Last week I saw a somewhat shabbily dressed man in the pharmacy trying to get a Covid booster. They told him it would cost $130. (It was the Moderna booster.) He said that he didn’t have this money. The pharmacist and a couple of people in line then suggested a few places he may be able to get it at a lower cost, or possibly even free. The man left and was hopefully able to get an affordable shot.

I was reminded of this incident when I read a New York Times piece on pharmacy benefit managers (PBMs). The gist of the piece is that PBMs often engage in sleazy practices that involve squeezing some drug stores, while overcompensating the chains with which they are affiliated. The result is higher prices and lower quality service, as many drug stores go out of business.

Years ago, Ronald Reagan ran around saying that we don’t need government to fix the problem, government is the problem. In the case of the high cost of drugs and vaccines and other pharmaceutical products, Reagan is exactly on the mark. The problems that people face in getting the drugs they need at affordable prices is almost entirely due to government-granted patent monopolies and related protections.

The point, which I know I make endlessly, is that drugs are almost always cheap to manufacture and distribute. In a free market it would be rare that a drug would sell for more than $30 a prescription – and often for considerably less. We would not have problems paying for our drugs and vaccines if they sold at free market prices. And there would be no such thing as PBMs in a free market. Do we have “grocery benefit managers?”

Government-granted patent monopolies create this totally avoidable problem where people have to struggle to pay for the drugs they need to protect their health and possibly their life. These can cost tens of thousands or even hundreds of thousands of dollars annually. Even if they are able to get an insurer, the government, or a GoFundMe page to cover the cost, why do we want to make people struggling with serious health issues go through this effort?

The rationale for patent monopolies is that they are necessary for the industry to recoup the research costs involved in developing new drugs or vaccines. If they spent hundreds of millions of dollars developing a drug, and then generic competitors could start producing it the day it was approved by the Food and Drug Administration (FDA), they would have no ability to earn back the money they had invested. If this was the situation drug companies faced, they would never invest serious money in developing new drugs since it would not be profitable.

This argument is completely true, but the problem with the logic is that we have other mechanisms for financing the research needed to develop new drugs. We could have public funding. This is not a secret. We currently spend over $50 billion a year to finance biomedical research through the National Institutes of Health (NIH) and other government agencies.

If we wanted to replace the patent-supported research currently conducted by the pharmaceutical industry, we would need to increase this amount by around $120 billion a year.........

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