When the government imposes restrictions that artificially raise prices above the competitive market level, economic theory predicts that producers will engage in anti-social rent-seeking behavior to maximize their rents. Drug patents, which raise drug prices by several hundred percent above the competitive market price (sometimes several thousand percent), lead to all sorts of corruption, just as economic theory predicts.
Unfortunately, economists show relatively little interest in this interference with the free market. Fortunately, the NYT shows more interest. It has a good article on doctor run foundations that receive large payments from drug and medical supply companies. These foundations tend to produce research that shows the effectiveness of their donors' products.
If you enjoyed this article, please consider making a tax-deductible donation today. For over 30 years, The American Prospect has delivered independent reporting that exposes corporate power, investigates political corruption, and analyzes threats to our democracy. Unlike many media outlets, we’re not owned by billionaires or corporations—we’re powered by readers like you.
Today’s independent journalism faces unprecedented challenges. Your support makes our reporting possible and keeps our work free and accessible to all. Whether it’s $5 or $50, every contribution helps sustain our nonprofit newsroom.
Join our community of supporters and make a donation today to help keep independent journalism thriving.
Copyright 2025 | The American Prospect, Inc. | All Rights Reserved