Baker on IP

[William S. Lear]

On Tuesday, August 17, 1999 at 11:28:24 (-0400) Doug Henwood posts:
>...
>In These Times - August 22, 1999
>
>THE REAL DRUG CRISIS
>by Dean Baker
>
>...
>
>The most basic principle in economic theory is that goods should sell 
>at their marginal cost of production (including a normal profit). In 
>the case of patented drugs, prescriptions that are produced for as 
>little as $1 each can sell for hundreds of dollars as a result of 
>patent protection. The rationale for this gap is that the firm has to 
>be able to recover its research costs, which are often quite 
>significant.

I've always wondered how one stipulates "normal profit".  Is it some
percentage of cost?


>However, at the point the drug is being produced, the research costs 
>are history. According to economic theory, it is inefficient to try 
>to roll these costs into the price of the drugs. ...

I don't understand how appealing to "economic theory" is supposed to
convince us that this is somehow "inefficient".  I would like to know
*why* this is so.  Anybody have a good answer?

The rest of this article was damned good.  Baker is a fine debunker of
myths.

Bill