The Scientific Activist Takes on the Free Market Myth

[LongTomH]

The Scientific Activist blog takes on questions at the intersection of science and public policy. The blogger is a Rhodes Scholar and biochemistry grad student at Oxford University.

His most recent post: Free Market Frenzy takes on the myth that total deregulation will produce the lowest prices for consumers. To be specific, he considers deregulation of energy and our "free market" big pharma industry.

The basis of the argument for deregulation depended on price competition between power suppliers, but due to a lack of real competition in most areas, prices have only gone up. In fact, deregulation was sold as a silver bullet that would address a variety of issues beyond just lowering prices, including encouraging infrastructure updates and modernization. However, in real life…

The blogger, Nick Anthis, addresses the pharmaceutical industries argument that the high cost of drugs is necessary to cover the high cost of research to provide a steady stream of new "wonder drugs."

The idea that the income generated from a drug is the most important factor at play here seems surprisingly cynical coming from an industry purported to have the humanitarian goal of alleviating human suffering from disease. Although I have already written at length about this, I should reiterate that the drug industry is indirectly, but heavily, subsidized through federal funding of biomedical research. I’m pretty sure that voters support this funding for the promise of medical breakthroughs and new medications, not to give big pharmaceutical companies new vehicles for making bundles of money.

Although there are plenty of differences between the energy and pharmaceutical industries, the drug companies’ previous use of research and development costs as justification for high prices isn’t that different from energy companies preaching the benefits of deregulation. As the logic of both of these arguments begins to break down, it appears that the lessons learned in one may have some relevance to the other. Regardless, based on how things have gone in these industries, the idea of paying a price for a good or service based on what it actually costs to deliver doesn’t sound all that unreasonable anymore.

Follow some of his links. The examples will infuriate you if anyone in your family depends on costly pharmaceuticals.