When The Government Overrides The Free Market

On Wednesday The Wall Street Journal posted an article about the current controversy about the cost of an EpiPen. Anyone who understands free market economics has been scratching their head trying to figure out why there was no competition to manufacture this product (and thus a more reasonable price). Well, The Wall Street Journal article provides an explanation. For the moment, I am going to overlook the fact that the company involved made a large donation to the Clinton Foundation and that the person in charge of the company is the daughter of Democratic Senator Joe Manchin.

The article at The Wall Street Journal explains:

In a statement, the Democrat (Hillary Clinton) assailed the “outrageous” cost of EpiPen, an emergency treatment for allergic reactions known as anaphylaxis, and she demanded that drug maker Mylan “immediately reduce the price.” Federal and Senate investigations are pending into these spring-loaded syringes filled with epinephrine (adrenaline) used primarily by children with life-threatening sensitivities to food or insect stings.

Mylan has raised the price of EpiPen in semiannual 10% to 15% tranches so that a two-pack that cost about $100 in 2008 now runs $500 or more after insurance discounts and coupons. Outrage seems to be peaking now because more families are exposed to drug prices directly though insurance deductibles and co-pays, plus the political class has discovered another easy corporate villain.

Still, the steady Mylan rise is hard to read as anything other than inevitable when a billion-dollar market is cornered by one supplier. Epinephrine is a basic and super-cheap medicine, and the EpiPen auto-injector device has been around since the 1970s.

Thus EpiPen should be open to generic competition, which cuts prices dramatically for most other old medicines. Competitors have been trying for years to challenge Mylan’s EpiPen franchise with low-cost alternatives—only to become entangled in the Food and Drug Administration’s regulatory afflatus.

Approving a generic copy that is biologically equivalent to a branded drug is simple, but the FDA maintains no clear and consistent principles for generic drug-delivery devices like auto injectors or asthma inhalers. How does a company prove that a generic device is the same as the original product if there are notional differences, even if the differences don’t matter to the end result? In this case, that means immediately injecting a kid in anaphylactic shock with epinephrine—which is not complex medical engineering.

But no company has been able to do so to the FDA’s satisfaction. Last year Sanofi withdrew an EpiPen rival called Auvi-Q that was introduced in 2013, after merely 26 cases in which the device malfunctioned and delivered an inaccurate dose. Though the recall was voluntary and the FDA process is not transparent, such extraordinary actions are never done without agency involvement. This suggests a regulatory motive other than patient safety.

The article concludes:

Mrs. Clinton claims the EpiPen price hikes show the need for price controls, and she says she’ll require drug makers to “prove that any additional costs are linked to additional patient benefits and better value.” Somebody in Congress should require the FDA to justify how its delays are advancing the same goals.

Price controls are not the answer–a government agency that cannot be corrupted by special interests is the answer. The FDA has been interfering with the free market, and the price of the EpiPen is exhibit A in the case against the FDA. I am all for safe drugs and clinical trials, but I am tired of federal agencies being used to pick winners and losers.

It’s Good To Have A Friend

The Washington Free Beacon reported today that giving money to the Clinton Foundation has many benefits.

The article reports:

Drug companies that have donated to Hillary Clinton’s foundation received most of the contract money from an international tuberculosis initiative after the foundation was brought on to manage the initiative’s procurement operation, public records show.

Two of every three dollars spent acquiring anti-tuberculosis drugs through the program, which is administered by the World Bank, have gone to two companies—Swiss health care giant Novartis and Indian drug company Lupin Ltd.—that together have donated up to $130,000 to the Clinton Foundation.

Clinton and her allies have pointed to the foundation’s international charitable work to deflect allegations of cronyism. However, the millions of dollars in contracts awarded to the two drug companies illustrate how foundation donors profited from laudable causes.

The article also points out:

Clinton has pointed to her foundation’s work in promoting access to pharmaceuticals in the developing world as an example of its laudatory humanitarian mission.

However, critics have noted how beneficiaries of other foundation-backed pharmaceutical access programs have made large financial contributions to the group. Companies that received funds from the foundation to provide low-cost HIV drugs, for instance, were donors to the foundation.

In many cases, the same companies were also lobbying the State Department for lucrative international health contracts while Clinton was secretary of state.

Despite years of collaboration with the industry, Clinton has described pharmaceutical companies as her “enemies,” even as lobbyists for the industry bankroll her presidential campaign.

Unfortunately, this kind of corruption has been going on with the Clintons for a very long time. It needs to end. If she is elected, the Clinton Administration will be a money-making scheme to enrich the Clintons while ignoring the problems and needs of America.

Another Industry Suffering From Overregulation

The Washington Examiner posted an article today on the government-caused drug shortages America is experiencing. Yes, you read that right.

The article reports that prescription drug shortages tripled from 2005 to 2010 and reached record levels in 2011 as manufacturers ceased operations or ran into production problems.

The article reports:

Last year, nearly half of hospitals reported experiencing a drug shortage on a daily basis, according to a survey of 820 hospitals by the American Hospital Association. About 82 percent of hospitals said they delayed treatment because of a shortage, and 35 percent of hospitals said patients experienced “adverse outcomes.” The survey did not categorize those outcomes, a spokeswoman said.

So what is going on? The Federal Food and Drug Administration (FDA) has increased its enforcement efforts. The article explains:

…the FDA’s “zero tolerance” regime is forcing manufacturers to abide by rules that are rigid, inflexible and unforgiving. For example, a drug manufacturer must get approval for how much of a drug it plans to produce, as well as the timeframe. If a shortage develops (because, say, the FDA shuts down a competitor’s plant), a drug manufacturer cannot increase its output of that drug without another round of approvals. Nor can it alter its timetable production (producing a shortage drug earlier than planned) without FDA approval.

We elected this government. We are responsible. The only way to fix this is to unelect everyone who has worked toward bigger government and more regulation and elect people who want smaller government and less regulation. It’s up to us.

 

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