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Home Publications Blogs Beat the Press The High Cost of Protectionism in Prescription Drugs #53,476

The High Cost of Protectionism in Prescription Drugs #53,476

Thursday, 12 August 2010 21:42

The NYT has a front page article on the enormous success in identifying biological markers for the development of Alzheimer's that resulted from a collaborative effort in which all data was made freely available. The article reports the assessment of the leading participants that this departure from normal practice allowed for much greater progress than would have otherwise been possible.

It would be useful if in this or other articles the NYT explored the implications of this experience for bio-medical research more generally. It suggests that if research was freely shared that scientists may be far more successful in developing new drugs and other treatments for medical conditions. An open system of research would require the elimination of patent protection, but this would also mean that drugs could sell at their competitive market price rather than at prices that are several hundred to several thousand percent above the free market price.

Comments (9)Add Comment
Patent Will Stay
written by Amgen Save Life, August 13, 2010 1:08
bc too much money, too many jobs are on the line. Just a few bucks for prescripton @ your local Wal-Mart!
written by izzatzo, August 13, 2010 6:34
Oh yeah Mr Commie Mommie, you want to do the community sharing thing with medical data so there's no clear winner, just one collective winner with no losers. Any economist knows that collectivism just suppresses the best and brightest from producing data in the first place if they have to give it away or are forced to underprice it.

This is why health care has gone down the road of serfdom already, creating massive shortages everywhere because of fears the data will have to be shared with customers, like providing itemized prices and descriptions for services provided, and not only that, but provided to consumers before they actually make the purchase like cheap over-the-counter drugs.

What's next Mr Commie Mommie, requiring football players to have open huddles and share the next play with the opposing team so sports can be more efficient?

Stupid liberals.
written by purple, August 13, 2010 8:04
Unfortunately, truly free markets make profit rates nill, if one believes marginal theory. In a private profit and investment system that presents a problem (resolved through monopoly and market capture).
'new and improved' marketing hits the drug market
written by frankenduf, August 13, 2010 8:14
another important point is that money corrupts the research system itself, in that much more research studies are done to prop up new, expensive drugs, creating a lag in research to underpin older (cheaper) generation drugs- i once heard an intern ask an attending why they don't prescribe an older drug to avoid a complication from a newer drug, and he said the problem is that all the newer research is being done on the new drug, so that a doctor prescribing the old drug would look negligent in keeping up-to-date- in this way, research becomes stacked behind the more expensive drugs, and is a self-fulfilling prophecy which one will get prescribed, the older effective cheap drug or the newer effective analog which costs more
written by floccina, August 13, 2010 11:36
I basically agree with you Dean but I do have doubts and I hope that you do too.
I've talked with my doctor about Viagra
written by MinnItMan, August 14, 2010 1:59
but she won't prescribe it for me. BTW, I don't expect insurance to pay, but I'm not exactly sure why it won't, other than the insurance companies find it pleasing to excluse it as a luxury or recreational item. This means something. Fortunately, there are companies out of Utah that make an "herbal" supplement version that is pretty satisfactory, although I have my doubts about whether their QC is Six Sigma. This is the only meaningful way in which a free market system exists for better living through chemistry/alchemy/witch-doctory. Interestingly enough, the price for the herbal supplement is pretty much the same as for Viagra.

What a country!
Profit Driven Health Care Is Broken
written by Sean, August 16, 2010 2:03
Izzatzo has it backwards and he doesn't make any sense. It is ANTI CAPITALIST to have a system where prices and services are not clearly described to the customer before they buy something. You can't have a functioning market if nobody can make rational choices between service providers.

Health care is a perfect example. When a person is lying injured in a wrecked car, it's not like three different ambulances show up and each offers a quote for taking the person to the hospital and then he chooses which ambulance to take.

For profit health care of the sort we have encourages ill health. Providers including insurers have an incentive to do everything they can to make society sicker -- providers because they sell more product and insurers because unless everyone is sick, or at least sickness is prevalent, many won't pay the high price of insurance.

The United States is a nation of very sick people. It's 38th or 40th now in health and 38th in lifespan. Countries like Chile and Cuba which spend a small fraction of what the US does on health care get better outcomes. The US spends more than double per capita on health care what the next highest spender does (which is France I believe). The US doesn't just spend more, it spends DOUBLE per capita what the next highest spender does.

The entire system from research to care delivery is all about pushing product. A disturbing number of Americans are pushed to take drugs -- the pharma companies have lobbied and pressured and funded so many "friendly" studies that now the consensus among doctors is that almost every living American should be on cholesterol lowering drugs. 20% of Americans are on anti depressants. There are measurable levels of prescription drugs in the water now because American people have become toxic waste dumps.

And it's not just that 37 other countries that spend much less than the United States on health care have longer lifespans. They also have better health. Most Americans live the last five to ten years of their lives in horrible pain and fear with heavy medication, hospitalization, surgeries, etc.

Because there is so much profit in medicine here, no one asks about the role of the toxic soup pumped into the American food supply from new pesticides, genetically modified foods, preservatives, chemical coloring agents, new plastic softeners used in food packaging, anti mold chemicals, hormones and antibiotics fed to livestock, partially hydrogenated oil, new chemicals like chloramine used to disinfect tap water and very poorly tested before public use (the persistence of chloramine in tap water for instance has been shown now to leach toxic chemicals out of metal pipes causing lead and plastic chemical poisoning depending on what the pipes are made of from the source to the faucet).

There are gasoline additives like MTBE that were widely used with inadequate testing and now contaminate the groundwater and are found in most people's blood.
written by Sean, August 16, 2010 2:04

The health system we have has zero interest in identifying the cause of illness because there's no profit in it. Who would pay for research to show that some chemical additive was causing a lot of cancer? And who would release the information if they had it? Less cancer means less Avastin at $100,000 a treatment to lengthen your life by 12 months while you live in pain and fear.

There is no choice but for people to get sicker under the health care system we have. If I was selling something, I'd do everything in my power to make sure that people needed as much of it as possible and that's what's going to happen here and what has happened. It's the nature of capitalism and it works well with consumer goods and lots of other things, but it doesn't appear to work so well with health care.

You do see some insidious things like this in the consumer and industrial goods sector with engineered obsolescence, price fixing, collusion, etc. -- and often with the tacit approval of government who's in it for the kickbacks. But health care is a different animal because the demand is somewhat inelastic. People will spend their family's last $1 million to live six to twelve more months in pain and fear. It's not that they shouldn't be free to, but the reason for it is that death, just like life in the United States is unnatural. It's unnatural to live without drugs and surgeries in the United States just like it is unnatural to die and that's why even a 75 year old with cancer undergoes painful and expensive chemotherapy for a year before dying anyway.

I had lunch with two health insurance agents not too long ago who told me that it was minorities who screw up US health care statistics. They said that it's poor blacks and Mexicans who skew all the health statistics and that without them Americans are much healthier and live longer than other people. What I found amusing about this was that one of the two men was sitting there smoking after having his second bypass surgery after his second heart attack -- he was on an array of medications from cholesterol lowering medication to antidepressants, blood thinners, etc. He also had an implantable defibrillator that had to be replaced soon. The other man, who was drinking alcohol that day had a colostomy bag because of some problem with his digestion related to his diet. I did have the bad taste to point out to these two men that they were so delusional as to not notice their own ridiculously poor health and they said, "Well, yeah, OK, let's talk about something else."

Americans suffer from delusions where they can't even see what's wrong, so they can't do anything about it. That's why many smart people here just try to make money off of this situation by investing in companies that really victimize people. The way this all works is so deeply unchangeable that even people who are disgusted by it have few options other than ignore it, or try to profit from it.
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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.