Ahead of the November election, President Biden and his team have been looking back on his “legislative achievements'' to attract voters. An area of focus as of late is his policy and goals regarding healthcare, in which he has said, “Finally, finally we beat Big Pharma. Finally.”
Major policy changes under the Biden administration have dealt with insulin, inhaler, and more general prescription drug prices. While these achievements may be attractive to voters, this approach to healthcare costs is another example of attacking the symptom and not the disease.
Insulin prices are always a hot-button topic in America. Many voters are outraged over companies that exploit people with this chronic condition by charging such high prices. In any sort of market-oriented economy, companies are going to try to maximize their profits. But the ideal is that a free market would be self-regulating, in that competition would serve as a barrier to price gouging rather than actual government legislation.
In reality, we have a regulatory system that hinders competition and allows big corporations to find more power than they would otherwise have in a free market. This is especially clear in the insulin market, in which only three companies produce 90% of the insulin in America. The main issue with the healthcare industry is patent laws, mostly due to the patenting process.
The patenting process involves something called the “orange book.” This orange book is where exclusive rights to produce a certain product are held. The issue is that names are held in this book for at least 30 months, even if the patent is being challenged legally. Essentially, insulin companies have been keeping their name in the orange book for things related to insulin, like the injection device. Despite being unrelated to the actual insulin, the protection is extended to the entire product, which prevents competition from entering the market. And they continue to make minor developments and refile for new patents, consistently delaying the ability of any competitor to challenge them.
So when Biden touts the achievement of capping certain prices for insulin, he’s not actually showing a feat of defeating the problem in healthcare. The problem is not companies having the freedom to price their goods where they choose but rather the freedom to act without competitive forces. The patent system created and enforced by this government is the reason insulin prices are where they are, but Biden makes no mention of it.
When looking at the inhaler price caps, we can again see the non-necessity of government regulation. Despite the way it’s portrayed, these price changes for inhalers did not come as a result of any actual government legislation. Rather, companies were facing great public scrutiny and catching the eye of the government for their abuse of the patent system. So again, we see that the government is taking credit for attacking an issue they created in the first place. Obviously, corporations are the ones who set the prices, but why are we expecting them to be altruistic?
The most common critique of an ideal free market system is that it will allow for these monopolies and oligopolies, but when they come into existence in the already regulated market, the answer continues to be more regulation. The healthcare industry in America is riddled with problems that extend beyond those discussed, and at some point, there needs to be a different approach. President Biden has maintained the same approach and touts these achievements, but in reality, they give no insight into his ability to analyze the root of an issue and initiate the necessary systemic change.