What Price Are YOU Now Charging to Supply the Drug?

by Don Boudreaux on July 22, 2014

in Health, Innovation, Seen and Unseen

Here’s a letter to an e-mail correspondent (whose name is used here with her kind permission):

Ms. Molly Mills

Dear Ms. Mills:

Thanks for alerting me to Joe Nocera’s article on the cystic-fibrosis wonder drug Kalydeco - a drug that now costs each patient more than $300,000 annually (“The $300,000 Drug,” July 18).  You ask how my “free market principles justify a private business charging sick people this extortionate price.”

While admitting that this price is unusually high - and with mentioning here in passing that Mr. Nocera himself notes that Kalydeco’s maker, Vertex, “provides the drug for free” to uninsured patients - let me answer your question by first asking some of my own.

How much would each person suffering from cystic fibrosis have to pay you to devote the time and resources necessary for you to supply him or her with a drug such as Kalydeco?  Are you prepared to supply such a drug to each patient at an annual price of, say, only $5,000 or $500 or $50?  Indeed, are you prepared to supply such a drug to each patient even at an annual price of $300,000?  I suspect not.  I suspect also that, unlike Vertex, you spend no time working to invent and supply life-saving drugs, and that - also unlike Vertex - you are unwilling to supply people with a drug such as Kalydeco even if you are offered a price twice that now charged by Vertex.

Moralizing is easy, cheap, and fun.  You and Mr. Nocera excel at it.  But I ask you and him to please think twice before either of you - who do absolutely ​nothing to relieve the suffering of cystic-fibrosis patients - upbraid others (the owners of Vertex) for doing at least something to relieve such suffering.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

P.S. I believe that intellectual-property statutes in the U.S. now provide patent rights that are too broad and too long-lived.  But your complaint isn’t premised on faulty intellectual-property regulation.

Ms. Mills ended her e-mail to me by asserting that ”[a]ll sick people should have access to drugs at affordable prices!!!!!

Also, I just discovered that the Wall Street Journal‘s James Taranto has here his own response to Nocera’s uninformed moralizing.

UPDATE: My friend Frank Stephenson e-mails the following sensible point in response:

You might also ask her what she does to have the FDA streamline its approval process thereby reducing costs and barriers for creators of new drugs.

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