The debate over prescription drug pricing is a great testament to how deeply propaganda can affect people's thinkings. The NYT had a piece on lowering prescription drug prices by Jay Hancock, a reporter for Kaiser News Service.
Hancock runs through a range of mechanisms that the government can pursue to make drug prices lower. Incredibly, he never mentions what would almost certainly be the most simple route: stop making drugs expensive with patent monopolies.
Drugs are almost invariably cheap to manufacture. The reason they are expensive is that we give drug companies patent monopolies and related protections which severely restrict competition in the market. We will spend roughly $450 billion this year on prescription drugs. If drugs were sold in a free market, without patents or related protections, these drugs would almost certainly cost less than $80 billion. The difference of $370 billion is a bit less than 2.0 percent of GDP, it is more than five times the annual food stamp budget. In other words, it is real money.
We do have to pay for the research, but there are other more efficient mechanisms, most obviously direct government funding. We currently spend more than $30 billion a year on research through the National Institutes of Health. If we tripled this figure we could likely replace the $50 billion that the industry claims to spend on research each year. (A mechanism for funding is described in my book Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer [it's free].)
Anyhow, it is incredible that the idea of not having the government grant the monopolies that make drugs expensive in the first place never even made Hancock's list. This is not a new idea, it has been pushed by Nobel Prize-winning economist Joe Stiglitz, cited as a route for future funding by a UN panel, and even considered seriously by an OECD meeting on the topic. It should at least warrant a few sentences in what is supposed to a far-reaching NYT piece on drug pricing.