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Home Publications Blogs Beat the Press New Prostate Cancer Drugs are Expensive Because of Government-Granted Patent Monopolies

New Prostate Cancer Drugs are Expensive Because of Government-Granted Patent Monopolies

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Tuesday, 28 June 2011 04:41
That point would have been worth making in an article about new drugs approved by the Food and Drug Administration for treating prostrate cancer. According to the article, these drug costs can cost up to $8,000 a month. If the drugs were sold in a free market without patent protection, they would almost certainly sell for less than $100 a month. It would have been worth noting this cost of the patent system for financing prescription drug research.
Comments (3)Add Comment
...
written by denim, June 28, 2011 7:26
The very purpose of insurance, private or Medicare, is to spread the costs over the entire base of premium payers. This stuff should already be part of the out-of-pocket premiums that supplemental Medigap or Part D Rx pay for already. Is is not already so?
Taxing capital gains on the penny stock companies that hit the jackpot and taxing regular corporate income is supposed to level the playing field. Do you think a windfall profit tax is needed in addition?
Drug Markets Not Free Without Patents
written by izzatzo, June 28, 2011 7:47
{quote]If the drugs were sold in a free market without patent protection ...

Uh huh. And if drugstores sold these drugs in free markets without protecting their private property rights from theft the drugs would be even cheaper - free even.

Stupid liberals.
drug store protecting their physical property is a bad analogy
written by ecnmst, June 30, 2011 8:21
A drug store protecting their physical property is a bad analogy for patents.

No profit making organization could exist if anyone could stroll in and steal its physical property.

But patents are a way of protecting intellectual property, which is not the same as physical property. Once a discovery is made, often the cost of adopting the knowledge by others is very low. Preventing others from using this new knowledge at low cost reduces production and creates an inefficiency. The problem is balancing rewards needed for discovery, with the inefficiency of restricting the spread of the knowledge the discovery provides at low coat. Patents provide for protection of intellectual property by granting a monopoly to the discoverer, who can charge a price far higher than the cost of production, and restrict the spread of knowledge of production techniques which produce inefficiency.

The blog post simply pointed out that this inefficiency should be reported in any economic analysis of patents. There are other ways to protect the the investment made to discover new knowledge than patents, and that do so with less cost in reduced prodcution using the knew knowledge.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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