The NYT discussed concerns that the new health care bill will do little to address the problem of overuse of certain medical procedures that drive up costs. Remarkably, the article never discusses patent monopolies, which are a major factor driving up costs and excess use.
Patents lead to excess costs for two reasons. First, by granting monopolies, patents push up the price of many drugs and medical equipment by several thousand percent above their marginal cost. This is especially true of drugs, almost all of could be profitably sold for just a few dollars a prescription in a free market.
The other reason that patents drive up costs and lead to misuse is that the rents provided by patent monopolies provide an enormous incentive for manufacturers to mislead patients and doctors and push their products in cases where they may be inappropriate. In pursuit of patent rents manufacturers spend an enormous amount of money marketing their products and often conceal information that reflects poorly on its usefulness.
It is surprising that there is no discussion of this basic economic issue in this sort of article. There are more efficient mechanisms to support biomedical research.
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