05 November 2011

Call It Confidence

Yes, I’m sure this is a vote of confidence:

Even the generic drug industry is calling for more regulation. The industry recently agreed to provide the F.D.A. with nearly $300 million annually to bolster inspections and speed drug applications. That amounts to about 1 percent of the industry’s revenues and about 5 percent of its profits in the United States, an extraordinary vote of confidence in the government’s ability to improve the situation.

Now, why in the world would generic drug companies desire more regulation?  Probably because the current legal system puts them at a bit of a disadvantage.
See, generic companies can’t just rip off whatever drugs they want.  Drugs are protected by patent law, so generic drug companies have to either wait for the patents to expire or license production rights from the companies that hold the patents to the brand-name drugs.  One way, then, for producers of generic drugs to increase profits is if they can piggyback onto more drugs, and do so sooner (preferably before the market is saturated or exhausted).  Faster drug applications mean they can make more money sooner, either because licensing becomes somewhat cheaper, or because they can enter the market sooner.  So really, the $300 million dollar donation is more of a bribe, with the hopes that this will lead to more profits later on.

What’s really needed is an elimination of the FDA and patent law.  The former is largely wasteful and deadly, especially in light of the increasing personalization of prescription drugs.  The latter simply discourages innovation and growth, and encourages waste.  Imagine how much money people could save on medicine if they weren’t forced to line the pockets of major pharmaceutical companies and pay the salaries of parasitic bureaucrats.  And imagine how much healthier people could be if the government stopped making it so difficult to market new drugs.

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