The New York Times ran a terribly misguided column that argued against using price controls to contain health care costs. The reason the piece is misguided is that it ignores the fact that government intervention — in the form of patent monopolies and related protections — are the reason many prices are high to begin with. Nearly all drugs, tests, vaccines, and medical equipment would be hugely cheaper without these monopolies. 

The amount of money involved is enormous. We will spend over $750 billion ($6,000 per household) on prescription drugs and other pharmaceutical products. These drugs would likely cost less than one-fifth as much if they were sold in a free market, without government protection. It is rare that it is expensive to manufacture and distribute drugs. They end up being expensive because the government grants companies a monopoly on a product necessary for people’s health or their life. 

The country will also pay over $130 billion, another $1,000 per household, for various types of medical equipment, such as MRIs and dialysis machines. These would also be far less expensive without government-granted monopolies.

In a world without patent monopolies, a cancer drug that sells for tens of thousands of dollars for a year’s treatment might instead cost hundreds of dollars. The scans, for which hospitals bill thousands, might instead cost one or two hundred dollars. Eliminating patent monopolies would get rid of many of the hard calls in health care and most of the reason for talking about price controls.

The current system of patent monopolies does provide the financing for developing new drugs and medical devices. This funding could be replaced by increased public funding. We already spend over $50 billion a year through the National Institutes of Health and other government agencies. We could triple or quadruple this sum and let all newly developed drugs and medical equipment be sold in a free market. 

It is more than a bit bizarre that the Times would run a piece complaining about government price controls that completely ignores the ways in which government-granted monopolies provide much of the reason that anyone would propose price controls. This doesn’t mean that patents are the only problem with our health care system. 

We have allowed excessive monopolization of the market in some health care sectors, notably with hospitals in many markets. Increased competition could go far towards limiting prices. Also, increasing the supply of doctors, and especially highly paid specialists, could also do much to lower costs. This could be accomplished by reducing unnecessary restrictions that block foreign-trained doctors from practicing here, as well as increasing the number of medical residents.   

It speaks to the corruption of public debate that when the government grants a patent monopoly that allows a drug company to charge 10 or even 100 times the free market price, this is referred to as the “market,” but if the government tries to restrict the price a company can charge with the monopoly it granted, this is price controls. And this column is unfortunately the norm, not an exception.