Saturday , May 8 2021

How to reduce corruption in medicine: remove money

The former editor of the New England Journal of Medicine Marcia Angell attended the NYT explaining how efforts to increase transparency did not put an end to the corrupting influence of money on medical research. His article describes various ways in which researchers who receive money from pharmaceutical companies bend research to favor their benefactors.

While the dr. Angell suggests some reforms, there is an obvious that is overlooked: take the money. Pharmaceutical companies have incentives to bend research results because patent monopolies allow them to sell their drugs at prices that are several thousand times higher than the free market price.

As any good economist knows, when the government implements an artificial barrier that raises prices above the free market price, it is creating an incentive for corruption. However, they usually think of gaps like those created by Trump's 10 or 25 percent tariffs that should punish our business partners.

They usually do not think about the corruption of patent monopolies that allow pharmaceutical companies to sell drugs for tens of thousands of dollars that are sold for a few hundred dollars as generic. But the same principle applies, with proportionally larger incentives for corruption.

The remedy of the economist would be the same in both cases: get rid of the artificial barrier. We could do this by paying in advance for research on drugs and making all results public and inserting all patents in the public domain (discussed here and in rigged Chapter 5). This would allow all new drugs to be sold at generic prices. There would therefore be no more incentive to make profits to doctors to help promote drugs.

Dean Baker he is the senior economist of the Center for Economic and Policy Research in Washington, DC.

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