KOL469 | Haman Nature Hn 149: Tabarrok on Patents, Price Controls, and Drug Reimportation

Kinsella on Liberty Podcast: Episode 469. Related: Tabarrok and Murphy: Why Are US Drug Prices So High? Pharmaceutical Shills and Think Tank Corruption: Sally Pipes’s The World’s Medicine Chest: How America Achieved Pharmaceutical Supremacy―and How to Keep It This is my appearance on Adam Haman’s podcast and Youtube channel, Haman Nature (Haman Nature substack), episode HN 149, “Free The DRUGS! Stephan KINSELLA Counters Economist Alex TABARROK On Price Controls | Hn 149” (recorded June 25,  2025). Tabarrok seems to be generally pro-free market and an Austrian or fellow traveler. However, although he sometimes criticizes existing IP law, he is not opposed to intellectual property (IP), unlike all the cool Austro-libertarians. (( The Death Throes of Pro-IP Libertarianism. )) And he often proposes changes to IP law—sometimes outrageously goofy ones, such as his truly insane idea of replacing the patent system with $3.5 trillion worth of taxpayer subsidies (if you take his logic for a taxpayer funded "medical innovation price fund" to its limit apply it to all forms of patented innovation and other forms of IP like copyright) (( $30 Billion Taxfunded Innovation Contracts: The “Progressive-Libertarian” Solution; Libertarian Favors $80 Billion Annual Tax-Funded “Medical Innovation Prize Fund; What's Worse: $80 Billion or $30 Million?. )) or based on simplistic assertions or confusions like the idea that we can empirically know that we are on the "wrong side" of the optimal patent term length on his ridiculous "Tabarrok Curve." (( Tabarrok: Patent Policy on the Back of a Napkin; The Overwhelming Empirical Case Against Patent and Copyright; Optimal Patent and Copyright Term Length. )) So even though he's not against IP and thus not a very good libertarian, and he's not a Misesian since he seems to think utility is cardinal, measurable, and knowable, (( "The Problem with Intellectual Property" (2025), Part III.B.2. )) and he’s not an IP law expert either, he keeps trotting out proposals to “reform” IP, such as, I guess, banning free trade or urging that the US engage in IP imperialism to twist the arms of other countries like Australia (see below) to adopt the stronger US patent protections that Tabarrok seems to want to reform. (( See various posts on US style IP Imperialism. )) Read more at Tabarrok and Murphy: Why Are US Drug Prices So High? ... Shownotes, links, grok summary, and transcript below. https://youtu.be/gNRsjF3UXT4?si=2T9-4aE3cMPRoMD1 GROK SUMMARY: In the Haman Nature episode featuring patent attorney and libertarian legal theorist Stephan Kinsella, hosted by Adam Haman, the discussion centers on the high cost of prescription drugs in the United States and the misconceptions surrounding proposed solutions, including critiques of arguments made by economist Alex Tabarrok. Kinsella challenges the notion that former President Trump’s executive order would effectively lower drug prices, arguing that the issue stems from a complex interplay of government regulations, subsidies, and intellectual property (IP) laws, particularly pharmaceutical patents. He disputes the idea that other countries "free ride" on a supposed U.S. "free market" system, emphasizing that the U.S. pharmaceutical industry is far from a free market due to patent-driven monopolies that inflate prices and restrict competition. Kinsella’s critique, informed by his extensive work on IP (e.g., his discussions in the Kinsella on Liberty Podcast, Episode 469, and articles on c4sif.org), highlights how these monopolies distort market dynamics and prevent natural price equalization through arbitrage across borders. The conversation also addresses Tabarrok’s arguments, as discussed in his interview with Bob Murphy, particularly the concept of the "Tabarrok Curve," which posits an optimal level of IP protection to maximize innovation. Kinsella rejects this, asserting that pharmaceutical patents are not the definitive case for IP necessity, as they often delay generic drugs, skew research toward profitable rather than essential medicines, and raise costs for consumers. He points to industries like fashion and software, which thrive without heavy patent reliance, to argue that innovation does not require IP protections (referencing his critiques in “Tabarrok, Cowen, and Douglass North on Patents” and “Software Patents Bad, Pharmaceutical Patents Good?” on c4sif.org). Additionally, Kinsella dismisses Tabarrok’s proposal for a tax-funded prize system to replace IP as an unlibertarian solution that substitutes one form of government intervention for another, citing his analysis in “$30 Billion Taxfunded Innovation Contracts: The ‘Progressive-Libertarian’ Solution” and related articles. He argues that such systems assume government competence in picking winners, which markets historically do better. The discussion concludes with a reflection on whether the Overton Window is shifting on IP issues. Kinsella notes slow progress, particularly in tech and libertarian circles, but acknowledges resistance from entrenched interests like Big Pharma. He emphasizes the need for continued dialogue to challenge the status quo, aligning with his broader advocacy against IP as a barrier to competition and innovation (as detailed in his c4sif.org writings). The episode underscores the complexity of drug pricing and the pitfalls of relying on government-driven solutions, advocating instead for market-driven approaches free from artificial monopolies. 00:00 -- Intro. Welcoming my friend and verifiably smart person, Stephan Kinsella! 00:44 -- Is Trump's new executive order going to make drugs cheaper in the US? 02:26 -- What ever would we do without the government? Are they here to make us safe? 04:30 -- Bob Murphy interviewed Alex Tabarrok about this issue. Stephan has some critiques! 06:32 -- Clip 1: Does Trump's EO "import price controls" from other countries? What's missing from the analysis? 14:38 -- Clip 2: Do countries "free ride" off our "free market" system? Is that why drugs cost more here? No! What freakin' free market?! Also, what does "market failure" really mean? 23:47 -- Clip 3: Price discrimination makes sense in other market areas. What's the problem with using it for pharmaceuticals across national boundaries? 30:27 -- Clip 4: Why do some "free market" economists hate free trade so much? 34:36 -- Clip 5: What on earth is the "Tabarrok Curve" in relation to intellectual property laws? Also, is it true that pharmaceuticals are THE definitive case for the necessity for IP laws? Stephan says not, and shows his work. 52:03 -- A truly bonkers "replacement" for IP: Create a tax-funded prize system for innovation! 57:30 -- Is the Overton Window on the IP issue beginning to shift at all? 1:02:53 -- Outro. Thanks for watching Haman Nature! Background and Relevant Links Tabarrok and Murphy: Why Are US Drug Prices So High? The Problem with Intellectual Property Mark Lemley: The Very Basis Of Our Patent System… Is A Myth Intellectual Property’s Great Fallacy The Overwhelming Empirical Case Against Patent and Copyright Tabarrok, Cowen, and Douglass North on Patents Tabarrok’s Launching the Innovation Renaissance: Statism, not renaissance Tabarrok: Patent Policy on the Back of a Napkin7 $30 Billion Taxfunded Innovation Contracts: The “Progressive-Libertarian” Solution Libertarian Favors $80 Billion Annual Tax-Funded “Medical Innovation Prize Fund What’s Worse: $80 Billion or $30 Million? Software Patents Bad, Pharmaceutical Patents Good?: confused “libertarian” “opponents” of state monopoly privileges body { font-family: Arial, sans-serif; line-height: 1.6; margin: 20px; } .timestamp { font-weight: bold; color: #555; } .speaker { font-weight: bold; color: #333; } .dialogue { margin-bottom: 10px; } Transcript: Haman Nature with Stephan Kinsella Adam Haman welcomes patent attorney and libertarian legal theorist Stephan Kinsella back to the show to discuss why prescription drugs are so expensive in the US and what can (and should) be done about it. Even "free market" economists like George Mason University's Alex Tabarrok get this wrong! 00:00 Adam Haman: Welcome to Haman Nature! Today, I’m thrilled to have my friend and verifiably smart person, Stephan Kinsella, back on the show! 00:44 Adam Haman: Stephan, let’s dive in. Is Trump’s new executive order going to make drugs cheaper in the US? 00:44 Stephan Kinsella: Well, Adam, the idea that an executive order can just magically lower drug prices oversimplifies a complex issue. The high cost of pharmaceuticals in the US is tied to a web of regulations, subsidies, and intellectual property laws, not something you fix with a pen stroke. Let’s unpack it. 02:26 Adam Haman: It’s easy to lean on the government as the solution. Are they really here to make us safe, or is there more to the story? 02:26 Stephan Kinsella: The notion that we’d be lost without government intervention is a myth. Safety often comes from market incentives and competition, not bureaucratic mandates. The government’s role in drug pricing often distorts markets, driving costs up rather than down. 04:30 Adam Haman: Bob Murphy interviewed Alex Tabarrok about this issue, and I know you’ve got some thoughts on that. What’s your critique? 04:30 Stephan Kinsella: Tabarrok’s take, as discussed with Murphy, misses some critical points. He’s a sharp guy, but his defense of certain policies leans too heavily on statist assumptions. Let’s look at the specifics. 06:32 Adam Haman: Here’s Clip 1: Does Trump’s executive order “import price controls” from other countries? What’s missing from Tabarrok’s analysis?