Dean Baker on Drugs

I\’ve been deperately trying to get my head around Dean Baker\’s proposals for reducing the costs of pharmaceuticals.

Essentially, as I understand it, do not allow patents on drugs. Instead, pay development costs directly from tax revenue and thus the drugs will be sold at marginal cost, rather than having to bear the costs of their development as well.

This would of course require that the bureaucrats allocating the tax money were wise enough (and unbribable enough) to only fund the good drugs. And central planning has worked so well, hasn\’t it?

But it all becomes clear in this comment he made to one of my questions:

We can also radically reduce the amount of research wasted developing copycat drugs, since there is much less incentive for this research, absent the opportunities to gain patent rents.

So we will reduce the number of copycat drugs. So those drug firms with a successful product will in fact face less competition.

And this is going to reduce the costs of drugs?

Genius, pure genius!

5 thoughts on “Dean Baker on Drugs”

  1. I don’t think you’ve got this one quite right – if there were no patents, companies wouldn’t need to develop copycat drugs made of (similar-but) different molecules that exploit the same mechanisms in the body, which is what most current drug research consists of.

    Instead, they’ll be able to produce generic versions of the same molecule – which are much cheaper, because you know the molecule works and has been through clinical trials. All you need to do is work out a way of making it, and to show the regulator that it’s the same.

    [this doesn’t mean Baker’s is a good idea though, for the “bureaucrats picking winners” reason you mention]

  2. Why would they do that? They would be better off creating similar drugs and stressing the benefits of their version.

  3. Yes many drugs of a particular type have similar mechanisms but they also have marginal differences. This is important as in a competitive market (one can hope) such marginal differences are important and drive innovation and quality improvement. One cholesterol lowering drug may work much as another but have a better side effect profile or easier administration. Similar to how all cars will get you from A to B but some do it that bit better, with consumer choice thus driving further improvement. The benefit from accumulated marginal improvement of car quality over 20 years can be seen in any showroom, if only the same mechanism could work for pharmaceuticals……….

  4. The real benefit would be in the lack of competition and the natural cash hoarding instincts of politicians.
    This way no new and expensive drugs would be developed. No keeping alive of the marginal people – so less need for taxes on the young.
    I am sure this could all be made to sound very attractive to the average voter.

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