Something must be done. The Committee to Conduct an Interim Study Concerning the Cost of Prescription Drugs is something. But must it be done? 

Prescription drugs in Nevada, like every other state, cost too much. There are a variety of reasons for that, of which approximately zero of them have to do with anything happening in Nevada specifically or directly. We know that because we’re not alone in this struggle - like I said, every other state in the country struggles with astronomical prescription drug prices. Even so, voters would really appreciate it if someone, anyone really, would do something about them.

Thus the Committee to Conduct an Interim Study Concerning the Cost of Prescription Drugs was birthed to do… something. 

Anything, really.

About all the committee can do, at least as it’s currently structured, is mostly serve as a forum for airing grievances. As a bureaucratically organized group therapy session, it might perhaps prove useful. As an instrument of systemic change, however, which is what’s actually required to meaningfully address the prescription drug price problem, it is useless. That’s a shame since the reason Nevada’s prescription drug prices are so high is because Nevada’s patients are paying for prescription drugs through a federally imposed system that protects monopoly profits and stifles innovation. 

Fortunately, just as we successfully went our own way against federal marijuana policy, we can also go our own way against federal prescription drug policy. Here are a few suggestions, in increasing order of probable political viability.

Option 1: Ignore intellectual monopoly law

Before I begin, I know this will never happen. Patents are recognized in the Constitution, and the Commerce Clause, which regulates interstate commerce, is judicially paramount. Even if Nevada was bold enough to try this, the Supreme Court would swiftly undo it. Though I wish there was something Nevada could do about abusive intellectual monopoly laws as applied to pharmaceuticals, that’s all it is - a wish.

I bring it up, however, to start at the root of our systemic problems. There is no technological barrier to, for example, delivering generic insulin. There were, however, for nearly a century, regulatory barriers to do so - barriers that weren’t overcome until last year. The production of insulin, despite being a natural product of not only our bodies but the bodies of most vertebrates, has been protected by federal regulation since 1921. Relatedly, insulin is also notoriously expensive.

As Michele Boldrin’s and David K. Levine’s Against Intellectual Monopoly makes clear, this is entirely by design. The stated purpose of intellectual monopoly is to support innovation by offering a government-enforced time-limited monopoly on a specific intellectual product, like a novel method of delivering insulin or the column you’re reading today. In theory, by providing this brief monopoly, the innovator can guarantee a return on the investment that produced the innovation. In practice, this monopoly is both unnecessary and actively harmful to innovation. 

Intellectual monopolies are demonstrably unnecessary since innovations occurred well before the existence of patent law and still happen in the modern day in fields too new and novel for existing patent laws to apply. For example, since software is a mathematical product, not a physical product, it was impossible to patent it at all until the Supreme Court ruled in Diamond v. Diehr in 1981 that it was at least permissible to patent physical inventions that used software to make novel improvements. Since innovative software clearly existed well before 1981 without patent protection, and certainly existed before the Federal Circuit Court’s ruling In Re Alappat in 1994 legitimized software patents in their modern entirety, patents are clearly not a necessary precondition for innovation. 

Intellectual monopolies are demonstrably harmful because, as soon as they exist in industries that didn’t previously “benefit” from them, energy and resources normally spent on innovation are instead spent on legal costs and narrowly avoiding patents. For example, as soon as software patents were imposed upon the industry, the software industry started to patent trivially obvious ideas, like buying something with a single click of a mouse, and then started suing each other to protect these ridiculous patents. To protect against this sort of behavior, organizations like the Open Invention Network were created to effectively nullify software patents by pooling multiple companies’ patents together and offering them to the public royalty-free. 

If Nevada refused to recognize the current 20-year patent on pharmaceuticals, or at least refused to recognize small tweaks to existing pharmaceutical patents that are clearly designed to push the patent window into eternity, that would go a long way towards solving our pharmaceutical cost problem by enabling more producers to more cheaply produce and sell the drugs Nevadans need. Unfortunately, attempting to do so would almost certainly overwhelm our attorney general’s office with various unwinnable lawsuits, so let’s move on.

Option 2: Regulate pharmaceutical production like beer or wine

You can brew your own beer at home. You can vint your own wine at home. Why not produce your own insulin? 

This isn’t as ridiculous as it might sound. Remember - insulin was first isolated and manufactured in 1921. Technology has advanced a long way since then. Much of the technology that was state-of-the-art in a laboratory at the time is now common at home, if not obsoleted by various superior technologies. As an example, the Open Insulin Project is actively working on finding bacterial strains that not only produce insulin, but do so using relatively inexpensive laboratory equipment that can be deployed at home. 

To be clear, making insulin (or any other pharmaceutical) at home isn’t for everyone, nor am I suggesting everyone rush out and start raising insulin-producing bacteria in their RVs in the desert. It can be dangerous to brew your own beer or vint your own wine if you don’t know what you’re doing and remarkably difficult to get a consistent product even when you do know what you’re doing. This, of course, goes doubly true for insulin or any other drug that requires a predictable dose to be effective. Additionally, encouraging people to buy empty needles (or, worse yet, reusing needles) to put their homemade insulin into would probably be frowned on in most corners of polite society. That’s a shame since I personally believe that personal production and consumption of medication should absolutely be deregulated, especially if it’s for personal consumption and not for commercial distribution.

More topically, however, endeavors such as the Open Insulin Project demonstrate that it is possible to produce small-scale batches of insulin and other crucial drugs using off-the-shelf technology and components, just like alcoholic beverages. This shouldn’t be surprising since, again, many of the patent encumbered drugs prescribed today are decades old. That’s good since existing federal regulations already allow small-scale production of alcoholic beverages that are unlikely to be sold across state lines. If we can adopt the same logic to common prescription drugs like insulin, we can radically increase the supply and decrease the cost of these drugs to Nevadans. 

A quick amendment to NRS 597 would probably do the trick.

Option 3: Create a pharmaceutical company of last resort

Before Elizabeth Warren ended her campaign for President, one of her policy planks to drive drug costs down was to publicly manufacture pharmaceuticals. The idea was to have a government-run pharmaceutical company responsible for producing various pharmaceuticals that ordinarily would only be produced by, say, the likes of one of Martin Shkreli’s former companies.

I can’t believe I’m saying this, but that’s not an entirely ridiculous notion, though I cannot stress enough that it should be a measure of last resort. 

The reason Martin Shkreli was able to drastically raise prices on specific drugs was because of a combination of intellectual monopoly law and the FDA’s pathological unwillingness to allow new drug producers to, well, produce drugs - a trait the FDA demonstrated more recently with its initial refusal to allow hospitals to perform tests for COVID-19 even though many hospitals already had the necessary equipment and ingredients in place (the FDA recently relaxed these restrictions). Insulin producers, among other prescription drug producers, are able to profit off the backs of Nevada’s patients through the same mechanisms Shkreli used; they’re just usually more subtle about it. 

The solution is to remove those mechanisms.

However, just as software companies couldn’t wish software patents away, we can’t wish federal drug regulations away, either, and we may not even be able to route around the worst of the damage through creative applications of federalism. Consequently, pulling a page from the spirit of the Open Invention Network by creating a friendly collectively owned FDA approved generic drug manufacturer may be the least bad option we have available to us. 

I will note, however, that such an entity neither has to be nor should be run directly by the government. There’s nothing to suggest that there’s a native competence for manufacturing pharmaceuticals among Nevada’s state government’s employees and the Division of Human Resource Management already has its hands full trying to keep up with the state’s existing hiring needs without adding a brand new bureaucracy to the mix. Instead, I would suggest that a non-profit cooperative using private sector recruiting and hiring practices would be a better, faster choice. If our legislators absolutely insist on getting the state government involved, said co-op may perhaps benefit from an initial round of seed funding and a close partnership with the Nevada System of Higher Education, which could guide prospective students in appropriate fields to assist in the entity’s work.

Unfortunately, none of these options, nor any other option capable of delivering the systemic changes necessary to meaningfully address Nevada’s prescription drug crisis, can be produced from a committee-driven process that assumes the status quo exists in a perfect, immutable state of nature. That’s a shame since that’s all the Committee to Conduct an Interim Study Concerning the Cost of Prescription Drugs is designed to deliver.

David Colborne has been active in the Libertarian Party for two decades. During that time, he has blogged intermittently on his personal blog, as well as the Libertarian Party of Nevada blog, and ran for office twice as a Libertarian candidate. He serves on the Executive Committee for both his state and county Libertarian Party chapters. He is the father of two sons and an IT professional. You can follow him on Twitter @DavidColborne or email him at [email protected].