FacebookTwitterRedditEmail

Big Pharma’s Lethal Patent Monopoly on Drugs

The United States stands out among wealthy countries in that we give drug companies patent monopolies on drugs that are essential for people’s health or lives and then allows them to charge whatever they want. Every other wealthy country has some system of price controls or negotiated prices where the government limits the extent to which drug companies can exploit the monopoly it has given them. The result is that we pay roughly twice as much for our drugs as the average for other wealthy countries. This additional cost is not associated with better care; we are just paying more for the same drugs.

This is not an issue about the free market. The free market doesn’t have patent monopolies. The monopoly power provided by a patent is a government policy to promote innovation. There are problems with patent monopolies in many areas, but nowhere is the issue worse than with prescription drugs.

Patent protected drugs are often essential for people’s health or even their lives. Allowing a drug company to have a monopoly where it can charge whatever it can force the individual, or more typically the insurer or the government, to pay makes little sense. This is like negotiating the pay of firefighters at the point where they show up at your burning house with your family inside. This would give us much worse fire service and many very wealthy firefighters.

A monopoly that allows drug companies to sell their drugs at prices that can be hundreds of times the free market price has all the problems economics predicts when governments interfere with the market. Drug companies routinely mislead doctors and the public about the safety and effectiveness of their drugs to increase sales. The cost in terms of bad health outcomes and avoidable deaths runs into the tens of billions of dollars every year.

Drug companies also spend tens of millions on campaign contributions and lobbying to get every longer and stronger patent protection. The pharmaceutical industry is one of the main forces behind the Trans-Pacific Partnership, and its demands for stronger patent protections is one of the main obstacles to reaching an agreement with the other countries.

We don’t need patent monopolies to support research. We already spend more than $30 billion a year financing research through the National Institutes of Health. Everyone, including the drug companies, agrees that this money is very productive. We could double or triple this spending and replace the patent supported research done by the drug companies. With the research costs paid upfront, most drugs would be available for the same price as a bottle of generic aspirin.

While the measures being proposed by Hillary Clinton and earlier Bernie Sanders don’t go this far, they are a big step in the right direction.

This column originally appeared in the New York Times.

More articles by:

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

July 02, 2020
Stan Cox
It’s Not Just Meat: All Farm and Food Workers Are in Peril
Marshall Auerback
We Won’t Have a Truly Global Economy Until People Start Taxing It That Way
John O'Kane
Progressive Pulses Among the Ruins of Riot
John Feffer
Time to Rethink the US-ROK Alliance
Binoy Kampmark
The Kafkaesque Imperium: Julian Assange and the Second Superseding Indictment
Kim C. Domenico
Disbelief, Belief and the Perils of Pandemic Re-opening
George Ochenski
Trump’s Contagion Road Show Heads West
Haydar Khan
The Great Wall of Wokeness
Jeremy Kuzmarov
Biden Compared Indicted War Criminal to “George Washington”
Howard Lisnoff
Try to Get Published; Try to Be Heard
Rebecca Gordon
Fear of Falling: Can Making Black Lives Matter Rescue a Failing State?
Gary Leupp
Traditional Russophobia in an Unusual Election Year
John Kendall Hawkins
Biopic? Shirley, You Jest
Gary Macfarlane – Mike Garrity
Conservation Groups Sue Trump Administration to Halt Massive Logging in Steelhead Critical Habitat
Quincy Saul
Who Made the Plague?
July 01, 2020
Melvin Goodman
De-Militarizing the United States
Kenneth Surin
UK’s Labour Leader Sacks the Most Left-Wing Member of His Shadow Cabinet
Ruth Fowler
Then as Farce: the Commodification of Black Lives Matter
Kent Paterson
Crisis After Crisis on the Border
Rick Baum
The Pandemic and Wealth Inequality
Michael Welton
“Into the World of Bad Spirits”: Slavery and Plantation Culture
James W. Carden
The Return of the Anti-Antiwar Left
Dan Wakefield
Charles Webb Enters Heaven
Julian Vigo
A Call for Radical Humanism: the Left Needs to Return to Class Analyses of Power
Binoy Kampmark
A Trendy Rage: Boycotting Facebook and the Stop Hate for Profit Campaign
Michael D. Knox – Linda Pentz Gunter
As Monuments to War Generals Come Down, Let’s Replace Them with Monuments to Peace
Cesar Chelala
Attorney General William Barr’s Insomnia
Raphael Tsavkko Garcia
Is Bolsonaro Plotting a Self-Coup?
Mandy Smithberger
COVID-19 Means Good Times for the Pentagon
Joe Emersberger
On Pablo Celi, Ecuador’s super shady “Auditor General”
June 30, 2020
James Bovard
Bill Clinton’s Serbian War Atrocities Exposed in New Indictment
Bianca Sierra Wolff – Lisa Knox
ICE is Leaving Immigrants to Die in Detention, and Retaliating When They Speak Out
Don Fitz
Should NYC’s Wall Street Be Renamed “Eric Garner St.?”
Chris Hedges
My Student Comes Home
Richard C. Gross
Obamacare Vulnerable
John Feffer
The Hatchet Man’s Tale: Why Bolton Matters
Thomas Knapp
Afghanistan Bounties: Pot, Meet Kettle (and Turn Off the Stove!)
Charles Reitz
Anti-Racist Engagement in the Kansas Free State Struggle, 1854-64: Horace Greeley, German 48-ers, and the Civil War Journalism of Karl Marx, 1861-62
Howard Lisnoff
A Student Murdered in Cold Blood and a Kids’ Bike Ride Through Queens, New York
David Swanson
Hey Congress, Move the Money
Aparna Karthikeyan
Memories of Pox, Plague, and Pandemics in Tamil Nadu
John Kendall Hawkins
Democracy Chasers in a Badly Injured Nation
Binoy Kampmark
Wasteful, Secret and Vicious: the Absurd Prosecution of Witness K and Bernard Collaery
Norman Solomon
Ro Khanna and Barbara Lee Could Defy “the Madness of Militarism” as Co-Chairs of the Democratic Convention’s Biggest Delegation
Jon Hochschartner
Imagining a Vegan Superman
FacebookTwitterRedditEmail