Healthy Skepticism Library item: 1789

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Journal Article

Baker D.
A free market solution for prescription drug crises.
Int J Health Serv 2004; 34:(3):517-26

Abstract:

The cost of prescription drugs is imposing an ever greater burden on families and varying levels of government. The vast majority of this cost is attributable to patent protection, since most drugs are actually relatively cheap to produce. The temporary monopolies provided by patent protection have been the main mechanism through which corporations have financed their drug research. This article examines the efficiency of publicly supported drug research relative to the current patent system. The author shows that even if publicly funded research were considerably less efficient on a dollar-per-dollar basis than patent-supported research, there would still be enormous gains from switching to a system of publicly supported research. The main reason for this conclusion is that patent monopolies lead to enormous economic distortions, including expensive sales promotion efforts, research into “copycat drugs,” incentives to conceal unfavorable research findings, and other inefficiencies that economic theory predicts would result from a government-created monopoly. The gains from publicly supported research, coupled with a free market in the production of drugs, could reach into several hundred billion dollars annually within a decade.

Keywords:
Biomedical Research/economics* Drug Costs* Drug Industry/economics* Drugs, Generic/economics Financing, Government/economics* Patents* Research Support/economics* United States