Our new issue, “After Bernie,” is out now. Our questions are simple: what did Bernie accomplish, why did he fail, what is his legacy, and how should we continue the struggle for democratic socialism? Get a discounted print subscription today !

The United States spends nearly 18 percent of its GDP on health care. The next biggest spender among comparably wealthy nations pays about half that. And yet from life expectancy to infant mortality, American health outcomes lag behind. So if we aren’t paying for better health, what are we paying for? Increasingly the answer is: whatever pharmaceutical and medical supply companies are selling, at whatever price they demand. A new paper published by the Journal of the American Medical Association finds that the reason the US spends so much on health care is because our medical prices and administrative costs are through the roof — “medical prices” in this case meaning the amount charged by corporations for drugs and equipment. The US is one of the only nations that doesn’t regulate drug and supply prices. Companies negotiate contracts directly with hospitals and insurance providers, and these private contracts dictate the terms of our health care spending. The result is a health care system oriented around corporate profit instead of patient need. The case of the saline-bag manufacturer Baxter Healthcare — currently under investigation for exploiting a production shortage to force unnecessary products on hospitals — is just one example of this corporate hostage-taking in action.

False Scarcity Recent scandals like those surrounding Martin Shkreli’s AIDS drug and Mylan’s EpiPen have raised popular awareness of pharmaceutical price gouging. But pharma has more tricks up its sleeve than just drug price increases. Take GlaxoSmithKline, which makes the popular anti-nausea drug Zofran: the company spent a decade working to create a shortage of generic anti-nausea medication so it could corner the market and secure contracts with a majority of American hospitals. Pharma companies have learned that sometimes a shortage works just as well as an egregious price hike to maximize profits. The case of Baxter Healthcare bears similar markings. Baxter is the nation’s largest manufacturer of saline bags. It competes with only two smaller companies, Hospira Infusion Systems and B Braun. These three manufacturers are in little danger of being disrupted by new competitors: sterile saline plants are very costly and difficult to build. So they alone monopolize the supply of saline bags in American hospitals — and as anyone who has visited a hospital can tell you, saline bags are a staple of health care delivery, used to clean wounds, treat dehydration, mix medications, and more. Without them, normal hospital operations would grind to a halt. In 2014, unsafe particles were found in Baxter saline solution, leading to a product recall and intensified FDA scrutiny of all three manufacturers. As a result, production dropped and hospitals began experiencing severe saline shortages, endangering patients — dialysis recipients, for instance, need four liters of saline per week to stay healthy, and can die without it. The shortage had health care workers scrambling. “Technicians worked through the night to mix saline by hand,” reports the Financial Times, “while nurses injected the solution of salt in water into patients using syringes — a task normally done by the metal stands and plastic bags used for intravenous drips.” Hospitals had temporary contracts to keep the price of saline steady, but Baxter still found a way to use the shortage to its advantage, according to allegations being investigated by the Justice Department. Hospitals say that at the peak of the shortage, Baxter dispatched sales representatives who pressured them into buying high-priced saline delivery products they didn’t need, including pumps, tubes, catheters. “If they did not agree to purchase the additional merchandise,” the Financial Times reported, “hard charging sales reps suggested they could see their supplies of saline cut.” The cost was enormous in some cases, but hospitals felt they had little choice. Afraid of losing access to a health care necessity, some hospitals agreed to the new purchasing terms. Worse, when its contracts with hospitals expired, Baxter nearly doubled the price of the saline bags themselves. Baxter’s revenue increased 12.5 percent between 2015 and 2017. Meanwhile hospital expenditures also increased — costs that are eventually passed down to patients, with no improvement in the quality of care they receive. Instead of spending billions on expanding health services or adopting new medical technologies, the US health care system spent it on bags of saltwater.