This challenges the Phrma contention that US price controls would kill innovation link here. Its study identified the nationality of new drugs based on the head office of the developing company. But The Economist points out that companies have research facilities and markets in several countries so that the location of the head office of the innovating company should not matter.
The article also notes that Britain and Germany are exploring reimbursing companies based on drugs' effectiveness but doesn't address the issue of patents as a contributor to the cost of health care, instead suggesting price controls based on effectiveness would be a strong incentive for innovation and might help control the enormous increases in the cost of health care. That assumes the government agency administering the regulation isn't captured by the industry.
It is worth asking how the contemplated reforms in health care are going to control health spending and then to consider the role of monopoly, based on patents for drugs and on other measures, many under state or local control. The certification and pay scales of medical specialties which have limited the supply of primary care doctors as contrasted with specialists and the permissions to establish hospitals and other medical facilities comes to mind. Can anyone think of other monopolies prevalent in medicine?
For example, one was noted by Dean Baker who cites NPR's Planet Money piece on A Medical Mystery: Why Health Care Is So Expensive which focuses on the cost of medical devices like stents and instruments used in cardiac and blood vessel operations link here and transcript here. Baker then adds that NPR failed to mention the role of patents in making the cost of medical devices exorbitant.
It seems to me one of the most effective criticisms of our monopolistic system of health care and intellectual property is that until that system is reformed, we will not be able to control escalating health costs. That should be part of the current debate.
