• Tag Archives Ron Paul
  • Dr. Ron Paul: Unleash the Market to Lower Drug Prices


    Whenever politicians say they’ll “do something” about high drug prices, disastrous discussion of price controls isn’t very far behind. It makes no sense because price controls lead to shortages and rationing which, in the case of pharmaceuticals, could cost lives.

    Proponents of price controls pretend that high drug prices are a result of a free market in pharmaceuticals. This is the exact opposite of the truth. The real reason pharmaceutical prices are so high is government policies that allow big pharmaceutical companies to exclude their competitors from the marketplace. Therefore, an effective way to bring down the price of pharmaceuticals and increase access to the drugs is to reform by changing government policies that stifle the development of a competitive market in prescription drugs.

    The CREATES Act

    What we need is legislation that would inject needed competition into the drug industry, and we have that in the CREATES Act (H.R.2212;/S. .974). The CREATES Act creates a way to lower drug prices. It does so by making it much easier for drugs with expired patents to be sold in less expensive, generic brands.

    Support for the bill crosses party and ideological lines. Liberal Democrats such as Dianne Feinstein and Richard Durbin and very conservative Republicans including my son Rand and my Senator Ted Cruz support this bill. Also included in the coalition are organizations as far afield as my Campaign for Liberty and the AARP.

    This bill is broadly popular because it reforms government policies that allow big drug companies to obtain long-term monopoly protection by keeping their generic competitors out of the marketplace. This is key. Patents grant makers of new drugs temporary monopolies only, so they can recoup huge investments in research and development and use some of their profits to chase other cures. Once a patent has expired, other drug manufacturers are supposed to be able to reproduce a “generic” but effectively identical version of that drug so that consumers may purchase quality medicines at lower prices.

    Whatever you think of this system (and there are good libertarians on all sides of this debate) most agree the current system is not working the way Congress intended. This is because too many drug companies exploit the complexity of the post-patent rules to make it very time-consuming and costly for competitors to enter the marketplace. They can even withhold supplies of their drugs from companies that—under Food and Drug Administration (FDA) rules—must obtain them to make sure they’re copying them correctly. The result is the big drug companies are able to extend their de facto monopolies well beyond the intent of Congress, thus keeping the supply of the drugs artificially low and prices artificially high.

    In one case that will not go away, drug maker Turing refused to sell its off-patent drug Daraprim to would-be competitors. That might not have been so bad but for the fact that the same company then turned around and hiked its prices from $14 a pill to $750. That they could get away with that with off-patent medicine is a sign that something needs to change.

    The long-term solution is to reduce the power of the FDA and create a true free market in pharmaceuticals. The CREATES Act takes a step toward creating a competitive marketplace by ensuring generic drug companies can obtain the necessary samples to get FDA approval for their products and thus allow consumers to benefit from lower prices.

    Ron Paul

    Ron Paul is an American author, physician, and former politician. He served on the board of trustees of the Foundation for Economic Education.

    This article was originally published on FEE.org. Read the original article.

  • Bernie vs. Ron Paul: There’s No Comparison

    Super Tuesday may have been the beginning of the end for the Bernie Sanders campaign, but the ideas that propelled it are likely to linger for quite some time. With some writers comparing Bernie to Ron Paul (not in terms of economics and philosophy, of course, but as insurgent candidates), now seemed like an opportune moment to examine the Sanders message and legacy, and compare it to Ron’s.

    Like Ron, Bernie surprised all the pundits with his fundraising, polling, and electoral success. In fact, so successful has Sanders been that Hillary Clinton has been reduced to a pathetic and unconvincing “me, too” campaign — I can be just like Bernie, if that’s what you rubes want!

    Bernie has gained a lot of traction from his complaints that Hillary is in the tank for Wall Street and the big banks. He’s likewise pointed to the six-figure honoraria Hillary has earned from speeches given to the big banks.

    The best the now-hapless Bill Clinton could do in reply was to note that Bernie, too, had been paid to give speeches. Technically, Bill was right. Bernie had earned money from public speaking: a whopping $1,800 over the course of a year. The year before that, Bernie had earned $1,300 from public speaking. All of this money was donated to charity, as is the requirement for US senators.

    It’s true that Bernie is better than Hillary on foreign policy, but in keeping with Rothbard’s Law — everyone concentrates in the area in which he is worst — Bernie speaks very little about issues of war and peace. And even there, consistency and principle are elusive: he supported Bill Clinton’s bombing of Serbia over Kosovo, an act of terror based on propaganda that rivaled anything George W. Bush ever peddled. Sanders favors the ongoing drone campaigns, too, and even supported the F-35, one of the biggest boondoggles in the Pentagon’s long and sorry history.

    Bernie’s primary legacy will be to have resuscitated the idea of socialism in the minds of many Americans. It is a very confused socialism, to be sure. The young people who follow Bernie can’t even seem to define socialism, according to recent surveys. And in fact Bernie’s economics is really just a hyper-Keynesianism rather than out-and-out socialism. But by suggesting that the Scandinavian countries constitute a model that the United States should emulate, he has encouraged the idea that only large-scale, systemic change in the direction of vastly increased government power can produce the kind of society Americans want.

    Capitalism ought to be our default position, since it conforms to the basic moral insights we acquired in our youth: keep your word, live up to your agreements, don’t take what doesn’t belong to you, and do not cause anyone physical harm.

    But thanks to years of propaganda to the contrary, socialism has come to appear to many people as not simply a morally plausible position but clearly and obviously desirable and superior to the capitalist alternative. The free market, they are convinced from what they recall from their elementary school textbooks, leads to “monopoly” and oppression.

    Bernie speaks as if the system is rigged against the people because of business influence in government — a fair enough point, as far as it goes — but it’s hard to take this criticism seriously when his proposed solution is to extend the influence of politics over more and more areas of life and increase the powers and scope of the very government he is supposed to be criticizing.

    The Sanders narrative is rooted in two major historical claims, both of them dead wrong.

    First, Sanders believes “capitalism” was to blame for the 2008 crash. But as mises.org readers know, that downturn, like the Great Depression before it, was preceded by years of Federal Reserve credit expansion. According to the Austrian theory of the business cycle, the artificial lowering of interest rates below free-market levels sets in motion an unsustainable economic boom. The economy is set on a path that could be sustained only if real resource availability were greater than it really is. Eventually, when real savings and resources turn out not to exist in the abundance that the Fed’s interventions misled people into expecting, projects have to be abandoned and the phony prosperity becomes real recession.

    Sanders supporters will no doubt point to the great number of bad mortgages originated by private lenders. But would these mortgage loans have been extended in the first place if institutions like Countrywide couldn’t sell them to the government-privileged Fannie Mae and Freddie Mac? Fannie and Freddie enjoyed special tax and regulatory advantages and had a special line of credit from the US Treasury — a line of credit everyone knew would be essentially limitless if push ever came to shove.

    It was the perfect storm: the Fed’s crazed monetary policy injected huge quantities of additional credit circulating throughout the economy, and the federal government’s various mandates and regulations made real estate an artificially attractive outlet for all that new money. When this ramshackle edifice came crashing down, capitalism — which, in the midst of all this money creation and regulatory lunacy, had never been tried — took the blame.

    Indeed, what could be intellectually easier than blaming the “free market” for a phenomenon a critic doesn’t understand? Ron Paul, on the other hand, never tired in his own presidential campaigns of going beyond surface explanations to account for what really happened in the disaster of ’08, and identify who the real culprits were.

    The other part of the Sanders story — Scandinavia — is shallow and misleading, too.

    In fact, Denmark’s own prime minister, Lars Lokke Rasmussen, finally had to correct the Vermont senator’s references to his country as “socialist.” “I would like to make one thing clear,” Rasmussen said. “Denmark is far from a socialist planned economy. Denmark is a market economy.”

    Still, there’s no question Denmark has a large public sector. And it’s starting to suck the life out of the place. Denmark’s various benefits subsidize idleness to an absurd and unmanageable degree. In the country’s 98 municipalities, guess how many have a majority of residents working. If you answered three, you know far more about Denmark than Bernie and his supporters do.

    It’s a similar story in the rest of Scandinavia. For instance, Sweden’s welfare state was able to develop only because of the wealth created by decades and decades of a prosperous market economy. Private-sector job creation was anemic to nonexistent in the decades following the radical expansion of the Swedish welfare state. And as for Norway, there are lots of “free” things there, it’s true — if you’re prepared to pay a 75 percent effective tax rate.

    The comparison of Bernie to Ron goes like this: both launched insurgent, anti-establishment presidential campaigns while in their 70s, shook up their respective party establishments, and attracted large youth followings. But Bernie is no Ron.

    Just on the surface: Bernie is a grump and difficult to work with; Ron is a kindhearted gentleman who always showed his appreciation for the people in his office.

    More importantly, Ron urged his followers to read and learn. Countless high school and college students began reading dense and difficult treatises in economics and political philosophy because Ron encouraged them to. Bernie’s followers receive no such encouragement. And why should they? Bernie’s platform merely regurgitates the fallacies and prejudices his young followers already imbibed in school. What more is there to read?

    Ron’s followers, meanwhile, were curious enough to dig beneath the surface. Is the state really a benign institution that can costlessly provide us whatever we might demand? Or might there be moral, economic, an