We will spend over $440 billion this year for drugs that would likely sell for less than $80 billion in a free market. The difference of $360 billion is almost 2.0 percent of GDP, coming to almost $2,800 a year per family.
Patent monopolies on drugs lead to the sort of waste and corruption that economists predict when the government artificially inflates the price of a product. In the case of prescription drugs these problems are especially serious since the gap between the protected price and free market price is so huge.
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The list of offenses by the pharmaceutical industry is lengthy: payoffs to doctors to push their drugs in articles and lectures, payoffs to generic drug companies to keep competitors out of the market, payments to politicians to make patents stronger and longer both domestically and in international trade deals.
This is why the provision in the Senate bill to have the government start picking up the tab directly is so important. While the government already does spend more than $32 billion a year on basic research through the National Institutes of Health, the Senate bill would support payments to gain direct control over the end product either by buying out the patent or paying for the clinical testing and bringing the drug through the Food and Drug Administration’s approval process.
In both cases, new drugs could be sold as generics. No one would have to worry about mortgaging their house to pay for a loved one’s cancer treatment, drugs would be cheap.
In addition, by making drugs available at free market prices the bill would largely eliminate the incentive to lie. The test results would be fully public so doctors and researchers could determine which drugs were most effective in specific cases, without the corrupting influence of corporate money. And, research would likely proceed more quickly since findings would be quickly available to the community of researchers, rather than being closely guarded secrets from which drug companies hoped to profit.
Realistically, this bill has almost no chance of passing in a Republican-controlled Congress. Nonetheless, it is an enormous victory for clear-thinking over inertia. Democrats are embracing a way in which the market can be used to better people’s health and reduce inequality.
It is the Republicans who support big government in the form of patent monopolies. And their goal is to make the rich even richer.
