Government regulation of the medical industry, particularly making buying health insurance mandatory and granting monopolies on ideas, have made medication unaffordable. People in need of medication are justifiably pissed about this, especially since many pharmaceutical companies feel the market is regulated enough to make it safe for them to continuously jack prices up. Unfortunately their anger is only resulting in more price increases because they believe more government regulatory power is the solution.
But more government regulatory power only exacerbates the problem because it further pushes competition out of the market and competition is the solution to high medication prices:
Turing Pharmaceuticals, the company that last month raised the price of the decades-old drug Daraprim from $13.50 a pill to $750, now has a competitor.
Imprimis Pharmaceuticals, Inc., a specialty pharmaceutical company based in San Diego, announced today that it has made an alternative to Daraprim that costs about a buck a pill—or $99 for a 100-pill supply.
“While we respect Turing’s right to charge patients and insurance companies whatever it believes is appropriate, there may be more cost-effective compounded options for medications, such as Daraprim,” Mark L. Baum, CEO of Imprimis, said in a news release.
What government enabled to run up to $750 per pill a single competitor brought down to $1.00 per pill. In a free market this is the norm. Absent of monopolies on ideas, mandatory purchasing of services, absurdly high testing costs designed to favor politically connected established manufacturers, and other forms of regulation on medical products there is actually a very large pie. And if anything can be said about markets if there is pie everybody wants a piece. Different providers attempt to grab a piece in different ways.
Some sell a premium good or service, some will provide the most inexpensive option possible, and many others will fall somewhere in between. Rolex continues to thrive by providing a premium wristwatch to its target market just as Timex continues to thrive providing very affordable wristwatches.
The medical market is no different. Some medication providers will charge a premium while others will provide an inexpensive option because the two portions of the market ensure enough pie is available for both and enough pie being available for both ensures both portions of the market are served.
If you become outraged when medical companies jack their prices up don’t beg the government to do more of the same. Instead do whatever you can to help expand a free market.