FacebookTwitterGoogle+RedditEmail

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. 

Weekend Edition
February 22, 2019
Friday - Sunday
Timothy M. Gill
Why is the Venezuelan Government Rejecting U.S. Food Supplies?
John Pilger
The War on Venezuela is Built on Lies
Andrew Levine
Ilhan Omar Owes No Apologies, Apologies Are Owed Her
Jeffrey St. Clair
That Magic Feeling: the Strange Mystique of Bernie Sanders
David Rosen
Will Venezuela Crisis Split Democrats?
Jeffrey St. Clair - Joshua Frank
Curtain Call: A Response to Edward Curtin
Nick Pemberton
Donald Trump’s National Emergency Is The Exact Same As Barack Obama’s National Emergency
Paul Street
Buried Alive: The Story of Chicago Police State Racism
Rob Seimetz
Imagined Communities and Omitting Carbon Emissions: Shifting the Discussion On Climate Change
Ramzy Baroud
Russian Mediation: The Critical Messages of the Hamas-Fatah Talks in Moscow
Michael Welton
Dreaming Their Sweet Dreams: a Peace to End Peace
Robert Hunziker
Global Warming’s Monster Awakens
Huma Yasin
Chris Christie Spins a Story, Once Again
Ron Jacobs
Twenty-First Century Indian Wars
Robert Fantina
The U.S. and Venezuela: a Long History of Hostility
Lance Olsen
Climate and Money: a Tale of Two Accounts
Louis Proyect
El Chapo and the Path Taken
Fred Gardner
The Rise of Kamala Harris
John W. Whitehead
Rule by Fiat: National Crises, Fake Emergencies and Other Dangerous Presidential Powers
Kollibri terre Sonnenblume
Biomass is Not “Green”: an Interview With Josh Schlossberg
John Feffer
Answering Attacks on the Green New Deal
W. T. Whitney
US Racism and Imperialism Fuel Turbulence in Haiti
Kim Ives
How Trump’s Attacks on Venezuela Sparked a Revolution in Haiti
Mike Ferner
What War Films Never Show You
Lawrence Wittner
Should the U.S. Government Abide by the International Law It Has Created and Claims to Uphold?
James Graham
A Slow Motion Striptease in France
Dave Lindorff
Could Sanders 2.0 Win It All, Getting the Democratic Nomination and Defeating Trump?
Jill Richardson
Take It From Me, Addiction Doesn’t Start at the Border
Yves Engler
Canada and the Venezuela Coup Attempt
Tracey L. Rogers
We Need a New Standard for When Politicians Should Step Down
Gary Leupp
The Sounds of Silence
Dan Bacher
Appeals Court Rejects Big Oil’s Lawsuit Against L.A. Youth Groups, City of Los Angeles
Robert Koehler
Are You White, Black or Human?
Ralph Nader
What are Torts? They’re Everywhere!
Sarah Schulz
Immigrants Aren’t the Emergency, Naked Capitalism Is
James Campbell
In the Arctic Refuge, a Life Force Hangs in the Balance
Matthew Stevenson
Pacific Odyssey: Corregidor’s Iconography of Empire
Jonah Raskin
The Muckraking Novelist Dashiell Hammett: A Red Literary Harvest
Kim C. Domenico
Revolutionary Art and the Redemption of the Local
Paul Buhle
Life and Crime in Blue Collar Rhode Island
Eugene Schulman
J’Accuse!
Nicky Reid
Zionists are the Most Precious Snowflakes
Jim Goodman
The Green New Deal Outlines the Change Society Needs
David Yearsley
The Political Lyre
Cesar Chelala
The Blue Angel and JFK: One Night in Camelot
FacebookTwitterGoogle+RedditEmail