If we want to make health care affordable, we need to rein in prices. One way to do so is to enable a free market for drugs and medical equipment, writes Dean Baker for the Center for Economic and Policy Research. If the government did not give drug and medical equipment manufacturers patent protections, competition would reign and their prices would come down dramatically.
Anyone who supports a free market, should not want drug and device manufacturers to rely on government-granted patents to set their prices sky high. The government effectively gives them monopoly pricing power for these health care products. Consequently, in 2026, the US will spend nearly $750 billion on drugs and more than $50 billion on medical devices used at home; hospitals and other medical providers will spend another $130 billion on medical equipment.
Government-granted patent monopolies are largely the reason that drugs and medical equipment are as expensive as they are. And, because they are so expensive, insurers often delay and deny people access to them through prior authorization. Americans die needlessly.
To be sure, pharmaceutical companies and medical device companies spend a good deal of money researching and developing their treatments and health care products. But, there is no reason the government cannot pay for their research and development, which it already does to the tune of tens of billions of dollars a year. Without government-granted monopolies, our government would need to triple or quadruple its investment in medical research, but we would spend billions of dollars less on health care.
Those who oppose government investment in medical research and development claim that it is wasteful. To the contrary, government spending on research and development is more efficient and less wasteful than government-granted monopolies. In fact, government investment in research could be open source, enabling companies to build on each other’s findings and steer clear of research that is unproductive and wasteful.
Here’s more from Just Care:
- Lowering drug prices will not affect innovation
- How the US should negotiate drug prices
- 2026: Trump’s drug price deals haven’t stopped drug prices from rising
- Billions in Medicare savings from Medicare drug price negotiation by 2031
- Trump’s “deals” with drugmakers result in higher prices
