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Home Publications Blogs Beat the Press The "Free Traders" are Against Free Trade: Prescription Drugs

The "Free Traders" are Against Free Trade: Prescription Drugs

Tuesday, 25 March 2014 04:52

The NYT had a good column on the government's efforts to prevent people from buying lower cost drugs from foreign countries. The column makes the point that the Food and Drug Administration has misleadingly tried to claim that the issue with foreign drugs is one of safety when it really is just pharmaceutical industry profits. If people know that they can buy drugs for prices that are often less than one fifth the price in the United States, they will be unlikely to buy the drugs in the United States.

The government has therefore tried to prevent lower cost drugs from entering the country. It also uses trade agreements like the Transatlantic Trade and Investment Partnership to raise drug prices in other countries. This both increases industry profits overseas and removes a potential source of low cost drugs.

Low cost drugs do undermine the usefulness of patent protection as a way to finance research and development, just as black markets in blue jeans undermined central planning in the Soviet Union. Ordinarily economists look to mechanisms that are consistent with markets rather than ones that depend on stifling markets. For some reason economists have shown little interest in any of the alternatives to patents, such as public funding through entities like the NIH, as ways to finance prescription drug research. Since these alternatives could bring patent protected drug prices down by 80-90 percent, they would offer enormous economic gains, in addition to the obvious benefits to public health.  

Comments (3)Add Comment
Additional Public Health Benefits for Government Research
written by Robert Salzberg, March 25, 2014 6:57
Currently, there is a heavy bias towards drug research that controls or reduces symptoms for large numbers of patients instead of cures. Diseases that affect small percentages of the population are generally not worth the costs of drug development.

Switching to government based drug development should shift the focus to curing diseases instead of controlling symptoms.
written by Last Mover, March 25, 2014 7:16

Wait for it. Soon sock puppets for Big Pharma will be blaming the heroin scourge in America on uninformed addicts for choosing lower prices in black markets for dangerous unregulated heroin products ... over far higher priced legitimate painkillers confirmed safe by the FDA ... which is why they switched in the first place ...
Crazy talk
written by S. Ken Brown, March 25, 2014 12:28
I sit on a patent committee where I work. When I mention the downsides of IP I get this, "that's crazy talk, boy", from my peers. They don't get it and truly believe the world's a better place. Of course in the same breath they wish for the demise of product liability because it stifles innovation.

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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.