Chairman of the House Government Oversight and Reform Committee, Jason Chaffetz (R-UT) says that the free market will solve the problem of rising pharmaceutical prices.
What Mr. Chaffetz is referring to, however, is the “natural monopoly” model that both Democrats and Republicans say is the natural outcome of free-market economics. The profit margin, which is really high for big-pharma because of both patents and consolidation, simply measures the usefulness of the products it makes.
OK, so, Mr. Chaffetz is saying that if the government does not interfere with the market solution, then big-pharma will consolidate the competition that makes for the solution, thus yielding to the problem in the form of the solution–which is not at all too bright!
The evidence he uses to support his argument actually resists it.
If there is one thing we know, the free market works to reduce prices and increase quality–exactly what capitalists (like big-pharma) don’t want. If government operates to ensure it is really a free-market solution in priority (effectively reversing the incentive), seeking the margin of profit (gaining market share) naturally results in lower prices and higher quality BY DEFAULT.
It is something to really believe in because it actually works, naturally organizing a power structure that puts The People in control of the risk proportion, rewarding innovation with a marginal profit, which is not the model that Mr. Chaffetz, for example, is describing. Instead, he is advocating for a model (the “natural monopoly” model) that says the free market is inherently inefficient because it does not support a rising margin of profit, but resists it. That resistance (listen up!) is what makes the free market work–expanding the number of “makers” and reducing the number “takers” (reversing the perverse identity of capitalism) at the margin–every time!