Reply #8: Yes -- The Patent Monopolies are a Big Part of the Problem [View All]

Pharmaceuticals that receive drug patents are given a temporary monopoly to sell that drug. That solution works in other industries, like electronics. But the extraordinarily high prices of patented drugs and the excess profits in the pharmaceutical industry shows that that hands-off approach is harming consumers as well as other parts of the medical industry.

Competition does not solve the problem as does in many industries and it's supposed to according to free-market theory. First, patents are intended to be temporary. But the field is moving so fast that by the time patents expire, there's often a new set of drugs available. Second, excess profits inspire competition. But other companies that develop competing drug charge prices just as high. Third, these drugs heal sickness and prevent death. Leaving them unregulated is economic Darwinism with the lives and health of the population.

The solution is government tariffs for patented drugs. Pharmaceuticals should be allowed to charge enough to cover the costs of research, including a portion of failed research for drugs that didn't make it. They should be allowed a higher rate of return than many industries because of the inherently risky nature of the business (as shown by the volatility of the stock of companies that make new drugs).