Why Are Drugs So Outrageously Expensive?
The drugs industry is the most profitable on earth. It has two branches — an illegal one consisting of drug cartels and a legal one consisting of drug companies.
The huge profits derived by both branches accrue from the same source — monopoly price gouging. The monopoly on the illegal side is enforced by guns; on the legal side by patents, lawsuits, mergers, advertising, fake research, and bought politicians.
Both markets are asymmetrical — all the power is with the seller, the consumer is desperate to buy and therefore is price insensitive. Addiction and fear of illness are among the strongest of motivators.
The drug cartels are murderously ruthless; the drug companies only marginally less so. Twice as many people now die from prescription drugs as from street drugs, but this does not prevent the drug companies from pushing harmful products for profit.
In a previous blog, I pointed out that we are fighting the wrong war on drugs- a forty-five year losing battle with the cartels that we cannot possibly win, while neglecting the battle against the Pharma monopoly that we could not possibly lose.
I will indicate the various ways Pharma has gained and protected its monopoly power and then suggest ways of restoring restraint and price competition:
● Buying Politicians: Pharma has one of the strongest lobbies in Washington and is one of the biggest contributors to political parties and candidates, especially on the Republican side of the aisle. Its influence is also augmented by the revolving door- people who serve as legislators or staff or regulators during part of their careers become highly paid Pharma lobbyists during other parts. The crazy result- although Medicare is the world’s biggest buyer of drugs, it is prohibited because of Pharma political power from negotiating their price. US —> Read More