… than Trump’s underwhelming new plan.
It’s always refreshing—because unusual—to come across a policy paper that is simultaneously readable, sensible, and brief.
The smart folks at the Goodman Institute have just produced such a paper, on the important topic of how to slash prescription drug prices.
Written by economists David Henderson and Charles Hooper, it’s actually better than the Trump Administration’s big, complicated new drug-price-reduction plan, and a helluva lot better than Democrats’ price-control schemes.
Here’s the Goodman paper’s executive summary, in its entirety:
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.
Missing from this list is only one item—a vitally important one: (4) end drug-company gaming of patent monopolies.
A good start on that front, by the way, would be to pass the bipartisan CREATES Act, which I’ve written about elsewhere.
That omission aside, the authors offer some sensible but powerful proposals:
- Deregulate generic drugs.
- Encourage more off-label uses of drugs.
- Move more drugs to over-the-counter status.
- Allow pharmacists, in certain cases, to prescribe drugs.
- Make new drugs satisfy a ‘safety’ standard only, rather than ‘safety and efficacy,’ as has been required since 1962. (Doctors, patients, and medical researchers all have to discover efficacy anyway.)
There are simple ways to slash drug prices. And they’re not that complicated.