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Home Publications Blogs Beat the Press Patent Monopolies Cause Corruption: #56,897

Patent Monopolies Cause Corruption: #56,897

Monday, 23 June 2014 04:25

Every economist knows that when you put a 20 percent tariff on imported clothes it leads to inefficiency and corruption. For some reason they don't seem to know that when you give out patent monopolies that can raise prices by 2000 percent or more above the free market price that it leads to big-time inefficiency and corruption.

Reality is working hard to teach economists. Today the Washington Post had an article reporting on how many hospitals appear to be profiting from a program that allows them to buy drugs at a discount from the patent protected price. The program is ostensibly designed to provide drugs to low-income people.

This sort of program would of course be unnecessary if drugs were sold in a free market. There would be no reason to establish complicated discount systems if drugs were selling for $5-$10 per prescription, as is generally the case for generic drugs. This would require an alternative mechanism for financing drug research, but folks who have heard of the National Institutes of Health know that alternative mechanisms exist. (Yes, NIH mostly does basic research, but that it a policy choice not a fact of nature.)

Comments (3)Add Comment
Patriotic Patent Price (PPP): Stop Economic Terrorism, Stop Dumping Below the Full Price
written by Last Mover, June 23, 2014 7:58

Any economist knows one of the great crimes against economic efficiency is dumping goods and service below their patriotic patented price (PPP).

In this case even innocent low income individuals are patsy targets for the hospital dumpsters, set up to legitimize the heavy discount then discarded like one-time use syringes.

Take back your country America. It is being robbed by the socialists who want to underprice everything because the government is paying for it.

Government must protect protect property at all cost and that includes the cost of dump prevention regulation.

Pay the full PPP now or an even higher price later - no more golden eggs laid because the goose won't lay them at a discount.
written by Larry Signor, June 23, 2014 9:20
Who knew interminable patents where "patriotic"? Soon the descendants of the inventor of the wheel will be pursuing their "patriotic" patent rights. Wait. I am a descendant of the inventor of the wheel. I gotta see my lawyer, or my shrink,
written by djb, June 23, 2014 12:43
its worse than that

government already pays for the majority of research and development costs, then gives the patents to multinational pharmaceutical companies,

Ralph Nader has written on this

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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.