Americans pay more for prescription drugs than any other developed country, and the reason is not complicated. A large share of our drug spending is not shaped by supply and demand, competition, or consumer choice. It is shaped by monopoly power that the federal government itself creates.
Single source drugs such as insulin, hepatitis C cures, and many cancer therapies have no substitutes. Patients do not choose among options. Patients didn’t choose to get sick. They don’t participate in this market voluntarily. They buy what their doctor prescribes because there is no alternative. That is not a free market. It is a captive market.
Patents are the source of this exclusivity. We grant them to reward research and encourage innovation. In principle that is reasonable, but the reward has grown far beyond what the patent system was meant to justify. We now have exactly the type of market distortion described in basic economics courses. When a supplier controls an essential good and consumers cannot walk away, the price will rise until someone intervenes.
No one has intervened. The result is obvious in the data. Single source drugs account for roughly 20 percent of prescriptions written in the United States. They drive roughly 80 percent of total drug spending. That imbalance does not reflect innovation on a massive scale. It reflects unrestrained pricing power.
This is a household affordability problem and a public finance problem. Medicare, Medicaid, the VA, employer plans, and private insurers all pay whatever the monopolist decides to charge. That creates long term fiscal pressure. We are committing ourselves to higher spending with no mechanism to slow the increases. As public payers struggle to absorb these costs, private premiums climb. A monopoly problem becomes a national affordability problem.
The correction is straightforward. Regulate the price of single source drugs in the same way we regulate other essential monopolies. When a utility controls the only power line into a neighborhood, it cannot charge any price it chooses. We set rates that keep the service affordable, cover infrastructure costs, and provide a sustainable profit without allowing predatory behavior. This logic applies just as well to monopoly drugs.
A regulated price would apply to every payer, including Medicare, Medicaid, the VA, employer plans, and private insurers. No cost shifting. No special government rate. One price that pursues two goals: patient affordability and a profit margin large enough to sustain supply and support ongoing research. These goals are not in conflict. A functioning market requires both.
Some critics argue that regulating prices will harm innovation. In reality, the current system harms innovation by rewarding companies for stretching patents, exploiting exclusivity, and raising prices year after year instead of competing on new ideas. A predictable, disciplined pricing environment gives firms a reason to innovate rather than to rely on the rents created by monopoly status.
The real question is not whether to regulate monopoly drug prices. The real question is why we continue to pretend that this market can regulate itself when all evidence says it cannot. We already use government oversight wherever a monopoly controls an essential good such as electricity, water, or communications infrastructure. Drugs share the same structural characteristics, and the consequences of inaction are far more serious.
If we want a healthcare system that is financially sustainable, if we want Medicare and Medicaid to remain solvent, and if we want private insurance premiums to stop rising faster than wages, we need price discipline where the market cannot supply it. Regulating single source drug prices is not extreme. What is extreme is treating life saving medicines as luxury goods simply because no one has corrected a failure we created.
A regulated price for monopoly drugs protects patients, stabilizes public budgets, and strengthens innovation by directing effort toward research rather than rent seeking. We designed the current system. We can correct it. The longer we wait, the higher the cost will be for families, insurers, and the country. This is a policy we should expect all our elected officials to prioritize, and it is one they should not be allowed to ignore.
John Morris, a longtime Georgia resident, is a software developer with degrees in electrical engineering, computer science, and public policy.
