I have been thinking about how prescription drugs are as expensive as they are here, and I was also thinking about why that is. The pharmaceutical industry does make a big profit off of the American public, and they charge us more than they charge people in other countries (because the other countries demand that.) I was wondering why they can get away with the prices they charge.
Fundamentally, they can charge so much, because for any given product, they hold a monopoly. So long as they control the patent for their product, a customer needing that drug must pay the price set by the pharmaceutical company. Other drugs may treat the same problem, but ultimately, the circumstances and specific issues with the patient will determine which drugs are subscribed. Until the patent expires, no other company may compete with the patent owner.
Don't get me wrong; patents are good things. They encourage companies to innovate, and they protect the small-time entrepreneur from large companies that can squash them with economies of scale. It's just that medicine doesn't behave like other products; you need it, and you need a specific kind. A real economist could probably give you a word and a more complete description of the kind of problem, but I think that you get the idea. But what to do?
Because these companies are collections of monopolies, and because their behavior reflects that of bad monopolies of the past, I think that trust-busting regulation must come into play. The basic idea is to prevent companies that develop drugs from being the same companies that manufacture drugs. If you own a company that develops drugs, you get to sell the rights to manufacture it to other companies. In this way, you get compensated, and you have an incentive to sell manufacturing rights to more than one company. These companies, in turn, will have to compete with each other for quality and price for each and every drug on the market.
Such a regulation would be better than price-fixing or other regulatory schemes, because it works within the framework of a market economy, and it highlights one of the strengths of a market econmy-- competition.
I know that this idea isn't so much about campaign politics, but I've been thinking about it for a while. When and if the Democrats take control of the House, I would love to see something like this come forward. I don't have much hope that it will, even in a Democratic Congress, but I just wanted to get the idea out there.