American drug prices have only soared higher, even as innovation in the pharmaceutical industry continues to slacken. The effects of consolidation wreak havoc on the American healthcare system and on Americans’ well-being.
Dear friends, this is the inaugural issue of The Corner, a digest of need-to-know news about the concentration of economic power in America, and what people are doing about it. As a member of our list, we thought you’d be interested in The Corner. But if you’d prefer not to receive this newsletter, you can easily unsubscribe at the end of this e-mail.
In this week’s issue, we cover developments ranging from CVS’s bid to take over Aetna to the ways in which the Republican tax bill promotes consolidation to important new data on how monopoly is aggravating regional inequality.
Americans must pay the highest drug prices in the world because of the high cost of innovation, or so say lobbyists for big pharmaceutical companies. If the United States adopted policies to bring its drug prices in line with those in other advanced nations, they warn, drug companies would be forced to cut their spending on research and development, resulting in fewer cancer drugs, treatments for Alzheimer’s, and the like.
Rising health care costs continue to erode the American standard of living. For a typical American of family of four the annual cost of health care now surpasses $25,000, or roughly the equivalent to a payroll tax of 28 percent. Such families pay more than $11,000 of this cost directly out their own pockets.
When Americans buy health insurance they typically find they have fewer and fewer choices. In some states, such as Alabama, a single insurance company has a near total monopoly. In half of all metro areas, just two health insurers divide two-thirds of the market.
This high degree of concentration has been building for years. A study published in the American Economics Review in 2012 found that the share of U.S.