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

by Stephan Kinsella on July 28, 2025

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Kinsella on Liberty Podcast: Episode 469.

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. ¹ 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) ² 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.” ³

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. )

Shownotes, links, grok summary, and transcript below.

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

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?

06:32 Stephan Kinsella: The claim that the executive order imports price controls oversimplifies things. Other countries’ lower drug prices aren’t just about controls; they’re about different market dynamics and government negotiations. Tabarrok doesn’t fully address how US patent laws inflate costs domestically by granting monopolies, which is a bigger driver than foreign price controls.

14:38 Adam Haman: Clip 2: Do countries “free ride” off our “free market” system, and is that why drugs cost more here? What’s your take?

14:38 Stephan Kinsella: No, Adam, that’s a flawed narrative. First, what free market? The US pharmaceutical industry is riddled with government-granted monopolies through patents. The “free riding” argument ignores how these patents restrict competition and jack up prices. As for “market failure,” it’s a buzzword often used to justify intervention when markets aren’t even free to begin with.

23:47 Adam Haman: Clip 3: Price discrimination makes sense in other markets. What’s the issue with using it for pharmaceuticals across national boundaries?

23:47 Stephan Kinsella: Price discrimination can work in markets like airlines, where costs are variable and competition is real. But in pharmaceuticals, it’s distorted by government policies. Patents create artificial scarcity, and cross-border restrictions prevent arbitrage that would naturally equalize prices. It’s not a free market; it’s a rigged game.

30:27 Adam Haman: Clip 4: Why do some “free market” economists hate free trade so much?

30:27 Stephan Kinsella: It’s baffling. Some economists, even those claiming to love markets, cling to protectionist ideas when it suits their narrative. They’ll defend patents or trade barriers as “necessary” for innovation, ignoring how these policies stifle competition and harm consumers. It’s inconsistent with the principles they claim to uphold.

34:36 Adam Haman: Clip 5: Let’s talk about the “Tabarrok Curve” in relation to intellectual property laws. Also, is it true that pharmaceuticals are the definitive case for needing IP laws? You’ve got some thoughts here.

34:36 Stephan Kinsella: The “Tabarrok Curve” suggests there’s an optimal level of IP protection to maximize innovation. It’s a neat theory, but it’s built on shaky assumptions. Pharmaceuticals aren’t the slam-dunk case for IP that people think. Patents often delay generics, raise prices, and skew R&D toward profitable drugs, not life-saving ones. I’ve argued this extensively—IP isn’t necessary for innovation, and the data backs me up. Look at industries like fashion or software that thrive without heavy patent reliance.[](https://www.youtube.com/Youtube/watch)

52:03 Adam Haman: Okay, this one’s wild. Some propose replacing IP with a tax-funded prize system for innovation. What do you think of that?

52:03 Stephan Kinsella: It’s absolutely bonkers. Replacing one bad system—patents—with another, like taxing people to fund “innovation prizes,” is just swapping one form of state interference for another. It assumes the government can pick winners better than the market, which history shows it can’t. Look at Tabarrok’s own proposals for billion-dollar prize funds—it’s unprincipled and unlibertarian.[](https://www.youtube.com/watch?v=iOe6dI2JhgU)

57:30 Adam Haman: Do you think the Overton Window is shifting at all on the IP issue?

57:30 Stephan Kinsella: There’s some movement, Adam. More people are questioning the necessity of IP, especially in tech and libertarian circles. But entrenched interests—Big Pharma, for one—keep the narrative strong. The Overton Window is cracking open, but it’s slow. We need more discussions like this to push it further.

1:02:53 Adam Haman: That’s all for today. Thanks for watching Haman Nature, and a big thank you to Stephan Kinsella for joining us!