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After President Trump’s State of the Union Address, there seems to have emerged one common thread that is uniting the two parties. Both agree that the cost of prescription drugs is far too high in the United States. Trump mentioned it in his speech, and the theme has been invoked in countless post-speech interviews by elected Democrats.
America spends far more per capita on healthcare than other developed nations, and yet drug prices here dwarf those in other countries. In one analysis carried out by Reuters, researchers found that top-selling drugs in the U.S. cost roughly triple what their counterparts in the U.K. cost. There is clearly some sort of market failure here.
Failure - Government - Intervention - Case - Involvement
However, this failure is not because of too little government intervention. As is usually the case, the involvement of government bureaucrats has stifled competition and led to extraordinarily high prices for American patients and caregivers.
One prime way they do this is to pick winners and losers by denying generic drug manufacturers market access. Generic drugs - or biosimilars - contain very similar ingredients to brand name drugs and mirror their effects and intended usage. Generics are allowed market access after the patent on the original brand name drug has expired.
Companies - Game - System - Competitor - Market
Unfortunately, pharmaceutical companies game this system to prevent their generic competitor from ever being able to get to market. Some companies will patent their safety protocols right before the patent on their drug expires. This prevents generic competitors from using these safety protocols for their drugs, and they then cannot get approval from the Food and Drug administration (FDA). Despite the drug patent expiring, they still have an effective government-sanctioned monopoly.
The FDA and pharmaceutical companies will both then cynically claim that such a patent was necessary to protect patient safety, and that any challenges to them could allow dangerous drugs...
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