on the comments from President Obama himself or his surrogates, is to assume that the American state is the only organization that appraises the canceled insurance polices as “substandard.” The truth, however, is that the insurance companies themselves also perceive the relevant policies as “substandard.” The reasons the American state and the insurance companies divine the policies to be “substandard” are different, however. The American state judges the plans to be “substandard” because the American state wields less healthcare power than it otherwise would when it has not yet comprehensively micromanaged the health insurance market. The insurance companies, by contrast, judge the plans to be “substandard” because they earn less profit than they otherwise would when market competition necessitates that they offer inexpensive plans that have not been banned from the market. To solve this manufactured “crisis,” the insurance companies and the American state colluded — evidenced, among many things, by a December 2008 “reform” proposal by America’s Health Insurance Plans (AHIP), the national trade organization for insurance companies, which is nearly identical to ObamaCare — to create a corporatist system (an alliance of corporations and the state, also known as fascism) from which the state gains increased power by thoroughly micromanaging the health insurance market (by banning some products and mandating others) and the insurance companies gain greater profits because less-expensive, lesser-quality healthcare plans are banned from the marketplace.

In summary, White House protestations that the recently canceled healthcare insurance policies were “substandard” and, therefore, should have been abolished are unintelligible. The assertions are unintelligible not only because it is not logically possible for the American state to “objectively” declare that a product is “substandard” based on a subjective minimum quality standard, but also because the American state has conspired with insurance companies to increase state power (via micromanagement of the health insurance market) and corporate power (health insurance corporate profits soar due to state mandates to purchase ridiculously expensive health insurance plans). The just solution to these genuine problems — unaffordable health insurance and excessive state and corporate power — is abolition of the state, not ObamaCare.