Edwards Steps Forward on Prescription Drugs

Dean Baker
Truthout, June 18, 2007

See article on original website.

John Edwards may not end up as president, or even as the Democratic nominee, but he is having far more influence on the substance of this campaign than any other candidate. His strong opposition to the Iraq war (reversing his Senate vote in support of the war), has pushed the other leading Democratic contenders to also highlight their opposition to the war.

His proposal for universal health care, which allows businesses and individuals to buy into a government-run, Medicare-type system, was largely lifted by Senator Obama, and will certainly have a large impact on the plan that will eventually be put forward by Senator Clinton.

Last week, Edwards put forward a proposal on prescription drugs that is likely to set another benchmark for the other top candidates. Edwards proposed setting up a prize fund that would be used to buy up the patents for some important breakthrough drugs. The patents would then be placed in the public domain. This will allow the drugs to be sold as generics. With new drugs being sold in a competitive market, they will cost just a few dollars per prescription.

If drugs could be sold without government patent monopolies, they would be easily affordable for people in the United States and other wealthy countries. Supplying essential drugs for the poor in the developing world would also be a much less daunting task.

In addition, a competitive market would eliminate the cesspool of corruption that surrounds the prescription drug industry. Drug companies would no longer have an incentive to wine and dine doctors and provide various forms of kickbacks in order to get them to prescribe their drugs for patients. They would also not have the incentive to produce misleading advertisements and marketing campaigns to push their drugs to patients and doctors. Also, they would not have the same incentive to conceal research findings that show their drugs are ineffective, or even harmful.

Of course, a prize fund is not the only alternative to the current patent system and Edwards is not the first presidential candidate to speak on the issue. Representative Dennis Kucinich introduced the Free Market Drug Act back in 2004. (Kucinich also beat Edwards to the punch on the Iraq war and health care.)

This proposal would have the government directly finance the development of prescription drugs. It would roughly double the $30 billion that the government spends on biomedical research through the National Institutes of Health, while setting up a new structure explicitly for this purpose. As with the prize fund, all the patents would be placed in the public domain. This system would also require that all research findings be made public. With more openness in research, science could advance far more quickly, eliminating unnecessary duplication and hastening the development of new drugs. Even if Edwards's proposal may not be the first or the best from the candidates, he still deserves credit for bringing this issue into the mainstream of the national political debate. The patent system of financing prescription drug research desperately needs to be reformed.

This system is a relic of the feudal guild system. It survives due to inertia and the political power of the prescription drug industry. It is unlikely that any economist would try to defend the efficiency of a system that allows drugs to be sold for hundreds or even thousands of times their cost of production. Economic theory predicts that such a system will lead to massive corruption. The newspapers provide daily evidence that economic theory is correct, with endless stories of payoffs to doctors and falsified research.

On its merits, the case for the current patent system has about as much merit as marketing cigarettes to kids. But the drug industry is even more powerful than the tobacco industry. It took courage for Edwards to take on the drug industry on an issue that is its bread and butter. It will be interesting to see if the other top candidates will show the same courage.

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (www.conservativenannystate.org). He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues. You can find it at the American Prospect's web site.