May 20, 2012
The Washington Post showed that it clearly does not believe in free market fundamentalism. It ran an article on a bill proposed by Vermont Senator Bernie Sanders to replace patent monopolies for prescription drugs to treat AIDS with a prize system. The headline and second sentence of the piece described the system as “radical.”
Under this proposal, the government would pay to buy the patents for successful drugs. These drugs would then be placed in the public domain so that the drug could be produced as a generic in a free market. In most cases eliminating the patent monopoly would reduce the price of the drug by more than 99 percent. Drugs that would sell for tens of thousands of dollars a year with patent protection would sell for a few hundred dollars in a free market.
It is not clear why this idea would be viewed as “radical.” Usually the Post and other pillars of the political establishment are major proponents of free market economics. (There are other mechanisms that can be used to replace the funding that comes from patent monopolies. For example, the government could increase the $30 billion that it already spends each year on biomedical research through the National Institutes of Health.)
The article included some peculiar comments that may have misled readers. For example, it noted that an AIDS drug that sells for $25,000 a year here can be purchased for $200 a year in sub-Saharan Africa. It then told readers:
“The huge price gap is a result of a deal struck with brand-name U.S. drugmakers under the President’s Emergency Plan for AIDS Relief, which provides anti-retroviral drugs to 3.9 million people in developing countries. In 2003, to reach more patients, brand-name drugmakers agreed to let overseas drugmakers sell generic, low-cost versions of their patented AIDS drugs outside the United States.”
Actually, the price gap is due to patent protection in the United States. Generic manufacturers have the right to produce drugs without patent protection in large parts of the developing world. They don’t need permission from U.S. drug companies. (They are losing this right in the next decade.)
The article also told readers:
“In December, former president Bill Clinton called for a more direct solution to the problem of high AIDS drug prices: He asked Congress to allow currently patented AIDS drugs to be made available in the United States as generics.”
Actually this would be a more radical proposal than what Senator Sanders put forward. Sanders wants to compensate the drug companies for their research. Clinton’s proposal, as described in the Post, would simply take away their patent monopolies without compensation.
Finally the piece includes a comment from Mark Harrington, the executive director of Treatment Action Group:
“For drug companies, I don’t know how they will get a drug to market and then hope the prize fund will find out five years later they did a good deed and they’ll get this prize. It seems very indirect.”
Of course as it stands now, drug companies must research a drug, bring it through the FDA approval process and then hope that it finds a large enough market to cover its research costs. This is not in any obvious way more direct than getting reimbursement through a prize fund.
In spite of the flaws in this piece the Post deserves credit for giving attention to Sanders’ bill. The pricing of pharmaceuticals is an incredibly important issue. Currently the country spends close to $300 billion a year for drugs that would sell for less than $30 billion a year in a free market. The $270 billion difference is roughly five times as large as the amount of money at stake in extending the Bush tax cuts to the richest 2 percent.
If the amount of attention devoted to issues depended on their importance in people’s lives rather than the priorities of politicians, we would hear far more about patent protection for prescription drugs than we do about tax policy. Unfortunately this is not the case, but the Post piece is at least a small step in the right direction.
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