As TSW's health/environmental expert, this green lifestyle blogger/organic gardener has investigated health and environment issues. Her paranormal encounters further fuel her search for truth. SallyPainter has 20 post(s) at Top Secret Writers
Have you ever wondered why a particular drug company has a specific cure for a disease and is the only company allowed to manufacture the drug? This is done by what is commonly known as government grant monopolies and it’s prevalent in the prescription drug industry.What’s known as “trade protection” has been argued to be responsible for raising consumer prices by as much as 15 – 20%. Patent monopolies can also have the same effect on the drug industry. (1)
The economics of government granted monopoly is “a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement”. (1)
Federal and state governments can legally use coercive monopolies. In these instances specific government agencies hold and enforce the monopoly instead of an individual or corporation.
In fact, the government branch holding the monopoly can require other companies or agencies to work together on a given project, reporting to the government or another designated agency or company appointed by the government. (2)
There are degrees of granted monopolies that are not coercive but there are clearly not any competitors. This is known as non-coercive monopolies or efficiency monopolies. Two components of these types of granted monopolies are no competition and no enforced exclusion of other drug companies.
Dean Baker’s Report
Dean Baker, Co-director of the Center for Economic and Policy Research, published a report in Chemistry World on the current patent system and how it supports prescription drug research. Baker stated:“Patent protection typically raises the price of prescription drugs from a few dollars a prescription in a free market to hundreds or even thousands”.He points out that India and the UK governments control the pricing of drugs, so price gouging often seen in the US is avoided. He explained that “if all drugs were available as generics, paying for them would be a relatively minor issue except for the very poor.” (3)
Another aspect of patented drugs is the potential of drug companies marketing the prescriptions for other purposes instead of the ones approved. This has happened quite frequently in the recent past.
Baker makes an excellent point that the current system:
“Also gives the incentive to deliberately conceal research findings that reflect poorly on a drug. GlaxoSmithKline has recently been fined a record $3 billion (£1.9 billion) for using these illegal practices”. (3)By the same token, patent monopolies can also have the opposite effect by preventing research into other possible cures or medications. Scientists aren’t encouraged to seek out other possible diseases that current drugs might treat.
The money is the determining factor and if it’s earmarked for a specific drug research, then it isn’t cost-effective to go off exploring other possible diseases or drugs. The pharmaceutical company must make a profit, so the research and end result drug must pay off.
Advocates for abolishing patent and grant monopolies for prescription drugs state that these have become corrupted with political favoritism. Baker makes another unsettling point about the political and economical impact that patent monopolies have on law makers.
“Immediately after the US Congress approved an industry-friendly bill to subsidize prescription drugs for senior citizens, the head of the relevant committee resigned to take a lucrative position as the president of the US pharmaceutical industry’s trade association.” (1)
Senator Calls for Eliminating Patent Monopolies
In May 2012, Senator Bernie Sanders chaired the Senate Subcommittee on Primary Health and Aging, at which time he “called for eliminating legal monopolies that make HIV/AIDS medicine”.He stated that these monopolies are solely responsible for the exorbitant cost of these drugs to US citizens and explained that many patients die because they simply cannot afford to pay for the drugs. (5)
The Senator opened the hearing with his statement that:
“The U.S. has – by far – the highest prices in the world for prescription drugs. The simple fact is that the prices of patent medicines are a significant barrier to access to health for millions of uninsured and underinsured Americans and people die because of it.” (5)In his proposed legislation, S. 1138, the federal government would create a $3 billion annual prize fund to reward the discovery of new treatments for HIV/AIDS.
To give some idea of the massive chasm of cost to a patient in the US versus a patient outside the US, Sanders cited the drug Atripla that is used in HIV treatment.
The drug costs the average American patient $25,000 per year, while the FDA approved generic would cost the patient only $200 per year. The generic version is not available for sale in the US. (5)
The government granted monopoly of prescription drugs penalizes American citizens with over-priced drugs. Finding alternative ways to ensure free trade within the pharma industry seems a distant dream for some lawmakers. Until government regulations and programs are revamped, the American patient will remain the one suffering while Big Pharma continues to profit in a grant monopoly system.
References & Image Credits:
(1) Princeton
(2) Wikipedia: Government Granted Monopoly
(3) Royal Society of Chemistry
(4) Senator Sanders
(5) RambergMediaImages via photopin cc
(6) Ano Lobb. @healthyrx via photopin cc
The Government Granted Monopoly of Prescription Drugs | Top Secret Writers
