In a recent article, Robert Reich says the reason pharmaceuticals are so expensive in America, and their profits so big, is because “we let it.”
Reich identifies “product hopping” as a primary cause of high, pharmaceutical prices.
When a patent expires, just a small change to the patented product renews the patent, referred to as “product hopping.”
“Product hopping” leads us to the “natural monopoly” argument (the “organizational problem” I keep talking about).
Big pharma argues its patents are a natural right–the use of private property as a person (or a corporation) sees fit in “the pursuit of happiness.” Funny, though, how “nature” takes over when the patent expires!
The free market is the risk to be avoided because it works, not because it doesn’t.
Monopolies naturally yield to inflation and unemployment–the two things that otherwise drive us to peonage, existing a “zero-marginal-cost society.”
A free-and-unconsolidated marketplace reduces inflation, unemployment, and the need for big government. Reich, however, says it doesn’t because big government resists free-market alpha risk by supporting patent rights, which endows a so-called “natural monopoly” by means of positive law.
If we leave it to natural law, however, to regulate big-business and its pricing power, inflation and unemployment is controlled with the greatest facility, offering maximum utility, quite naturally, on demand.
Reich argues that pharmaceutical prices are high because the free market does not work, but it will if “we let it.”