Family and friends of Americans who overdosed on OxyContin protest at Purdue Pharma’s in Stamford, Connecticut.
Credit: Jessica Hill/AP/REX/Shutterstock

In recent years, America’s pharmaceutical industry has taken it on the chin. Populist demagogues have savaged drug companies for “jacking up” the price of life-saving substances like insulin (a.k.a. honoring their fiduciary duty to maximize shareholder value). These boisterous neo-Bolsheviks will point to the fact that pharmaceuticals are several times more expensive in the U.S. than in other countries, and conclude that our government’s exceptionally strong patent laws — and aberrant refusal to push down drug prices through direct negotiation — are meant to enrich Big Pharma at the working American’s expense.

But such cretinous critiques ignore a simple fact: In exchange for paying exceptionally high drug prices, Americans enjoy exceptionally high rates of pharmaceutical innovation. And when we give entrepreneurs the incentive to patent new medicines — by holding out the promise of windfall profits — our whole society benefits.

To see the beneficent effects of encouraging free enterprise […]