What we should do: Follow Brazil's lead (link courtesy Reason blog): "[The new minister's] first approach was to go to the key patent holders, the US pharmaceutical giant Merck and the Swiss firm Roche, and ask for a volume discount. When the companies said no, Serra raised the stakes. Under Brazilian law, he informed them, he had the power in cases of national emergency to license local labs to produce patented drugs, royalty free, and he would use it if necessary. Merck immediately caved, but Roche stood its ground until August 2001, when Serra prepared to make good on his threat by drawing up the required paperwork. It was the first time a poor country had even come close to breaking a drug patent - and Roche, stunned, returned to the bargaining table with a newly cooperative attitude. In return for Serra's agreement to play nice, the drugmaker would reduce the price of its drug in Brazil to less than half what it was (and less than Brazil's cost to go it alone)."
It's absurd for the feds to whine about high drug prices when they are the result of the FDA regulatory process combined with the government-granted patent monopolies. The government grants a patent-monopoly to a company, and threatens to take it away unless the company lowers its price to one closer to the market price. Even better, simply shorten the term of, or abolish, patents for pharmaceuticals.
