Here's the story. It's free text online. tldr: The government paid for the research and development, took all the risks, an academic researcher did all the work, a private company came along, took advantage of a naive scientist, and sold the test back to the taxpayers for 50 times what it actually cost.

(The New York Times just had a series on health care by Elisabeth Rosenthal which gave a dozen examples like this. Asthma inhalers cost about 20 to 50 times as much in the US as they do anywhere else. There are people who go to Europe once a year to buy a year's supply of drugs.)

http://www.nejm.org/doi/full/1...
Perspective
History of Medicine
Patenting the PKU Test — Federally Funded Research and Intellectual Property
Diane B. Paul, Ph.D., and Rachel A. Ankeny, Ph.D.
N Engl J Med 2013; 369:792-794
August 29, 2013
DOI: 10.1056/NEJMp1306755

In 1961, the U.S. Children's Bureau (USCB) embarked on a field trial of the test, requiring rapid production of kits to screen more than 400,000 babies. Guthrie, who had a cognitively impaired son and a niece with PKU, was involved in a parents' group, the National Association for Retarded Children (NARC). In consultation with the NARC, he decided that commercial production of test kits would be most efficient.

Guthrie favored the Ames Company, a division of Indiana-based Miles Laboratories, which marketed the earlier PKU tests. Although Guthrie assumed that the government would enter a contract with Ames, the company said it would manufacture the kits only if a patent were issued. In 1962, Guthrie filed a patent application in his own name and signed an exclusive licensing agreement with Miles, under which he would receive no royalties but 5% of net proceeds would be divided among the NARC Research Fund, the Association for Aid of Crippled Children, and the University of Buffalo Foundation (affiliated with the Buffalo Children's Hospital, Guthrie's employer). There was no pricing provision, an omission that Guthrie later deeply regretted.2

Miles, however, couldn't quickly produce test kits in the required quantity. So with financial support from the USCB, Guthrie rented a house in which to produce and assemble kits containing the materials necessary to perform and interpret 500 tests, at a cost of about $6 each. But when Guthrie visited the Ames Company in June 1963, he discovered that it planned to charge $262 for what were essentially the same kits. He was appalled, and when appeals to the company proved futile, he alerted USCB officials. They recommended that Miles not be granted exclusive commercial rights, in light of the large public expenditure on the test, the potential effect on states that planned to manufacture their own materials, and the steep price Miles planned to charge. Although the test had been developed with support from various organizations, the majority of the funds had come from the Public Health Service (PHS), which provided $251,700, and the USCB, which contributed $492,000 plus $250,000 through the states, chiefly for the trial. Given this federal funding, the surgeon general of the PHS determined that the invention belonged to the United States and abrogated the exclusive licensing agreement.

Yes, I read it. It's $83,000 a year, not $147,000. Stop bragging about how smart you are if you can't read a simple newspaper story, realize there are two sides to the story, and do some simple arithmetic.

You say it would be fair for them to make $35/h. Well, $35/h x 40h/wk x 50 wk/yr = $70,000/yr, which is pretty close to $83,000. So they merely drove a good bargain. You have a problem with people making good money?

There are reasons why they make so much money that you resent them.

First, they know how to negotiate. That's something you might learn from them.

When they negotiate, they don't want to match the race to the bottom. They know how much their employer is making and they want a piece of the action. They want job security and they want, in effect, something like an ownership interest in the company. That's not so strange. In Germany, unions have a seat on the board of directors of a company.

Second, they made a grand bargain decades ago. There was new technology that would make their job more labor-saving and efficient. Instead of obstructing it, they agreed to be forward-thinking and go along with it. However, if the company got the benefits of improved efficiency, they wanted the benefits of improved efficiency too. That's why they're making $83,000 a year. Here's a profitable business, where the owners are making millions a year. Why should they settle for $70,000 when their boss is rich and could easily pay $83,000 a year?

My landlord was making at least $300,000 a year, probably more. He inherited the building from his father, like most landlords. He worked hard, just like a longshoreman. Do I envy him? No. That's the free market.

If you live in a rental building, do you envy your landlord if he makes $300,000 a year? Do you envy your maintenance man, who fixes your boiler? Do you envy your auto mechanic? This is a rich country. Why do you want to drag everybody down to the bottom?

There's also a 15 point IQ difference between a normal human being and a racist. Guess which one you are.

I haven't heard anything so naive since Mitt Romney told kids to borrow $1 million from their parents.

I know a lot of immigrants, legal and otherwise.

Most of the "legal" immigrants fall into one of 3 categories: (1) Chinese who got in by lying and saying they were politically persecuted because they opposed the 1-child policy or because they were members of Falun Gong (2) Soviet Jews who got in by lying and saying they suffered anti-Semitism (even though some of them weren't even Jews) (3) Cubans who got in just because.

A lot of crooked immigration lawyers kept copies of standard affidavits for them to sign describing the persecution that never happened but was legally sufficient to get them in. The New York Times has published stories on this, but everybody knows what was going on.

So when I see a Soviet Jewish immigrant who got in because he lied, and a Mexican immigrant who got in because he climbed over a fence, I don't see any reason to favor one over the other.

In America, I meet a lot of people whose parents or grandparents survived in Europe because they climbed over fences and fled through fields running away from people who were trying to kill them. In the 19th century, there were illegal black fugitive slaves who got to a free country by climbing over fences and fleeing through fields.

So yeah, maybe they didn't follow the immigration laws. But I'm still sympathetic. It was people like them that made this country.

Maybe when you learn more American history and politics you'll understand it better.

I'd like to know where you got the idea that the working class was doing mostly manual unskilled jobs.

I lived in Brooklyn, where a major industry was manufacturing and repairing electric motors. That all disappeared with cheap (usually lower-quality) Japanese electric motors. We had a big electronics industry in New York. We had a big printing industry, which requires a lot of skilled workers. We had a big garment industry. We had airports with big maintenance shops. Most of the American airlines are now sending their planes out to mechanics in Latin America.

It wasn't because Americans were less efficient, or because foreign workers were willing to do the same job cheaper. German workers kept their industries and kept competitive while they paid their workers the same salaries Americans used to get. It was because the American businesses made a decision that treating their workers well wasn't a factor.

There are a wide range of jobs in an industrial factory, but most of them were skilled and high-paid. We lost them with free trade.

All the benefits of free trade went to the business owners, and none of the benefits went to the workers.

Employees can negotiate as individuals with employers. Employees can also join together with other employees and negotiate as a group in a union. In both cases, they're getting what the market can bear, but as a group, they have a better negotiating position. As individuals, they get less.

A free market requires information. Unions are a way for workers to exchange information and get a better market: How much are you making, what's the minimum you'd be willing to take, what do you know about how much the boss earns, how much do you think we can get?

As Adam Smith said, whenever businessmen get together, even for social purposes, the talk turns to pricing. Workers should have a right to do the same.

BTW those same $10,000 IV antibiotics are a lot cheaper in Europe, because the national health systems negotiate with the drug companies.

Those pills are prescribed by a doctor, and the drug companies were promoting those pills to the doctor, because the more pills they sell the more money they make. Drug company marketing is the problem.

This is a total fantasy. Paul Krugman said that conservatives read Fredrich Hayek's predictions about what government services would be like, they assume they're true, and they don't look at the actual facts in the real world which contradict Hayek.

The U.K. has a socialist health care system. I'd like you to tell me where anyone got a favor from the socialist U.K. health care system because he was connected with the politicians.

Sweden has a socialist health care system, perhaps the best health care system in the world. I challenge you to show me a Swede who needed health care and didn't get it.

First, the 19th century is the years between 1800 and 1899. In the 19th century, they had no effective medicine. They were still bloodletting. They could amputate limbs, although the patients often died of infection. I think you mean the 20th century, which is the years between 1900 and 1999. We are now in the 21st century.

Second, America never had a cheap, accessible free market capitalist system. I don't know where you get your ideas from. I live here, I work in the health care system, and I know the history and problems with the American health care system.

At the beginning of the 20th century, doctors couldn't do much. If you were shot in the leg, and the leg was infected, they could cut it off, and your chance of survival would go up from zero to maybe 50%. If you had heart disease, they couldn't do much to extend your life. If you had cancer they could give you morphine.

Things were going along like that without much progress until WWII, where the U.S. government (not free market capitalism) systematically studied the problems and came up with innovative new ways of handling surgery. Penicillin (from Alexander Flemming in England, an academic researcher) was a big breakthrough. Adriamycin, the first cancer drug, was discovered on -- guess where -- the Adriatic sea, by Italians.

The U.S. was a center of tremendous innovation after WWII, not because of free market capitalism, but because the U.S. government funded academic researchers, who provided a lot of the basic research that the private drug companies took and made money out of. The area with the most dramatic progress was heart disease, and much of the important research was done by the U.S. government's Veterans Affairs hospitals.

After WWII, there were private doctors, but people who couldn't afford their prices went to government hospitals, which were scattered around the country. What reason would capitalist doctors have to treat people who can't afford to pay a lot of money? By the 1980s, when doctors could finally do something useful, they got very expensive. People who can't afford health care are left to die http://www.wsj.com/articles/SB...

Yeah, I was just talking to an Italian girl who broke her wrist in the U.S. An American hospital charged her $1,000 for an x-ray that would have cost $20 in Italy.

She said what the Europeans always say about American medical prices: You have to be kidding.

The New York Times had a series on American health care by Elisabeth Rosenthal. A guy went to France to get a year's supply of asthma inhalers, and the saving paid for the cost of his trip.

It's true about people getting rejected from hospitals because they can't pay. http://www.wsj.com/articles/SB...

That's right. Cuban researchers went to Sweden for training.

The explanation I heard was that phages were developed at about the same time as antibiotics, and antibiotics were cheaper and simpler.

But some doctors have suggested that phages were a good idea that should be developed today.

Now that there's a lot of new technology for growing biological products, phages may be practical again.

As a point of fact, Cuban scientists have developed a new meningitis vaccine, and a new cancer drug. https://en.wikipedia.org/wiki/... Communist China developed artemisinin, a new class of malaria drug.

American capitalism in the 19th century created snake oil drugs that did more harm than good. You may be thinking of the 20th century. After a few disasters, we created the U.S. Food and Drug Administration to regulate the drug companies.

The USSR moved from socialism to capitalism. The results make you wonder whether they would have been better off under socialism. Male life expectancy immediately dropped by 10 years. The USSR was a world-class scientific power, that put the first man in space, discovered new trans-uranium elements, and developed urokinase, the first drug of the class that includes tissue plasminogen activator.

The reason you think capitalism is so great is that you don't have to live here.