Pharmaceutical patents

Published by marco on

The article Ross Douthat: Conservative Who’s Scared of a Free Market in Health Care by Dean Baker (Beat the Press) states the case with pharmaceutical patents very clearly, succinctly explaining how purported libertarian and small-government conservatives sometimes argue for government regulation. This case is a perfect example of why it’s OK to ignore the opinions of people like Douthat: they have shown time and again that they are either (A) corrupt, in it for themselves and their friends or (B) ignorant and possibly stupid and therefore incapable of engaging in productive debate.

Here’s Baker’s analysis of Douthat’s stance on health care:

“The story is that without government guaranteed patent monopolies, drug companies and medical device companies would not do all the wonderful research they are now doing into developing better drugs and devices.”

This is the classic claim. Without private industry, a return to the Dark Ages of medicine is imminent. It ignores not only the enormous amount of public money that funded—and still funds—medical research, but also a hidden subsidy, as Baker explains below.

“[…] granting these companies monopolies is a form of big government. That doesn’t get changed just because people like Douthat like the beneficiaries or think the purpose is good.

“If the government allows drug companies to pull in an extra $300 billion a year (@1.8 percent of GDP), by threatening to arrest anyone who competes with them, it is pretty much the same thing as if the government were to raise taxes by $300 billion and hand it to the drug companies.”

Economically, there is no difference. Patents are a very status-quo–friendly way of passing on the subsidy; as Baker says, in “the latter case there would be more public control over what happened to their tax dollars.” Both are government subsidies but the former is actually is a less responsible form of state government. The patent system essentially defers collection of the subsidy to the private sector. History has shown that such sectors tend toward monopoly and self-selection and self-preservation.

Do advocates like Douthat plead the case of the pharmaceutical companies because of personal kickbacks? Unlikely. More likely is that he—and others like him—are just too indoctrinated in maintaining the status quo that they can’t even see the basic hypocrisy of their views. What is highly suspicious is that their breaks from libertarian principles occur only when the beneficiaries are large corporations. Or, as Baker puts it in an addendum,

“the professed advocates of free markets and free trade are harsh opponents of freedom when it might hurt the income of their friends. […] We must recognize that the only ideology these people support is […] the ideology that the wealthy should have more money.”