April 15, 2012
Readers were no doubt wondering after seeing this piece on how insurers are trying to avoid being forced to pay for some new high-cost drugs. These drugs, which can make a huge difference in survival rates for cancer and other diseases, can cost tens of thousands or even hundreds of thousands of dollars a year.
The key point missing from this piece is that these high costs are entirely due to the patent monopoly given to drug companies by the government. These drugs could almost invariably be produced for less than a couple of hundred dollars a year. Needless to say, there would not be big fights between patients, insurers and the government if the drugs sold for $200 a year.
Of course we would then need an alternative mechanism to finance research, but readers will not even understand the problem if they don’t realize it is the patent monopoly that creates high cost drugs, not the fundamental economics. This realization could lead to a consideration of better alternatives.
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