… than Trump’s underwhelming new plan.
It’s always refreshing to come across a policy paper that is simultaneously readable, sensible, and brief . . . because it’s so unusual.
The smart folks at the Goodman Institute have just produced such a paper.
Titled ‘Why Are Drug Prices So High?’, the two-page paper by economists David Henderson and Charles Hooper is actually better than the Trump Administration’s big, complicated new drug-price-reduction plan.
Here’s the Goodman paper’s executive summary (all of it):
Why are pharmaceutical prices so high while the prices of so many other items we buy are low and even falling? One reason is a lack of competition. Drug companies typically have a monopoly on the drugs they sell, and monopolists charge higher prices than they would if they had to compete.
The solution seems straightforward. If we want lower drug prices, we need more competition and there are at least three ways to get it: (1) reduce the FDA’s power to keep drugs off the market; (2) allow more over-the-counter sales of drugs; and (3) allow pharmacists to prescribe drugs.
For busy readers, here’s a summary of the authors’ simple, yet extremely powerful proposals:
- Deregulate generic drugs.
- Encourage more off-label uses of drugs.
- Move more drugs to over-the-counter (OTC) status.
- Allow pharmacists, in certain cases, to prescribe drugs.
And my favorite:
- Make new drugs satisfy a ‘safety’ standard only, rather than ‘safety and efficacy,’ as has been required since 1962. (Doctors and patients have to discover ‘efficacy’ anyway.)
There are simple ways to slash drug prices, and they’re not that complicated.
By the way, speaking of generic drugs: another great idea is to pass the bipartisan CREATES Act, which I wrote about a few months ago.
Plaudits to the Goodman Institute for a refreshingly useful—and readable—contribution to the national drug-price debate.