The High Costs of Protectionism: Prescription Drugs, Again

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Tuesday, 13 July 2010 07:22

The NYT ran a front page story about how SmithKline Beecham concealed test results showing that its diabetes drug, Avandia, increased the risk of heart attack. It would have been worth including some economic analysis pointing out that this sort of behavior is a predictable result of government granted patent monopolies.

The huge mark-ups that drug companies get as a result of this monopoly give drug companies an enormous incentive to misrepresent the results of drug trials. Not mentioning patent protection in the context of an article like this would be like reporting on the black market in blue jeans in the Soviet Union without pointing out that there was a shortage of jeans at the prices set in stores run by the government.