Reverse Voxsplaining: Drugs vs. Chairs

[Content note: this is pretty much a rehash of things I’ve said before, and that other people have addressed much more eloquently. My only excuse for wasting your time with it again is that SOMEHOW THE MESSAGE STILL HASN’T SUNK IN. Pitching this as “market” vs. “government” is overly simplistic, but maybe if I am overly simplistic sometimes then it will sink in better.]

EpiPens, useful medical devices which reverse potentially fatal allergic reactions, have recently quadrupled in price, putting pressure on allergy sufferers and those who care for them. Vox writes that this “tells us a lot about what’s wrong with American health care” – namely that we don’t regulate it enough:

The story of Mylan’s giant EpiPen price increase is, more fundamentally, a story about America’s unique drug pricing policies. We are the only developed nation that lets drugmakers set their own prices, maximizing profits the same way sellers of chairs, mugs, shoes, or any other manufactured goods would.

Let me ask Vox a question: when was the last time that America’s chair industry hiked the price of chairs 400% and suddenly nobody in the country could afford to sit down? When was the last time that the mug industry decided to charge $300 per cup, and everyone had to drink coffee straight from the pot or face bankruptcy? When was the last time greedy shoe executives forced most Americans to go barefoot? And why do you think that is?

The problem with the pharmaceutical industry isn’t that they’re unregulated just like chairs and mugs. The problem with the pharmaceutical industry is that they’re part of a highly-regulated cronyist system that works completely differently from chairs and mugs.

If a chair company decided to charge $300 for their chairs, somebody else would set up a woodshop, sell their chairs for $250, and make a killing – and so on until chairs cost normal-chair-prices again. When Mylan decided to sell EpiPens for $300, in any normal system somebody would have made their own EpiPens and sold them for less. It wouldn’t have been hard. Its active ingredient, epinephrine, is off-patent, was being synthesized as early as 1906, and costs about ten cents per EpiPen-load.

Why don’t they? They keep trying, and the FDA keeps refusing to approve them for human use. For example, in 2009, a group called Teva Pharmaceuticals announced a plan to sell their own EpiPens in the US. The makers of the original EpiPen sued them, saying that they had patented the idea epinephrine-injecting devices. Teva successfully fended off the challenge and brought its product to the FDA, which rejected it because of “certain major deficiencies”. As far as I know, nobody has ever publicly said what the problem was – we can only hope they at least told Teva.

In 2010, another group, Sandoz, asked for permission to sell a generic EpiPen. Once again, the original manufacturers sued for patent infringement. According to Wikipedia, “as of July 2016 this litigation was ongoing”.

In 2011, Sanoji asked for permission to sell a generic EpiPen called e-cue. This got held up for a while because the FDA didn’t like the name (really!), but eventually was approved under the name Auvi-Q, (which if I were a giant government agency that rejected things for having dumb names, would be going straight into the wastebasket). But after unconfirmed reports of incorrect dosage delivery, they recalled all their products off the market.

This year, a company called Adamis decided that in order to get around the patent on devices that inject epinephrine, they would just sell pre-filled epinephrine syringes and let patients inject themselves. The FDA rejected it, noting that the company involved had done several studies but demanding that they do some more.

Also, throughout all of this a bunch of companies are merging and getting bought out by other companies and making secret deals with each other to retract their products and it’s all really complicated.

None of this is because EpiPens are just too hard to make correctly. Europe has eight competing versions. But aside from the EpiPen itself, only one competitor has ever made it past the FDA and onto the pharmacy shelf – a system called Adrenaclick.

And of course there’s a catch. With ordinary medications, pharmacists are allowed to interpret prescriptions for a brand name as prescriptions for the generic unless doctors ask them not to. For example, if I write a prescription for “Prozac”, a pharmacist knows that I mean anything containing fluoxetine, the chemical ingredient sold under the Prozac brand. They don’t have to buy it directly from Prozac trademark-holder Eli Lilly. It’s like if someone asks for a Kleenex and you give them a regular tissue, or if you suggest putting something in a Tupperware but actually use a plastic container made by someone other than the Tupperware Corporation.

EpiPens are protected from this substitution. If a doctor writes a prescription for “EpiPen”, the pharmacist must give an EpiPen-brand EpiPen, not an Adrenaclick-brand EpiPen. This is apparently so that children who have learned how to use an EpiPen don’t have to relearn how to use an entirely different device (hint: jam the pointy end into your body).

If you know anything at all about doctors, you know that they have way too much institutional inertia to change from writing one word on a prescription pad to writing a totally different word on a prescription pad, especially if the second word is almost twice as long, and especially especially if it’s just to do something silly like save a patient money. I have an attending who, whenever we are dealing with anything other than a life-or-death matter, just dismisses it with “Nobody ever died from X”, and I can totally hear him saying “Nobody ever died from paying extra for an adrenaline injector”. So Adrenaclick continues to languish in obscurity.

So why is the government having so much trouble permitting a usable form of a common medication?

There are a lot of different factors, but let me focus on the most annoying one. EpiPen manufacturer Mylan Inc spends about a million dollars on lobbying per year. OpenSecrets.org tells us what bills got all that money. They seem to have given the most to defeat S.214, the “Preserve Access to Affordable Generics Act”. The bill would ban pharmaceutical companies from bribing generic companies not to create generic drugs.

Did they win? Yup. In fact, various versions of this bill have apparently failed so many times that FDA Law Blog notes that “insanity is doing the same thing over and over again and expecting different result”.

So let me try to make this easier to understand.

Imagine that the government creates the Furniture and Desk Association, an agency which declares that only IKEA is allowed to sell chairs. IKEA responds by charging $300 per chair. Other companies try to sell stools or sofas, but get bogged down for years in litigation over whether these technically count as “chairs”. When a few of them win their court cases, the FDA shoots them down anyway for vague reasons it refuses to share, or because they haven’t done studies showing that their chairs will not break, or because the studies that showed their chairs will not break didn’t include a high enough number of morbidly obese people so we can’t be sure they won’t break. Finally, Target spends tens of millions of dollars on lawyers and gets the okay to compete with IKEA, but people can only get Target chairs if they have a note signed by a professional interior designer saying that their room needs a “comfort-producing seating implement” and which absolutely definitely does not mention “chairs” anywhere, because otherwise a child who was used to sitting on IKEA chairs might sit down on a Target chair the wrong way, get confused, fall off, and break her head.

(You’re going to say this is an unfair comparison because drugs are potentially dangerous and chairs aren’t – but 50 people die each year from falling off chairs in Britain alone and as far as I know nobody has ever died from an EpiPen malfunction.)

Imagine that this whole system is going on at the same time that IKEA spends millions of dollars lobbying senators about chair-related issues, and that these same senators vote down a bill preventing IKEA from paying off other companies to stay out of the chair industry. Also, suppose that a bunch of people are dying each year of exhaustion from having to stand up all the time because chairs are too expensive unless you’ve got really good furniture insurance, which is totally a thing and which everybody is legally required to have.

And now imagine that a news site responds with an article saying the government doesn’t regulate chairs enough.

737 thoughts on “Reverse Voxsplaining: Drugs vs. Chairs

  1. Dr RT

    Hmmmm.
    Thanks for the well thought out and researched article. The first thing I asked myself when the uproar over this price hike became apparent is ‘where’s the competition?’ and a quick search led me here, as well as to the expected bunch of reactionary articles blaming Obamacare on one side and greedy soulless Big Pharma on the other.

    Starting with the fact that we don’t have this issue here in Canada, (nor it seems over in Europe) both places being very regulated in this field compared with the US, I’m going to say that not all regulation is bad, so maybe lumping all government activity together and implying the baby, bathwater and tub should all be thrown out is not the best approach.

    Yes, as a practicing surgeon I have read plenty about the FDA drug approval process being unduly burdensome and maybe preventing some useful drugs getting on the market. Health Canada’s process is a little less byzantine from what I hear. But remember, our guys approved thalidomide, your FDA did not, so there’s that. We are talking medicines here, many of which are potentially highly toxic, others of which may be snake oil placebos. Any reasonable person (i.e. not anarcho-capitalist zealot) should agree that some regulation is necessary.

    Whereas other government actions you describe are definitely the problem. The ability to sue competitors for trivial drug copyright infractions is a particularly American phenomenon, and one that your government has been intent on exporting abroad (at the behest of US drug manufacturers), thankfully with little success. The lobbying you describe pretty much fits the definition of anti-competitive. This cronyist-corrupted version of capitalism is the problem (as you have pointed out so well), but not all regulation as a whole. It’s worth differentiating the two, lest you feed the zealots.

  2. Stephen Downey

    I understand Research and Development. Any manufacturing company that introduces new products spends a lot of money on R&D. I also understand the concept of “Public Companies” who have sold shares (stocks). People purchase stocks in order to develop an investment portfolio, and they expect to receive a return on their investment. So a Public Corporation must have money available to both spend for R&D, and then enough left over to pay investors every year. I understand and that’s all cool. And pricing a product they are selling must include enough Mark-up (profit) to allow for those expenses.

    The Pharma Industry is particularly vulnerable to wild swings in profitability. A chemist has an idea for a medicine. It is developed in a lab, subjected to extensive testing and, if lucky enough to potentially work, then must be subjected to years of larger testing scenarios, experimentation and, finally, human trials. If it is still viable then governmental trials and approvals are required. How much did it cost from idea to final government approval? Who knows. But the cost may have been in the multiple billion dollar range.

    Of course then we ask the question: How many product ideas were started that proved unsuccessful in the end? Like how many billions of dollars were spent in projects that were failures?

    There is no excuse for any Pharma company to Jack the price of a medication thru the roof just because they can. And while Pharms are publicly traded companies, they are not governmental agencies. They are entitled to make a profit, they are entitled to pay shareholders a reasonable return on their investment, mand they are entitled to pay their workers and management both fair wages, benefits and where appropriate, bonuses. And THERE is the floating question mark. Does a publicly traded company with a board of directors have a right to pay huge bonus rewards to executives along with golden parachutes paid when they leave?

    If you believe in a free market system then yes, they have the right to do so without governmental interference. Is it ethical, right and proper. Absolutely not. But it is the right, responsibility and duty of SHAREHOLDERS to put a stop to it, not the government.

    Look at your investment portfolio. Do you own shares in Mylan? If you do, then if you object to the price increase of their Epi-Pen then it is your right and obligation to protest it. And you can collect names of other stockholders then you can mount a campaign to protest it. If you are someone who buys the product, and if there is a generic available, then it is your right to ask your doctor to allow for the generic brand.

    But listen folks, running to the Government every time a company does something stupid should not help. Out Government should be in a place to have standards for production, research, all that. But if we allow our Government to control the sell price of anything in the private sector then we are inviting the Government to tell us too much.

    The government tells us not to smoke and raises the tax on tobacco. It tells us soft drinks are bad so New York prohibits super sized drinks. The Government tells us too much already. Let’s not allow them to tell us what we can eat, what we can drink, what we can smoke, how we do our hair and how we should view religion. Government, here in the US, was only designed to look out for the public good, collect duties and generally keep us prepared for but free from wars.

    Today government tells us what to eat and drink, how to wash our clothes, and even what we should and should not believe about religion. We’ve given them WAY too much power already. It is time for consumers and customers to step up, tell government to get lost, then to tell the Big Pharma companies that while we understand the costs, we will not tolerate their price gouging.

    Our efforts will keep us free from more government meddling and from more outrageous price hikes.

  3. Kat

    This is an outstanding rebuttal. Completely on point.

    Now, please explain why clobetasol is $20 in Colombia and $500 in the United States. Surely it’s not because ancient topical steroids are still on patent. And why is fecal matter classified as a drug by the FDA (I’m speaking to FMT, which are happening in far less sanitary and much more dangerous circumstances in private homes because the FDA is restricting safer alternatives for the desperate). The list goes on and on and on and on. The FDA has zero incentive to save lives and every incentive to both grow its bureaucracy and avoid blame when things go wrong (and they will).

  4. marty

    Eminent domain is the power of a state or a national government to take private property for public use.

    When a strip of land is needed for a pipeline, a roadway, etc, the government has the power to take (buy) that item for a reasonable price.

    There is no reason this should not be exercised for PHARMA items that are lifesaving “for the public good”

    1. Edward Scizorhands

      This would likely fail 9-0 at SCOTUS as your entire point is based on getting something cheaper.

      If someone was renting a piece of land to the government for $100,000 a year, the takings of that would require the NPV of $100,000 in perpetuity. Any plan to do it to save the government money would run afoul of the whole purpose of that clause of the fifth amendment. They had had enough of the King deciding that he wanted something and declaring it his.

  5. rico

    As usual, Scott goes right up to the edge of understanding but then backs off from the full implications.

    The entire government is completely corrupt and is engaged in wholesale looting. Progressives (and mainstream conservatives) are statists who are abusing their power to enrich pharmaceutical interests at the expense of the long-suffering American people.

    This is the world that progressivism built. 100 years ago, the federal government COULDN’T have pulled this off. But foolish “progressives” gave the government increasing amounts of money and power, mistakenly thinking that unchecked State power would be used for things like “fighting racism.” Nope, it’s being used to bankrupt the middle class and their children and their childrens children.

  6. Larry

    Don’t you understand that greed is the worst thing in the universe and that corporations are greedy and that Mylan is a corporation? No matter how many alternatives to Epipen were on the market, and no matter what the resulting price was, they’d all be made by corporations? Ewwww!

  7. Hal Koiman

    As an Allergy Fellow 30 some years ago, we were told that the “auto-injector” was actually created by the United States military to be used as a device by which soldiers could self-inject Nerve Agent Antidotes (http://www.meridianmeds.com/products). How Mylan ended up with an exclusive patent on it is another story worth investigating. And what were the royalties or consideration that the People of the U.S. received in return? I suspect We The People received nothing in return.

  8. Fernando Mendoza

    Hi, just a remark:

    (You’re going to say this is an unfair comparison because drugs are potentially dangerous and chairs aren’t – but 50 people die each year from falling off chairs in Britain alone and as far as I know nobody has ever died from an EpiPen malfunction.)

    That is because the FDA makes sure that enough test were done. If a similiar agency supervises chairs, then you would expect less chair accidents, wouldn’t you?

    Drug regulation is necessary because it saves lives, so deregulating is out of question. Also, how do you explain that, while similar regulations are in place in europe, there the cost are way less than the usa… And remember, europe is a lot more regulated.

  9. David Kettering

    And, unstated in this article, are the direct and knock-on costs of the disaster that is Obamacare on the market.

    One of the little-noticed taxes imposed to pay for Obamacare, was an excise tax directly on medical devices – such optional equipment as wheelchairs, insulin pumps, and yes, Epipens. The tax, as noted in this article (https://www.washingtonpost.com/blogs/right-turn/post/obamas-tax-on-insulin-pumps-and-wheelchairs/2012/05/11/gIQAAA6UIU_blog.html?utm_term=.274a8e937674) hits the trifecta of bad tax policy: It is ‘regressive, non-transparent, and anti-technology’. It is a direct tax on medical consumers, and a drag on innovation.

  10. Diane Murphy

    I loved this article and was about to share widely, until you mis-stated the following “If you know anything at all about doctors, you know that they have way too much institutional inertia to change from writing one word on a prescription pad to writing a totally different word on a prescription pad, especially if the second word is almost twice as long, and especially especially if it’s just to do something silly like save a patient money. I have an attending who, whenever we are dealing with anything other than a life-or-death matter, just dismisses it with “Nobody ever died from X”, and I can totally hear him saying “Nobody ever died from paying extra for an adrenaline injector”. So Adrenaclick continues to languish in obscurity.” Say what you will – the truth – about what you said in your article previously, and analogies made. But then you regress to targeting individuals – physicians – and clump them all together. They are people and though maybe you know some like that, I have exactly the opposite experience with my patients. I am very aware of costs and fight for them daily. Not being shared.

  11. George Dawson, MD, DFAPA

    >There you are presuming too much. If you have a body with no power, it’s easy to screen everyone on it for conflicts. Once you give that body power, however, it becomes much harder to do so. Everyone will scheme to get someone in their camp on the board. It’ll start looking like recent supreme court nominations, with everyone swearing up and down about not having litmus tests, but everyone knowing that they do. THe supreme court is actually a great example of how you can’t have technocracy. It has immense power and respect, gives power entirely to the best experts in their field, and it’s completely political<

    I would not consider the Supreme Court to be a technocracy. I would consider lawyers or judges to be technical experts only in the broadest sense of the term. The fact that there are clear political and ideological biases only reinforces that point.

    If I am sitting on a P&T Committee with 20 other physicians and PharmDs – we can read the technical literature and decide if a drug is useful enough to add to a formulary or not. We can also decide if somebody is trying to introduce a drug that is not likely to be useful, is too expensive for its benefit, or is being introduced strictly due to advocacy groups and is likely to not be effective. All of those decisions are based on an analysis of a literature written on a scientific basis.

    I hope I am stating and not implying that managing organizations and people is an overhyped skill and there is no better example than the gross mismanagement of the healthcare system. There are endless examples but it generally comes down to a serious lack of knowledge about how medicine needs to be delivered, serious problems in managing people, and then selling those models to the public like they are the best hospital or clinic in the US. Advertising healthcare in this country has never been at the level it is at today. Any physician working in these systems is subject to the science of the day. That occurs when the CEO (or whoever) wakes up with the next great idea in healthcare and imposes it on all of the medical staff. I have seen that endless stream of bad ideas go from the boardroom to the editorial pages of every prestigious medical journal. There seems to be a concerted effort to completely convert medicine to business as usual management and there are only a few of us who recognize that nightmare.

    To a large extent the idea that there is no better unbiased decision making group to be found comes down to whether you believe it exists or not. I have been there and done that and without a doubt that affects my belief system and I am in a much different world that the business managers, politicians, and lawyers who are affecting my patients.

    It will be a grim day when guys (and gals) like me don't exist. No matter what their primary technical discipline is.

    1. cassander

      >I would not consider the Supreme Court to be a technocracy. I would consider lawyers or judges to be technical experts only in the broadest sense of the term. The fact that there are clear political and ideological biases only reinforces that point.

      I fail to see how. Law is a technical discipline. The supremes are among the most respected practitioners in their field.

      >e can also decide if somebody is trying to introduce a drug that is not likely to be useful, is too expensive for its benefit, or is being introduced strictly due to advocacy groups and is likely to not be effective. Al

      No, you can’t. You can determine if a drug is efficacious at its stated function, that is all. You know nothing about what drugs are “too expensive”, or how useful they will be. And you cannot. Technical knowledge does not, and can not, solve the economic calculation problem.

      >I hope I am stating and not implying that managing organizations and people is an overhyped skill and there is no better example than the gross mismanagement of the healthcare system

      there are few systems more dominated by the sorts of committees of experts you suggest than the healthcare system. Perhaps the two are related?

      >To a large extent the idea that there is no better unbiased decision making group to be found comes down to whether you believe it exists or not

      There are many other questions at hand.

  12. Norman Bay

    Classic and elegant explanation of the real crony capitalist system!
    FDA should be better regulated!!

  13. Robert Arvanitis

    Excellent parody with the new “FDA,” a perfect illustration of iatrogenic disease. People understand best with such vivid examples.
    In algebra, this is known as “over-determined equations.” When there are more constraints on a system than there are free variables, contradictions are guaranteed.
    To extend an engineering metaphor – there are feedback mechanisms in society: prices, votes, jurors.
    Society spirals out of control when we stick a toothpick in the thermostat, so to speak. And the answer is never more toothpicks.
    The bigger government gets, the greater the honeypot for cronies, until a senator is a better investment than a factory.

    1. George Dawson, MD, DFAPA

      I would take an opposite view. As far as I can tell laws and regulations in this country are written mostly by lawyers and lobbyists. The conflict of interest with lobbyists is generally obvious whether they choose to disclose it or not. The conflict of interest with lawyers is to maximize their landscape whether that means more litigation around an issue or just rules so complex that you need an attorney or attorneys to interpret them. And even at that point you may have an attorney that encourages you to challenge what is written.

      Using an example from psychiatry – in states where there are emergency holds for psychiatric purposes it is generally illegal to put a person on back-to-back emergency holds. The initial hold period is supposed to be an adequate time frame to get a court order from a judge to hold the person longer. What if for some reason or another the initial hold expires and there is no court order? I am aware of several cases where the clinician was advised to consider the following advice from their attorney: “I would rather defend you for placing a second emergency hold than homicide or suicide based on a mental illness – but it is up to you.”

      I cite this example because I think it illustrates how attorneys generally view the law as relative and they write it the same way. Antitrust litigation is the same way. At one point not too long ago – physicians could be sued by the DOJ for meeting at a convention and casually discussing their fees. The DOJ has no similar problems with price fixing by major players in the healthcare industry or with anti-competition cases where one company can use managed care tactics against another to reduce their profits.

      I don’t see publically elected officials as being a solution, especially in health care. The single best example of how healthcare should be managed was the Peer Review Organization (PRO) that reviewed Medicare hospitalizations in the 1990s. All PRO reviewers were practicing physicians who were rigorously screened for conflicts of interests. They were mandated to review clear cut quality and utilization parameters for hospitalizations. At the time, there was widespread media concern that hospitals and doctors (especially surgeons) were lining their pockets by unnecessary hospitalizations and procedures. These were all high quality reviews and over about 10 years – it generally showed that the degree of overutilization was so small that it would not cover the cost of the program so it was disbanded. The results of that experiment are ignored today for the convenience of a for-profit managed care industry that can essentially refuse to fund medical care based on the reviews of their own employees. The result of that process is a highly rationed but expensive system that has a public relations interest in quality.

      Imagine what the FDA would look like if their Scientific Committees had absolute veto power over the regulators. Absolute rules over wild interpretation.

      Imagine what the tax code would look like if all o the conflict of interest and degrees of freedom were wrung out of it. I expect that you could fit it on a single 3 x 5 inch note card and you would not need an accountant – ever.

      1. cassander

        >Imagine what the FDA would look like if their Scientific Committees had absolute veto power over the regulators. Absolute rules over wild interpretation.

        If that happened, the game would become about placing people on the committee, instead of writing rules. Technocracy is a myth. Giving political power to scientists doesn’t make policy apolitical, it makes science political.

        1. George Dawson, MD, DFAPA

          Everything is political – but I can guarantee that FDA scientists play by the rules. Rule governed political behavior is much different than the appearance of rule governed political behavior. The politics of science is also not the same as the politics of Congress. It involves much more local agendas like favorite theories or personal disputes once all of the conflict of interest has been removed.

          When you are in a room with a group of people all of whom have been rigorously screened for conflicts of interest – it is very unlikely that a single person or even a small group of people can push a special interest agenda through. I go back to the decision about opioids. That vote to not approve a high dose hydrocodone preparation in the midst of an opioid epidemic by the scientific committee was 10 or 11 against to 3 for.

          Technocracy IS a myth simply because the predominant model of management in the US involves elevating a group of people who have been trained as managers and who generally know nothing about the people they manage into management positions. The path for a technocrat to become a manager is to get an MBA not a PhD. Khurana writes extensively about how shareholder based capitalism has had significant effect on trained business managers relative to the original goal of professionalism and accountability to a number of interests. That influence is as evident in the “cost-effective” rhetoric of for-profit health care businesses as it is in the “cost” of pharmaceuticals. In brief, the bureaucrats will only let the technocrats make very discrete and limited decisions within certain administrative structures.

          Those structures need to be recognized and nurtured – in all situations where specific expertise is required.

          1. cassander

            >Rule governed political behavior is much different than the appearance of rule governed political behavior.

            How do you ensure you have the former and not the latter?

            >When you are in a room with a group of people all of whom have been rigorously screened for conflicts of interest – it is very unlikely that a single person or even a small group of people can push a special interest agenda through.

            There you are presuming too much. If you have a body with no power, it’s easy to screen everyone on it for conflicts. Once you give that body power, however, it becomes much harder to do so. Everyone will scheme to get someone in their camp on the board. It’ll start looking like recent supreme court nominations, with everyone swearing up and down about not having litmus tests, but everyone knowing that they do. THe supreme court is actually a great example of how you can’t have technocracy. It has immense power and respect, gives power entirely to the best experts in their field, and it’s completely political.

            >Technocracy IS a myth simply because the predominant model of management in the US involves elevating a group of people who have been trained as managers and who generally know nothing about the people they manage into management positions

            You seem to be implying that management itself is not a technical skill. The US goes too far in its MBA mania, but there definitely exists a technical skill around managing people and organizations that not everyone possesses, and a company led by people with no knowledge of it is just as bad off as an engineering company run by people with no knowledge of engineering.

  14. Marscaleb

    Personally, I do think we should have an FDA, but it needs to be accountable to the people.

    I think we could resolve so many issues if every federal agency could have its top members voted off by the public.

  15. N. Joseph Potts

    Regulation invariably creates the requirement for more regulation. And on and on and on until the regulations themselves are regulated. By that time, there’s no one left, anyway, except the regulators.

  16. mut smut

    there is a solution and it is simple. place all monopoly or near-monoploy drug makers under the same umbrella as other essential services regulation. public utilities, telephone companies, broadcast properties, roads, bridges….all are regulated and rate controlled by public service commissions because their products are essential to society and should not be exploited unreasonably.

    regulatory board members would be elected, guaranteeing the public interest would be served or they lose their job. it works for the electric company. it will work for the drug company.

    1. Corey

      As a good socialist I think services provided by regulated monopolies are generally better-provided directly by the government; usually with public-private partnerships you get the worst of both. But that would indeed be a good start.

    2. J Mann

      Well, there are two solutions – break their monopoly and assume government control of the market. It’s probably worth looking at both to see which makes more sense on given facts.

      In this case, Europe has approved 7 competitors to EpiPen, and I believe the EU, Australia, Canada, etc. allow EpiPen and its competitors to be sold over the counter without a prescription.

      Given that they’ve made it work, that’s the solution I’d prefer to look at first.

  17. Theresa Turnauckas Moore

    This rule of reasoning must apply to insulin, because insulin has been on the market since 1922 and it so ridiculously high in price. It seems doctors only know the name brands too!

  18. Leslie Jones

    Like most government agencies their priority is to maximize,sometimes extemporize on the law that created them. Without let or hindrance they are able to expand their power so far past the original intent that a wimpy Congress and an overwhelmed executive branch simply can’t control them. They can brush aside scandal and embarrassment without a thought, demand more funding (or else!) and just keep on growing. They serve no one, have more independence than was ever contemplated and will keep growing until they control and consume us all. The FDA is the most masterful of all the agencies. Ask anyone who has ever dealt with them.

  19. George Dawson, MD, DFAPA

    Hoping to post something on this over the long weekend to elaborate on my original post about EpiPens and Advair Diskus another interesting case of packaging in effect cancelling out a generic effect or extending patent life:

    http://real-psychiatry.blogspot.com/2016/01/asthmatics-held-hostage.html

    Corrupt politics is certainly a big part of this. The corruption is also very unevenly applied. Price gouging in the total absence of competition brings to mind the original reason for utilities regulation in the US. Super Pharmacy and Therapeutics (P&T) Committees might be an option. Having worked on P&T Committees for years they are definitely not as pure as the driven snow when it comes to pharmaceuticals approved for use by their physicians – largely because they also have conflicts of interest due to the employer running the committees.

    At the level of the FDA, I think it is very naive to assume that they will not interpret the hell out of any regulation depending on the predominant political influences at the time. The best example I can think of is the approval of very high dose opioid preparations against the advice of their own scientific committee on opioids. I think there is also a lot of confusion about their mandate on safety and efficacy for new drugs. It seems obvious that their goal is to get new drugs out on the market and discover any serious side effects in the post marketing surveillance phase. The evidence for efficacy is also often very weak.

    In my post I try to make the argument that federal and state governments are essentially levying a health care tax on all of us whether we know it or not. With the majority of people in high deductible plans +/- HSAs, there is a lot of cash for the grabbing. That is where a lot of the incentive is coming from to reprice generics and maintain very high prices through packaging. In most of these cases the patient/customer is not even going to get the discount during their deductible or HSA charge. The companies make enough during that phase that they still have good profits when the deductible expires the insurance company starts paying for the drug at a 50-60% discount.

    Pharmaceutical pricing in many regards is inelastic, especially if the medication is necessary and there is no competition. We are seeing policy interventions that make the price even less elastic when there are incentives for the average person to pay the high cost for 3-6 months in order to get the reward of having their insurance plan finally cover the medication. In the case of asthma inhalers this may also involve burning through several very high cost models ($1,000 apiece) only to find out that there are no more effective than the originals.

    I don’t think there is a much better definition of price inelasticity than that, but I acknowledge that I am not an economist.

    1. Jill

      Thanks for your comments, from your place of experience on Pharmacy and Therapeutics (P&T) Committees. For those who have to look it up like me, here’s the wikipedia definition.

      https://en.wikipedia.org/wiki/Pharmacy_and_Therapeutics

      It certainly seems, from your comment as well as comments from others, that we really need more transparency, and fewer conflicts of interest, in this area.

      1. George Dawson, MD, DFAPA

        I think there is more to it than transparency. The best example is Congress. According to the rules they have full disclosure and there are sites that list all of their contributors. It seems like a good example of disclosing the conflicts of interest and therefore they are OK. I tried to capture all of that in a graphic a few years ago (double click to expand):

        http://real-psychiatry.blogspot.com/2014/01/the-real-conflicts-of-interest-in.html

        I think the best approach is to know what all of the conflicts are and don’t count too much on that changing any of the major players’ behaviors. I also never try to pay too much attention to misdirection and people telling me where the “real” conflict of interest is or I would have abandoned psychiatry a long time ago.

    1. Urstoff

      One way it’s favorable is that we let drug companies pick their own prices — in this way the United States is exceptional, as the vast majority of developed companies regulate their drug prices.

      Sort of completely misses the point of the chair industry metaphor, doesn’t she?

      Also, I will point out that her specific example of Humira at the end of the piece is somewhat misleading. I’m a user of that drug, and I pay a $5 copay because AbbVie would rather have the insurance’s portion of the price rather than nothing since they most likely would not get the insurance portion plus my consumer portion. Copay cards are handed out like candy by most pharmaceutical companies, so the list price is very often not the price to the consumer.

    2. Saint Fiasco

      But it doesn’t really make sense to put all regulation on the same playing field here. Some regulations, after all, are really good for pharmaceutical companies — and some are quite bad for their business.

      This is an odd way of putting it. I thought the whole debate was about what is best for the patients, so the worry about the pharmaceutical companies seems misplaced.

      I may have misunderstood, but I feel the author is a little too concerned about sticking it to the man and making evil pharma companies pay for their sins. Like the people in the ultimatum game who punish the bad players even at cost to themselves.

      1. Jill

        The more pharmaceutical companies are able to charge for their drugs, the less affordable they are for patients. So in this case, yes, regulations that are bad for pharma companies’ bottom lines are going to be good for patients.

    3. Edward Scizorhands

      Less red tape around generic drug competition wouldn’t really change that fact. As long as we’re going to have patented drugs, letting drug manufacturers set their own prices will remain a key driver of America’s higher drug spending.

      Sweet Christ, all that article to say “price controls save money.” No shit. The question is what would be lost in exchange for price controls.

      1. Jill

        So what would be lost if pharma companies couldn’t gouge sick people by super-overcharging them for their medications?

        1. Edward Scizorhands

          You don’t know that drug discovery would continue. You seriously don’t. You can theorize “oh it wouldn’t be so bad” but you don’t know that. It’s the primary risk condition of price caps.

          My own life is livable thanks to pharmaceuticals. They are generic now, so these days I am cheaply taken care of. There were about 5 years in there where I needed to have insurance to cover it, or else I would have had to go without for 5 years.

          When someone suggests mucking with their incentive structure, I see myself as a deep sea diver with a diving helmet and a tube providing me with vital air, and some third-party who is neither an economist nor a diver of any sort is messing with the air tube, telling me everything will be better if they were in charge, and how much the guy running the air tube sucks. Stop it.

          1. David Friedman

            At a slight tangent …

            There’s a famous empirical article on the effects of drug regulation by Sam Peltzman. He looked at the effect of one change in the regulatory rules, the Kefauver amendment to the Pure Food and Drug Act, which required that in order to be approved a drug had to be shown not only to be safe but to be useful, to be in some way an improvement on what was already out there (this is by memory so I don’t swear to precision in my description of the law).

            His conclusion was that that change cut in half the rate at which new drugs were coming out, with no detectable effect on their average quality.

          2. Corey

            Publicly fund drug development! It’s not so hard! It would even cost significantly less, possibly even if you only include US/state government drug expenditures!

            Or we could award monopoly profits and hope drugs get developed, and that the innovation goes towards useful things instead of gaming the monopoly-granting system (think Tricor II/III here).

          3. Cerebral Paul Z.

            You know what’s even less hard? Let other countries publicly fund drug development! (Reminder posted for the benefit of lurkers; no one with Corey’s keen interest in market failure could possibly have overlooked this free-rider problem.)

          4. Corey

            @Paul: Sure we could let other countries do the R&D, then we no longer have to subsidize them by paying monopoly prices.

            Anyone who’s read my posts in this thread would know that other countries currently free-riding on our funding of R&D through monopoly profits is in fact one of the drivers of market failure. (We’re really bad at excludability for health care innovation, for apparently-humanitarian reasons).

          5. Cerebral Paul Z.

            We can “let other countries do the R&D” only in the sense that we refrain from it ourselves and hope that they pick up the slack; we have no way of making them do so, and the logic of free-riding implies that they will not.

        2. Saint Fiasco

          What happened in Venezuela with toilet paper could happen with medicine. Control the price and the supply runs out.

          1. Corey

            A functioning competitive market could set prices better than fiat-imposed controls, but drugs don’t and can’t have one.

          2. WannabeCoder

            This is largely what drove the massive number of injectable drug shortages a few years ago. Roughly 90% of injectable drugs were sold on one of four Group Purchasing Organization (GPO) contracts. Because of the GPOs’ market power, they were able to require long-term pricing concessions from manufacturers. Because sterile injectable drugs require large costly facilities, most generic injectable manufacturers operate near capacity in order to spread the high overhead costs across more vials, bringing down average overhead, and therefore average total cost, across the portfolio.

            As a result, when there’s a shortage, a manufacturer had little incentive to shift production to the item with a shortage, since margins would be limited thanks to the locked-in GPO price, and would require creating potential shortages on other drugs that share the manufacturing lines as the first.

            In short, not all price controls are generated by the government. Given enough market power, intermediaries can effectively establish price controls, with familiar results (shortages, rationing).

            Good thing the number of generic retail pharmaceutical intermediaries controlling 85% market share has fallen from 7 to 3 in the past two years (Amerisource Bergen + Walgreens + Rite Aid = WBAD, Cardinal + CVS + Omnicare + Target = Red Oak, McKesson + Wal-Mart = Yet-to-be-named entity). Shortages of life-saving medications: not just for hospitals anymore!

    4. Uncle Ilya Kuriakin

      Duffel Blog is covering this story too:

      Sick call in crisis after 800% increase in price of Motrin

      After an unexpected spike in the price of ibuprofen brand Motrin, Surgeon General Nadja West has announced that the Army is unable to provide the drug for ailing soldiers until further notice.

      “We prescribe and deliver close to one billion milligrams of Motrin a day,” West said. “In addition to our cost limitations, medics are now stockpiling and stealing what’s left, and most soldiers can’t afford to buy miracle drugs like Motrin on the private market.

      Craig Mason, a physician assistant at Womack Army Medical Center, has already witnessed hundreds of helpless casualties.

      “Among other things, soldiers use Motrin to treat their headaches, joint pain, allergies, syphilis, cataracts, diabetes, and vertigo,” he said while consoling a soldier suffering from terminal ergophobia. “All I can do now is offer hospice care and dead-man profiles to preserve some of their dignity.”

      Alex Gorsky, CEO of Johnson & Johnson, said that the price change is justified.

      “I’m running a business, and shareholders expect returns,” Gorsky told reporters. “Except that, unlike most businesses, pharmaceutical companies hold the keys to life and death.”

      One billion milligrams of Motrin … per day?! That’s a whole sh*t-ton of Motrin, isn’t it?

      As for ergophobia … isn’t that an untreatable cognitive disorder that’s strongly correlated to excessive reading of SSC? 🙂

  20. nunnya bidnez, jr

    The CEO of Mylan (manufacturer of Epi-pens) Heather Bresch, is the daughter of Senator Joe Manchin (Democrat) of W.Virginia.
    No nepotism there, no sir.
    No possibility that he would sponsor or vote for legislation directly related to her industry, is there?
    He’s recused himself completely, eh?

    ’nuff said.

    1. The Nybbler

      I’m sure he’s recused himself completely in discussions on the floor of the Senate and in committee chambers.

      In the smoke-filled rooms where the favors are traded and the promises made and broken, I rather doubt it.

  21. Jill

    Scott, I really appreciate your starting a dialogue about an article from a site that is not Libertarian. That gives the board some variety. I like Vox and find them interesting. I often agree with them, but find them interesting even when I don’t

  22. TenaciousTerrier

    FDA abortion guidelines essentially weaponized by Republicans in Ohio.
    http://www.latimes.com/science/sciencenow/la-sci-sn-abortion-complications-ohio-20160830-snap-story.html

    “The law, which took effect in 2011, requires abortion providers to adhere to specific guidelines from the U.S. Food and Drug Administration when giving patients a combination of two drugs, mifepristone and misoprostol. The drugs have been shown to terminate early pregnancies safely and effectively.”

    “Before Ohio’s law went into effect, doctors in the state were able to decide what doses of the drugs were most effective based on the latest research and best practices. Afterward, doctors lost that flexibility and were forced to follow the FDA’s outdated protocol.”

    “To see what effect that had on patients, researchers examined the medical records of 2,783 women who had medication abortions at one of four clinics in Ohio between 2010 and 2014.”

    “The researchers found that women were nearly three times more likely to require additional intervention after the law was implemented than they were before.”

    Does the FDA do anything well?

    1. Corey

      Does the FDA do anything well?

      Regulation of generic OTC medicines seems to go well; we can all get store-brand cetirizine instead of buying Zyrtec(tm) and probably not notice the difference.

      I’m also a fan of minimum ketchup viscosity standards.

      1. Edward Scizorhands

        It’s become so normal I forgot how awesome getting a month’s worth of allergy pills for $10 at the CVS is. And how I couldn’t do it 10 years ago.

      1. Garrett

        The FDA makes certain mandates which are unhelpful, however. They have size limits for condoms which are unhelpful for those of us who fall outside of the standard ranges.

  23. Jeffery Mewtamer

    To comment briefly on some of the topics touched upon in these comments:

    I don’t like the state of IP law. I don’t like that publishers/heirs can ride the coat tails of dead creators for what can amount to several generations. I don’t like that businesses can legally steal their employees’ IP and that employees can’t build upon their prior work if dismissed or they resign. I don’t like that a term can become the generic word most people use for a class of object, but courts can still decide the company that owns the original trademark can stop people from using the term as it is used colloquially. I don’t like that patents can last long enough to inhibit technological advance or that the people who most need patent protection can’t afford them and there’s little to stop imitators from claiming patent in countries the creator couldn’t afford to claim. I don’t like that derivative works that are of superior quality to their inspiration can’t be freely used to generate profit for their creators. The only remotely good thing I can say about IP law is I’m glad patents max out at 20 years instead of being extended to the ridiculous extent copyright and trademark have. I also think it extremely unfair that even a bogus patent claim can stall the approval process, even if we ignore problems such as it seeming that the FDA and Courts are more likely to side with the drug company with more money than the drug company that is in the right.

    Regarding blood donation: While I can understand why HIV was originally more common among homosexuals, and can see that as a somewhat justifiable reason for a blanket ban on homosexual blood donations, I have to wonder why the rate is still so much higher than in the general population and can’t help thinking that it would be a bigger victory for Gays if we could get the rates down such that allowing Gay donors poses no additional risk. Of course, given that a small fraction of eligible donors actually donate, solving the issue of why people don’t donate would probably be second only to a viable blood substitute for reducing deaths preventable by transfusion.

    Regarding the comments on the weaknesses of democracy, another issue inherent to most forms is that most elected officials only have to answer to a small portion of those they have authority over. A senator or representative could have a 100% approval rating in their home state/district and still piss off the majority of the American people, and that’s not even considering when the decisions of the US Federal Government have repercussions on the world stage.

    Also, I too am in the “it’s not how much regulation we have, but which regulations we have” camp.

    1. Uncle Ilya Kuriakin

      Aircraft flight-control (“fly-by-wire” avionics) software is constructed very much as your essay describes.

      The FAA stringently regulates avionics software; the regulations require strict adherence to engineering best-practices; those best-practices are arduous and expensive.

      A crucial lesson is evident: In engineering practice — and in medical practice narrowly regarded as a biological variety of engineering practice — it isn’t the regulations that are expensive; it’s the best-practices.

      Are engineering best-practices absolutely effective? No. The best that can be achieved in practice are reasonable levels of efficacy, reliability, and safety.

      Still, no sane person would cross a bridge, drive a car, fly in an aircraft, stand near a boiler, or take a medication, that wasn’t designed and produced in certified accord with engineering best-practices. All of these activities entail life-threatening risks; risks that perforce are delegated to the engineers and physicians who design and produce and prescribe (for profit) these products.

      In just and stable societies, there can be no acquisition of profit without the assumption of responsibility; this necessary check-and-balance between profit-acquisition and responsibility-assumption is the primary rationale for progressive regulation in engineering and medicine.

      1. Glen Raphael

        Still, no sane person would cross a bridge, drive a car, fly in an aircraft, stand near a boiler, or take a medication, that wasn’t designed and produced in certified accord with engineering best-practices.

        Um. I have crossed small rivers by walking across a bridge that consists of a naturally fallen tree. I’m pretty sure no deliberate use of “engineering best-practices” created that bridge, yet I crossed it. So…are you calling me insane?

        Similarly I’ve ridden in (and would have happily driven, though I was not of driving age at the time) a car that was a very early electric conversion, reconstructed by an amateur hobbyist. Again, no “certification of best practices” in sight. Does that also mark me as insane?

        certified accord with engineering best-practices” is a fine thing, but it’s not the only way to get useful stuff accomplished.

    2. John Schilling

      There’s actually an interesting data point in the aircraft world: About a decade ago, the FAA decided that airplanes weighing less than 600 kg, carrying no more than 2 people at no more than 120 knots(*), would not need formal FAA certification if they were designed and manufactured to industry-standard best practices. Pilot training requirements were relaxed but not eliminated for such aircraft, and crucially the pilot medical requirements were reduced from a dedicated FAA medical certificate to whatever your state requires for a drivers’ license.

      The overall result of getting the FAA mostly out of the business of deciding who can fly which very small airplanes, was a roughly 2x increase in the rate of fatal accidents compared to otherwise-similar FAA-certified light airplanes. And most of this is I believe on the medical side, as most of the early adopters were older pilots who explicitly would not have met the requirements for an FAA medical certificate but wanted to stay in the air until they literally or figuratively dropped.

      So, somewhere between “the private sector will do it better!” and “rivers of blood, courtesy of Ayn Rand!”. Probably closer to the former, given the desires of the target market.

      *And some other stuff. Roughly speaking, airplanes that can only kill people who know what they are getting into and will e.g. bounce off houses if they crash – the FAA’s mandate is specifically about protecting innocent bystanders.

      1. David Friedman

        “The overall result of getting the FAA mostly out of the business of deciding who can fly which very small airplanes, was a roughly 2x increase in the rate of fatal accidents compared to otherwise-similar FAA-certified light airplanes.”

        I’m not sure what this means. Was the increase a change over time from before and after the change in FAA regulation or a difference between fatal accident rates after the change between those that had been certified and those that had not been? If the latter, what were the reasons that some were and some were not certified?

        1. John Schilling

          Comparison of the accident rate for two-seat aircraft meeting the S-LSA rules and industry best practices but without formal FAA certification, with the accident rate during the same period for slightly larger 2-4 seat aircraft that still require formal FAA certification. So, adjacent market segments that should have very similar safety behavior.

          The reason some aircraft were not certified is that it costs tens to hundreds of millions of dollars to certify a new design and nobody wants to do that if they don’t have to. The reasons others were certified is A: they were certified before the FAA changed the rules and said “oops, you don’t really have to do that” or B: they are aimed at customers who are willing to pay lots more $$$ for the ability to carry a third passenger and/or fly faster than 120 knots.

          On the medical side, the general infirmities of advancing age make it harder for people to maintain FAA certification. E.g. every pill or drug you take has to be on the FAA’s Guaranteed Not to Make Pilots Dizzy list, which is rather shorter than the FDA’s Safe and Effective list.

          1. John Schilling

            Unfortunately no, or at least not that I’ve seen, because the age comparison would be particularly enlightening.

            Aside from flight instructors, nobody is flying Light Sport Aircraft professionally, and someone with an active commercial license is unlikely to fly one for sport. A fair number of the older LSA pilots will have been professional pilots earlier in their career; that also would be interesting to know.

      2. Uncle Ilya Kuriakin

        John Schilling observes [perspicaciously] “The FAA’s mandate is specifically about protecting innocent bystanders.”

        This excellent observation (as it seems to me) suggests another salient data-point in regard to progressive regulation: wing-suit flying.

        Wing suit manufacturing, training, and licensing all are substantially unregulated (AFAIK); this is socially reasonable because, in accord John Schilling’s observation, innocent bystanders are very seldom (if indeed ever) killed in wing-suit accidents … although some exceedingly close calls have occurred.

        For wing-suit flyers themselves, the mortality rate is horrendous; this is one of the highest-risk activities that human beings voluntarily embrace. For details SSC readers are encouraged to consult BliNC Magazine’s in-depth, immensely sobering, and ever-lengthening BASE Fatality List and accident analysis

        In reading the BASE Fatality List’s accident reports, the blessings and consequences of libertarism alike are vividly presented.

        The main lessons of the BASE Fatality List (as I read the List anyway) apply to climate-change: a sustained carbon-burning global energy economy compels all of humanity to accept risks that are comparable to wing-suit proximity flying

        Thus the same libertarian freedoms that are thrilling and wonderful for individuals, become — by traditional conservative standards — indefensibly immoral and practically disastrous for global communities, isn’t that plain common sense?

        As a rational compromise, SSC readers who desire to experience the full benefits and consequences of libertarianism, are invited to take up group wing-suit flying. But please don’t imagine that all of humanity will share your enthusiasm for it!

  24. Uncle Ilya Kuriakin

    More than a few weighty citizens have asserted publicly that the industrial and environmental sectors of the economy are insufficiently respectful of non-ratiocinative cognition and non-monetary valuations; conditions for which progressive regulation is a necessary and well-understood corrective.

    A natural question then is: whence does opposition to progressive regulation arise?

    The comments and topic-selection here on SSC have helped me to appreciate that the alt-right’s over-arching objective is the suppression of broad-spectrum human cognition: in the near-term by intimidation, demagoguery and censorship; in the middle-term by legislation, deportation, and isolation; and in the long-term by outright genetic engineering to suppress human empathic cognition,

    Yes, the alt-right is entirely serious about the cultural and genetic suppression of empathic human cognition … and isn’t this a seductive narrative that humanity has embraced before?

    In effect, the alt-right’s core objective, slogan, and fantasy boils down to: “You will be made to NOT care”, isn’t that a fair summary of it?

    In this emerging alt-right dreamworld, all of those pesky SJWs, environmentalists, progressives, scientists, philosophers, critics, and poets will “softly and suddenly vanish away, and never be met with again” … without any need for awkward deportations or ugly concentration camps.

    The alt-right’s vehement opposition to progressive regulation can thus be appreciated as arising from the alt-right’s (correct) assessment that progressive regulations are a crucial obstruction to the alt-right’s long-term uncaring objectives.

    For at least some SSC commenters, the justification (or not) and the realization (or not) of the alt-right’s uncaring objectives — understood literally as the purging of empathic caring both from individual cognition and from global culture — are chiefly what SSC discourse is about, and chiefly what the culture wars are about too, isn’t that correct?

    1. Corey

      My impression is that some of it is the straw-Vulcan problem; people confuse rationality for lack-of-empathy then work hard to demonstrate the latter.

      I do find it odd that, as far as I can tell, nobody in this thread has objected to EpiPens on eugenic grounds.

    2. Gil

      1. Most Deatheaters and Alt->ers are more hostile to free markets and more supportive of regulations than the typical libertarian. They have less faith in people’s ability to make complex decisions, and so prefer to defer either to law or social convention. Any weakening of social convention for handling a problem increases the necessity of law, which has associated [direct/indirect] costs.

      The difference is that progressives want regulations to protect all, alt-> wants regulations to protect the in-group.

      2. The primary distinction between Alt-> and Progressive is the distribution of empathy across the spectrum of genetic similarity rather than magnitude. Some progressives demand equal empathy across the entire genetic spectrum for the entire global populace. Other progressives tolerate unequal empathy across the genetic spectrum as practiced by some groups but not by others [Which is to say, ‘particularism for me, universalism for thee’]. Progressives and Libertarians are both universalists but differ in the magnitude of moral obligation people have across the spectrum.

      3. Alt->ers would accuse progressives of trying to, in the near-term by intimidation, demagoguery and censorship; in the middle-term by legislation and isolation; and in the long-term outright genetic engineering to suppress human empathic cognition for *in*-groups.

      _________

      My own Bias:

      Social cooperation is mutually advantageous but is still fundamentally a prisoner’s dilemma. “I always cooperate” [i.e. “Refugees Welcome”] works as long as the vast majority of people involved share the same strategy. When “I always Cooperate” butts heads with “Me and my own” — “Me and my own” wins every time. You either compel everyone to practice “I always cooperate” [‘Civic Nationalism’] or you exclude those who fail to practice it [Ethnonationalism]. But that latter approach ultimately renders “I always cooperate” as “I always cooperate with the in-group” which is essentially “Me and my Own”

      1. David Friedman

        “Social cooperation is mutually advantageous but is still fundamentally a prisoner’s dilemma.”

        That depends very much on the context. Social cooperation limited to other people observed to socially cooperate is not a prisoner’s dilemma.

        1. Gil

          Agreed. To imply otherwise would suggest that, in real life, no one cooperates with anyone unless a leviathan is present. in-groups cooperation performs reasonably well [though to varying degrees] . It’s the inter-group cooperation, especially between groups that do not share a common language, appearance, or even Schelling points where “I always cooperate” ends in failure.

          1. David Friedman

            “It’s the inter-group cooperation, especially between groups that do not share a common language, appearance, or even Schelling points where “I always cooperate” ends in failure.”

            The silent auctions used by traders in Africa in the distant past, with no common language or appearance, are evidence that even then the result is not always failure.

  25. loupgarous

    While the saga of Mylan and EpiPen is impressively convoluted, another story may nudge it out of the sidelines (if the case has merit). https://www.scribd.com/doc/309957583/Amended-Levaquin-complaint alleges “…on or about May of 2009, President Barack Obama nominated Dr. Margaret A. Hamburg as a political appointee to become Commissioner of the U.S. Food and Drug Administration (“FDA”). On information and belief, Dr. Margaret A. Hamburg was nominated as a result of huge political and other gratuities to Hillary Clinton and The Clinton Foundation, and at Mrs. Clinton’s recommendation. During the confirmation process before Congress, Dr. Margaret A. Hamburg, acting in concert with her husband, Peter F. Brown and the other Defendants named in this Amended Complaint, at all material times the Co-CEO of a hedge fund named Renaissance Technologies, L.L.C., failed to disclose to Congress and other relevant authorities, her and her husband’s clear-cut conflict of interest –specifically, that Renaissance Technologies, L.L.C. held hundreds of millions of dollars of Johnson & Johnson stock, the manufacturer of the deadly drug, Levaquin.

    Once confirmed as FDA Commissioner, Dr. Margaret A. Hamburg acted as the instrumentality that all Defendants used to perpetrate their conspiracy and racketeering enterprise by having her act illegally and outside the scope of her authority as FDA Commissioner to suppress material information to Plaintiffs and the public that Levaquin was inherently dangerous and in fact, deadly. Had this information been disclosed to Plaintiffs and the public at large, her and her husband’s financial gain and net worth would have plummeted, since Dr. Margaret A. Hamburg’s husband, Peter F. Brown, reaped and continues to reap huge financial gain as a result of Renaissance Technologies, L.L.C.’s holdings of Johnson & Johnson stock.”

    The plaintiffs in the case are seeking damages as part of whet they allege are over 5,000 deaths from use of Levaqiun and other drugs marketed by Johnson & Johnson, in addition to nonlethal adverse side effects of those drugs. Lest you think that when Dr. Hamburg left FDA early last year to sin no more, President Obama re-appointed her as FDA Commissioner in March.

    Imagine an agency tasked with regulating chairs knows that 5,000 people DIED in one manufacturer’s chairs, but instead of doing something about THAT, chose to make sure IKEA had a semi-monopoly on chairs and could bribe other manufacturers from selling less expensive chairs.

  26. James Brunk

    Once upon a time there was a drug used to treat Gout.
    The drug had been around for over 200 years. There were companies making it all over the world and it was very inexpensive (about 10 cents per dose of one pill).
    The quality and effectiveness of the drug varied. A small pharma company said it would perform tests of its version and prove it’s effectiveness with clinical trials if the FDA would grant it an exclusive license to sell the drug and ban all other versions. After it proved it was effective (which was already well known) a large Japanese Pharmaceutical company bought the little company and the owners of the small company got very rich. Now the drug costs $1 per pill.
    Can anyone name the drug. I can because I need it whenever I have a very painful Gout attack.

    1. loupgarous

      Colchicine? I’m glad it’s working for you, but it’s got a scary low therapeutic index, not only varying from patient to patient, but from day to day for some patients. And there are people with toxoplasmosis who wish their Daraprim only cost $1/pill.

      But you make a great point. What’s to keep another pharma company from “testing their version” of sublingual nitroglycerine, also quite an old drug grandfathered in past FDA safety and efficacy rules – and asking the new, kinder and gentler (to companies) FDA to grant them an exclusive license to sell all sublingual NG, no matter whose version, in the US at a steep markup?

  27. James Brunk

    I have an idea. The FDA should let Bayer have a monopoly on aspirin.(American Bayer not the original German Bayer) After all This will eliminate the 1 cent dangerous generic aspirins and then Bayer can charge 1$ per tablet. $1 is a reasonable price as families can afford $1. Never mind that it costs about $1 to manufacture 500 aspirin tablets.
    When Walmart or Costco protests the FDA then can allow a generic manufacturer to make aspirin but only if it is called Poisona.

  28. Nathan Pitts

    Thank you very very much for an excellent piece! But I think there is another part to this that is “equally” important! I will be 70 next spring and have seen a lot of things happen in one lifetime. When I was a lad, there was a “supply and demand” system for providing medical care. Care was provided, in a timely fashion, and the services were billed at reasonable rates that working people could afford to pay.

    Nowadays, by contrast, that “supply and demand system” is gone, replaced by third party payers, for the majority of healthcare services! With a system in place that does not allow the person receiving the care, to decide if he thinks the price is reasonable…….or not……the providers or course, seeing something akin to “section 8” housing, with guaranteed payments, thuss have NO incentive to keep costs down, in fact they have every incentive to inflate them as rapidly as possible…..like the Epi-pen recently.

    Here in Eastern ME we have one HUGE hospital, that has bought all the local hospitals, and made them funnels into their trough. They control the virtually the whole provision of healthcare in this part of the state. They just built a $275 million dollar expansion…..out of their pocket…..as a “non-profit” is making a HUGE profit out of all of this, just like the Coca Cola company does, only difference is they don’t pay taxes! They have a CEO whose salary is in 7 figures who contributes nothing to healthcare but everything to making vast profits!

    When I tell people that the insurance industry has contributed hugely to this, they think I am crazy and that they could not exist without someone there to pay for THEIR healthcare. Instead they suggest that we have a new “third party payer”! We have had third party payers for too long and that is part of the reason we are in this mess. Bring back the free market situation and the providers will charge what willing consumers will pay, and no more. Soon we will look like Venezuela…..for most of the same reasons.

    Again, many thanks for a great piece!

    Nathan

    1. Matt M

      The good news is that Obamacare has so completely ruined the insurance industry that more and more people are finding themselves stuck with “insurance” that features insanely high deductibles, co-pays, and co-insurance.

      Which essentially puts them in a spot as if (for day to day non-emergency care) they had no insurance at all. Which makes them free market consumers who are price sensitive. And if we once again have price sensitive consumers, the producers will have to start competing on price as well.

      Assuming the whole thing doesn’t collapse and get replaced with single payer before this happens – it’s entirely possible that Obamacare is a stepping stone to free market medicine – completely accidentally of course.

      1. Ariel Ben-Yehuda

        > that more and more people are finding themselves stuck with “insurance” that features insanely high deductibles, co-pays, and co-insurance.

        Or, in other words, real insurance.

      2. Corey

        Spoken like someone who has never tried to get insurance on the pre-Obamacare individual market, or gotten billed at charge-master rates for care provided while uninsured.

        1. Maware

          Except the difference is the massive deductibles in Obamacare. The silver plans start at around 400 per month, with subsidies they can be $100 a month, but you have a $4000 deductible per year. and $150 deductible for medicine. When you factor in all the copayments too, you’re really paying for others to get catastrophic care, while basic care you’re probably getting shafted on.

      3. jaed

        Which makes them free market consumers who are price sensitive.

        Unfortunately, ACA insurance is comprehensive, even though it has high deductibles. Which means that even before you meet the deductible, you’re restricted to the company’s list of providers, who must charge you the agreed-upon rate. In this situation, there’s no opportunity to shop based on price – because every provider you can go to must charge you the same rate – and very little opportunity to shop based on anything else if you’re in a narrow network, since you have few or only one provider to choose from.

        (You can go outside the insurance completely, of course, but in that case anything you spend doesn’t count toward your deductible. Most people are reluctant to do that, both because of a feeling of losing something they’re entitled to, and because the learned helplessness of an “everything must go through insurance” mindset predisposes them to assume they can’t.)

        1. Corey

          Oh no, never ever go out-of-network for anything if you can help it (sometimes you can’t; anaesthesia is the best-known example). Without the price control of the network contract, there’s no legal nor logical limit to what the provider can and will bill you after the fact, and usually no way to know before the fact.

          You will often literally pay 5 times as much. Your leverage: threaten bankruptcy, or threaten tiny but regular payments (most states forbid charging interest on medical bills).

    2. Corey

      Health care has never been a functional free market.

      Among the reasons: patients have never been smart shoppers. Giving them more skin in the game simply reduces overall utilization, regardless of how effective or necessary that utilization was. This result goes back at least to the famous “RAND Health Insurance Experiment” in the 1960s. (The think tank, not the author).

      Check theincidentaleconomist.com FAQs for more health policy backstory.

  29. Ryan

    Isn’t an epipen malfunction by definition deadly? The whole point of an epipen is to provide life saving drugs to the patient. If it doesn’t do its job, the patient would be in a life critical situation. In that situation, I wouldn’t want to have a product that works 90% of the time. Also 50 out of how many people use chairs? The death rate of chairs is minuscule to say the least. That’s a horrible use of a statistic.

    1. Edward Scizorhands

      If it worked 90% of the time, and it cost 1/4 as much, and I was a school that had to have 10 on hand at a time, and I regularly go through stock instead of having them expire on the shelf, yeah, I’d take that deal.

      1. Gbdub

        If it works 90% of the time, but is 1/4 the price, I can buy 3 and still come out ahead unless the expensive model is better than 99.999% effective.

        1. LHN

          For “works 90% of the time” the other 10% could include anything from “needle visibly doesn’t deploy, try another injector” to “invisibly fails” to “injects massive overdose”. Some failure modes are more tolerable than others.

      2. The Nybbler

        If the product fails, the kid dies. Sure, if you _knew_ it had failed and given no dose at all, having three injectors on hand would likely mitigate this (except that the user is going to be _really_ panicking after the first failure). But I expect it’s as likely it fails and you don’t find out, or it fails and gives a partial dose, which aren’t nearly as easy to recover from.

  30. BBA

    Is regulation less awful in parliamentary systems or is this just grass-is-greener thinking?

    I mean, in America you have House leadership, Senate leadership, committee chairs guarding their own fiefdoms, the President, Presidential appointees, and agency staff pulling in all directions, guaranteeing that any law will be an incoherent mess (and I haven’t even gotten into federalism yet). In a parliamentary country everyone with any power answers to the Prime Minister so there’s somebody who can actually do something about the drug approval process clashing with the patent system.

    If nothing else, acts of the UK Parliament are written in readable English.

      1. David Friedman

        “Every system is equally awful, they’re just awful in different ways ?”

        Demonstrably false. Compare North Korea and South Korea, East and West Germany fifty years ago, Hong Kong, Taiwan, and Singapore to China when Mao was still alive.

        All systems are imperfect–work less well than a system run by a benevolent, omniscient, and all powerful authority would. But some work much less well than others.

    1. Murphy

      they have their own problems but yes, for some things they work better.

      Also you have things like parts of the US constitution which create a massive mess. For example the government can grant a trillion dollars worth of imaginary property to someone today with a typo but if they want to fix that typo tomorrow then they have to pay the person a trillion dollars.

      Hence things like how copyright and patents can be extended but (practically speaking) never shortened.

    2. Salem

      Grass-is-greener thinking.

      Theresa May can’t fire civil servants or QUANGO heads any more than Barack Obama can.

        1. The Nybbler

          Brazil? 1984? Brave New World?

          Oh. Right. They’re ALL set in the UK. Maybe there’s a reason for that.

          1. W. Peden

            Yes, Minister and Yes, Prime Minster.

            The reason why the UK has produced a lot of good dystopian fiction is probably the same reason that we’ve produced a lot of good fiction in general. (I don’t know why that is.)

  31. Daniel Keys

    So, I believe at one point you complained about the lack of explanation for how wealthy conspirators avoided a free-rider problem.

    Suppose a noble family starts sending children to the medieval Church. One might suppose this would help shape the Church’s behavior and benefit the family, especially if their child became a bishop or other high authority. Other noble families might be at a disadvantage unless they sent children of their own to join the Church. Once they all do it, the original purpose might be lost. But they can still get a benefit by instilling a bias towards nobles in general. And if one family tries to become a free rider, they could lose out big time.

  32. Ellen K

    What keeps the cost of any product low is adequate supply to meet demand. When Democrats met with Big Pharma in order to get their blessing on ACA, what do you think they discussed? Merck has tried twice to get facilities licensed so they could sell pharmaceuticals in the US, only to be denied by the likes of Joe Manchin who, surprise surprise, is the father of CEO of Mylan. Failure to allow true competition domestically and abroad has kept drug costs unnecessarily restrictive. My 87 year old mother, who just found out she’s getting a social security decrease, has seen her slate of medications for diabetes and blood pressure go through the roof. In order to give the appearance that everyone in the medical industry wanted ACA, the Obama administration did some very deceitful things. They cooked the data to the CBO making it appear deficit neutral. They got doctors from the AMA, complete with borrowed white lab coats for the photo op, to sign off (note: the AMA doesn’t represent all doctors anymore than the TEA represents all teachers….). And then the Democrats, behind closed doors, without any Republicans allowed to perch in the corner and listen, met with Big Pharma and executed a deal that benefited every single aspect of their industry—-just not American workers.

  33. James

    It’s fun to ask people if they know what the drug price is in Canada.
    Then, ask them why they can’t buy the one from Canada. Oh right, the government won’t let you.

    1. Corey

      It’d be kind of mean for Americans to free-ride on Canada’s price controls. Enough of that and Trudeau will build a wall to keep us out.

      1. Edward Scizorhands

        You mean this as a joke, but Canada knows that their price agreements will break if significant number of people push the drugs through from Canada to the US.

      2. Gbdub

        Only fair, since they’re free-riding on our willingness to pay pharmas enough to justify making minimal profit in the Canadian market.

  34. Marguerite Snow

    One of the best articles I’ve ever seen explaining the insane way the FDA operates.

  35. grendelkhan

    Speaking as someone who knows roughly bubkes about medical things… the epinephrine autoinjector was invented in the 1970s. It should be genericized. Epinephrine is a very simple drug. It definitely is genericized. Why the heck is the simple combination of these two things subject to a monopoly? Why aren’t there manufacturers of generic autoinjectors (much like generic, say, wheelchairs or crutches or syringes) and manufacturers of generic epinephrine to load into said autoinjectors?

    1. Anonymous

      There is a specific problem here, which is that the when people try to bring generic autoinjectors to market, Mylan accuses them of infringing on its current patents. And, as Scott notes in the OP, pharmacies won’t substitute devices, so a generic device has to do marketing to doctors, rather than just marketing to insurance.

      But there is also general problem that we see lots of generic drugs (with no patents at all) with no competitors suddenly realizing that they can raise prices (eg, Shkreli’s stable). I think part of the problem is that it is a lot harder to get generic approval today than in the past. In the past, the first drug kept its price down to discourage further competitors. The perfect strategy would have been to slowly raise its price to match the increasing price of approval, but instead lots of drugs are only just realizing decades of moat appreciation. But this is largely about rare drugs, so that the further generic manufacturer has trouble amortizing the cost of approval over a small number of doses, while autoinjectors are pretty popular.

    2. Earthly Knight

      Speaking now about drugs in general rather than epipens:

      Suppose that Pfizer makes $X each year from its monopoly on the blockbuster drug Zebreffex. Meanwhile, Acme Pharmaceuticals is developing a generic version of the same drug called Horsaction. Were Zebreffex and Horsaction to be on the market at the same time, Pfizer would make $Y per year while Acme makes $Z. Because of the enormous advantages of maintaining a monopoly, what often happens is that $X-$Y is greater than $Z. This is very bad. Why is it bad? Because then it is in the interests of both Acme and Pfizer to collude to keep Horsaction of the market. All Pfizer has to do is pay Acme an annual sum greater than $Z but less than $X-$Y. Pfizer loses less than it would have if its monopoly had been broken, while Acme gets more in the bribe from Pfizer than it would have earned from sales of Horsaction.

      This problem is compounded by the high barriers to entry inherent in developing pharmaceuticals, along with the strict FDA approval standards. The bill Scott mentions in his post, the Preserve Access to Affordable Generics Act, would ban these type of backroom deals. It’s been reintroduced in every congress for a decade or so, so far without success.

      1. Edward Scizorhands

        A competitor showing up in a place where you used to be a monopoly will often increase sales, because it validates the market.

  36. Dee Renee

    Scott, I was thrown off a certain social media site (it rhymes with “space crook”)–twice–for discussing this issue (and isn’t that in itself interesting?) But I’m doing it again, because I feel strongly about it. I’m an allergist. While I agree with you on some things, there are a few things that need clarification.
    1. There ARE other auto-injector options on the market. (AuviQ was taken off the market last year because of quality control issues.)
    2. You are blaming government regulations. You shouldn’t. Corporate health insurance companies are much more at fault. Take a look at insurance “preferred drug lists” (=”formularies”) Google any major insurance plan. They list “EPIPEN,” not “epinephrine,” not “AuviQ,” not “Adrenaclick.” That means the only drug they will cover is EPIPEN. Otherwise my patient is all out of pocket. In other words, I “can’t” prescribe anything but EPIPEN. I don’t know it for a fact…I just know it’s true: there’s a rea$on that some companies’ drugs are on formularies, and others aren’t.
    3. The least expensive option is generic epinephrine and a syringe. That’s what doctors have ALWAYS used and prescribed to patients before auto-injectors were available. And there are lots of medical conditions–including emergency conditions–which require self injection with a syringe (eg diabetes, hemophilia, angioedema). So if MY kid had a life threatening allergy, and I was going to have to choose between food and EPIPEN, this would be what I’d be asking my doctor to prescribe. This would be like drinking coffee from the pot or a mug or anything but a cup. A cup is convenient, but the cup is not what you need. AND you’d hurt the greedy cup company at the same time.

    1. srp

      I don’t see how an insurance company and Mylan could conspire to make more money by Mylan paying the insurer to specify only the EpiPen. The insurance company loses money the more expensive the treatments it pays for, and even with deductibles higher provider prices cause more patients to go past their annual limit and the insurer to pay more. A high fraction of every dollar gained by Mylan via price increases comes from the hide of the insurance company and vice versa.

      1. Douglas Knight

        There are a lot more parties involved than just the drug company and the insurer. There are widely reported problems of this form from drug companies owning pharmacy benefit managers.

      2. Dee Renee

        No offense, srp, but really? You can’t figure this out on your own? You can’t even imagine why an insurance corporation would choose one company’s drug over another company’s drug? Do you assume that a corporate insurance entity is so altruistic that they choose a particular drug for their formulary because it’s best for the patient? Could there possibly be another motivation? Do I really need to spell it out for you?

        1. srp

          Your barrage of rhetorical questions fails to answer my completely cynical analysis of the insurance company profit motive. There is no mathematical way that your insurer AND Mylan can both profit from the insurer choosing the EpiPen exclusively for its covered population. Try to plug in some numbers for yourself and you’ll see that your purported conspiracy is a mirage.

          1. Daniel Keys

            @srp: I suspect you’re right on the object level, but why are you assuming that corporate decision-makers make decisions for the benefit of the corporation?

            I was going to ask if politicians make decisions for the benefit of the government, but perhaps you do believe that? Instead I’ll ask: do party nominees always make decisions for the benefit of the party?

          2. John Schilling

            @Daniel: That, also, looks like a rhetorical question that fails to answer srp’s cynical analysis. Corporate decision-makers are generally expected to make decisions for the benefit of the corporation, and if you are going to assert otherwise I think it is reasonable for you to specify whose benefit they are seeking and why, and how this as-yet-unspecified entity benefits from the insurance companies losing money.

          3. John Schilling

            @Linch: “suggestion” is not a substitute for evidence, or even coherent argument. If it were, I might suggest that pharma rep / doctor is a poor example for the principle-agent problem.

          4. Dee Renee

            OK, let me spell it out: I think money, or something else of value, exchanges hands between the drug maker and the formulary decision makers for the insurance company. There is no other logical reason for the capricious choices of the formularies. And no, it is not “inertia.” These formularies change nearly on a month-by-month basis (and they don’t necessarily inform the doctor or the patient.)

            I just got a letter from a major insurer in New York telling me to change the prescriptions of ALL of my insured patients who are taking inhalers made by Drug Company A to the inhalers made by Drug Company B, otherwise, the insurer won’t cover the drug. In almost all of those cases, Company B’s comparable drugs are MORE expensive. Either way, it’s a windfall for Company B.

            And the insurers really don’t care how much the drug costs. If EPIPEN costs $600, and the insurer only wants to pay $300, they’ll raise the patient’s co-pay for EPIPEN. That’s why they have “tiers” for various drugs. Or, they’ll put pressure on the pharmacist to eat the difference. If they wanted to, the insurance companies could change their formulary tomorrow to list Adrenaclick instead of EpiPen.

            Sorry, it’s not a conspiracy theory. There’s something else operating, and I think somebody should be following the money.

        2. gbdub

          Presumably they are going to choose the drug that is most cost-effective for them, with “cost-effective” being a complicated formula that takes into account actual cost, negotiated rates, regulations, liability-aversion, and yes, even what makes their customers more happy.

          You seem to be implying, but are reluctant to say, that you believe Mylan is bribing or giving kickbacks to insurance companies to not carry competitors. I’d need to see some actual evidence for this – how would this be a better deal for the insurers than just carrying the lower cost option, unless the bribe was so large that it offset the increased cost (in which case it would be cheaper for Mylan to just lower the cost, because they’d be paying out more in bribes than they make from the higher price).

          If you’re going to bribe someone, either the regulators or the prescribing doctors would be a much cheaper and more effective target.

          1. WannabeCoder

            You seem to be implying, but are reluctant to say, that you believe Mylan is bribing or giving kickbacks to insurance companies to not carry competitors.

            This is exactly how branded drug formularies work at PBMs. Company A will offer a 50% rebate for their drug to be covered “1 of 1,” excluding their competitor, but only a 20% rebate for it to be covered “1 of 2,” with a formulary that would also cover Company B’s drug. If Company B’s drug is similarly priced but has only 10% market share, it makes more financial sense for the PBM to exclude Company B’s drug from formulary than to forgo the incremental 30% rebate from Company A.

            Look up the financials for a branded pharma company. Most companies will have a gross-to-net well above the 5% you’d expect due to cash discounts, returns, product destruction, &c. That’s generally driven by rebate paid directly to PBMs in exchange for formulary access.

        3. Neike Taika-Tessaro

          As someone who found both your initial comment and srp’s question really interesting and thought-provoking: …yes? I’m not even sure what you’re trying to imply with your questions. If you think that makes me unintelligent, then I certainly accept that judgement (I’m fairly sure I’m not particularly bright), but could you nonetheless explain, for onlookers like me?

      3. TrivialGravitas

        It works out because the price went up, assuming that the insurance company didn’t think a devil’s deal all the way through.

        1) Insurance company writes rules where only Epi-Pen is allowed, gets epi pens for 10$ a piece after the bribe.

        2) Price goes up by a factor of 6

        3) Insurance company now paying an effective 260$ a piece. Since deal was illegal to begin with insurance company can break it, but generics are hard to come by because of suppressed competition and it’ll take time for the rule change to take effect, in the meantime Pharmacorp rakes in the $$$.

        The insurance company loses in the long run, but there are verifiable examples of companies making good short term deals that are terrible in the long run (see anybody who got EEEd by Microsoft for example).

        1. John Schilling

          It works out because the price went up, assuming that the insurance company didn’t think a devil’s deal all the way through.

          So your theory is that the reason this is happening is that corporations larger than most national health services, with thousands of man-years of collective experience dealing with medical-device manufacturers and billions of dollars of profits at stake, somehow failed to imagine a scheme that a few blog commenters came up with on a lazy afternoon?

          And that Mylan’s decade-long marketing strategy was based on the assumption that something like this would slip by unnoticed?

          1. The Nybbler

            On one hand, somehow everyone in power missed Mylan’s obvious strategy of getting their monopoly product mandated to be bought, then jacking up the price once they’d done so.

            On the other hand, they were probably incentivized to miss that.

          2. John Schilling

            Missed it, or were powerless to do anything about it. As you note, the people who could do something about it (under the current system) were not incentivized to. The ones who were going to be stuck paying the bill, couldn’t really do anything about it. For either, apathy is as reasonable an explanation of inaction as ignorance.

          3. TrivialGravitas

            You’ve never tried to fix a multimillion dollar fuckup in a major corporation before have you.

            I have (specifically people were being sent the wrong part for repairs, resulting in extra shipping costs to send the right part and unhappy customers, this looks like it was caused because somebody wanted to use a cheaper part which didn’t work in those computers). Just finding the problem was absurdly hard, it took me over a year to get a list of repeat part dispatches (which there were too many of for lazy employees to account for) in order to figure out where the mistake was actually being made, once I had it it was incredibly obvious that the problem was techs were being told to send the wrong part for a given error. Getting it fixed turned out to be impossible, when I took it up with my superior I was told to fuck off (this guy went on to fuck up so badly in attempting to cut costs that we lost a ~100 million dollar a year contract, at which point he was promoted). When I tried taking it to the people whose job it was specifically to handle the issue I was told I had to take it through proper channels, when I tried to take it through proper channels I was told to go away because I wasn’t authorized to bring it up.

            So the idea that large unwieldy corporations are somehow super competent is batshit insane.

          4. Jill

            Fascinating stuff, TrivialGravitas. Thanks for sharing your experience. Reminds me of the Dilbert comics. I don’t like Scott Adams’ blog because it’s become just a big Trump man crush and cheering squad lately. But his comics are great.

      4. Deiseach

        It doesn’t necessarily have to be a bribery and corruption conspiracy. At the time this item was being added to the insurance companies’ preferred list, it was the major (only?) brand so the companies put down “epipen” as what they’d cover.

        This works fine until the company starts hiking up the price. You start looking for alternatives and what happens?

        (a) Institutional inertia. From local government minion experience, it takes forever for outdated “these are the recommended and only items” lists to be pruned and updated, partly because nobody has the time to sit down and go through them and partly because you need the permission of somebody much higher up the food chain to change anything and the real higher-ups don’t bother with such trivial details. So “EpiPen” is left on the preferred drugs list as the only item of its kind because nobody cares about “are there new alternatives to update our list?” Something new comes along, they’ll add it on later rather than taking anything off.

        (b) A new company does come along and try and get insurers to cover its device. “Sure, just need to check a few boxes first. You have FDA approval?” “Well, kind of – they’re waiting until the court case where Mylan sue us for patent infringement is settled”.

        “Oookay, sure. Come back to us then” and that’s the end of putting a new device on the list alongside the EpiPen, because if the manufacturer is being sued for patent infringement the insurers don’t want to go near that mess with a ten-foot bargepole.

        So the EpiPen stays as the only preferred drug and yet nobody is a bribe-accepting villain.

    2. pku

      Like srp – why don’t insurers solve this on their own then? Sounds like they’d make money doing it.

  37. Dan

    You exclusively blames the FDA, but the in the examples you cites, competing injectors were only blocked by the FDA in one case. The other cases were blocked or pulled from the market for other reasons:
    a) patents
    b) they didn’t work or
    c) doctors can’t manage to write generic prescriptions correctly.

    I agree the FDA is part of the problem but the article does not support your conclusion that regulation is the entire problem.

  38. Freddie deBoer

    Yes but, Scott, setting drug prices does work, in every other developed democracy..

    This is the part where, were this piece written by anyone else but yourself, you’d write several thousand words about how they’ve managed to delude themselves out of seeing this basic and intractable fact.

    1. pku

      Is that how they do it? My impression was that most countries have health insurance who buy the drugs for you and negotiate freemarketishly with manufacturers (but I don’t actually remember where I got this impression). Citation?

      1. Murphy

        Probably more common at least in europe is a system where some state body negotiates a price with the company, buys the drugs and provides them through the health system.

        The state has a lot of negotiating power and can generally get a reasonable deal.

      2. Corey

        A universal state-run insurance plan is essentially price control; the proposal from the plan to the drug-maker is “accept this price and get paid reliably, or try to collect out-of-pocket from everyone in this country who uses your drug”. The drug-maker’s only leverage is “let your citizens do without this drug, then” which, depending on the drug can lead to the government involved simply authorizing knock-offs.

        1. The Nybbler

          There’s also the “proposal” of “OK, we’ll kill our expensive R&D division; the people working there can work on air fresheners or something else that can make a good profit”. Destroying the last large non-price-controlled market could well have that effect.

          1. Murphy

            Somehow I doubt it.

            pharma companies currently enjoy some of the thickest profit margins of any industry. (yes, after counting all the R&D)

            The sad thing is that since R&D takes so long to yield results it’s an easy area to cut for short-term execs. They’ll be gone 5 years before the negative effects of the cuts hit but the extra profits happen now.

            of course if anyone notices you can be sure the shysters will blame their profit margins not being even more obscene.

            Depressingly some of the big pharma companies have been cutting research budgets even while profits are increasing.

          2. The Nybbler

            Why would you doubt it? Under a price-control regime, those thick profit margins could go away. If they’re set at a level which allows them to make a profit on the actual making of the drugs, but not a profit on the making of the drugs plus R&D expenses, why go through R&D to make new drugs? Might as well just keep making the old ones.

    2. J Mann

      Freddie, I don’t think Europe, Canada, or Australia price set for EpiPen or competing autoinjectors. All of those markets sell the pens over the counter instead of by prescription, and have approved numerous competitors.

  39. srp

    I apologize for not having perused this super-long thread, so if the following is duplicative of what came above, just disregard.

    Students of the FDA have long pointed out that its incentives, absent any corruption, are to minimize political risk to protect its budget and standing. The worst thing for the FDA is bad headlines. The easiest way for them to get bad headlines is to have an approved drug fail or have bad safety effects. Then everyone blames the FDA for approving an ineffective/dangerous drug.

    Failing to approve a beneficial drug imposes much lower costs on the agency. There are rarely headlines and the victims are invisible and usually don’t even know that they suffered or died unnecessarily. Sure, you sometimes have activist patient/disease groups that complain and of course the manufacturer won’t be happy but the latter are easily dismissed as emotional non-experts while the latter are easily dismissed as biased (and are also usually unwilling to risk future retaliation by going public against the FDA unless they are small, one-product start-ups with limited resources).

    Therefore the FDA tends to err on the side of not approving things. If you have a population of near-term terminal patients they’re more likely to approve stuff quickly, e.g. for late-stage cancer patients with little hope, because the headline risks to the agency are again low. But for anything where the advantage is just an issue of money or convenience, a new drug with even slightly iffy safety or efficacy relative to the state of the art is going to get slow-rolled into oblivion.

    Now think about EpiPens, required by law to be mass-stocked in schools to SAVE CHILDREN from DANGEROUS ALLERGIC REACTIONS. Suppose the Teva product had a slightly less reliable injector mechanism than the Mylan EpiPen, but the difference was very small, say an additional risk of one in ten-thousand uses of delivering less than the needed dose. The FDA would have absolutely no reason to license the Teva product, because they would be terrified of the one or two or twenty cases hitting the news where KIDS DIED FROM DEFECTIVE INJECTORS APPROVED BY THE FDA. The gains from lower prices for injectors caused by approval of the Teva product–families having a little more money to spend on their next-most-important need, maybe a few more people’s lives saved because they were willing to buy the cheaper injectors rather than gambling by going without–would be completely invisible and not redound to the FDA’s credit at all.

    So the crony-capitalist angle is really not necessary to create the FDA’s behavior.

    1. John Schilling

      The crony-capitalist angle is necessary for Mylan to profit from the FDA’s behavior. Absent crony capitalism or something very like it, either Epipens themselves are not approved (because the FDA is too paranoid to allow anything beyond the traditional needle-and-syringe), or a dozen competitors are approved along with Epipens (because ordinary non-crony capitalist processes are sufficient to secure FDA approval). There is less risk to the FDA in approving something very like the Epipen when the Epipen is a proven success, than there was in approving the Epipen when the idea of having children stab themselves with spring-loaded needles full of potent drugs was wholly unproven.

      Crony capitalism is, in this context, Mylan mobilizing its substantial lobbying power against the FDA’s reluctance to allow Epipens in the first place, and then turn around and align its lobbyists with the FDA in disallowing everything else.

    2. srp

      Your point is incorrect. The EpiPen uses a different mechanism (that was patented) from other injectors and might well have been more reliable, especially at first. Moreover, they could have easily demonstrated superiority of the EpiPen for children compared to traditional syringes. But once the EpiPen was approved, competing injectors would have to leap the much higher bar of beating or matching the EpiPen for reliability. Moreover, the FDA not only approves the product but requires approval of the factory and its manufacturing processes, a highly non-trivial process that has played a role in current shortages of a number of generic chemotherapy drugs.

    3. Deiseach

      The real genius here, that you have to admire even if you don’t approve, was that Mylan got “EpiPens required by law to be mass-stocked in schools”.

      Did anybody crunch any numbers about the number of children definitely suffering from life-threatening allergic reactions and compare that to school populations? Maybe we’re horribly backwards here in Ireland, but the school I worked in had nothing like “mandatory by law have to carry epipens or similar devices”. We had the mandatory first aid kits and any children on medication would bring their medicines in to be stored and administered as needed, but nobody had any kind of “my allergies mean I need adrenaline shots to be kept on hand in case” history.

      You can’t blame the FDA for being cautious around things like this, where a brilliant marketing scheme has convinced parents their childrens’ lives are in mortal peril unless Our Product is stocked – by law! – in every school in the land. They don’t want a mass PR campaign where tearful mothers of adorable moppets sob in front of a sympathetic investigative reporter about how little Billy or Susie nearly died because the mean ol’ government regulatory body forced the drug company to withdraw its product since they couldn’t compete on price with the SINISTER FOREIGN IMPORTS OF DUBIOUS PROVENANCE AND DOUBTFUL EFFICIENCY (and if Mylan can’t manage to get tearful mothers of adorable moppets to sob plaintively in front of dogged media newshounds, they should fire their marketing and advertising people forthwith*).

      *Having seen how the sausage is made, so to speak, I am highly cynical whenever tearful mothers start sobbing onto the shoulder of a sympathetic newshound; plenty of our clients threaten to go to the local radio station/newspapers if we don’t accede to their wishes, and there was at least one front-page with accompanying colour photo article done in the city paper on a tearful mother etc. which, if you knew the real facts of the case, was a complete fabrication from start to finish on the part of the tearful mother.

  40. ChristianKl

    Today I researched data about drug approvals. The FDA does approve drugs for specific illnesses. On the other hand it doesn’t publish a machine readable database of which drugs are approved to treat which illnesses. I even ask via email and they don’t provide such a database.

    1. Matt M

      And any drug company that so much as winks at the idea that its drug might be able to treat some other thing that it wasn’t approved for gets in a HUGE amount of trouble.

      From what I’ve heard though, doctors are immune from that – if a doctor chooses to prescribe you an approved drug for a non-approved usage, he has every right to do so. The drug company is just strictly forbidden from communicating to him IN ANY WAY that this might be a thing to do.

  41. Kevin C

    Great article! I would add one thing though.

    If you know anything at all about doctors, you know that they have way too much institutional inertia to change from writing one word on a prescription pad to writing a totally different word on a prescription pad, especially if the second word is almost twice

    as long, and especially if it’s just to do something silly like save a patient money

    Part of the problem is that it doesn’t save patients much money directly. We’re all forced to have insurance, so it’s a copay savings of a few dollars — not really enough to justify explaining to patients that they’re being prescribed something similar to an EpiPen but with an extra step or whatever. If they know a patient is a lawbreaker who doesn’t have insurance, I’m willing to bet that virtually every doctor would prescribe Adrenaclick to save the patient a few hundred dollars.

    The problem with this situation is that we all feel the effects of this in the form of increased premiums.

    1. pku

      Why don’t insurance companies try to solve this then? Seems like an insurance company that only covered alternatives could make a profit (and its easier for them to lobby doctors than for individual patients).

      1. Corey

        In fact I would expect them to, insurers are pretty much the only force that can apply downward pressure on prices in the US.

        Specifically, as with other expensive drugs, I’d expect every insurer to soon start denying all claims for EpiPens with “use AdrenaClick instead”. Whether this spawns price decreases, an industry devoted to jumping through whatever hoops insurers put in place, or legal mandates to cover branded EpiPens remains to be seen.

    2. Corey

      Any insurance anyone is “required” to have will have a big-ass deductible. Most employer-sponsored plans are going that way too.

      1. The Nybbler

        > Most employer-sponsored plans are going that way too.

        Yes, because of the “Cadillac Plan” rules. Thanks Obama.

        1. Corey

          That’s currently postponed until 2020, and will likely never take effect? Barry’s got mad skillz, I guess.

  42. Brad

    “With ordinary medications, pharmacists are allowed to interpret prescriptions for a brand name as prescriptions for the generic unless doctors ask them not to. For example, if I write a prescription for “Prozac”, a pharmacist knows that I mean anything containing fluoxetine, the chemical ingredient sold under the Prozac brand. They don’t have to buy it directly from Prozac trademark-holder Eli Lilly. It’s like if someone asks for a Kleenex and you give them a regular tissue, or if you suggest putting something in a Tupperware but actually use a plastic container made by someone other than the Tupperware Corporation”
    These statements misinterpret the intellectual property issues involved. Putting aside that prescription pads generally tell the pharmacist if he/she can substitute, for approximately two decades, there will be no legal substitute. Patent laws are the same for drugs as other inventions (which also makes the chair analogy off and the Vox article correct). As IP law is the essence of the result of capitalism/competition, I assume you wouldn’t want to change that. So, the issue is pricing, not competition.
    And by the way, from a trademark perspective…if you went to a store and asked for Tupperware or Kleenex and they gave you a product from someone else, that store would be in tremendous trouble. You might be able to “substitute” with your friends, but you can’t in the marketplace.

    Finally, this article seems to make numerous points on why the Vox article is exactly correct. Vox is just suggesting pricing regulations. If such regulations existed, there would be no need for the lobbying this article complains about.

    1. Said Achmiz

      if you went to a store and asked for Tupperware or Kleenex and they gave you a product from someone else, that store would be in tremendous trouble

      What the heck is this? I’ve gone to many a store and asked for many a Kleenex and have been given many a non-Kleenex tissue pack. What sort of trouble could I get my local bodegas into if I reported this flagrant abuse? Would you be so kind as to cite the relevant laws and/or regulations…?

    2. pku

      The specific problem could probably be solved either by reducing FDA requirements or by price regulation. But free-marketing is generally more flexible and robust under challenges. For example, if your healthcare policy is “anything that passes x QALYs per dollar”, and you have a competitive drug manufacturing environment, you can get good results. Price fixing is a kludge, which tend to make systems work less efficiently (and price fixing in particular is a kludge with some bad history – see Venezuela).
      Sometimes you need kludges to make things work, and free markets don’t solve all problems well, but it’s generally better to use them when they do.

        1. David Friedman

          “If it was possible to get anywhere close to a free healthcare market, sure.”

          Why do you believe it is impossible?

          I can see two possible lines of argument, none of which seems strong enough to justify the strength of your conclusion.

          1. It is politically impossible. Whether or not a free healthcare market would be a good idea, the emotional force of arguments about people dying due to nobody being willing to pay for their medical care mean that governments will always intervene to play a large role in health care.

          2. It is impossible because a free market in health care would not work due to some special features of that market–asymmetric information, inelastic demands, or whatever.

          Which are you arguing, and can you sketch enough of the argument so that those who disagree can try to rebut it?

          I am assuming, by the way, that your claim really is about health care, not the claim that free markets don’t really exist anywhere or cannot really work.

          1. Corey

            It is about health care, and includes both, actually.

            For 1, we indeed don’t have the stomach to make health care excludable based on ability to pay, and I don’t think any society which vaguely resembles the US is going to get rid of all or even most care mandates, and there are many (from EMTALA on down to ABA insurance coverage mandates).

            Between the two: US regulation is always going to establish a rather high safety floor in healthcare – that’s what this whole post/thread is about after all. In libertarian thought experiments one could come up with UL-for-drugs, physicians making their own accreditation boards, or whatever, but a society that would willingly adopt them looks different enough from 2016 USA that it’s not worth talking about.

            Also in that group: insurance of some sort will always play a big part, given that catastrophic needs exist. Insurance has to be either government-provided or heavily regulated to be usable (or you need insurance insurance, etc.)

            For 2, health care has the seeds of many textbook market failures: asymmetric information being the big one, as you note. Often even doctors don’t know the best practices (read any health policy blog for examples), and patients sure don’t.

            Also we’re obviously not capturing all of the economic benefit to the medical innovation our high prices fund, otherwise the rest of the world would be unable to free-ride on it. Having partially stricken rivalry and excludability, we’re edging towards textbook public-good territory.

            There are also US-specific failures, that could be fixed by different regulation, e.g. binding pre-treatment estimates in a manner similar to auto work. The current US status quo is that prices are totally unknown until after services are rendered, and in the absence of an insurer-imposed price, you’re liable for whatever amount you’re billed.

          2. Jill

            “The current US status quo is that prices are totally unknown until after services are rendered, and in the absence of an insurer-imposed price, you’re liable for whatever amount you’re billed.”

            Yes, this is a horrendous practice. If any situation begged for regulation, this is one. Lots of people are screwed over big time by this practice.

          3. Doctor Mist

            we indeed don’t have the stomach to make health care excludable based on ability to pay

            We don’t have the stomach to make food excludable based on ability to pay, either, but we having a thriving market in food, plus charity and food stamps.

            I know, this is an old argument, but somehow it never seems to stop needing to be said.

          4. Corey

            @Doctor Mist: We actually deal with hunger partially through health-care mandates like EMTALA; check the monthly cycle in hypoglycemia-related ER visits for an example.

          5. Doctor Mist

            @Corey

            We actually deal with hunger partially through health-care mandates like EMTALA

            Okay, a thriving market in food, plus charity and food stamps and EMTALA. You’re not seriously arguing that the market for food is as controlled as the market for health care?

            The point is, address the corner cases as corner cases. Don’t try to hide the corner cases by throwing away the single best mechanism we have for delivering high quality at low prices.

          6. Douglas Knight

            Corey, do you have a link about the monthly cycle in hypoglycemic ER visits?

            It seems strange to me to attribute hypoglycemia to hunger. Do you know what the precise mechanism is? Presumably the proximate cause is too much insulin. Is that because of low calories/carbs, or is it because of different, uncalibrated sources of food?

          7. Corey

            @Doctor Mist: No, that was more an aside. A more serious response: food is just a *bit* more substitutable than medicine.

        2. Edward Scizorhands

          We can’t get all of health care to a free market. When you found unconscious next to a car crash with no ID, you are going to be taken to the nearest ER.

          But just because there are some parts of it where it doesn’t work doesn’t mean that we cannot utilize it in the parts where it does work. The free market helps new entrants decide where to compete, helps determine what the more efficient allocation of resources are, and even makes it easier for regulators to get an accurate picture of what’s going on.

          (I’m not necessarily advocating for any particular policy here. There are a number of things I would like to see, but because of other policies or laws, an incremental move towards them would be worse than we are at now.)

          1. HeelBearCub

            The problem is that the parts that aren’t amenable to solution by the free market are the ones that drive the overall costs.

          2. Edward Scizorhands

            Which parts do you think those are?

            Let’s say that, just for shits and giggles, we wanted to create a health care system that was as free market system as possible. What parts would you cordon off as things that just can’t be handled by the free market?

          3. HeelBearCub

            @Edward Scizzorhands:
            “Let’s say that, just for shits and giggles,”

            Allow me to say that I am not inclined to actually put any effort into a response when you phrase it that way.

            So I’ll just say that the most expensive treatments tend to be the ones that are the least optional, and where the the consumer is least equipped to make educated decisions.

            Now I think you are going to throw end of life care at me, and I will just say that the person at the very end of their own life has less incentive to save money on their healthcare than at any other point in their life.

          4. Edward Scizorhands

            Now I think you are going to throw end of life care at me

            Well, you’re predicting what I’m going to say, and I’m not even thinking of it. I think this conversation has taken a wrong turn.

          5. HeelBearCub

            @Edward Scizzorhands:
            Modify that to “I might expect a counter argument to reference end of life care” if it helps.

          6. onyomi

            “So I’ll just say that the most expensive treatments tend to be the ones that are the least optional, and where the the consumer is least equipped to make educated decisions.”

            How is this different from home and auto repair? Fixing a house that burned down is both more expensive and less optional than retiling the kitchen.

          7. HeelBearCub

            @onyomi:

            There are a variety of arguments that spring to mind here, but I think they all sort of boil down to “humans aren’t things that are built to code”.

            So, imagine how expensive it would be to “rebuild a house damaged by fire” if:
            a) you don”t know how to build houses from scratch
            b) most of the the house can’t actually be entered by contractors
            c) what’s left of the house mostly needs to be left standing and undisturbed or the house will rapidly collapse
            d) the entire family remains in the house while you do the work
            e) lots of the work has to done by means of injecting a gas into the structure and hoping the house spontaneously rebuilds itself.
            f) Sometimes a whole room of the house can be replaced, but you have to hope that a family moves out of a relatively nearby house that you can scavenge for a room of almost exactly the same size.
            etc.

            Basically until you master (a) everything will be a semi-unique cluster-fuck where abandoning the house isn’t an option because of (d).

          8. Corey

            @onyomi: Home and auto repair are regulated to give up-front binding estimates; medicine is not. Those things are also a lot more deterministic than (most) medicine – consider most drugs have unknown mechanisms of action.

          9. Edward Scizorhands

            give up-front binding estimates; medicine is not.

            Hey, I just thought of a good regulation.

          10. cassander

            ER care is a tiny share of healthcare costs, a couple percent. The VAST majority of healthcare is bought in a perfectly leisurely manner.

  43. J Mann

    One regulatory fix is prescriptions generally. It sounds like Epipens and their competitors are available over the counter in Canada, Australia, and I think Europe.

  44. The Patriot

    Brilliant response. Precisely the reaction I had to that bogus article.

    It’s sad that the vehicle for our free speech, is now so heavily bought and sold by the ruling class, and such a compliant ally in the expansion of the state, even if under false pretenses.

  45. naro10

    Brand name companies buy off potential genetic makers…..which should be totally illegal,
    and FDA workers get work with the private sector, and are sensitive to their demands.

  46. John

    Exactly right. The source of the problem is the government’s ability to sell monopoly licenses. Remove this, and the problem disappears. But, judging from some of the responses below, people are not ideologically prepared to accept that. So the government continues to regulate heavily, in fact, much more than in Europe, with the outcome Mr. Alexander ably documents above. Change is unlikely to come from the ballot box. It may be that someday we’ll be able to 3D print our own medications and escape petty tyranny like this.

  47. Anonymous

    they haven’t done studies showing that their chairs will not break

    I remember the first time I visited IKEA, 30 years ago. They had all these demonstrations of machines repeatedly opening and closing a drawer; or the more complicated simulation of sitting in a chair, first the impact of the butt, then the impact of the back. And a counter saying how many hundreds of thousands of times the machine had punched the chair.

    I haven’t seen these in decades, but youtube has a few videos.

  48. Bob@bob.com

    When was rhe last time a chair had to save someones life with 99.99% reliabilty, and could kill someone if used improperly? And you think the solution is to kill the fda? This is why its impossoble to be educated about history and be a libertarian. The fda exists because snake oil salesmen killed people.

    1. Jill

      “This is why its impossible to be educated about history and be a libertarian.”

      No problem there. Most Americans know almost nothing about history. And even there, the Right Wing Propaganda Tanks– oh, I mean Think Tanks of course– supply Libertarian skewed false versions of history for anyone interested in holding fast to their fundamentalist religion in the church of Saint Ayn. They’ll leave out facts, distort facts, or simply make things up, in order to prove that Saint Ayn’s principles work better than any other system of economics or government around, and always have. And they’ll invent lots of straw men– lumping together everyone Left of Center with Soviet Communists, as if they are all the same.

      All hail Saint Ayn. It’s our state religion. Church of the Almighty Dollar.

      1. anosognosic

        I love it (don’t love it) when internet randos drop by popular posts with hilariously off the mark assumptions about the politics of this forum.

        1. Whatever Happened to Anonymous

          For better or for worse, Jill is a regular, and the comment you’re replying is not ironic (or rather, it’s not doubly ironic).

          1. Sniffnoy

            “Regular” is being generous. She posts a lot, yes. But she ignored the ancient rule of “lurk moar” and despite all her posting she still has no feel of the place. “Hilariously off the mark assumptions about the politics of this forum” is still an accurate characterization. She may be a “regular” in the literal sense, but not in the stronger sense of “someone respected, someone a newbie can look to to figure out what’s going on”.

          2. Diadem

            A someone who had been reading all the threads on this forum for a few months now, I can say that Jill is certainly one of the most recognizable names for me. And one with a positive association.

            As for correctly identifying the politics of this place. Are you claiming that these threads aren’t filled with libertarians?

          3. Corey

            Being a regular in the open threads will skew anyone’s perception of the commentariat, it’s RedStateStarCodex in there. More nuance: it’s full of what Farkers would call “Fark Independents”, with a sprinkling of people who embody “internet libertarian” stereotypes.

            Perhaps the topic threads are less skewed.

          4. Jill

            Here’s a whole book of fake and distorted history for Libertarians who want the kind of “history” that “proves” Libertarianism has always been the best policy in history, at least in the past few decades– by cherry picking the examples in order to “prove” this. And by pretending that everyone Left of Center desires to make the U.S. into either Soviet Russia or Mao’s China.

            The Evolution of Everything: How New Ideas Emerge Hardcover – October 27, 2015
            by Matt Ridley

            It’s very easy to be Libertarian and still believe in history. Books, media channels, web sites etc. can be selected so as to constantly “prove” anything you want to believe, on either side of the political spectrum, including the extreme edges of the political spectrum. “Facts” to suit whatever ideology you desire to believe, as Matt Taibbi notes about the media.

            http://www.rollingstone.com/politics/matt-taibbi-on-the-summer-of-the-media-shill-w434484

            There is no consensus on objective reality of what is going on in our economy or government, in the U.S. today.

          5. Jill

            Sniffoy, I may have ignored the rule of “Lurk more.” Or it may just be that I am a quick study. How many milliseconds does a person need to lurk on this board in order to realize that 80% of people here are Libertarians? And to realize that Left of Center people are bashed routinely by the meanest subgroup of people here, as being stupid, irrational and/or evil– when actually we are no moreso than anyone else here– just because we don’t worship at the shrine of Saint Ayn like most other people here do? There are some very good and kind Libertarians here. And there are some others treat Left of Center people atrociously.

            And how long does it take to realize that most of the tiny group of Left of Center folks here are too nice– so that one could make a significant contribution by being a Left of Center person who occasionally stands up for herself?

            Even Hillary has finally realized that you don’t get anywhere by being a doormat and letting people walk on you constantly. And even Obama has given up trying to compromise with people who won’t ever compromise, no matter what. You don’t get anywhere by treating people ever so kindly, while they treat you very badly. I hope that other Left of Center people will catch up to Hillary and Obama and learn that lesson too. You don’t have to engage with people of different political persuasions, if you think there’s not much to be gained from it, and there may not be. But if you do engage, for Gawd’s sake, don’t be a doormat.

          6. David Friedman

            “Books, media channels, web sites etc. can be selected so as to constantly “prove” anything you want to believe, on either side of the political spectrum, including the extreme edges of the political spectrum.”

            Probably true.

            But why, knowing this, do you remain so certain that your own views on political issues are correct? Do you think you are somehow immune to the risk of data filtered to support what you already believe?

          7. David Friedman

            “just because we don’t worship at the shrine of Saint Ayn like most other people here do?”

            A sizable fraction of commenters here, possibly by now a majority, are libertarian, a few are conservative, somewhat more are left of center of one sort or another.

            My guess is that fewer than half of the libertarians are Objectivists or anything close, people who derive their libertarian views from the sorts of arguments Rand made.

            I, to take the example I know best, devoted a chapter of the latest edition of my first book to explaining why Rand’s central philosophical argument was wrong. Back when I was in college I managed to get myself expelled from an Objectivist group of which I was not a member by showing up at their meetings and pointing out problems with their arguments. Many years later, much of my online time was spent on the Usenet group Humanities.Philosophy.Objectivism arguing with Objectivists.

            Let me offer a conjecture, possibly mistaken, as to why you mistakenly link all libertarians to Rand. You do not take seriously the possibility that there are good arguments for libertarian views, that a reasonable person might conclude that libertarian policies will make most people better off. Given that, the only explanation of why people support such policies is that they don’t care if their policies hurt most people as long as they benefit themselves. That fits your cartoon picture of Rand’s views. So libertarians must all be worshipers of St. Ayn.

          8. Jill

            “But why, knowing this, do you remain so certain that your own views on political issues are correct? Do you think you are somehow immune to the risk of data filtered to support what you already believe?”

            I might ask you the same question. And how are you so sure that I am “arrogant” (as you said previously) rather than simply correct?

            I mentioned before on another thread in response to you that I do a ton of fact checking, and that I find that Left of Center sources have a whole lot fewer inaccuracies than Right of Center sources. I read both sides, just as you do. But I check facts also.

            Reading both sides hardly guarantees objectivity, especially if one does no fact checking, and if one reads the opposite side only with a “Know thy enemy” point of view. People here read my views on most threads, because I post on most threads. But I haven’t noticed any Libertarians budging a micrometer away from their own original views. And I think that would still be the case even if I were making the absolutely best arguments, and citing the best possible articles and facts that validate Left of Center positions.

          9. Jill

            I may be generalizing a bit when I call Libertarians worshipers of Saint Ayn. I’m really mostly thinking of the Saint Ayn principle of the virtue of selfishness.

            “Let me offer a conjecture, possibly mistaken, as to why you mistakenly link all libertarians to Rand. You do not take seriously the possibility that there are good arguments for libertarian views, that a reasonable person might conclude that libertarian policies will make most people better off. Given that, the only explanation of why people support such policies is that they don’t care if their policies hurt most people as long as they benefit themselves. That fits your cartoon picture of Rand’s views. So libertarians must all be worshipers of St. Ayn.”

            And do you take seriously the possibility that there are good arguments for Left of Center views, that a reasonable person might conclude that Left of Center policies will make most people better off?

            To you, what is the explanation of why people support Left of Center policies? These policies often do not benefit themselves, at least financially, like Right Wing folks’ policies do. So that can’t be the reason. Seems like the most common reason I see on the board here, for what Libertarians think about Left of Center folks, is that we Left of Center folks arrogantly think we can arrange society so that it works well for everyone or for most people. Is that your view? Since you think I am arrogant, it’s what I am guessing.

            I totally get the concept that people are all selfish and that society works better when we each pursue our own best interests. I don’t agree with it. But I understand it. I don’t think it”s evil. I just think it’s a different political religion than the Left of Center religion.

            And when I fact check, I find that the Left of Center “religion” is better supported by facts– that the G I Bill, social security, single payer health care in countries that have it, the Marshall Plan after WWII and the lack of one after WWI– that these and many other programs support the idea that large scale interventions by government often turn out well and help people.

            I’m not really very far Left of Center, and I strongly disapprove of Communism, perhaps just as strongly as Rand did. I have read almost all of her books, BTW.

            Thanks for the chapter of your book. I appreciate that and will read it. It’s great when someone does analysis and reflection on a topic like this, and writes up an article or book chapter on it, to share their reflections with others.

          10. onyomi

            “I’m really mostly thinking of the Saint Ayn principle of the virtue of selfishness.”

            Ideological Turing test: can you describe what she means by “the virtue of selfishness”?

          11. Julie K

            Do you think you are somehow immune to the risk of data filtered to support what you already believe?

            I will point out on Jill’s behalf that she doesn’t limit herself entirely to filtered data, as evidenced by her presence here.

          12. David Friedman

            “I will point out on Jill’s behalf that she doesn’t limit herself entirely to filtered data, as evidenced by her presence here.”

            A fair point. But she has been making some fairly strong claims about everyone (else?) having a one sided view due to filtered data, and the rest of us are here too–reading posts by, among others, her.

          13. Jill

            “Ideological Turing test: can you describe what she means by “the virtue of selfishness”?”

            That doesn’t matter to me. Feel free to describe it yourself if it matters to you.

            I am not interested in the obscure ideological fine points of exactly what Ayn Rand meant years ago when she wrote her books. I am interested in how this principle of the virtue of selfishness affects our culture and economy right now– including people who do not even know who Ayn Rand is. The idea is central to our economy and culture in ways that are extremely influential, obvious, and destructive.

          14. cassander

            >I am not interested in the obscure ideological fine points of exactly what Ayn Rand meant years ago when she wrote her books. I am interested in how this principle of the virtue of selfishness affects our culture and economy right now– including people who do not even know who Ayn Rand is. The idea is central to our economy and culture in ways that are extremely influential, obvious, and destructive.

            So, in other words, you don’t know anything about Ayn Rand’s philosophy, don’t want to know, but are certain both that those ideas are wrong and the animating philosophy of millions of your ideological opponents. And everyone who disagrees with you is an ideologue? Truly, I have no words.

          15. Jill

            No, it would be far better if you really DID have no words. That is not what I meant at all.

            I’ve read most of Ayn Rand’s books, although it’s been a while. But to me, looking at exactly what she meant while she was alive about the virtue of selfishness is like thinking I have to know the difference between Shia and Sunni Muslims, or all kinds of beliefs in the Muslim faith, before I can have an opinion on what to do about terrorism done by people who say they are Muslim.

            The idea that if everyone acts selfishly, then everything in the economy just works out for the best automatically is believed by lots of people.

            I’ve believed in myself before. I don’t think people who believe it are any more evil than I was when I believed it. But I think it has a Moloch like destructive effect.

            It seems to trace its origins to Ayn Rand, but even if it didn’t, this belief system is what is important to me. Because this is what has a huge effect on our society. Obscure fine points of Rand’s beliefs, or even what she personally meant at the time she wrote about this, are not necessary for me, or anyone, to understand– in order to understand the effects of this belief system on our society, economy and government.

            People like Paul Ryan believe this, and it doesn’t matter if he remembers none of the specifics of Rand’s philosophy. He holds a lot of power, and his belief system affects our society and government and econmy greatly.

            I really don’t believe that ideology is a very real thing, except as it affects people in the real world–especially as it affects our whole society, culture, economy, or government.

            Ideological religions are like regular religions in that way to me. “By their fruits you shall know them” is my favorite Bible verse.

          16. Julie K

            The idea that if everyone acts selfishly, then everything in the economy just works out for the best automatically is believed by lots of people.

            It seems to trace its origins to Ayn Rand, but even if it didn’t, this belief system is what is important to me.

            So why not just speak about “greed” or “selfishness,” and leave out the references to “St. Ayn,” which are sure to lead to tangents?

            BTW:
            “But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.”
            (Adam Smith, Wealth of Nations)

          17. Corey

            most of the tiny group of Left of Center folks here are too nice

            I think niceness is part of what makes this place so frustrating, having to take everyone seriously is exhausting when reality bubbles are in play. It’s like trying to seriously discuss CRISPR when people are yelling at you that eyes are irreducibly complex and mutation can’t create information.

          18. Doctor Mist

            @Jill

            How many milliseconds does a person need to lurk on this board in order to realize that 80% of people here are Libertarians?

            I’m a pretty libertarian guy. I’ve voted Lib for decades, and subscribed to both Reason and Liberty. I am not an Objectivist, having read no Rand until a year or two ago. If this board were as overwhelmingly Libertarian as you say, I would have expected to feel more at home here and less like it’s full of blinkered folks who will just not see the truth when it’s right in front of them.

          19. David Friedman

            “How many milliseconds does a person need to lurk on this board in order to realize that 80% of people here are Libertarians?”

            My guess is that the percentage is much lower than that, but it’s only a guess.

            Perhaps some enterprising person could try running down one or two comment threads, classifying posters as libertarian, not libertarian, or cannot tell. Ideally the result would be reported along with the list of names and classifications, so that anyone who thought he was misclassified could say so.

          20. cassander

            >No, it would be far better if you really DID have no words. That is not what I meant at all.

            Might not be what you meant, but it’s what you said. And then repeated.

            >But to me, looking at exactly what she meant while she was alive about the virtue of selfishness is like thinking I have to know the difference between Shia and Sunni Muslims, or all kinds of beliefs in the Muslim faith, before I can have an opinion on what to do about terrorism done by people who say they are Muslim.

            It would be the same, if you were going around saying that Shiism is an evil cult and that anyone who believes in it is bad and should feel bad. If you want to go around condemning a philosophical idea, you’re damned right I expect you to have a basic idea of what it actually is.

            >The idea that if everyone acts selfishly, then everything in the economy just works out for the best automatically is believed by lots of people.

            That’s not Rand’s idea.

            >It seems to trace its origins to Ayn Rand, but even if it didn’t, this belief system is what is important to me.

            It dates, at least, to Adam Smith, not Rand.

            >Because this is what has a huge effect on our society. Obscure fine points of Rand’s beliefs, or even what she personally meant at the time she wrote about this, are not necessary for me, or anyone, to understand– in order to understand the effects of this belief system on our society, economy and government.

            That’s why I condemn Judaism and its prohibition on men wearing pants! What? Judaism doesn’t do that? That’s irrelevant. Obscure fine points of Jewish belief are not necessary for me, or anyone, to understand– in order to understand the effects of this belief system on our society, economy and government.

            Do you realize how absurd you sound?

            >I really don’t believe that ideology is a very real thing, except as it affects people in the real world–especially as it affects our whole society, culture, economy, or government.

            what on earth does this even mean?

            >Ideological religions are like regular religions in that way to me. “By their fruits you shall know them” is my favorite Bible verse.

            Yes, you shall. Which is why you should look in mirrors from time to time.

          21. houseboatonstyxb

            / reads long thread silently
            applauding most of J’s points /

            / finds one thing to disagree with and immediately posts about it /

            Jill said:
            I am not interested in the obscure ideological fine points of exactly what Ayn Rand meant years ago when she wrote her books.

            Rand has quoted Kipling:

            to hear the truth you’ve spoken
            Twisted by knaves to make a trap for fools

            One of the early customs of SSC was to refer to opponents by the name they choose for themselves. Rand does not post here (which is our loss), so I can only speculate about how she would handle this.

            Me, in Jill’s position I would find another name for the group/s Jill is referring to: groups who falsely attribute their views to some respected person safely dead. I’m sure there’s a prefix or several for this. Can anyone suggest any, or shall we just page Deiseach?

    2. InferentialDistance

      This is why its impossoble to be educated about history and be a libertarian. The fda exists because snake oil salesmen killed people.

      history

      I’d really prefer people be educated about statistics over history, because by god are you historians bad at interpreting the data. The FDA exists because the snake oil it sells requires mathematical competence to identify as snake oil. But please, continue denying people life-saving medicine and devices in the name of preventing snake oil!

    3. ChristianKl

      The FDA approves drugs for the treatment of illnesses. Yet it doesn’t publish a database that tells you which drug is approved to treat which illness. I even emailed them and they explicitely said that they don’t publish that information.

      If the FDA wanted patients to only get treated by drugs that are approved for the treatment they are used for, why doesn’t it make it easy for patients to see the data about what drugs are approved for what illnesses?

      How good was the FDA at preventing Ranbaxy from selling faux drugs (http://fortune.com/2013/05/15/dirty-medicine/)? Very poor.

    4. Murphy

      the problem is false negatives and false positives.

      Lets imagine an agency tasked with making hospitals safe.

      They find out that a patient died of a preventable infection so they rush into action… they shut down the hosptial they project that they’ve probably saved 3 people from similar deaths in future …. and turn all the patients out into the street and a few dozen die.

      They hear that a hospital is being built in an area currently lacking hospitals… so they swing into action and delay the building of the hospital to inspect everything. They project that they’ve probably saved a dozen lives with the changes they insisted upon… meanwhile a hundred extra people die in those years because there was no hospital close enough.

      Is this a good successful agency?

      it’s entirely possible to murder people through excessive caution. A surgeon who keep delaying a surgery because he wants to keep double checking details… until the patient dies of gangrene isn’t a good surgeon.

      You can kill people by preventing actions, you can murder by delay and it’s entirely possible for the body county from those delays and those barriers to be larger than the number of people you save through your caution.

      There have been analysis done on the FDA’s policies and effects and the best estimate is that they err much much too far on the side of caution to the point where they’re killing a really large number of people. Every time they delay a good and working drug by an extra year means a year’s worth of corpses piled up at their feet which are 100% their fault.

      I’m very much of the opinion that agencies like the FDA, NICE or similar are essential but that doesn’t mean that everything they do is optimal or that more delays and more regs are always good.

      1. Jiro

        They find out that a patient died of a preventable infection so they rush into action… they shut down the hosptial they project that they’ve probably saved 3 people from similar deaths in future …. and turn all the patients out into the street and a few dozen die.

        This may still be a good tradeoff, because the result is that you saved 3 people from the project, you’ve doomed a few dozen patients who can’t use the hospital you shut down, and you saved a bunch more patients because shutting down the hospital changed the incentives for other hospitals to prevent preventable infections.

        1. Murphy

          I knew I should have gone with another metaphor.

          unfortunately in the FDA case it’s all or nothing across the entire USA and outside the USA nobody need worry about them. So imagine that in the story the hospital is the only one in the country.

          If you pull one drug from the shelves or delay it to market by a year it doesn’t make all the other drugs better, the chemicals continue to have the same level of efficacy as before.

          1. Yehoshua K

            Not totally true that nobody outside the USA needs to worry about the FDA. I live in Israel, and I’ve been informed by pharmacists and doctors on various occasions that a treatment for such-and-such doesn’t exist on the market because the FDA is holding it up.

            Apparently a lot of stuff doesn’t get made, research doesn’t get done, because without any in to the American market, it is not economically feasible.

            When you are a gatekeeper for an economy the size of America’s, you do impact the whole world.

          2. Jiro

            The more you pull drugs for dangerousness, the greater the incentives you create for companies to make sure their next drug isn’t dangerous, so it still applies. Just because the drugs that the companies already have in the market are not affected doesn’t mean that it won’t affect the incentives for future drugs.

          3. Murphy

            unfortunately since by the time they’ve proven whether the compound works at all they’ve already sunk vast amounts of money into it the incentives don’t line up quite that neatly.

            There’s little incentive to do extra safety testing after you’ve already spent close to a billion dollars, there is however incentive to do “extra safety testing”, very much in quotes.

            I get the feeling you’re thinking of this as like standard product safety. But it isn’t. If you pull a car from the market GM can do extra work to make sure the wheels won’t fall off with a modest additional outlay.

            You can’t do that with a compound. If a compound turns out to be dangerous then you can’t hack in a patch or change the design. if you do change the compound you need to go back to square one and start again proving that it even works at all which it very well might not. Because it’s not a car, it’s a molecule.

            The same mechanism is not in play and can’t really work.

            They might try to come up with better ways to test safety at early stages of drug discovery but they’re already doing that and it’s not a very tractable problem. Sometimes the only way to spot problems is to look at what happens to thousands of living humans so their incentives are entirely to try to game that stage since they already have so many massive sunk costs.

  49. naro10

    The biggest factor in the escalation of drug prices is NOT lack of competition. It is that Medicare is required by law TO PAY WHATEVER THE DRUG COMPANIES CHARGE for approved drugs. If Epipen cost $60, Medicare would pay $60. If Epipen cost $600 MEDICARE IS FORCED TO PAY $600 by law. So what do you expect drug makers to do. They jacked up prices 100 to 1000 times after 2006 when the Medicare part D became effective.
    They charge $100,000 for Hep C treatment course in America (and Medicare pays) , but the same treatment in India cost $1000.
    Competition may help, but will not restrain the prices, as all drug makers want to set their prices as as high a level as their consciences will allow.

    The solution is to repeal the rule that prevents Medicare from negotiating with drug makers like private insurers do, REQUIRE MEDICARE TO NEGOTIATE THE BEST PRICES IN THE WORLD, and allow importation of drugs from overseas. NOTHING ELSE WILL WORK.

    1. Corey

      Allowing importation of drugs from overseas is just free-riding on their price controls. Instead of that, just get price controls of our own.

      1. naro10

        no need for price control…need negotiations..and importation.

        Medicare Part D should amended and be given to private companies to manage.

      2. Furslid

        This doesn’t seem right, because it doesn’t follow the economics of price controls.

        If a price control sets a maximum price below the market price it leads to shortages. If hepatitis C treatments cost 2500$ and it is illegal to sell them for over 1000$ in India, the result is not 1000$ treatment in India. It is people with untreated hepatitis C and 1000$ for treatment in India.

        If America has medical treatments being sold at many times the market price, that means there is some form of price control. A minimum price is being set somewhere. In this case it’s being set through intellectual property law. The obvious solution is to change this price control, not set a new one.

        Setting a new maximum price control below the new minimum price control we have doesn’t make sense.

        1. John Schilling

          If a price control sets a maximum price below the market price it leads to shortages.

          Price discrimination is a real thing. It is entirely possible for an identical product to have two different prices in different markets – even if the markets consist of people who live next door to one another, but particularly if they live on opposite sides of the world.

          1. Furslid

            I agree. There is something really messed up going on. However. Foreign drugs cheap because price controls doesn’t explain the phenomenon. There’s something more complex going on.

            It’s generally a bad idea to start fixing a problem by misdiagnosing it. My understanding of Corey’s post was that his diagnosis of the problem was No Price Controls = Huge Prices. Price Controls = Cheap Drugs. That can’t be the whole story for basic economic reasons.

          2. Corey

            That can’t be the whole story for basic economic reasons.

            It is the whole story, for less-basic economic reasons.

        2. Corey

          There’s not a functioning market in healthcare, nor can there be. Prices are unrelated to costs except that they must be greater. Trying to get people to realize these things is my entire purpose of posting in this thread.

          1. John Schilling

            You’ve just asserted that there can never be a functioning market in health care. Nowhere in your thirty-six postings to this thread is there anything even hinting at an argument for that assertion. Your stated purpose is not served by your actions, unless you believe that the audience is simply going to take your word for it.

          2. Corey

            If I do glibertarian cranks will just counter-assert.

            – The mother of all asymmetric information problems
            – Provider-induced demand
            – Price opacity (US-specific)
            – Lack of financial excludability (e.g. EMTALA, Medicaid)
            – High legal barriers to entry (lots of folks arguing ITT that such are not required already, based on pure faith. Surely in ancap libertopia one could get rid of them, but we’re talking about US health policy, not Somali)

  50. Vintage Rocker

    Scott is still on a roll, and this was again brilliant (as Tyler Cowen put it in MR, he has “knocked it out of the park”). I work in a completely different field, nuclear energy, and we see a similar problem: why hasn’t a single reactor with a desing not 50 years old been approved in the USA in the last decades? (and why the existing designs keep growing more and more expensive to actually be built?) because the equivalent of the FDA, the NRC, keeps adding regulatory hurdles which happen to benefit some already very wealthy players, which then can use their increased wealth to further distort the whole approval process to facilitate their rent-seeking.

    Now, nobody (in his right mind, that is) would say “the obvious solution is to let the market do its magic, and stop regulating nuclear energy, so anybody with a half clever design can build it, security requirements be damned” (as no sane person would say, I hope, “let’s deregulate the whole pharmaceutical business and let anybody sell any drug they can manufacture, under any claim whatosoever of what purpose it serves, and let consumers sort out which ones are effective/ safe/ fairly priced”). Unfortunately, telling a priori which regulatory framework avoids the disfunctionality of the current one (which a previous commenter has dubbed, quite correctly IMHO, a “clusterfuck”) is an entirely different (and more complex) question…

      1. James D. Miller

        “as no sane person would say, I hope, “let’s deregulate the whole pharmaceutical business and let anybody sell any drug they can manufacture, under any claim whatosoever of what purpose it serves,”

        I would for consumers who can pass some basic test showing they understand the relevant tradeoffs.

        1. Matt M

          “right to try” laws seem to be gaining momentum recently

          Basically the idea is that for terminally ill patients who have not responded to currently available forms of treatment, they can waive their right to sue and volunteer to try non-FDA approved medications.

          If this starts becoming popularly accepted as a just and decent thing, how long does it take to start asking the questions like “why should only people who are about to die have this right?”

        2. Vintage Rocker

          But for even the most intelligent and wise consumers to understand the tradeoffs enough information (true, veridical, complete information, it goes without saying) has to be provided… who would ensure that such information is indeed available? Not for sure the companies set to make some profit frmo the manufacturing and distribution of drugs, for which some (biased as it may be) justification can always be found.

          Don’t want to be an asshole here or nitpick anybody else’s opinion, just the more I think about it the more complex I see the situation as being, and less amenable to simple solutions. The FDA sucks, completely agree (again, so does the NRC, with which I have to deal frequently), but just can’t see how eliminating it (or vastly reducing its powers) would not make things even worse…

          1. James D. Miller

            ” who would ensure that such information is indeed available? ”

            The marketplace of ideas. Consumers being free to make their own drug buying decisions would create an enormous demand for information about drugs.

  51. Shodo

    I fail to see how regulations are the problem when you fail to explain HOW regulations coerced the company to inflate their prices 500%.

    It seems to me a company can have a monopoly and still not price gouge.
    The problem isn’t regulations or monopolies – just simple greed.

    “Price-gouging is often defined in terms of three criteria listed below:

    1-Period of emergency: The majority of laws apply only to price shifts during a time of disaster.
    2-Necessary items: Most laws apply exclusively to items which are essential to survival.
    3-Price ceilings: Laws limit the maximum price that can be charged for given goods.

    A prevalent concern surrounding price gouging is that it exploits consumers. Supporters of anti-price gouging laws argue that it is morally wrong for sellers to take advantage of buyer’s vulnerability and increased demand. Opponents argue that buyers are not coerced to take part in this exchange, and they voluntarily agree to pay the seller’s asking price.”

    https://en.wikipedia.org/wiki/Price_gouging

    1. bluto

      Essentially if you have a monopoly and don’t price where marginal revenue meets marginal cost (well above the cost of production), you must own the firm forever or else someone smarter or greedier than you will buy the company out from under you and change things (Mylan bought the EpiPen business and several others from Merek in 2007).

    2. Matt M

      Not to mention that under the doctrine of fiduciary responsibility, the CEO of a company is quite literally personally legally responsible for acting in the best interests of the owners (shareholders) of a company. To not increase profitability when you could easily do so might very well be a crime.

    3. gbdub

      Relying on corporate morality to correct for government stupidity seems like a recipe for failure. Laws that only work when everyone behaves perfectly are still dumb laws.

      1. Shodo

        Bluto – EpiPens cost several dollars to make. What that company did is called “price gouging, and it’s illegal.

        Matt M – Yep, money above all else, and that is a flimsy excuse for doing something that already IS illegal. What this company did had less to do with some painful IKEA analogy… but was more like a sole water-seller at the edge of the Sahara, offering to sell bottles of water for people dying of thirst at the “low low price” of only 300$ a bottle.

        gbdub – Are you against laws against price gouging? Or do you think price gouging should be a legal activity?

        Once again everyone. Regulations didn’t force this company to raise their prices 500%.
        This is the very heart of what people get so pissed off about with capitalism. Rich people at the top trying to find some way to rationalise away the greed at the heart of all of their decision-making. With no care at all for how many people get hurt along the way.

        1. gbdub

          Sure, in a vacuum, exploiting desperate people is a dick move.

          The tricky bit is how to define price gouging reliably, clearly, and enforceably. What looks like price-gouging to you could look like a fair price for a legitimately scarce good to someone else. (Or more critically, regulators aren’t immune to idiocy, corruption, and greed – so what a politician can be convinced to call a fair price may not meet your definition of that)

          Should a gas station owner go to jail for charging 2x prices in a hurricane, knowing that that may be the last cash he sees for a couple weeks? 3x? 4x?Should a cab driver not get any bonus for working out in the sticks on New Year’s Eve? Should we encourage hoarding by the guy lucky enough to live next to the grocery store even though others that need the supplies just as much, and are willing to pay more for a fair share, are a few minutes too late?

          It’s not like price-fixing is without downsides. It’s not nimble, for one, and it’s particularly susceptible to the situation where raising the fixed price is politically unpopular but the price is too low to make a profit so you end up with either a shortage or with having to subsidize production of the thing you need (meaning that ultimately the public is paying the higher price, but it’s obscured and subject to deadweight losses).

          I’m not a fan of thievery of any stripe, and clearly Mylan overreached in a greedy, nasty way here. But they are only able to get away with it because the people willing to sell at a fair price were denied access to the market. If the cops all take the day off and turn the keys over to the Mob, well, I’ll be pissed at the Mob boss for the inevitable crime that follows, but that’s no reason to give the cops a free pass.

          1. bluto

            As a non-gas station owning price potential price gougee, I’d much rather have a gas station that charged 2-3x the price when there’s a shortage and know that I can get some precious fuel when I have to make that emergency trip to the hospital the next day, then find there’s none to be had at any price because the non-gouging low prices and broken supply meant they ran out faster than One Direction tickets at a middle school.

    4. Corey

      Yep, one of the constants behind price-gouging complaints is the (perceived) voluntary-ness of the transaction. Hence one of the examples linked upthread complaining about gas shortages during hurricanes exacerbated by anti-price-gouging laws. Complaints about Uber’s surge pricing are similar (and to be fair, many do ignore the counterfactual of “can’t get a cab at all”).

      Consumers will never consider health-care purchases to be an entirely voluntary transaction (there’s a sliding scale, of course).

    5. anosognosic

      Comments with wikipedia links on non-obscure topics are hardly ever worth engaging, but

      I don’t trust the people who talk about price gouging to be able to predict when price fixing will cause damaging shortages. Not at all.

      If only we had a mechanism that could help separate the two–say, maybe we could try not supporting artificial monopolies with bad regulation.

    6. cassander

      >I fail to see how regulations are the problem when you fail to explain HOW regulations coerced the company to inflate their prices 500%.

      Regulations made such a price hike viable, where a similar hike by a chair company would simply result in no one buying them.

      1. Furslid

        ^This^

        Making asshole moves profitable is a problem. If you create incentives for people to price gouge, then you can’t be surprised when you see price gouging.

        Imagine your roommate leaves your apartment door wide open with no one home and your laptop in plain view. Someone comes in and steals your laptop. Your roommate is to blame for your laptop getting stolen.

        The current regulations on medicine in the US have created a similar situation. It is obvious that buying a medical patent and hiking prices is free money. So the regulations/regulators are to blame for people having to pay extra for medicine.

    7. Yehoshua K

      I’m going to differ with you on two points. First, I think it is strange to say that “the problem is the existence of greed,” when greed is a fairly constant and predictable element of human nature. If you’re setting up a system where everything will go swell just so long as humans don’t act like humans, you’re setting up a bad system.

      Secondly, I don’t think price gouging, here defined as dramatically higher prices on necessary items during periods of emergency, is actually a bad thing. Why not?

      Because when prices on true necessities–water, for example–go way up, that acts as a signal to lots of greedy humans to bring water in to the area, thus alleviating the shortage that caused the high prices in the first place. When such prices are forbidden by law, those greedy humans don’t bother to bring water, leaving poor families to have to decide who gets a cup of water to drink.

      Don’t forbid high prices because they’re offensive. The consequence is extended shortages of necessities like water.

      1. Jill

        “Because when prices on true necessities–water, for example–go way up, that acts as a signal to lots of greedy humans to bring water in to the area, thus alleviating the shortage that caused the high prices in the first place.”

        In a theoretical world, that may happen. In the real world, price gouging often goes on for very long periods of time.

        1. Doctor Mist

          In the real world, price gouging often goes on for very long periods of time.

          Can you cite an example where the behavior is not propped up by government-granted monopoly? (I’m not asking rhetorically; there may well be one, but I can’t think of one.)

  52. Diadem

    There’s nothing in this article that I disagree with, you raise a number of very good points. But still…

    This entire article kinda feels like a giant Motte and Bailey. Your article is reasonable, but the unspoken implication at the end seems to be “So we need to get rid of all government regulation and convert to libertarianism”.

    The fact that current regulations are bad does not mean that all regulations are bad. The only conclusion we can reasonably draw is that we have the wrong regulation. Whether we have too much, too little or exactly the right amount of regulation is an orthogonal question.

    1. gbdub

      You’re putting words in Scott’s mouth and then blaming him for them. It should be clear by now that he is hardly a strict libertarian.

      And Scott’s critics seem to be losing sight of the context here: this wasn’t an out-of-the-blue attack on regulation, this was a response to a one-sided Vox article blaming capitalism while ignoring the role of regulation in EpiPenghazi. From that perspective, focusing on the negatives of regulation makes sense (Vox already made the pro-regulation case).

    2. pku

      This is actually a good example of why the Aumann agreement theorem doesn’t work in real life: Parts of this article are “arguments on why we need to reduce the FDA and copyright law’s power to regulate drugs”, on which I’ll update my stance towards Scott to some degree, he’d update his towards mine (to a lesser degree, since he starts out a lot more confident), and we’d reach agreement.
      But another part of this is waving a “yay liberterianism” flag, and that does the opposite – it sharpens the dividing line, so that if I start out libertarian I feel a bit more ingroupish, and if I’m not I feel a bit more alienated.

    1. gbdub

      Should Vioxx have been blocked? I thought it was an effective drug that increased heart attack risk in certain long-term users with existing high risk for heart disease (that may be similar to the impact of other NSAIDs). Could those effects have been reliably anticipated without a massive population, years-long trial? Was the effect of COX-2 inhibitors on heart health known prior to the Vioxx trials? If we apply a level of scrutiny sufficient to catch every Vioxx, will anything ever get approved?

      Even then, it seems like those side effects could be monitored / controlled, but we’ll never know because Merck engaged in shenanigans regarding the studies and side effects, the brand was irrecoverably tainted, and they pulled it from market.

  53. Alan Bachers, Ph.D.

    Similar shenanigans prevail in the DEA/FDA refusal to reschedule cannabis from Schedule 1 to, actually where it fits best, schedule 3 with alcohol and tobacco. Their refusal is also part of restricting even research because the CB1 cannabanoid receptors in the millions in the brain and nervous system and the CB2 receptors abundant in the muscles, gut, and connective tissues are omnipresent are available to this plant. That freaks out big pharma enough to keep us away from finding out that there is already a 29% reduction in opiate deaths in populations who use cannabis rather than opiates when they are no longer available.

  54. gbdub

    It seems like part of the issue is that the FDA acts mostly as a gatekeeper rather than a policeman. Getting a drug to market takes huge upfront costs, and takes forever (often leaving a lot of sick people in the interim). But there are plenty of problems down the road with long-term negative effects popping up, and those usually take years and lots of complex lawsuits that mostly just make money for lawyers to resolve.

    Maybe we need to make it easier to get in the door, and shift focus to ongoing monitoring of safety and efficacy (and a more sane system of resolving ongoing issues)?

  55. Elias

    So if this all comes down to cronyism, how come there isn’t a marketplace for chair, mug, or shoe related rent-seeking? Is it because drugs sounds more serious and it appears as something more important to get right, providing more justification to create a vehicle for rent-seeking (FDA)?

    1. Scott Alexander Post author

      My guess is that in a democracy, the government couldn’t get away with regulating chairs this strictly, so there’s no point in lobbying them to try it.

      1. Matt M

        He says, forgetting the series of weekly reason.com articles about how various states have occupational licensing requirements for things as mundane as flower arrangement, hair braiding, eyebrow threading, coffin construction, etc.

        See also: Uber getting chased out of large cities because they’re just so terribly unsafe.

      2. Matt M

        It’s also worth reading the history of IKEA. When they started, there was, in fact, a government supported guild of furniture manufacturers in Sweden that absolutely despised and undermined them at every turn. Many of their innovative ideas and techniques were not necessarily their preference, but necessary responses to the fact that the establishment players in the industry were encouraging suppliers to not work with them, etc. Their early days were a continuous uphill battle against a government-backed cartel that tried to crush any upstart competition.

      3. Furslid

        It also has to do with substitute goods. We can easily find a way around a certain style of chair. If “wheeled desk chairs with adjustable height” are regulated out of my price range, I could get a chair without wheels, or sit on a couch, or get a chair that can’t adjust height on the fly but I assemble at one fixed height.

        If I can’t afford an epinephrine autoinjector, I can’t switch as easily. If I get an autoinjector of some other chemical, it won’t work. If I get a syringe and bottle, I can’t count on being calm enough to use it while going into shock from an allergic reaction.

        This makes the results of successful lobbying a lot more effective in medicine than in chairs. So lobbyists and patent trolls are drawn to the areas where their talents are the most profitable.

    2. Brian

      There probably is, but it’s not as obvious or egregious because it can’t be justified by safety concerns. Manufacturing plants get tax incentives to locate in certain places, companies try to use zoning laws to crowd out competitors, etc.

    3. naro10

      If the US Department of Chairs and Sofas was forced by law to pay ANY PRICE set by by the chair makers, and forbade negotiation on prices for any chair used by the government, chair prices would rise to thousands of dollars per chair.
      This is what happen because of provisions in the corrupt and stupid Medicare part D.

      1. Jacobian

        Right, I think Sarah (of Vox) and Scott are talking past each other.

        Mylan can charge whatever they want for Epipens because they sell a bunch of them to Medicare, and Medicare isn’t allowed to negotiate prices. But Medicare is a CONSUMER of medicine, not a REGULATOR. So the US fucks itself over twice: it prevents Medicare from using market mechanisms to affect prices as a consumer (i.e. just buying Adrenaclicks) and then compounds the problem with counterproductive regulatory mechanisms.

        It’s like if a bar raised their beer prices to $50, and instead of going to another bar I drank 10 beers in a row and called the police on the bar owner.

    4. Deiseach

      how come there isn’t a marketplace for chair, mug, or shoe related rent-seeking?

      If you just want something to drink your tea out of, you can buy a cheap set of mugs in the pound euro shop. If you want to get fancy, you buy Wedgewood but it really isn’t going to make a difference to the tea (though they do say it tastes better out of fine bone china).

      Unfortunately, drugs are not like that. It really will make a difference if you take generic aspirin versus generic paracetamol, particularly if you have a history of stomach bleeding.

  56. J Mann

    Is the patient level solution for this problem really as simple as “ask your doctor to write a prescription for Adrenaclick instead of EpiPen?”

    If so, that should be father up in most of the articles I’ve read.

    The idea that Europe has eight competing versions and that the US has (at most) two is pretty strong evidence that something is wrong at the FDA. (In fact, now that I think about it, I generally assume that if I go to a Canadian or European pharmacy, I’ll get more effective drugs and more choices than I would in the US, although I might be mistaken.)

    1. Scott Alexander Post author

      Adrenaclick is also overpriced. There’s a generic version of the Adrenaclick that I think you can get if your doctor just writes “adrenaline autoinjector”, but I’m not sure how overpriced it is or isn’t.

      1. grendelkhan

        I think Adrenaclick is the generic; Consumer Reports suggests combining a prescription for “epinephrine auto-injector” with a particular coupon bringing the price down to about $140 at Wal-Mart. (See here.) So far as I know, that’s the best you can do here in the States. (Though the price goes up if you select ‘brand’ rather than ‘generic’, so maybe there’s a third manufacturer making generic Adrenaclick?)

  57. Blue

    I think in a field that is sufficiently regulated already, minor changes are not best read as “less regulation” or “more regulation” but just *different regulation*. Absent revolutionary changes (like abolish the FDA, or abolish patents), all the inefficiencies of centralized networks are still going to exist, and there’s a real danger to calling something “less regulation” when it’s only making another loophole or allowing regulatory capture that will lead to further distortions. It is not like proving that your regulation is “less” in some small sense guarantees you won’t have new or continued inefficiencies.

    Different regulations can still have big and positive impacts, and they should be considered and pursued. But it’s that very need for them to be properly and rationally analyzed, that we should not attach to them the ideological weight of “less or more regulation” that will tend to overshadow technocratic objectivity.

    I also think it’s really easy to overestimate the effectiveness of lobbying dollars. I think rationalists should devote some energy to figuring out what sort of results political donations and lobbyists can reliably buy you, and they’ll come to the conclusion “not very much” (hence why GiveWell ranks such programs so low.) Is there an alternative explanation for why groups donate so much money? Well, lobbyists do have a lot of incentive to convince their clients that they need to spend money on them…

    1. Jill

      “Different regulations can still have big and positive impacts, and they should be considered and pursued. But it’s that very need for them to be properly and rationally analyzed, that we should not attach to them the ideological weight of “less or more regulation” that will tend to overshadow technocratic objectivity.”

      Too bad. We live in a hyper-polarized ideological country in the U.S. So the less regulation fundamentalist church of Saint Ayn will fight the Liberal establishment church of Make More Regulations. Both churches cater to political donors and allow regulatory capture to be super easy. Both churches have only ONE point of agreement with regard to regulations. They both agree that they have ZERO interest in properly and rationally analyzing current or proposed regulations.

      “I also think it’s really easy to overestimate the effectiveness of lobbying dollars. I think rationalists should devote some energy to figuring out what sort of results political donations and lobbyists can reliably buy you, and they’ll come to the conclusion “not very much” (hence why GiveWell ranks such programs so low.) Is there an alternative explanation for why groups donate so much money? Well, lobbyists do have a lot of incentive to convince their clients that they need to spend money on them…”

      I think that the opposite is true– that it’s really easy to underestimate the effectiveness of lobbying and huge corporate donations to Congress and the president. We are immersed in Right Wing economic and political propaganda in our Right Wing country of the USA here. Saint Ayn rules. The party most friendly to the .01% controls both Houses of Congress, most governorships, most state legislatures, plus SCOTUS too until Scalia died. This is not an accident.

      And these mega-corporations do not throw money away. And they did not push through the Citizens United ruling for no reason. Since we are surrounded by Right Wing Think Tanks– AKA Propaganda Tanks– there is going to be plenty of “research” done, and plenty of other research misinterpreted– in order to hide the fact of the tremendous effect of lobbying and huge donations on politics. Knowledge is power. And so the .01% want to hide their knowledge about what they are doing to keep their power over the 99.99%.

      But our whole complicated system, full of regulatory capture, and countless laws, is not set up for the purpose of helping the common person. And, as much as the .01% might do to try to hide it, in fact:

      The Government Listens To Lobbyists And The Wealthy, Not You And Me
      https://thinkprogress.org/the-government-listens-to-lobbyists-and-the-wealthy-not-you-and-me-4f7078c88e9a#.myfy9ef2z

      1. Blue

        “Too bad. We live in a hyper-polarized ideological country in the U.S. So the less regulation fundamentalist church of Saint Ayn will fight the Liberal establishment church of Make More Regulations. Both churches cater to political donors and allow regulatory capture to be super easy. Both churches have only ONE point of agreement with regard to regulations. They both agree that they have ZERO interest in properly and rationally analyzing current or proposed regulations.”

        Sure, but it doesn’t mean Scott should engage in the same back and forth (nor Vox, many of whose writers regularly read Scott.)

        “I think that the opposite is true– that it’s really easy to underestimate the effectiveness of lobbying and huge corporate donations to Congress and the president.”

        Okay so then rationalists should aim to measure the effectiveness of such spending. If there is a reliable connection between giving a dollar, and policy results, it shouldn’t be too hard to find. And hey, if EA can find the most effective way to spend lobbying dollars, then they’ll have a leg up on other ideologies.

        Political scientists have tried to measure this connection for decades, including GiveWell, and the results are really underwhelming. But I would welcome studies that show clear results connecting certain kind of donations and policy outputs. I’d then take *my* money and give it to those reliable entry points, instead of throwing it another wasteful political-celebrity campaign, which I guarantee you abound.

    2. Jill

      In the U.S. we’re all like G W Bush. We don’t do nuance or precision here. It’s actually impossible because our bills are too long to read, and the laws on the books are almost interminable. So tell us: More Regulations or Less Regulations? We all belong to fundamentalist political ideologies, so we just can’t do Different Regulations.

          1. The Nybbler

            Ah, Rolling Stone, that bastion of journalistic reliability….

            What’s crucial to understand is that a great many commercial media outlets now are not so much liberal-leaning as Democratic-Party leaning.

            This isn’t new at all. This is why Fox News was formed.

          2. David Friedman

            Pretty good article.

            But it does not demonstrate your “we all belong to” claim. People can and sometimes do read media from both sides, something that’s easier if you get your news online from Google News or some other source that feeds you stories from a wide range of sources. People know people who disagree with their politics, some of whom they respect. Quite a lot of people are reasonably skeptical of what the media, even the media that mostly agree with them, say.

            My “speak for yourself” was intended literally. You are not the only person commenting here who your description of polarization applies to, but you are one of a small number of such people. I’ve had lots of arguments with HealBearCub and I think he is far too inclined to look for and believe justifications of bad policies, but I have seen no evidence that he believes that the mission of the Republican Party is to raise the income of the top .01% or that there are never legitimate arguments for right wing policies or against left wing ones.

            I see an occasional post by someone on the other side, or one of the other sides, which matches your level of arrogant certainty, but rarely.

            Which is why I find it amusing that you are complaining about, and presenting an exaggerated (but not wholly false) picture of, political polarization.

        1. Anon

          That’s a nice glass house you got there, David. Considering you pretty much invented anarchocapitalism and most of the important part of libertarianism, it’s hard for you to claim you’re not partisan to a political ideology. You’re definitely a radical compared to mainstream America. Fundamentalist you probably aren’t, but you seem to have a fundamental belief that the market can solve all problems.

          (EDIT: My gravatar changed even though I’ve never changed my e-mail. Shucks. I liked the old one.)

          1. anonymous posh

            “I see an occasional post by someone on the other side, or one of the other sides, which matches your level of arrogant certainty, but rarely.”

            I think I see the problem with your seeing. You’re too mind-killed/self-blind to be leading this line of attack, David.

          2. Glen Raphael

            @Anon:

            Hang on, is the person who creates a political ideology best described as partisan to that ideology?

            A modern follower of Marx might have to worry with each new issue “what would Marx have thought about this?” but Marx himself is relatively free to be a pragmatist, respond as seems appropriate or even change his mind, no?

            Taken a bit further, your argument suggests that if somebody has lots of followers who think his ideas are really good, then he’s not free to have good ideas. Because the presence of followers means he’s stuck in the ideology of…thinking the way he thinks. Do I have that right?

          3. HeelBearCub

            @Glen Raphael:
            I don’t like the tone of the comments above yours, but you are weak/straw manning their arguments.

            Taken a bit further, your argument suggests that if somebody has lots of followers who think his ideas are really good, then he’s not free to have good ideas.

            This is very much straw.

            History is rife with people who came up with a theory, argument, idea, etc. and were unable to then objectively analyze the flaws in their own argument. I would say it is basically confirmation bias. We are all subject to this, no matter how we struggle against it.

          4. David Friedman

            @Anon:

            I am a radical, am not a fundamentalist.

            I have discussed, at some length in print, ways in which my preferred set of institutions might fail to produce the results I want or might prove unstable. Also problems with the justification of an important element in my preferred system of institutions (private property in land).

            You give me too much credit with regard to anarcho-capitalism. Important parts of the argument were produced by other people earlier.

  58. Muad'Dib

    One way in which chairs are not like drugs (or at least not to the same extent) is the general point about intellectual property: lots of up-front cost, low marginal cost. The chair analogy does not address this well.

    This is not to say that IP laws are sane. But one major issue isn’t addressed in the analogy. An analogy with music or books might be better. Though I don’t know how it will work, exactly.

    Edit: I see Benjamin has made roughly the same point above.

    1. Scott Alexander Post author

      I’m not 100% clear about the importance of IP laws in this case because I don’t know how novel or inventive the EpiPen really is. My impression is not very, that Mylan would lose most of its patent cases, but that they sue anyone to delay things and make it harder for everyone else.

      I also think there’s an unfortunate interaction going on where in order to get around the patent issues, other companies make their EpiPens look really different, and then the FDA demands that this apparently novel product undergo much more testing. For example, I think this is part of why they worry that children who know how to use EpiPens won’t be able to figure out Adrenaclicks.

      1. Brian

        Scott, see my comment elsewhere on some of the patent issues. The short answer is that the Epipen’s “innovation” was having the needle protected by a sheath that gets pierced when used, rather than a cap that has to be removed.

      2. Mengsk

        That’s an interesting double-blind. If competitors are too similar to the EpiPen, they have to worry about patent infringement, and if they’re not similar enough, they have to worry about transition costs and regulatory scrutiny.

        1. Brian

          Mengsk, this is exactly right. In fact, in extended release drugs, companies have taken to patenting the drug release profile that the FDA uses to establish equivalence so that it is impossible for a generic to pass FDA scrutiny and not infringe.

        2. Douglas Knight

          What’s wrong with that “double-bind”? The whole point of a patent is to grant a monopoly. The problem is that this is not what is going on. The original auto-injector patent has expired. So generic companies are supposed to copy it and get an easy approval based on the old safety data. But those generic companies are being sued by Mylan, pretending that they are infringing its new patents.

          1. ChristianKl

            The average generics approval still costs 1 to 5 million dollar. Easy approval is the wrong term. It’s easier not not easy.

  59. Mengsk

    Yeah, the claim being made by the vox article is really indefensible. They seem to be saying that because people need certain drugs to live, normal market forces allows manufacturers to abuse consumers, when in reality, controlling prices is one of the few things that markets are actually pretty good at doing. Food, for example, is also a consumer good that is necessary for people to live, and is even regulated for consumer protection. But the reason you don’t see dramatic price hikes is because the regulatory system is transparent enough and easy enough to comply with that individual firms don’t end up with a corner on the market.

      1. Mengsk

        I think it’s because it’s easier to justify consumer safety regulation for newer, less well known products, where people don’t have well calibrated expectations about its accessibility or safety.

        The FDA would probably fall under a lot of scrutiny if they started pulling multiple brands of peanut butter off the shelves because of “unsafe manufacturing practices”, simply because the culture at large has a reasonably good sense of how safe peanut butter is.

      2. bluto

        Because regulations for food are in the form of:

        (A) Except as specified in ¶ (D) of this section, FOOD EMPLOYEES
        shall clean their hands and exposed portions of their arms,
        including surrogate prosthetic devices for hands or arms for at
        least 20 seconds, using a cleaning compound in a HANDW ASHING
        SINK that is equipped as specified under § 5-202.12 and Subpart
        6-301. P
        (B) FOOD EMPLOYEES shall use the following cleaning procedure in
        the order stated to clean their hands and exposed portions of
        their arms, including surrogate prosthetic devices for hands and
        arms:
        (1) Rinse under clean, running warm water; P
        (2) Apply an amount of cleaning compound recommended by
        the cleaning compound manufacturer; P
        (3) Rub together vigorously for at least 10 to 15 seconds
        while:
        (a) Paying particular attention to removing soil from
        underneath the fingernails during the cleaning procedure,
        (b) Creating friction on the surfaces of the hands and arms
        or surrogate prosthetic devices for hands and arms, finger
        tips, and areas between the fingers;
        (4) Thoroughly rinse under clean, running warm water; and
        (5) Immediately follow the cleaning procedure with thorough
        drying using a method as specified under § 6-301.12.

        And anyone complying with the all of the regulations can make food. Drug regulation is more like, Oscar Meyer is approved to produce hot dogs and the approval process for Zweigle’s to compete with them might take as long as 6 years and have a 1% approval rate on the first application!

        1. gbdub

          And also the Zweigle’s dogs must be rectangular in cross section to avoid the Oscar Mayer patent.

  60. Jiro

    EpiPens are protected from this substitution. If a doctor writes a prescription for “EpiPen”, the pharmacist must give an EpiPen-brand EpiPen, not an Adrenaclick-brand EpiPen. This is apparently so that children who have learned how to use an EpiPen don’t have to relearn how to use an entirely different device (hint: jam the pointy end into your body).

    This seems to misrepresent the article. It is separately claiming that substitution by pharmacists is not permitted, and that using substitutes may cause problems for children. No claim is made that the problems for children are the reason the substitution is not permitted; the two are in separate paragraphs, and they even use the phrase “another complication is that”, indicating that they are separate and one is not an explanation of the other.

    1. Scott Alexander Post author

      I think I remember reading somewhere that this was the reason why medical devices but not drugs can’t be genericized, and it seems to make sense. If it’s not the reason, what is?

      1. Deiseach

        If it’s not the reason, what is?

        If EpiPen is a registered trademark? It’s not like the doctor is writing a prescription for (say) metformin and the pharmacist can substitute brand B from a different company for brand A. (My chemist always tells me when they do this “this isn’t what the doctor wrote but it’s the same drug, just a different version”, I don’t care but they are careful to inform me before they fill the prescription). It’s not the adrenaline as such that’s being prescribed, it’s the whole “adrenaline packaged in handy injector”, and that’s the brand name copyright device.

        Presumably patients might complain (have complained?) if pharmacists gave them Adrenaclicks when “the prescription says EpiPen, I want an EpiPen not some cheap knock-off”. I’m sure Mylan would certainly do so, and they might take Adrenaclick to court for “passing off” or the like.

    2. Jiro

      I don’t know if that’s the reason. But it’s not the reason given in the article you’re using as a reference.

  61. Benjamin

    Okay, so obviously the mug and chairs example was stupid but I think you’re neglecting other factors that make drugs different.

    A lot of the over-regulation is because monopolies in this industry can actually spark more innovation. Nobody is gonna pour millions into R&D of a lifesaving drug if somebody can just copy it afterwards. The problem with those monopolies is that it’s paired with relatively inelastic demand, which allows companies to raise consumer prices without many consequences. So yes, one solution could be to regulate the market less, but it’s not ridiculous to think that the solution could be to control the price more, not control the companies less.

    Some level of corruption is always going to exist in the political system, I’m fine with biting the harms of granted a monopoly for slightly longer than it should be as long as it encourages the innovation of the drugs to begin with and as long as there are other controls on how the company can act once that monopoly exists.

    1. Brian

      In the regular market, companies can design around patents. It’s the interaction between FDA regulation and patent law that makes pharmaceutical patents different. If IKEA patents “a chair with four wooden legs supporting a plastic seat 24″ off the ground,” Target can sell a chair with 4 plastic legs or that’s higher or lower. In pharma, however, the generic has to be identical enough to the brand to fall within the patent, or the pharmacy can’t fill a prescription for the brand with the generic. That’s why generic companies can’t just design around the Epipen patents’ fairly minor improvements on prior art autoinjectors.

      1. Benjamin

        Sure, but the difference is that it doesn’t cost millions of dollars to learn how to build a chair. So I understand that the controls mean we miss out on some minor improvements but a world that allows those minor improvements is also one that creates an enormous disincentive on being the first person to develop a product if people can free-ride on your research and beat you in the market by making marginal improvements.

    2. Julian

      Can you name one example where price controls on a large scale (preferably nationally in the US) have had the intended effect? This is a serious question as I cant think of any.

      1. Corey

        Health care! Everyone anyone would want to live that’s not the US.

        Seriously, either through monopsony buying power, direct government provision, or good old fashioned fiat.

        Canadian drugs aren’t cheaper because Her Majesty’s FDA is less strict; they’re cheaper because she requires them to be so.

        1. gbdub

          Was “drugs get way more expensive in the US because that’s the only place pharma-cos can get away with it and cover their upfront costs” an intended effect? You posited free-riding on European price controls earlier, but certainly free-riding in the other direction (high US prices subsidizing Euro price controls) is also possible?

          1. Corey

            They certainly do. But that makes medical innovation a public good [1] and therefore under-supplied by markets. If our high prices (this goes for everything medical, not just drugs) are necessary to subsidize the innovation, why not make the subsidy explicit, instead of granting monopoly rents and hoping innovation happens?

            [1] Non-rivalrous (or we’d keep the rest of the world from free-riding) and non-excludable (because we don’t have the stomach, societally).

    3. Scott Alexander Post author

      But I’m not even talking about patents! Sure, let the company that invents a drug have a 20 year patent on it. Adrenaline’s been around since 1906; injectors have been around since the 70s, and Mylan has been losing its patent cases because I think at this point they’re making bizarre claims like having a permanent patent on making things easy to inject.

      1. Alex

        But I’m not even talking about patents!

        Which is kind of the problem. Do you really claim that it is sensible to compare the drug market and the chair market in the way you compare them in the light of patents and their role in the respective market?

        Mylan has been losing its patent cases because

        This is not completely clear from your original post.

        at this point they’re making bizarre claims like having a permanent patent on making things easy to inject.

        Anyway, the claim that regulations screwed up in this particular case is very different from the claim that the drug market in general should function more like the chair market.

        The comparison you make is intellectually diskonest, IMO. You should either compare the category chairs to the category drugs, which makes it obvious that chairs are substitutes for eachother in a way that drugs are not, or compare a drug to a chair which makes it obvious that there are of course chairs that cost a fortune.

      2. Douglas Knight

        You gave several examples of competitors failing to get to market that you didn’t understand. I think that they actually are about patents.

        1. ChristianKl

          No, there are about generics not getting approved. Patents don’t stop the FDA from approving a drug. You can’t simply produce a generic and put it on the market. On average you need to spent 1-5 million for it and face a lot of barriers.

          1. Douglas Knight

            I don’t know about the particular cases, but patents are part of the approval process.

        2. wintermute

          From checking on those cases, no.

          Patents are relevant to the approval process, but at this point successful patent claims aren’t what’s blocking alternatives. Unsuccessful claims are still a factor, but we should file that under “massive capital burden for competitors” rather than “patents preventing competition”.

      3. Deiseach

        But isn’t that really what the problem is? Mylan isn’t suing “companies that make adrenaline that is injected via syringe”, they’re going after companies trying to make similar easy-inject-not-a-syringe versions of their product.

        Anyone can make a batch of adrenaline, the FDA regulations about what you can and can’t do are well-known. The problem seems to arise when you put your adrenaline into a portable injector and then Mylan comes out of the woodwork with its lawyers saying “you’re infringing our copyright”.

        I mean, it’s not like the USA is confined to “you can only have aspirin as a pain reliever because we hold the patent on analgesia”. There’s paracetamol, ibuprofen and naproxen on the market as well. Mylan seems to be trying to hog its major market share by chasing off any competitors, and this is not really the FDA’s fault, this is something that involves patent law and monopolies and probably will require the government to step in and intervene. The FDA can be blamed for over-regulating the devices from competitors, but it’s not the one saying “You can’t make a competing device in the first place”.

    4. Dumky

      “Nobody is gonna pour millions into R&D of a lifesaving drug if somebody can just copy it afterwards.”

      This is a common claim of IP supporters. The trouble is that IP also imposes costs on innovators too, especially new entrants. So there is an empirical question of whether IP encourages or discourages innovation on net.
      Historical study of this question is addressed in “Against Intellectual Monopoly”, which as the title suggests find little evidence that such monopoly-granting produces net benefits.

  62. Yildo

    Any deregulation that does not abolish patents (aka government-approved monopolies) is inherently flawed. No deregulation in the US is going to abolish patents. Since optimal deregulation is impossible, improvement to the current situation may require more regulation, not less, to balance out the flaws in the system.

    1. Brian

      Patents are limited!! You only need to relax the regulations that prevent generics from designing around patents. If Mylan had invented epinephrine, they would deserve the monopoly profits and few would complain. The problems and the outrage come from cases like this and Daraprim where FDA’s regulations prevent generics of old drugs from coming to the market.

    2. TomFL

      A company needs an incentive to invest in R&D. If a company’s hard work can be subsequently easily copied by a competitor (reverse engineering a drug can be trivial) then they will not invest in R&D.

      The theoretical deal of the patent system is you are granted a government protected monopoly for disclosing the methods and design of your invention publicly. This public disclosure can then be used by others after to create better versions or improve their own products after the period expires.

      Looks good on paper, not so much in practice. Engineers rarely read patents from competitors because the “patent infringement clock starts ticking” once you become aware of the patent. Since many of the patents out there are vaguely worded trivial garbage it is best not to know about them. Paradoxically very few patents would ever expose valuable trade secrets if it can possibly be avoided.

      The reality of the patent system in the US is that it is an IP lawyer welfare system that taxes the consumer without a lot of benefit. We need patents, but the system is corrupt and has lots of counter-productive incentives.

      If you are ever asked to become part of a patent infringement defense for your company, run away screaming as fast as you can.

  63. Brad (The Other One)

    It seems the issue is not precisely that regulation is intrinsically bad nor good; rather, it’s that regulation, by which we can more generally say “laws”, are usually (in our minds) intended to prevent harm, but in this case, the laws exist mainly to enrich a small cartel of epipen manufacturers by destroying competition. Or more simply, laws are supposed to keep people from acting like assholes, but the law in this case is being written of the assholes, for the assholes, and by the assholes, that their profits may not vanish from the earth.

    So when people say “more regulation!” they, if they were informed, would change their stance, as I have, to “fix the existing regulations!”

  64. Corey

    In all the lobbying talk, nobody seems to have mentioned Mylan getting a requirement in place that all schools keep a stock of unexpired EpiPens. (Most probably would anyway, to be fair).

    1. Scott Alexander Post author

      Yeah, it seems scummy that the company gets to lobby on that, but it’s not in and of itself a bad rule.

  65. Brian

    Let’s not forget the broken interaction between patent law and FDA regulation. I’m a patent lawyer who litigates ANDA cases, so this is solidly in my area of expertise.

    The Hatch-Waxman Act, which created the structure for FDA approval of generics, allows branded product owners to list patents that cover their product after approval. You can find this list in the “Orange Book,” which is now a searchable database on the FDA website.

    The patents can cover any aspect of the drug or medical device, no matter how trivial. In the Epipen’s case, if you go look at the patent and then look at its prosecution history on the USPTO website, you’ll find that the company that created the Epipen (1) patented the auto injector, not epinephrine, and (2) didn’t invent the autoinjector, but merely added the slight improvement of adding a needle sheath that covers the needle before use and then is pierced when the autoinjector is used. In the prior art, there was a cap protecting the needle that you had to use.

    Now, under Hatch-Waxman, if a company applies for a generic with the intent to sell it before the expiration of one of the branded product’s listed patents, the company has to send a notice letter to the branded product when they first apply to the FDA explaining why they believe their product either won’t infringe or why the patent is invalid. The branded company then gets to bring an infringement lawsuit before the FDA approves the drug, and filing suit automatically imposes a 30 month stay on FDA approval of the drug/device.

    But in these Hatch-Waxman infringement suits, unlike in normal patent lawsuits, injunctions are automatic on a finding of infringement of a valid patent. The Supreme Court in eBay v. MercExchange brought some sanity to injunctions in regular patent suits by requiring a showing of irreparable harm and bringing some balance to the field. This is why when a troll patents some trivial feature that no one ever uses and sues Microsoft Word for containing that feature, the courts won’t prevent Microsoft from selling Word, they’ll make Microsoft pay a small royalty for the feature. The Hatch-Waxman Act, though, imposes an automatic injunction in the form of ordering the FDA not to approve the drug until the patent expires, no matter how trivial the patent and no matter how the balance of hardships comes out.

    So branded Pharma companies routinely get patents on trivial modifications of well known drugs, use that to cover their products, use FDA regulation to make sure anyone who wants to make a generic has to include the trivial modification they got the patent on, and then use the Hatch-Waxman Act to impose harsh litigation costs and injunctions against generic competitors willing to try anyway.

    1. TomFL

      This abuse of the patent system is way more common than most people think and it is appalling to watch up close and personal. I have seen companies delay life-saving improvements in technology for the sole purpose of extending the patent life of an existing product.

      I am torn on the patent system and pharmaceuticals. I generally find the patent system to be a parody of its original intentions (software patents…) but see the pharmaceutical industry as one of the prima facie cases of why we need the patent system. A company that needs to invest a billion dollars to create a drug that can be reversed engineered in a week needs to have protection for their investment. They need to be allowed to make enough profit to cover their failures as well. The fact that these companies then engage in the same abuse of the system every one else does is not very surprising.

      There are many different ways to improve the system, I would personally like to see patent approvals fall by a factor of 10 or have shorter patents periods for trivial improvements, and have patent trials decided by a jury of those skilled in the art. Having random citizens making $100M decisions by interpreting complex patent law and intricacies of signal processing algorithms might as well be a random number generator.

      1. Corey

        We could publicly fund pharma R&D at current levels and still save tons of money in aggregate even if we literally gave away the pills. Their R&D expenditure is big, but their marketing expenditure is even bigger. Add them together and you get less than the *difference* in what we spend on drugs vs. what other OECD countries spend on drugs.

        For something less Communist, we could fund R&D by prizes, for example.

        1. TomFL

          “We could publicly fund pharma R&D”

          The area where this makes sense is antibiotics. The capitalist incentives are wrong here as doctors try NOT to prescribe new antibiotics to keep them ready for a new outbreak. So a billion dollars of R&D is poured in and then the market actively works against you. Companies won’t invest in antibiotics even though it is a vitally important area.

      2. Two McMillion

        This abuse of the patent system is way more common than most people think and it is appalling to watch up close and personal. I have seen companies delay life-saving improvements in technology for the sole purpose of extending the patent life of an existing product.

        I saw this happen at my first job out of college. I participated in the development of a certain medical device, and about a year after I’d been hired it was time to patent the device. It was my first experience with the patent system and my joy at getting to be part of the patent system soon turned into horror at what was actually being written into the patent. It wasn’t just about protecting our product; it was about eking out an area in idea-space and preventing anyone else from going there. I’d always thought of patents as something that you used to make sure innovators got fairly paid, but this was a pretty blatant attempt to try and keep competition off the market. I brought this up with my boss, who basically told me, “That’s the way it’s always done.” I left the company shortly thereafter.

        1. Garrett

          I had the same experience in the software space. I have a patent with my name on it. I have no idea of what it covers because the 1-page description was turned into this monstrosity by the lawyers. I read court decisions for fun and I could barely follow the legal description of the thing I’d worked on.

  66. Alsadius

    Reminds me of an old story about how Microsoft used to brag in the 90s that they didn’t spend a dime on lobbying – they had the best product, so they’d just sell it and let Washington do whatever. Then they almost got sued out of existence by said Washingtonians, and now they spend millions on lobbyists.

    When legislators determine what can be bought and sold, the first thing anyone will buy and sell is legislators. This really shouldn’t be a surprise.

      1. Edward Scizorhands

        Well, that implies you have a choice to play. Microsoft found out that not having lobbyists means not having any protection.

        1. The Nybbler

          Well, isn’t that the point of

          “The common people pray for rain, healthy children and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace.”

          The next line of dialog is “They never are.”

  67. S_J

    I know next to nothing about the FDA.

    But, professionally, I have to pay attention to the US-DOT and the FMVSS.

    (That’s Federal Motor Vehicle Safety Standards. There is a Canadian equivalent, and a Mexican equivalent, and an EU equivalent, and a China equivalent…)

    We have things like rules about airbags, rules about RearViewCameras, rules about Instrument Clusters, and rules about how the gearshift selects gears. (Ever wonder why most automatic-transmission cars have positions for Park/Reverse/Neutral/Driver in that order? That’s from the FMVSS.)

    Some of these regulations make sense. Others produce sometimes-weird results.

    The regulations for air-bags ended up producing an incentive that led to a generic prohibition against children sitting in the front seat of a car. Not sure whether this can be argued against, but the pathway of the regulatory process didn’t even ask about child-safety, and whether children should sit in the front seat. The focus on child-safety grew out of stories about children dying because their bodies weren’t the size/shape that the regulations had been written for.

    Another item: generally, regulations for car-safety tend to result in heavier vehicles that can absorb impact better.

    But a different set of regulations, from the EPA, push in the opposite directions. Fuel-economy standards push towards lighter vehicles that require less gasoline to push around.

    Automobile manufacturers are squeezed between those two sets of regulations.

    A subcategory: there are different EPA standards for “cars”, “light trucks”, and “heavy trucks”. Light trucks of the Sport-Utility-Vehicle type have existed as a market niche since the 1950s. But when EPA regulations and DOT safety standards made it hard to manufacture large sedans in the size range that the market wanted, the SUV suddenly became very popular.

    Conclusion: it’s easy to regulate for higher safety or better fuel economy.

    Tighter regulations can make design and manufacturing very expensive. So the industry spends money on lobbyists, because lobbyists produce value for the company. (Or, lobbyists reduce losses from future laws and regulations.)

    1. Elias

      The child safety thing is interesting. People I know have some very firm beliefs about whether children should be in the front seats. I guess this is why.

    2. Linch

      I thought that front seats are generally a lot more dangerous than the back seat anyway? (regardless of whether you’re a child or an adult).

      That’s why I always try to sit behind the driver when I can get away with it.

      1. Bryan Hann

        But there is the hidden cost of reduced communication with your child when your child is in the back seat. (And yes, you can safely talk while driving.)

  68. Jim Putnam

    This issue is symptomatic of the failure of the entire health care system in America from delivery, (Obamacare), to R&D, (FDA NDA process), to a systematic undermining of thousands of years of R&D in herbology, acupuncture, Indigenous medicinal treatment, folk medicine, and time tested cures. Health care must be addressed from birth to death and incorporate a massive preventive effort built around nutrition, attitude, education, and discipline. The hundreds of millions of dollars spent misinforming the public must be stopped in the interest of serving the public good.

    1. bluto

      Stop regulating entry, rather pick a standard and regulate all products compliance with the standard. Have medical device codes like building codes. Or allow market access to generic drugs and devices approved in selected other nations.

    2. Corey

      Embrace that the US will never have anything approximating a free market in anything healthcare-related (barriers to entry will always be high, and every market failure in the book applies). Implement price controls, subsidize innovation directly.

      1. Julian

        But those barriers to entry and “market failtures” are due to the regulations. Why do you think more regulations would help?

        1. Corey

          Why do you think they’re due to the regulations? We both just stick to our priors, like everyone does with everything.

          1. Corey

            The barriers to entry are from regulations. The market failures are not. The market failures are part of the reason regulations are necessary (a safety and efficacy floor being somewhat bigger).

          2. gbdub

            But this particular problem isn’t a market failure, it’s a lack-of-market failure imposed by regulation (there is certainly a possibility of other market failures)

  69. Deiseach

    This is apparently so that children who have learned how to use an EpiPen don’t have to relearn how to use an entirely different device (hint: jam the pointy end into your body).

    I understand the dissatisfaction with the whole regulatory tangle, but given that the patent holders seem to have a habit of suing anyone who produces anything that can be said to resemble an EpiPen for breaching their copyright, I imagine the Adrenaclick people had to produce something that is just different enough to avoid this, and the kids might well need to be trained how to use it – especially if they’re used to using an EpiPen and would automatically apply the Adrenaclick the way they’d always done with the EpiPen.

    (There are a ton of blood glucose monitors that all basically work the same way, but you can’t use the test strips for device A with device B, you have to buy the strips for the specific machine. Same with the lancets that go into the device you jab yourself with. I bet the two models of pen are slightly different enough that you can’t swap things around).

  70. Akk

    A few questions regarding the conclusion that it is regulation that is the issue here:
    1) If a market leader is paying of potential competitors, is this an issue of over regulation? Or is it a case of under regulation that seems to be allowing cartelization?
    2) You seem to let off doctors prescribing behavior rather easily. How much of this is influenced by marketing spends. You mention the lobbying spend but no mention of marketing spend. Pharma influence on doc prescription and the means of achieving this are well documented. One could argue that a simple regulation that a doctor should only prescribe the generic name of a molecule rather than a brandname can go a long way to increase competitor marketshare.
    3)The articles you linked to say that insurance cos did not support the alternatives. If FDA is at fault why are alternatives not covered by insurance cos? They have an incentive to reduce costs no?
    4) The recall of a competitor drug is alluded to seem like FDA intervention. It was voluntary http://www.fda.gov/Safety/Recalls/ucm469980.htm
    5)Hard to buy the logic that pharma cos w hordes of lawyers would sit by and let evident cronyism at FDA to spoil their chances of playing a lucrative market, especially if as the article argues, the ‘reasons for not approving were not clear’. There seems to be too much insinuation without much evidence.

    1. The Nybbler

      A “voluntary recall” in this case is as voluntary as handing over your wallet when a mugger points a gun at your head. They’re going to get the wallet either way, the only question is whether you get shot first.

    2. BrianM

      It does seem peculiar that slow and expensive FDA approval is Something That Must Be Fixed, while the selfishness of physicians is Just The Way Things Are.

      Once read an interesting (non-journal) article about how death rates from anesthesia were drastically reduced. The guild of anesthesiologists implemented regulations on medical equipment. What sticks in my mind is that they bullheadedly decided turning the knob in this direction means more gas, and in this direction means less, rather than – as had previously been the case – letting the market decide. (It was apparently taking a long time to come to a decision.)

      So I wonder why medical associations haven’t, in the interest of the patients they serve, launched a campaign to pressure/remind physicians that there’s a cheaper alternative to the Epipen, albeit one with a longer name.

      That failure seems at least as culpable – and at least as systematic a problem – as people in the FDA acting in their self-interest, which heavily involves not being the person who approves the next thalidomide and/or gets hauled in front of a congressional committee to be confronted with pictures of a cute girl who died.

      1. Corey

        In this case what you propose will probably happen (doctors prescribing “generic adrenalin injecta-thingy” instead of “EpiPen”) because it’s so high profile.

        To be fair to doctors, in the general case, doctors don’t have any idea what anything costs, but nobody does – certainly not patients, and sometimes not even people whose job it is to navigate billing. For any given thing, there’s a constantly shifting set of Medicare rates, Medicaid rates, dozens of insurer-network-set rates, charge-master rates (the insane “sticker prices”), and an amount one might reasonably expect to collect, and these often differ by orders of magnitude.

      2. Deiseach

        So I wonder why medical associations haven’t, in the interest of the patients they serve, launched a campaign to pressure/remind physicians that there’s a cheaper alternative to the Epipen, albeit one with a longer name.

        Patients (particularly parents of allergic children) may insist on the good old reliable well-known brand name rather than the cheaper alternative which is unknown to them and hasn’t had a huge marketing push behind it touting it as vital life-saver and the best thing you can get. Probably they’ll keep on calling the device, whether it’s the brand name version or not, an EpiPen*. If they’re rushing into a chemist’s shop in a panic yelling for an EpiPen because little Jimmy got stung by a bee, it’s unlikely the chemist is going to pull out the cheaper version, they’ll hand over the EpiPen “because that’s what they asked for”, even if the person didn’t care a straw what brand it was.

        *The way “Hoover” has become the generic term meaning “vacuum cleaner” in Ireland, anyway, to the point where it’s become a verb: “I must do the hoovering before the visitors arrive”. Nobody thinks of it being a particular brand of vacuum cleaner, they might say “I need to buy a new hoover” and buy any brand.

  71. Ptoliporthos

    There are a lot of different factors, but let me focus on the most annoying one. EpiPen manufacturer Mylan Inc spends about a million dollars on lobbying per year. OpenSecrets.org tells us what bills got all that money. They seem to have given the most to defeat S.214, the “Preserve Access to Affordable Generics Act”. The bill would ban pharmaceutical companies from bribing generic companies not to create generic drugs.

    Note that this probably wasn’t something Mylan supported because they wanted to bribe competitors from manufacturing generic epipens. As one of the largest manufacturers of generics in the U.S. market, they probably would rather use that position to accept bribes for doing nothing rather than having to work hard to make drugs to sell for money.

  72. Jon Gunnarsson

    Your claim that 50 people die in Britain every year from falling off a chair is not supported by the link you provided. That link gives a table of mortality rates from various causes in the United States and tells us that in the year 2000, 650 people died from a “[f]all involving bed, chair, other furniture”.

    1. Scott Alexander Post author

      Thanks. I was debating which statistic to use and I accidentally used one and linked the other. I’ve fixed it now.

  73. Henning

    This is less a matter of too much or to little regulation, but rather of good and bad regulation. It’s good to have an FDA that performs reasonable safety checks; it’s bad to have an FDA captured by corporate interests that’s basically the Gatekeeper to a monopoly. One of the reasons there are more generics in the EU is probably that the European Commission is extremely keen to preserve/create a functioning Single market among the member-states. Other than that I totally agree that Vox has it completely wrong.

  74. Rob

    TTIP would have at least helped move a little bit in the direction of harmonising medical device approval between the US and the EU, but it is essentially dead because of populism, trump, sanders, etc etc

    1. wysinwyg

      There are plenty of legitimate reasons to oppose TTIP and it’s reasonable to ask whether the possibility of a positive outcome in the space of medical device approval (note that this could also potentially go horribly wrong) is worth the costs.

      Framing opposition to TTIP as “populism” smacks of bad faith. It certainly doesn’t do anything to help win me over to your perspective, so if your goal is more support for TTIP or similar trade deals, you should rethink your communication strategy.

  75. Julie K

    Do most people who need EpiPens pay the cost themselves, or is it covered by insurance? If the latter, that would be another reason why the manufacturer would expect that most customers wouldn’t mind if the price were raised.

    1. thirqual

      Two epi-pens analogues cost €67 or €75 (for a box of 2) in France, and the national health insurance will reimburse 65% of that cost. Many if not most people also have a mutual insurance on top which can cover part or all of the remainder.

    2. Matt M

      Keep in mind, per the Bloomberg article I cited earlier, a whole lot of the “new” epi-pen customers are not individuals and families, but institutions, often public institutions (like schools) which are not known for being particularly price-sensitive.

      It comes as zero shock to me that once you successfully lobby for some sort of federal guidance that every school in the country “should” purchase your product, you’d consider tripling your price…

      1. gbdub

        If I were the CEO of Mylan really wanted to be sneaky, I’d hand out a bajillion BOGO coupons by way of apology – but only to individual customers.

    1. Jacobian

      Which shows that it takes very few tragic cases for people to notice problems with drugs, not the “pile of swollen bodies” Anon referred to a few posts up. Yes, a few people will probably die if we deregulate adrenaline injectors, but for each one many more will be saved.

  76. Earthly Knight

    The problem with the pharmaceutical industry isn’t that they’re unregulated just like chairs and mugs.

    As it turns out, the FDA does carefully regulate mugs, because mugs manufactured without government oversight often end up tainted with cadmium and lead. So the explanation for why pharmaceuticals sometimes quadruple in price for no apparent reason while mugs never do could not be as simple as “pharmaceuticals regulated, mugs not.”

    1. The Nybbler

      The FDA does not regulate mugs to nearly the same degree as it does medical devices or drugs. Nor does it oversee the manufacturing of mugs. In particular, anyone can sell or import a mug without asking the FDA permission. If the mug does not meet FDA standards (the one you reference is about as objective as a standard gets, again in contrast to standards for drugs or medical devices), then it can be pulled from the market. This is still regulation, but orders of magnitude less onerous regulation.

      1. Earthly Knight

        Nor does it oversee the manufacturing of mugs.

        This isn’t true. From the article:

        “[T]he FDA and a regulatory body within the Chinese government worked out a formal agreement (called a Memorandum of Understanding) to certify Chinese factories. To get on the FDA’s coveted list of certified factories, a ceramics-maker “must prove that they can make their wares satisfactorily, to FDA standards,” Jacobs says.”

        “Any infraction and a certified factory goes into FDA detention– and a complex process of regaining its certified status. Shipments from factories on detention are inspected more rigorously. (Shipments from non-certified factories are not banned from the U.S., but also are subjected to more rigorous inspections.) Currently, more than 600 Chinese factories are certified.”

        You are right, of course, that this is orders of magnitude less onerous than the regulations the FDA imposes on medical devices and drugs. But the risk posed by medical devices and drugs is also orders of magnitude greater.

        1. The Nybbler

          The certified factory list is _only_ for China, and only because Chinese tableware has historically been a problem.

    2. Andrew Clough

      I would hope that nobody would complain about making sure that drugs are safe to administer. That’s something that every drug regulatory agency does and it’s very valuable. It’s mostly the stringency of the FDA’s efficacy regulation that’s the problem. I think most of the people who criticize the FDA would be happy with looser, European style, regulation of drugs.

  77. Chris Thomas

    While some of us would love to “nuke it all”, I don’t see that that’s Scott’s position. I read him as saying that a lot of the problem is clumsy regulations, one side effect of which is to cause new problems that call for more clumsy regulations, ad nauseum.

  78. Anonymous, but not that anonymous

    > The problem with the pharmaceutical industry isn’t that they’re unregulated just like chairs and mugs.

    Sorry, Scott, but I couldn’t possibly disagree more strongly.

    Your comparisons are way out of whack here. Mugs, chairs, and shoes all have a low barrier to entry. A perfectly functional mug can be – and often is – slapped together in forty-five minutes by an elementary school kid. And chairmaking is one of those quaint retiree-with-a-garage hobbies – all you need is some wood and a few tools. As for shoes, while they’re generally not a very popular DIY-hobbyist endeavour, they’re certainly simple enough to have been fashioned for, oh, a few thousand years or so.

    Synthesizing a chemical compound (and please let’s not get cute by bringing up cooking or moonshine or other “well, technically”s) is in a different league. And moreover, pretty much any idiot can detect a faulty mug, chair, or shoe through casual observation. I strongly doubt even a trained professional can detect epinephrine from PineSol-phrine without access to a lab, or at least a lab rat. Well, okay, you could probably smell Pine Sol, but I’m sure the general point is still clear. Furthermore, the cost to me as a consumer if I get a faulty mug is a wet lap. A bad chair leaves me with a sore ass, a crummy pair of shoes might give me blisters or cuts on my feet. Crappy epinephrine? Well, that’s not a risk to be treated lightly, or hand-waved away with the standard radical-free-market nonsense of “well, the market will eventually learn and correct itself, upon the piles of swollen bodies”.

    Simply put, yes, the FDA sucks, but the answer is not to nuke it and go back to the days of radium tonics, mercury salves, and various placebos being labelled as actual drugs – noses, faces, spite, you know how it goes.

    1. Negligent Discharge

      Have you considered that a middle ground between nuke-and-pave and what we currently have is? And it’s not like the FDA is particularly effective in preventing harmful medicines from proliferating. (See: Miracle Mineral Solution)

    2. Alex

      My first question while reading the article was: “are there patent laws in libertrarian utopia”. The author went on to acknowledge this by mention that epinephrine is off-patent. Then he continues with a list of examples that at least in part refer to patent law. I have no explaination how this might happen. The author simultaneously is aware and not aware that patents might be a problem with his argument?

      1. Gil

        I think the patent is in the “pen” rather than the “Epi” part. I assume the price surge doesn’t preclude people from administering epinephrine via conventional needle, but that almost certainly requires more training and therefore presents greater risks.

        Monopolies exist either because of some legal barrier or economies of scale. But you’re right in that not all legal barriers need to be patents.

        1. Corey

          Right, there was an article recently debunking the “get your doctor to prescribe epi and a syringe, and teach you how to inject it” meme going around. Experiments have shown it’s difficult to get a layperson to get the right dosage even under ideal conditions, much less panic (and self-administration would be even worse).

    3. Julian

      Why do you think there are high barriers to entry in the US but not in other major countries?

      Have you considered that regulations can create barriers to entry? If you have considered it and rejected, why?

    4. IrishDude

      Have a voluntary FDA certification process. Anyone that finds value in the FDA seal of approval can only use products that pass the FDA process. Anyone that prefers an alternative private certification or no certificate at all can use those products. Seems like a win/win for those who think the FDA is valuable and those who think it’s mostly a hindrance.

      1. Corey

        Insurers stop covering FDA-certified drugs in 3… 2… 1…

        Market for drugs becomes unusable via market-for-lemons problems soon thereafter.

        1. IrishDude

          Insurers stop covering FDA-certified drugs in 3… 2… 1…

          Why?

          Market for drugs becomes unusable via market-for-lemons problems soon thereafter.

          There was a usable market for drugs before the FDA. If the FDA had never existed I imagine many private certification alternatives to it would have been created over the past several decades, given market demand for safe and efficacious products.

          1. Corey

            If the FDA had never existed I imagine many private certification alternatives to it would have been created over the past several decades, given market demand for safe and efficacious products.

            You are welcome to imagine that. But it’s an article of libertarian faith rather than an evidence-supported position, so own that.

          2. bluto

            So is the MPAA (which has been providing private movie ratings) a figment of libertarian imagination?

          3. IrishDude

            @Corey
            Private certification exists today (Underwriters Laboratory being the most prominent example), so I don’t have to take it on faith that there’s a demand for it that the market supplies. Why would private certification for pharmaceuticals be any different in the absence of the FDA? Do you doubt that the demand for it would exist, or do you think there would be no suppliers?

            “Private certification as a means of risk regulation and quality assurance is widespread. The 2001 Directory of U.S. Private Sector Product Certification Programs lists 180 U.S.-based nongovernmental organizations that certify more than 850 types of products. These private entities provide assurance that the products they certify meet criteria specified by professional associations, standards organizations, and government agencies. Private certification also extends to professional services and institutions. ”

            http://www.regblog.org/2014/10/06/lytton-private-certification/

          4. Anonymous, but not that anonymous

            If the FDA had never existed I imagine many private certification alternatives to it would have been created over the past several decades, given market demand for safe and efficacious products.

            [SCENE: A pharmacy in Libertopia. Our HERO arrives to pick up an epinephrine delivery device.]

            HERO: I would like an epinephrine delivery device, please.

            PHARM TECH: Why certainly sir. Which model would sir prefer?

            [The PHARM TECH gestures to a dazzling array of colorful boxes]

            HERO: Oh goodness me, such a wide selection. Might I see a price list?

            [The PHARM TECH hands over the requested list]

            HERO: So many to choose from. Ah, TrimCo seems to be the cheapest, but I recall them getting a mere “D-” in the Stomweit Guide. But then again, they did get a B+ from the Yaltzington Publisher’s Digest Review. Or was that the Waltz-Kingston Publisher’s Review Digest? I remember that one of those was outed as a bogus shell company of Tortislina IncCo, who, if I’m not mistaken, has a nominal investment in TrimCo – at least according to the Business Trade Quarterly, though several accountants working for Hutman Hike claimed those investments were nothing more than two employees’ private 401(k) investments made by a neutral firm. Of course, the Great-Lambro Meta Review only gave Stomweit a C- for neutrality– [our HERO is beginning to hyperventilate slightly] –so I suppose I can at least slightly discount the Stomweit rating regardless of Tortislina IncCo’s potential conflict-of-interest which may or may not apply to the guide that I vaguely remember skimming in line at the McWalmart Security Force office… geez, maybe I should just ignore it, what about Yamweilk, they seem almost as cheap and Yamweilk is definitely a name to tr– AGH!! That’s Yamwielk, not Yamweilk, forget it, forget it… [by now our HERO is turning red in the face from stress] Oooh I see Karington’s DeliverNator is on sale, I know Togton gave it a SAFE PLUS, and of course Togton’s SAFE PLUS equates to an A- from the Rammopal Medical Overview Society, oh god oh god what to do what to do–

            [The PHARM TECH rolls their eyes and hands our HERO a paper bag to huff on]

            [The paper bag, which our HERO is now sucking feverishly upon, formerly contained a peanut-shellfish butter sandwich on whole wheat bread, drizzled in a maple walnut soy sauce and garnished with honeybee stingers]

            [Our HERO, already resembling a certain snobby gum-chewer in Willy Wonka’s candy factory, lurches across the counter for the nearest device, which happens to be a RightPen DeathStopper 3000. The needle bends and can barely manage to break the skin, the button breaks off midway through the injection, the epinephrine is diluted to quarter-strength, and the entire device is made of lead]

            [Our HERO dies a choking gasping wheezing death]

            PHARM TECH: Gosh… all the vetted-neutral third-party medical wellness reviews I’ve seen for the DeathStopper have placed it the high-80 percentile.

            BOOMING VOICE OF JOHN GALT: Fret not, child. The market is correcting.

          5. Glen Raphael

            [SCENE: A pharmacy in Libertopia. Our HERO arrives to pick up an epinephrine delivery device.]
            …I suppose I can at least slightly discount the Stomweit rating…

            You’re ignoring the informational value of retailers.

            When you go to Safeway (note the name!), you’re only planning to buy ONE jar of peanut butter and you might never have bought one there before. So it’s not reasonable to expect you to be an EXPERT in peanut butter types or brands. But Safeway expects to buy tens of thousands of crates of peanut butter and to risk selling that same peanut butter to its customers. So for any brand they consider putting on the shelf it is worth their while to apply their expertise. They’ll look at any relevant brands or certifications and if there aren’t any they’ll invent their own private certification process.

            Then if some customer complains of finding glass or rat poison in the peanut butter they will IMMEDIATELY stop selling that brand to avoid damaging their OWN brand.

            As a result of the incentives faced by retailers, EVERY brand of peanut butter you find in the store is a SAFE brand of peanut butter, just as EVERY electronic device at Major Retailer has the UL seal, whether you look for it or not.

            So in a free market if there are 10 varieties of Epipen on the shelves, that’s because the retailer judges that ALL of them are safe for you to buy and use. The fact that SOME customers care deeply about quality means that you can free-ride on their influence – you can expect the quality to be there even when you yourself don’t bother to investigate at all. Thus eenie-minie-mo becomes an adequate choice mechanism.

          6. IrishDude

            @Anonymous, but not that anonymous

            +1 to Glen Raphael’s response. Consumers don’t need to be private certification experts when there are intermediaries with a huge incentive to ensure safe and efficacious products. Your argument against private certification proves too much, because Underwriter’s Laboratory does in fact exist, tests thousands of products for safety, and has a solid reputation as a quality private certification organization. UL could just replace the role of the FDA, as they already are involved in pharmaceutical safety and effectiveness evaluation and actually have trained and certified 36,000 FDA inspectors: http://industries.ul.com/otc-and-pharmaceuticals/pharmaceuticals

            BTW, in AnCapLand there is still tort law, which creates strong incentives for product manufacturers to get insured against suits, which in turn creates strong incentives for insurance companies to require a high quality safety certification process to reduce their exposure to paying out for bad incidents.

          7. Sivaas

            @Anonymous, but not that anonymous:

            I think the responses to it are pretty valid points, but I wanted to say that your narrative made me crack up.

          8. Corey

            @Glen Raphael: Peanut butter production is government-regulated, by an agency which might be familiar to readers of this thread.

          9. Maware

            The FDA was created in 1908, and no real usable market existed before that. Private certifications are useless, because they have no regulatory teeth and often are underfunded compared to the certifications run by the companies themselves to rubberstamp their products.

          10. John Schilling

            Private certifications are useless, because they have no regulatory teeth

            Ah, that explains the massive wave of toaster electrocutions, exploding shotguns, decompression trauma, and parachute failures that have been decimating the population of western civilization. Among many other things.

            Private certifications are demonstrably useful, in spite of their lack of regulatory teeth, because most people don’t like needless death, and because if they lack the knowledge or interest to seek out private certification that same relative apathy almost certainly has them buying through a middleman who does have the requisite knowledge and interest.

            But if you have some ideological objection to private certification anyway, we don’t need it to solve this problem. Multilateral regulatory agreements, where a thing requires the blessing of the State but any developed-world State is acceptable, would have a highly competitive market for cheap epinephrine autoinjectors in the US. So where’s your argument that the FDA and only the FDA can be trusted with the job?

          11. Yehoshua K

            There’s a major industry entirely built on private certification, with various cert agencies, each of which has its own policies and reputation. The system seems to work well.

            You might have heard of this industry. Think “kosher food.”

          12. Julie K

            I would add that in Israel there are kosher certifications from both private organizations and the government rabbinate. The private ones usually have stricter standards.

        2. David Friedman

          “Market for drugs becomes unusable via market-for-lemons problems soon thereafter.”

          Adverse selection (the “market for lemons problem”) depends on asymetric information–the seller of a used car knows how good it is, the buyer doesn’t.

          In the proposed system, whether a drug has been approved by the FDA is public information–both buyer and seller have it.

          1. Corey

            In the proposed system, FDA-approved drugs go the way of the dodo as prices race to the bottom.

          2. Terpbear

            @ Corey. The only way FDA-approved drugs go the way of the dodo in your scenario, is if the value to purchasers of FDA certification is less than the difference in price between non-FDA drugs and (assumed cheaper) FDA drugs. In that case, why do we care?

          3. baconbacon

            @ David Friedman,

            I think half of your comment got eaten, you know the part about how the market solved the lemon problem on its own through dealer reputations, warranties etc.

          4. The Nybbler

            @Terpbear

            I think the issue is that the _purchasers_ of the drugs are not the _users_ of the drugs. That is, Eatna Health (any resemblance to actual insurance companies entirely coincidental) doesn’t care if the drug is ineffective as long as providing it satisfies their contractual obligation to LargeCorp, who employs the actual patient. This happens nowadays with some less effective generics, though in those cases the FDA _has_ accepted the generic.

            I think in practice in our litigious society it’d more likely be the other way around; insurance companies would insist on the certified drug so they don’t get sued.

          5. Anonymous, but not that anonymous

            @BaconBacon

            “Well, sorry that the epinephrine device you purchased for your son’s camping trip turned out to be a lemon. But hey, now the dealer’s reputation shall suffer, assuming their PR firm doesn’t successfully paint you as an addle-brained kook or a shill of a competing dealer or just a plain old-fashioned troll. Either way, I’m sure you’ll now be equipped to make a more-informed decision in the future, assuming you’re going to be making another son at some point. Oh, hey, it was still under warranty, so here’s a manufacturer’s coupon for a replacement. Lucky you!”

          6. baconbacon

            @ Anonymous, but not that anonymous-

            We are sorry that your son died of a terrible disease, and that we denied a dozen different experimental treatments which might have benefitted him and dozens of others like him, but without this system in place you wouldn’t have been able to demonstrate your ignorance of the Lemon Problem online, so you have that going for you, which is nice.

          7. John Schilling

            “Well, sorry that the epinephrine device you purchased for your son’s camping trip turned out to be a lemon. But hey, now the dealer’s reputation shall suffer, assuming their PR firm doesn’t successfully paint you as an addle-brained kook…”

            How is that any different than, e.g., Auvi-Q selling alleged lemons until their reputation with the FDA suffers, assuming their lobbyists don’t manage to paint the complainers as addle-brained kooks?

            Lemons exist, and make it to market, because foresight can never be perfect. In the market, their deficiencies are revealed, and if they are of a severely life-threatening nature they are removed from the market unless someone pulls off a Big Lie to conceal the failure. Why does it matter that they are removed by a government agency rather than a private one? If there’s a class of good with a potential for severely life-threatening defects but no regulating government agency, there will be a private agency with the stature to drive the unsafe products out of the core markets; we’ve seen that time and again.

          8. Corey

            How is that any different than, e.g., Auvi-Q selling alleged lemons until their reputation with the FDA suffers, assuming their lobbyists don’t manage to paint the complainers as addle-brained kooks?

            FDA tracks that stuff, and has authority to pull the stuff from shelves the moment they decide it’s unsafe. DrugUL would have no such authority (if they did, how are they different from the FDA, except with worse-aligned incentives?)

          9. Dice Without Rulers

            If by authority you mean ability to send in men with guns, then yes, Drug UL does not have the authority. But they can tell retailers and insurance companies of retailers that the product is unsafe, and I don’t think you could blink for how fast they would pull those unsafe drugs off the shelves rather than risk liability.

  79. Chris Thomas

    I wouldn’t be surprised if the FDA were in the top 3 most deadly US government agencies.

      1. Chris Thomas

        http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1985/5/cj5n1-10.pdf

        This CATO study tries (admittedly a partisan source). It estimates the the lives saved by the FDA at between 5,000 and 10,000 per decade, and the lives cost at between 21,000 and 120,000 per decade.

        Question, what would happen if the FDA was subject to its own approval standard? Have there been a sufficient number of studies showing the FDA to be both safe and effective?

    1. Earthly Knight

      Yeah, Scott’s way of framing the issue doesn’t make much sense. He takes Vox to task for thinking we can solve problems caused by over-regulation with more regulation, but the fix he endorses, the Preserve Access to Affordable Generics Act, is also more regulation! The bill prohibits a certain type of transaction between pharmaceutical companies, namely, the manufacturer of a name-brand drug bribing the would-be manufacturer of a generic version of the same drug not to enter the market so that they can maintain their monopoly. The fact that this is, indeed, a type of regulation is also reflected in its congressional history: when PAAGA made it out of committee in 2011, 9 democratic senators and one republican voted in its favor, with 8 republicans opposed. Orrin Hatch, one of the nay votes, said:

      “As someone who has been a longtime proponent of allowing businesses to settle patent-infringement cases out of court, I cannot support legislation that would give unprecedented authority to unelected Washington bureaucrats to perform this role, as this bill seeks to do.”

      1. Autolykos

        The bill prohibits a certain type of transaction between pharmaceutical companies, namely, the manufacturer of a name-brand drug bribing the would-be manufacturer of a generic version of the same drug not to enter the market so that they can maintain their monopoly.

        How is this not already illegal? It seems like one of the things antitrust laws are meant to prevent anyway, even for chairs and mugs.

        It is also questionable whether this tactic would even work for long. It seems trivially easy to spread rumors that your competing pharmaceutical company plans on producing a large amount of that generic (without actually intending to do it or spending money on it), and then getting paid a lot of money for nothing. Leaving production capacity free to threaten all wanna-be monopolists into buying you off might be more profitable than actually producing stuff, if that business model becomes common.

  80. TomA

    The Epipen dysfunction is a symptom of societal-level meta-psychosis. As a psychiatrist, how would you react if confronted with a room full of patients with severe cognitive dissonance? No quick fix with drug therapy. No opportunity for one-on-one behavior intervention. Magic incantations seem like a long shot to me.

    1. Corey

      The price is always right when there is healthy competition, which requires sufficiently low barriers to entry. We will never have such low barriers in anything healthcare-related.

      1. Matt M

        Dude – this thing is a needle with a spring attached to it that supplies a small amount of ridiculously cheap and available drug.

        How could the barrier possibly be high? You could manufacture this thing in your basement if the government got out of the way.

        1. Corey

          Who’s going to test and certify that it actually delivers the drug correctly and in the right amounts? Who’s going to test and certify that it actually contains epinephrine? Who’s going to test and certify that it doesn’t contain other harmful stuff? (I suppose the last two could be worked around by making them user-fillable and have the user buy epi from certified drugmakers, though then you have to trust the users to not contaminate the stuff).

          Sure, anyone could sell AdrenaPencils off the backs of their trucks, but how would you trust they’ll work?

          I’ll anticipate your response of “private certification labels will form thanks to the Invisible Hand” and point out that that’s an article of faith rather than evidence-supported.

          1. Jacobian

            It seems like a lot of hassle to set up a manufacturing, marketing and distribution operation of bad epi-injectors just to go out of business as your first customer dies. If you wanted to make money, what on Earth would make you sell bad drugs instead of good ones?

          2. Patrick

            Jacobian- you wouldn’t sell bad drugs instead of good ones. You’d sell kinda crappy drugs with poor quality control and high variance instead of good ones, and trust that the exact success or failure rate will disappear in the overall statistical muddle.

            It’s a simple and time worn business model. It works particularly well with products that have inherent failure rates unrelated to quality. Who’s to say whether Little Timmy died of anaphylactic shock because his reaction was too bad for an epipen to save him, or because the epipen didn’t work as intended? Who’s to say Little Timmy 2 lived because of his epipen, versus because he didn’t have that bad of a reaction? If a counter factual unregulated epipen saves 5% fewer Timmy’s than the real world one, how long would it take for consumers to even notice? And if they did, could you just switch up names, and muddy the water with a little PR (“Just look at Little Timmy! He’d be dead without our product! How can anyone say our product is bad?!”).

            You need statistical analysis of counter factual situations to draw real conclusions. And you can sell products that are just plain crappier than they ought to be by relying on statistical variance to conceal the real results.

            I mean, it happens in real life with all kinds of cheap electronics, foods, etcetera. It would be awfully surprising if it didn’t happen with medications.

          3. Dice Without Rulers

            Those are still useful goalposts to have, but I want to make sure it is acknowledged that this is the bailey to the motte of “if we don’t regulate capitalism they will sell us poison/destroy the environment/kill us” where the more nuanced approach is the defence when called out on the fear mongering motte.

            As a counterpoint, we should remember that this currently happens under a regulating regime of various strengths in various industries. We should compare what unregulated free markets would do relative to that standard instead of a perfect standard of stopping companies from selling things that you need statistical models to notice are worse.

    2. Brian

      This is not true. As long as the *cost* to produce EpiPens is far enough below the *price*, then the *profit* motive still exists and the manufacturer will produce and sell the profit maximizing amount of EpiPens. Products with fairly inelastic demand give monopoly sellers the opportunity to make excess profits.

      Capping the price will not reduce the supply here.

    1. Tom Hunt

      Skimming that, the only plausible candidate for “Epipen misuse” is the one where someone relied on it to save them from a reaction when it didn’t. Are there any cases of death caused by the epipen, rather than not prevented?

      1. Earthly Knight

        “Epinephrine auto-injector pens had been provided to 19 (40%) [of the people who died of anaphylactic shock], including 11 of the 13 with previous severe reactions. Over half the deaths occurred in patients whose previous reactions had been so mild that it was unlikely that a doctor would have recommended they should carry a pen. Pens were (apparently) used correctly by 9 (but 2 had time-expired); 1 used 3 pens correctly but still died. For some, pens may have failed to deliver an intramuscular injection because of the depth of the subcutaneous adipose tissue, but this was not the case for at least 3. Pens not used correctly were used too late in the reaction (5), had not been carried on that occasion (4), or were misused (1).”

        If you’re asking whether there are any cases where it is clear that an Epipen killed someone who definitely would not have died otherwise, I do not know of any, but that seems like kind of a crazy thing to happen. The point is that Epipen/Epipen-knock-off misuse or malfunction does carry a serious risk of death.

        1. Gbdub

          For the remainder of the “used correctly but died” deaths, did they fail to seek follow up care? In the training I got on EpiPens, they mentioned that the medicine is only effective for a short time, and the reaction can continue longer without additional treatment (the suggestion was, if care is a long way away, dose with Benadryl immediately, which is slow acting but longer lasting, and give the EpiPen when the symptoms start to get acute).

    2. InferentialDistance

      User error is not a function of the brand, and therefor just as harmful for EpiPen as for all its (theoretical) competitors.

      1. Earthly Knight

        This is false– different brands of medical devices with the same function can be more or less complicated and more or less intuitive. I would be surprised if this wasn’t one of the factors considered in the FDA approval process.

        1. Gil

          Yet quality control of this type hardly seems like a justification for the existence of a monopoly. It certainly doesn’t apply to a battery of other tools and appliances that are misused. If you think of something like power tools, usually some minimum safety standard is set and it is implicitly understood that there will be people who misuse the tools and therefore end up injured or even killed.

          When most people think of drugs killing people they tend to think of the manufacturer putting something *in it* that is dangerous, rather than the substance being misused.

        2. Earthly Knight

          When most people think of drugs killing people they tend to think of the manufacturer putting something *in it* that is dangerous, rather than the substance being misused.

          It’s true that we do normally think this way, but it’s not clear that we should. Over 100 Americans die each year as a result of accidental Acetaminophen (Tylenol) overdoses, for instance, largely because of failure to follow dosing instructions. European countries, meanwhile, have successfully reduced the Acetaminophen death toll by restricting its sale to pharmacies and capping the amount of the drug each package can contain. User error matters for pharmaceuticals.

          1. The Nybbler

            Sure, the amount of pain increased due to people not using acetaminophen is unquantifiable, so making it harder to buy is all win; the drug has zero quantifiable benefits and quantifiable detriments.

            Same goes for the restriction of pseudoepehedrine in the US; you can point to the reduction in meth labs; all the people with stopped-up noses are not measurable.

          2. Gil

            I’m sure similar rules are in effect for other appliances.

            What I meant by this was that proving the safety of a chemical substance is probably more expensive then proving the safety of an appliance or tool, which has R+D and therefore patent implications.

    1. Pete

      It was certainly mentioned when I read it last night, but I think Scott removed it along with a couple of other things such as donations to the Clinton Foundation.

  81. Steve Sailer

    A genuine Mies van der Rohe-designed Barcelona chair from Knoll costs you $5,592:

    http://www.knoll.com/product/barcelona-chair

    From The Guardian in July:

    Mid-century design classics, such as Charles Eames chairs, Eileen Gray tables and Arco lamps are set to rocket in price, following EU regulations which came into force this week that extend the copyright on furniture from 25 years to 70 years after the death of a designer. …

    Take, for example, the Barcelona chair designed by Ludwig Mies van der Rohe – hailed as one of the most celebrated designs of all time. Currently replicas can be found on sites such as Swivel UK for just £455. The officially licensed version sells at the Conran Shop for more than £4,000. Van der Rohe died in 1969, so his copyright will now last until 2039.

    1. Dice Without Rulers

      Those chairs are dumb and Mies should feel bad. I should know, he taught at my alma mater and my school wasted hundreds of thousands of dollars to put these uncomfortable messes in a bunch of our buildings.

      Mies is a much better structural visionary than a good architect, he just makes boxes! Boxes with interesting structural designs and novel techniques, but boxes nonetheless.

      1. Deiseach

        But good Lord, man (or woman or other), you don’t think the point of an architecturally designed chair is to sit on, do you? In comfort, no less!

        Any dunce with a saw and a plane could knock you up something like that. No, this is for the virtuous glow of proper aesthetic standards according to the correct theory 🙂

        1. Dice Without Rulers

          That would seem to follow in Mies’ building design style… the architecture building was notoriously bad at heating/cooling, air flow, accommodating classroom furniture, or for keeping the water out.

          Am I the only one who sometimes thinks that famous post-modernist objects are a big joke the artist/creator is playing to see just how much nonsense they can push?

          1. Anon

            Am I the only one who sometimes thinks that famous post-modernist objects are a big joke the artist/creator is playing to see just how much nonsense they can push?

            You ever hear of a guy named Marcel Duchamp? Or by his other name, “the guy who ruined art forever”?

          2. Maware

            It’s not just that, you could call it the Newberry Medal problem.

            http://www.slj.com/2008/10/industry-news/has-the-newbery-lost-its-way/

            If you read Children’s books or follow them, the Newberry is the most prestigious award you can get, but usually the award winners aren’t books that children tend to read. It seems like whenever something gets an elite, it winds up losing sight of its audience and valuing things it enjoys over things that meet their real needs.

      2. Steve Sailer

        “At the end of the rug, there it would be … The Barcelona Chair. The Platonic ideal of chair, it was pure Worker Housing leather and stainless steel, the most perfect piece of furniture design in the 20th century. When you saw that holy object on the sisal rug you knew you were in a household where a fledgling architect and his young wife had sacrificed everything to bring the symbol of the godly mission (modernism) into their home. Five hundred and fifty dollars! She had even given up the diaper service and was doing the diapers by hand.” — Tom Wolfe, From Bauhaus to Our House, 1981

  82. Squirrel of Doom

    BTW, if the drug itself costs very little while the complex and ultra reliable mechanics of the pen cost orders of magnitude more, wouldn’t it make sense to sell the drug as replaceable cartridges?

    I assume 90%+ of the pens are never actually used within the year they work.

    1. The Nybbler

      Neither the drug nor the injector is particularly expensive to make, and retooling it to take replaceable cartridges would require some development and, more importantly, another run through the regulatory gauntlet.

    2. Corey

      Also prices and costs are unrelated, except that the former must be greater or the thing doesn’t get made.

  83. pku

    I’m wondering if Teva could use its being an Israeli company to get the pro-Israel lobby to do its lobbying for it. (I’m guessing the answer is no, since otherwise they’d’ve done it.)

  84. Matt M

    By the way, when I was researching this myself, I found this Bloomberg article from about a year ago.

    http://www.bloomberg.com/news/articles/2015-09-23/how-marketing-turned-the-epipen-into-a-billion-dollar-business

    For all the complaints from Vox and the like about monopolies and inelastic demand and how people must have this product or they will die it’s kind of weird to see such huge sales increases over a relatively short amount of time that the business community chalked up to a brilliant market strategy.

    1. Corey

      They got schools to be required to stock it, which, while brilliant, isn’t what we typically think of as “marketing”.

  85. pku

    Something that confuses me: The US seems a lot more pro-free-market than Europe, and people here always talk about the EU’s suffocating regulations, and yet Europe as a whole seems to avoid this type of regulation-caused issue fairly well (see the epipen thing mentioned above, or the cost of building trains in Spain vs. the US).

    My general impression here is that America has a problem that all its laws have to jump through so many hoops to make sure they’re constitutional, work between the balance of powers, don’t offend any minority or interest groups, and so forth, that they end up being terribly designed and unwieldy.

    1. Matt M

      “The US seems a lot more pro-free-market than Europe”

      I feel like this has become a point of cultural identity mythology (both for Americans AND Europeans) that no longer has much basis in reality. It might be true to a small extent on the aggregate, but if you start looking at various issues, the U.S. is more regulated/structured/planned/socialistic/whatever you want to call it on many issues than many various European countries are.

      1. Broggly

        Funnily enough, when I quoted the Board of Ritual Magic passage from Unsong on an RPG forum, a few people were certain that it couldn’t have been written by an American, since over regulation doesn’t happen in the US

      2. Elan

        I disagree and think that it’s to a LARGE extent on the aggregate. Just look at government spending as a percentage of GDP is lower than almost every other OECD country. Also public sector employment percentage and how tightly the labor markets are regulated.

        Like you say, there are many exceptions to this. But in aggregate we are an outlier.

        1. Civilis

          Most of the cost of regulations isn’t in the form of government spending, it’s in the form of increased spending on regulatory compliance by the regulated companies. While I’d suspect there is a correlation, there’s not a direct relation between ‘how free an economy is’ and ‘size of social safety net’; likewise, while I suspect there’s a correlation between non-economic freedom and economic growth, places like Singapore make it obvious that there’s not a direct dependency.

          It’s merely one view of the data, but take a look at Heritage’s Index of Economic Freedom (http://www.heritage.org/index/ranking). In aggregate, the US is 11th, behind Switzerland, Ireland, and the UK. The US is listed as 18th for Business Freedom (behind 9 European countries) and 1st for Labor Freedom.

          1. Matt M

            Right. I once listened to a podcast that talked about this a lot. Blanking on remembering the exact name so I can’t link it at the moment, maybe I’ll remember and post it later.

            But it goes back to my point about cultural identity. Because Americans think of themselves as more free and individualistic than those crazy collectivist socialists over in Europe, we do a great job of hiding from view any areas in which we might not be. We create ridiculous bloated structures like Obamacare and call it a “public-private partnership” rather than go full single payer, even if Obamacare ends up costing just as much and restricting options just as much (I’m not claiming it does specifically here, consider this a hypothetical example).

            For most industries, we don’t hire government employees and create an oversight board – rather we create private regulatory groups and simply give them equivalent power that the state would have (which, surprise surprise, they use to construct high barriers to entry and protect their own interests). The same harm is done, but they aren’t “public employees” so they don’t count against the statistics.

      3. Merian

        To the extent that it is more acceptable in the US than in Europe to direct flows of money to profit extraction in areas of public utility (and which are linked to the delivery of what is conceived as being a human right, or sometimes a function of government — education, health care, administration of justice, etc.), it is correct that the US is more pro-free-market. Details are riddled with devils, though.

    2. Squirrel of Doom

      Two angles:

      1. The US regulates less things, but what they do regulate is done in a more heavy handed and corrupt way. One theory is that Americans trust government less than others, because American government is worse than others.

      2. This used to be true, but America has built a Regulatory State at a furious pace the last few decades, and is now close to industrial world averages.

    3. Anon.

      Keep in mind there is enormous variation within the EU. Denmark is #12 on the Freedom Index; Greece is #138.

      1. pku

        That is interesting. I was under the impression that most EU member regulations were imposed by Brussels. Is the main contributor to the variance corruption and bad implementation?
        Either way, it seems important that you can get such a large variation while still subject to EU regulation – it suggests that there really is something to “make government work better” over “just shrink the government, since ‘make government work better’ is too vague a platitude.'”

        1. KingOfNothing

          EU regulations can also regulate how much a government is allowed to interfere in the market.

          Germany had a monopoly on long distance buses hold by the state owned railway company for decades. They only liberalized the market a few years ago thanks to the EU.

          We also had a weird tax on light bulbs since the Kaiserreich, whose collection cost more money than it earned. Thanks EU again for stopping this madness.

          1. Alex

            We also had a weird tax on light bulbs since the Kaiserreich, whose collection cost more money than it earned. Thanks EU again for stopping this madness.

            You are kidding, yes?

            Some jurisdictions, such as the European Union, China, Canada and United States, are in the process of phasing out the use of incandescent light bulbs while others, including Colombia,[6] Mexico, Cuba, Argentina, Brazil and Australia,[7] have prohibited them already. (Source: https://en.wikipedia.org/wiki/Incandescent_light_bulb)

          2. Peter

            People love to complain about EU regulations. One point of the Brexit debate, on the Remain side, was – if you’re an exporter, isn’t it better to have one set of regulations to deal with rather than 28. It’s a big part of the single market idea that centralising regulation removes “non-tariff barriers”.

            Of course, when you centralise regulation, you centralise things to complain about, and people who like to complain about nonsense, real or imagined (or a curious mixture of the two, where there’s a kernel of true nonsense surrounded by layers of myth), have one single source to go to, very convenient, really expedites the production of “they did what?” stories. And so the EU gets all of the blame for regulations, letting national governments off the hook.

            Of course, as good red-blooded patriots, we’d never imagine our governments would do anything as daft… until we come across some story that has nothing to do with international relations and we can get on with pointing out how daft the government is.

            (Ah good, there’s another bar on the stable door. Looks good and solid now. Now where’s that horse I was meant to be taking care of?)

          3. Peter

            Looking at the Wikipedia article pushed through Google Translate: the tax appears a lot broader than just incandescent light bulbs, it also includes various other things including gas mantle lights, and importantly, electric arc lamps, mercury lamps and similar. Given that fluorescent lamps – including our modern compact fluorescent light bulbs that are a replacement for incandescent bulbs – are a type of arc lamp (indeed a type of mercury lamp), it seems they’d have been taxed under the German law.

          4. Alex

            My impression is that the Leuchtmittelsteuer was a minor nuisance compared to “phasing out” an entire class of “Leuchtmittel” which the market clearly loved. So maybe “Leuchtmittel” is not an example for a field where the EU is a net win. (From the consumer perspective.)

            But I never had to deal with “Leuchtmittelsteuer”. Maybe it was worse than I imagine.

          5. Peter

            One thing – the Leuchtmittelsteuer was a uniquely German thing, your quote suggests that practically everyone whose everyone is phasing out or has phased out incandescent light bulbs. Even China. China! When the EU, the USA, China, Cuba and Australia agree on something, it seems a bit odd to single out the EU.

            The market often loves things that generate negative externalities, doesn’t mean that phasing them out is a bad idea.

            It sounds like a win followed by another win to me; in fact the only problem is that the EU hasn’t been quicker off the mark.

          6. Alex

            The market often loves things that generate negative externalities, doesn’t mean that phasing them out is a bad idea.

            Personally I’d rather buy a mandatory emission certificate together with my light bulb (or my electricity). Which coincidentally is not that different from a tax on lightbulbs.

        2. peter D Jones

          g. I was under the impression that most EU member regulations were imposed by Brussels.

          Brussels also imposes requirements for free and fair competition.

    4. Jules.LT

      Yep, the US is so afraid that the government will do anything wrong, that they overregulate it into oblivion.
      This makes the idea that the government can’t do anything right a self-fulfilling prophecy.

    5. Deiseach

      I could be (probably totally am) mistaken on this, but I do think a lot of US regulations and fix-it laws come about because of the recourse to the courts to fix things.

      We had the example given (jokingly) in the Swedish-vs-US likely reaction to an inspector telling you to move your machines, with the US answer being “Make me, I’ll see you in court!”

      Where people routinely will go to court to sue for damages, that seems to me to make it more likely that any law or regulation introduced after Jones’ Heat Death Sauce Manufacturers Vs I Burned My Mouth On Your Hot Sauce is going to have a lot of fiddly bits’n’bobs to try and head off any other “you never said on the packaging I couldn’t stick it up my nose and I burned my mucous membranes and I’m suing for the cost of plastic surgery for a new nose” cases that might come along in future.

      So government regulators may well impose “Will any of the ingredients in this burn off someone’s nose if they shove it up there?” regulations on manufacturers, simply because people are stupid and will do stupid crap.

      And that’s not taking into account genuine dangerous drugs, manufacturers wanting to keep a profitable monopoly, etc.

      1. Maware

        The courts here though are the last resort, and going to them means you either have failed at reasonable redress, or are banking on it taking so long and being so expensive that your adversary will give up. If an inspector here says “move the machines,” unless moving the machines will do more harm than a court case that could take years in litigation and millions of dollars, they’ll move the machines.

        More likely the court option is just to threaten a settlement or push an issue into “hey this is serious” territory. The idea that we go to the courts to sue over anything is more a media fiction I think-making it to an actual judgment can be a years-long process.

    6. Julian

      The economic costs of regulations are well hidden in Europe. Take this epi-pen example. The pen does cost $600 in the EU. This is largely because of regulation. But because epipen has a defacto monopoly in the US, they drive the price up allow them to subsidize lower prices in the rest of the world.

      With other industries, the ‘lower’ costs have a negative impact of other aspects of the economy because they require higher government spending (meaning taxes). Unfortunately finding strong causal evidence for this is hard, the effects are often abstracted. But per capita GDP is lower in the major countries in Europe than in the US, youth unemployment is much higher in Europe, and economic dynamism is much lower (meaning very few European companies contribute on a grand sale in the global economy: how many S&P 500 companies are based in europe? how many in china? how many in the US?).

      The european view on life is different. And thats fine. They can live how they like. But that doesnt mean the way the US does it is totally wrong. There are areas to improve no doubt, but mostly its just different than Europe. And based on historical immigration patters, it seems more people in the world prefer the US style to the European one (how many people emigrate from Europe to the US? How many go the other way?).

      1. Tandagore

        The highest price I was able to find for an Epipen in the German market was about a hundred euros, I am not sure where you get your prices from.

      2. TrivialGravitas

        So Eli Lily is subsidizing the Epi pen in Europe, what are the other 7 companies that aren’t allowed to sell it in the US doing exactly? And if the cost of meeting the regulation in Europe is so high, Eli Lily could make even more money by not selling them in Europe at all.

        This concept does make sense when recuperating R&D costs (which only need to be spent once globally) of drugs with a patent, but its absolute nonsense when talking about an unpatented drug, let alone one that went through R&D a century ago.

      3. KingOfNothing

        (meaning very few European companies contribute on a grand sale in the global economy: how many S&P 500 companies are based in europe? how many in china? how many in the US?).

        How many EUROSTOXX50 companies are based in europe? how many in china? how many in the US?
        How many Hushen 300 companies are based in europe? how many in china? how many in the US?

        Even though america might have a larger share in the european index than vice versa (didn’t check), this question is still quite silly.

    7. Gbdub

      Dark cynic mode says Euro countries care about the cost of medical regulation because with single payer systems, the government has to pay the bill.

      1. chaosmage

        Europe has big national insurers with excellent international connections who would certainly stop nonsense like this EpiPen thing from happening. Government involvement need not come into the picture.

    8. Brian

      One of the big things you didn’t mention is the segment of politicians and outside groups that actively work to make sure that regulations are ineffective. When the enemy is “regulation” itself, it is very easy to cause damage.

  86. Matt M

    “nobody has ever died from an EpiPen malfunction.”

    Technically this is not a “malfunction” but my mom is a legend among local first aid instructors after having *nearly* lost her thumb because, in a panicked state where her friend was nearly dying from a bee sting allergy, she was holding the pen the wrong way when she tried to inject it and the needle literally went up through her thumb.

    (Note, both mom and her friend ended up being fine, and now local medical personnel have an instructive case to tell people MAKE SURE YOU’RE POINTING IT THE RIGHT WAY)

    1. Eltargrim

      This is apocrypha I’ve heard (and repeated) in many first-aid classes, but you’re the first person I’ve encountered to have an actual connection to someone it’s happened to.

      I’ve never actually doubted that it happened, just nice to have some confirmation that yes, it is real.

      1. Matt M

        The double irony is that my mom is an elementary school teacher who had various kids with severe allergies, and had been specifically trained on epi-pen use a few years prior. She claims that as a result she was overconfident that she “knew what she was doing” and didn’t bother to look carefully at any instructions or diagrams that make it very clear which end goes where.

        1. Rosemary7391

          I had training to use an epi pen a few years ago; I’m pretty sure we were told to keep well away from both ends, just in case. Then the worst that happens is you turn it around and have another go!

  87. dtsund

    George Williams put forth the generally-accepted argument that selective pressure could only increase organisms’ genetic complexity by so much each generation, while genetic drift would impose a complexity cost proportional to the existing complexity level.

    In differential equation terms, we can model the equation for genetic complexity over time as x’=A-Bx, which stabilizes at x=A/B. If you prefer a more physical analogy, imagine that you can build 50 sand castles per day, while overnight there’s a 10% chance that any sand castle you build will get trampled; you won’t realistically be able to maintain more than 500 sand castles at once.

    As a result, while any upper bound to the size of an organism’s genome will come from physical constraints (how much DNA can fit in a nucleus, energy costs of duplication, etc.), the theory of evolution imposes a very strict upper bound to to the amount of useful information contained within a naturally-occurring genome, a bound we’ve probably already hit.

    There’s a similar phenomenon in politics.

    In any given election, the voting public adds some information to the system, analogous to selective pressure in organisms. Flagrantly bad politicians can (maybe) be weeded out and replaced by better ones. But there’s a limit; each individual race or initiative is at most two or three bits of information, assuming a high number of candidates. One bit is more typical. An entire voting district’s results will only be a few bytes, and some of that information will be garbage unless you’re prepared to argue that the best candidate always wins.

    Meanwhile, the government presents a corruption attack surface whose size is directly proportional to how much government happens to be doing at the moment.

    While there’s no upper bound to how much government regulation we can have, there’s probably a very strict upper bound to the level of genuinely useful regulation. Anything above and beyond that amount should be expected as a matter of course to wind up perverted by malefactors of great wealth.

    Pick the one issue you care most about, pro- or anti-: gun control, minimum wage increases, transgender bathrooms, whatever. Hell, pick two or three. If you fight hard enough, you can maybe win those fights. You should expect to lose everything else.

    The above applies to democratically-elected governments. The Death Eaters, I’m sure, will argue that this points toward monarchy/authoritarianism as the ideal governmental model. As though injecting zero information into a system is somehow better than injecting a small amount.

    1. cassander

      the deatheater argument is that the information the voters inject is worse than random., that voters select positively bad policies more often than not for their own reasons.

    2. John Salvatier

      There’s a countervailing force which is that politicians have slack and often use that slack for relatively good purposes. Of course they also use that slack for bad purposes, so an important consideration is what factors make politicians use their slack better or worse.

      1. dtsund

        Sure, but a politician can only care about so many things. The more things get regulated, the more often politicians will just take the advice of the nice man in the business suit they just met so they can go back to dealing with things they’re actually interested in.

    3. Tyrrell McAllister

      Anything above and beyond that amount should be expected as a matter of course to wind up perverted by malefactors of great wealth.

      But won’t these attempts at “perversion” run up against the same information-theoretic constraints?

      1. gwern

        No, because rent-seekers have a wide variety of options and information sources to affect the regulatory process. They can dole out donations and post-career sinecures constantly in carefully measured proportion to a politician or bureaucrat’s usefulness, and can closely observe the passage of the laws affecting them and the administrative laws & regulations and de facto policies affecting their laser-sharp interest. They have the means, motivation, and method for tight control in a way that a generic voter voting once every 4 or 6 years does not (assuming the election is even competitive for them).

    4. Brian

      You don’t provide any reason for us to believe that the behavior of human agents can be modeled this way.

    5. simon

      This analogy doesn’t work, because candidates don’t (necessarily) choose policies as random variations of existing policies. If >50% of voters favour the arbitrarily complicated set of optimal policies, then if there is competition among the politicians the politicians must all choose that set of policies or they won’t win.

      This is, of course, a purely theoretical counterexample. But I think it does indicate that the issue is more that the voters don’t know what the best policies are.

    6. Stuart Armstrong

      >each individual race or initiative is at most two or three bits of information

      I don’t think it works that way. Consider a simple model: there’s a single voter, with complex preferences, and only two parties. It seems the voter only contributes one bit; and if the parties literally have no idea about the voter’s preferences, that’s true.

      However, if the parties can figure out what that voter’s preferences are (through polling or other methods), they will offer them that. So though the voter has a single bit of choice, their influence is the total number of bits that the competing parties can deduce about the voter’s preferences.

  88. CatCube

    Why aren’t the Adrenaclick people running ads non-stop for their product? Including telling people that their doctor must write [something other than Epi-Pen] on the prescription? This would be the perfect time for them to grab a whole bunch of market share. I hadn’t even heard of them until you mentioned it.

      1. Ian Argent

        The epipen folks are (or were, anyway, I kinda stopped watching TV a while back) running TV ads for their products. I noted it as being rather sudden, and since it’s not exactly a lifestyle drug, wondered why.

        1. AlphaGamma

          Although there are people without allergies who buy them (which does require a friendly doctor to write a prescription), due to living in isolated places and worrying about themselves or a visitor having a reaction they didn’t know about to an insect sting or something.

          1. Gbdub

            There was also a push for schools to be required to have them on hand.

            They were also recommended to me in a wilderness first aid course for anybody planning to lead groups in the backcountry, on the probably sound notion that someone might get exposed to a novel allergen they didn’t know about, and untreated anaphylactic shock 2 hrs from medical help would probably be fatal.

    1. bluto

      Just a few:

      Adrenalina WZF
      Adrenaline (epinephrine) 1 in 1000 solution for injection BP auto-injector
      Altellus
      Anapen
      Emerade
      Fastjekt
      FastPen
      Jext

      Not including EpiPens which are also sold there.

          1. Gbdub

            Why would it work any worse than what we already have? Worst case scenario is you now have two versions of the EpiPen that both cost $300 each.

            Or are you saying we’d need to set a price floor?

          2. Corey

            Fair enough, it certainly would be an improvement. Just pointing out that major EU markets have price controls in addition to competition, so we probably won’t get quite down to their prices via competition alone.

        1. Devilbunny

          I agree, but there is one stunningly heart-gripping counterargument that would probably sink any attempt to make this change in the law: thalidomide, which was tested in the US but never approved and sold.

          1. Zwieback

            That does mean we need to be careful, but I think there are still things we can do. Thalidomide was first sold in 1957 and was taken off the market in 1961. Maybe we should auto-approve drugs that have been commonly used in Europe for five years with no bad side effects.

            Maybe ten years, I dunno.

          1. Peter

            Also – one uses Greek roots, one Latin. “nephros” (well, νεφρός if you’re pedantic) is Greek for “kidney”, “ren” is Latin for “kidney”. “ad” doesn’t quite translate to “epi” but prefixes are like prepositions which are weird. Anyway, your adrenal glands (there appears to be no synonym for these involving “epineph”) are the ones on top of your kidneys, so that’s what all the kidney business is about.

            There’s also a US/UK split: in the USA it seems that “adrenaline” is a lay term and the medical term is “epinephrine”, whereas in the UK it’s all adrenaline all the time. (Hmmm, that could be taken out of context.)

      1. Squirrel of Doom

        OK, maybe we can agree that this shows the regulatory approval process isn’t very scientific. If it was, the same things would be approved in different countries, since the science is universal.

        Another possible interpretation is that one agency follows science while the other doesn’t.

        1. Scott Alexander Post author

          I think the real problem is that different companies ask for approval in different countries. I think a European company wouldn’t even try to get its products approved in the US unless they had a Negotiating-With-The-FDA division, which has to be a completely different division from the Negotiating-With-EU-Drug-Regulators division because they have different requirements, and which it’s not cost-effective for non-gigantic-multinational European countries to have. I’m not sure how much lobbying plays into this, eg it might be easy for a European company to lobby the EU but harder for them to lobby the US.

          1. Shieldfoss

            I think a European company wouldn’t even try to get its products approved in the US unless they had a Negotiating-With-The-FDA division, which has to be a completely different division from the Negotiating-With-EU-Drug-Regulators division

            You’d think so, but it is actually not always so. E.g. one of my previous clients have their drugs separately approved in several different regions, and they use essentially the same paperwork for each – the trick is to live up to the strictest requirements of each separate region (so if e.g. there are 5 different purity standards, live up to the strictest one, 5 different logging standards, log everything all of them require etc.) and then, when e.g. the FDA inspection comes around, present everything that the FDA asks for – and if they’ve suddenly decided to ask for more, you might well have that already.

            (An FDA inspection is a weird time at the factory let me tell you. It’s like being under an FBI investigation – never volunteer any information you aren’t required to divulge, definitely never say anything like “I believe,” etc. etc. – also all the whiteboards are wiped clean so there’s nothing to draw an inspectors interest.)

          2. Deiseach

            it’s not cost-effective for non-gigantic-multinational European countries to have

            Bayer manage to have so much dosh sloshing around, they can own a football club 🙂

          3. Pete

            @Shieldfoss I work for a company involved in the sterilization of Medical Devices and a few years ago (before my time) we had an FDA audit. It was made perfectly clear that they were well within their rights to shut us down and (apparently) arrest the company’s directors if they didn’t like what they saw.

            We passed the inspection, but it was the most stressful time anyone here can remember.

          4. shieldfoss

            @Pete – RE: Arrest

            Ayup. That part was less stressful for my client in Europe where the FDA doesn’t have police authority – a failed inspection would “merely” cost literally billions of dollars. Oh and kill a stack of Americans who could no longer get their medicine, of course.

  89. Squirrel of Doom

    I expect that some number of people have died from not buying their prescribed EpiPens due to the price.

    Can anyone think of a way to figure out that number?

    1. Chris Rhodes

      Can anyone think of a way to figure out that number?

      But that’s the great thing about being the FDA: If they approve a drug that kills people, they get flak for it, but if they deny a drug that would save lives, no one can conclusively pin it on them.

      1. grendelkhan

        You may have missed this. It’s worth reading through for the math, but the money quote:

        “the FDA imposed a bunch of e-cigarette regulations, including forbidding them to make true claims about how they are safer than cigarettes […] THEY LEFT OUT THE SUBSTITUTION EFFECT BETWEEN CIGARETTES AND VAPING IN THE COST-BENEFIT CALCULATION. […] This is roughly equivalent to ~9360 (probably more) people dying. Literally worse than 9/11.”

        I would have missed this if not for that Tumblr post. I expect that these events will get significantly less than three times the amount of public interest that 9/11 did. Public health is hard.

        1. pku

          The math is bad though. This is a good example of a case where using numbers and saying “hence worse than 9/11” is incredibly misleading – It’s hard to argue that 9/11 killed more people than it saved, but running this cost/benefit analysis with slightly different numbers easily can.

          1. grendelkhan

            I’m a big fan of pulling numbers out of your ass and doing math on them, and the assumptions there look not entirely crazy to me. Do you think that the math is outright wrong (in which case, can you provide the right math?), or that there’s just too much variability in the inputs to get any certainty out of it?

          2. pku

            A mixture. In terms of the math being wrong, they calculate the lost benefits due to substitution effects but not the potential benefits due to people smoking less.
            Between that and the variability of the numbers you can put in, their conclusion is far from certain. They took a worst-case scenario of no benefits and optimistic assumptions for substitution effects. Eyeballing the calculation by assuming this happens at 10% probability and otherwise nothing happens, we go down to around 900 deaths – and 0.2 9/11s doesn’t sound nearly as bad as two 9/11s.
            Trying to eyeball a reasonable distribution of potential harms and benefits, I got somewhere in the ~500-1000 added by this policy (slightly surprised me – I was expecting it to turn out to be negative), which is only 5-10% as bad as they said. But if vaping turns out to be significantly worse than they think, it could turn out beneficial on the balance.
            Their calculation just assumes a worst-case scenario will happen with 100% probability, which a bit like saying “why didn’t they watch airports better in September 2001?! They could have prevented a whole 9/11”.

            I am, however, starting to like using 9/11s as a unit of measurement.

            edit: to clarify, I too am generally a fan of pulling numbers out of your ass with which to do calculations. But you need to acknowledge your error margin, which imposes a limit on the amount of outrage you can get over it.

  90. John Schilling

    Out of curiosity, what do people with potentially fatal allergies use in India? Not the dirt-poor ones, the hundred million or so who are prosperous enough that the Indian government cares whether they live or die, but not so rich or well-insured as to not be stung by the price of even pre-markup Epi-pens? Because I think the Indian government has a reputation for not being terribly concerned with foreign pharma corporations’ IP rights in cases like that, and as you note there isn’t really an IP issue in this case anyhow.

    So it seems to me there ought to be a business case for making a New Delhi but not FDA approved $50 epinephrine autoinjector for sale on A: the Indian market and B: the don’t-mind-the-US-shipping-address-on-this-internet-order market.

    1. Zakharov

      Selling Indian generic medication online is a massive industry, mostly known in the west for being responsible for all the email spam.

    2. Pete

      The EpiPen price hike and the associated problems are local to the USA only as far as I see, the rest of the world, including EU, has many alternatives so there the competition ensures that the pricing stays sane.

      The whole issue exists only because USA regulations have prohibited alternatives that have been developed, tested, approved, mass-manufactured and successfully used elsewhere.

  91. Isaac P.

    Are you suggesting that donating to the Clinton Foundation is an act of lobbying? I thought that particular thread of conspiracy had been exhausted.

    1. E. Harding

      Saudi Arabia isn’t donating to the Clinton foundation because its rulers are so intrinsically generous. Of course donating to the Clinton Foundation on a major scale is an act of lobbying.

      And if you’re after conspiracy, well…

      And the grand godfather of this global brand of extreme nationalism is Russian President Vladimir Putin.

      In fact, Farage regularly appears on Russian propaganda programs.

      Now he’s standing on the same stage as the Republican nominee.

      Trump himself heaps praise on Putin and embraces pro-Russian policies.

      He talks casually of abandoning our NATO allies, recognizing Russia’s annexation of Crimea, and of giving the Kremlin a free hand in Eastern Europe more generally.

      American presidents from Truman to Reagan have rejected the kind of approach Trump is taking on Russia.
      We should, too.

      We know that Russian intelligence services, which are part of the Russian government, which is under the firm control of Vladimir Putin, hacked into the DNC. We know that they arranged for a lot of those emails to be released,

      So let’s put ourselves in the shoes of young black and Latino men and women who face the effects of systemic racism, and are made to feel like their lives are disposable.

      https://www.youtube.com/watch?v=EwtkorQKGFE
      https://twitter.com/GrrrGraphics/status/770258149588635648

      “Obama created ISIS” is on far more solid footing than any of the above.

        1. anon

          The Gates foundation is politically influential (e.g. it has ties to the Clinton foundation), and probably even more so in some developing countries where it has active projects. While the Saudi donations could be purely altruistic, there’s a pretty clear pattern that they’ve deployed a lot of resources to obtain ideological influence in countries with large Sunni populations (which likely describes a number of countries with active Gates foundation programs).

        2. Corey

          They just like the thought, like Warren Buffet, of being rich enough that they can hire Bill Gates to spend their money.

      1. Paul Barnsley

        “We know that Russian intelligence services, which are part of the Russian government, which is under the firm control of Vladimir Putin, hacked into the DNC. We know that they arranged for a lot of those emails to be released”

        I think this is more or less accepted as fact, correct?

        So we have Putin taking steps seemingly designed to help Trump.

        Trump’s (then) campaign manager altered the Republican platform to soften it’s stance against Putin, and then denied doing it. Then he was fired partially as a result of having been found to have received large payments from a pro-Russian, Putin-backed Ukrainian regime.

        Trump has made a number of pro-Putin and anti-NATO statements and raised questions about how America would respond to further Russian military adventurism.

        Surely “Putin would like Trump to win and will assist him where possible because Trump favours policies which would help Putin” isn’t much of a stretch, or even really much of a conspiracy? Or are we debating the reasons for Trump’s Putin friendly policies?

        Or is your objection to the last line of the quote, which doesn’t seem to follow from the earlier material?

        This is much, much stronger than “Saudi Arabia gave money to the Clinton Foundation (and various other charities) therefore they have purchased significant influence over any possible Clinton administration”, or even some milder version of that claim. Certainly, Saudi Arabia doesn’t have to pay for access…

        1. anon

          I think this is more or less accepted as fact, correct?

          I do not accept this as fact. Certainly no credible evidence conclusively linking the DNC hack to the Russian *state* has been presented. There is circumstantial evidence indicating the hackers are sophisticated (hence more likely than average to be working for a nation-state), and also either Russian or trying to be perceived as Russian. But if anyone (NSA, FBI, etc) has non-circumstantial evidence that is stronger, they’ve not been forthcoming with it. Note, too, that the US government has not taken an official position on this matter. (Contrast with the Sony case.)

        1. Gbdub

          And if there is, selling seats at the table seems worse. “I’ll listen to everybody who shows up to plead their case” is a lot better than “No one talks to me until my foundation gets paid”.

          Lobbying is (or ought to be) considered distinctly from “campaign contributions”. Really a lobbyist is just someone paid to set up an office in DC, hang around important people, and talk about how great their cause is. That seems like a separate thing from “hey, keep supporting me and I’ll keep throwing cash your way” although the two are often performed together.

        2. Bryan Hann

          Ah. ‘Real’ as an adjective. Is there ever a case where a better adjective would serve better? 🙂

      1. Scott Alexander Post author

        This was my fault. The article originally mentioned that Mylan donated to the Clinton Foundation. I realized this was going to detract from my point and I didn’t know anything about the larger controversy, so I edited that part out.

        1. Anon

          In that case, Isaac P. has succeeded in his transparent goal of altering your writing now and in the future to not, even incidentally, question his political worldview. The mere intimation of the threat of derailment has caused you to instantly retract, revise, and reverse.

          In such a way, the body of discourse on such matters has grown ever so slightly hazier, ever so slightly dimmer, and ever so slightly less honest, open, and free.

          Be careful not to get lost in the fog.

          1. Isaac P.

            You’re giving me a lot of credit.

            General apologies for the delayed reply; I’m too used to getting email notifications for comments/replies and haven’t checked this page since the comment.

    2. RCF

      “I thought that particular thread of conspiracy had been exhausted.”

      And thoroughly debunked, I take it?

      Did you have some meaning of “conspiracy” in mind beyond merely being a well-poisoning epithet?

      1. Isaac P.

        By “conspiracy” here, I mean assuming the worst possible motivation for an action based on minimal evidence. Maybe “knee-jerk reaction” would be the better term? I’m getting fairly burnt out on people assuming the worst about everything either Clinton is involved in.

        A lot of this may be the result of Hilary Clinton being a well-known policy wonk. She has a consistent streak of seemingly illegal behavior that is, in fact, perfectly legal according to the letter of the law/regulation. We have a reactive, click-seeking media and many of Hilary/Bill Clinton’s actions can be spun as a controversy without much effort. That spin is, for most people, more important than reality. I guess the mistrust of politicians outweighs people’s mistrust of media?

        Also, I realize Vox appears to be a dirty word around here, but I found their critique of the AP story on the Clinton Foundation pretty sound. Granted, that might just be because I agree with it.

        http://www.vox.com/2016/8/24/12618446/ap-clinton-foundation-meeting

  92. Uncle Ilya Kuriakin

    The free-as-in-freedom survey article “Rethinking medical device regulation“, by Carl Heneghan and Mathew Thompson (Journal of the Royal Society of Medicine, 2012) provides data that concretely illuminate some of the issues that Scott’s essay discusses:

    From 2006 to 2010, the UK regulator, the MHRA issued 2,124 manufacturer field safety notices, an increase of 1,220% over this five-year period [reference]. In the USA the number of recalls for moderate or high-risk devices more than doubled between 2007 to 2011 [reference] ….

    The influential Institute of Medicine has recommended the FDA do away with the 510(k) approval process and replace it ‘with an integrated premarket and post-market regulatory framework that effectively provides a reasonable assurance of safety and effectiveness throughout the device life cycle.’ […]

    However, more stringent regulations are unlikely to be passed into law in the US without a substantial battle with the medical device industry.

    The Heneghan-Thompson article concludes by noting that “Failures of medical devices cause harm and cost money”. This contrasts sharply with chair-failures, which typically cause little or no harm and don’t cost all that much money either (obviously).

    Hmmmm … so perhaps analogies along the lines of “a medical device is rather like a chair” aren’t all that illuminating?

    1. Homo Iracundus

      John Sidles, did you perhaps miss the bit about chair-related accidents killing 50 people a year, vs 0 (ever) for epinephrine injectors?

        1. tgb

          You know the song about how if you never miss your flight, you’re getting to the airport too early? If no one does from the drug, maybe we’re regulating it too much.

          1. Julia

            I don’t yet know if my kids are allergic to beestings. If epipens cost $20 and were freely available, I would totally keep one in the first aid kit (and a lot of other people would too). It seems pretty likely that people have died for lack of cheap epipens.

          2. tgb

            “If you never make typos, you’re typing too slowly” <- my retroactive excuse for that comment.

          3. Matt M

            Bee-sting allergies can actually manifest themselves late in life. Both my father and a close family friend nearly died from beestings in their 50s. They had been stung plenty of times before with no issues, but developed very severe allergies later.

          4. Garrett

            I volunteer in EMS. When on-duty I’m trained and authorized to use the individual vials of epinephrine to treat allergic reactions. The combo that costs less than $10.

            Yet I can’t buy that medication myself to keep in my own first-aid kit.

          5. wintermute

            This is almost certainly true. Most analyses I’ve seen suggest that the FDA’s defining problem is “drugs not taken”.

            So if your drug will kill some people, it can’t hit the market even if it will save far more people. Notably, there’s only one safety standard in play, so a new anti-allergenic and a drug to treat ALS both have to pass the same bar. If I remember the numbers, we’d get more lives saved by raising standards on drugs for treatable, nonlethal diseases, while lowering standards on new drugs for lethal/untreated diseases.

      1. Uncle Ilya Kuriakin

        Homo Iracundus cherry-picks “0 fatalities (ever) for epinephrine injectors?”

        Conversely, there’s no evident shortage of sobering, or ghastly, or even horrendous cherries on the medical dysregulation tree, isn’t that so? Including certain terrifying failure modes that were associated to chair-like medical devices?

        So it’s best to survey the whole tree (of medical regulation) … not just pick a few selected cherries from it, isn’t that the sole rational course?

        For forms of medical regulation,
            let fools contest.
        Those regulations best administered,
            work best.

        With apologies to Alexander Pope! 🙂

        1. Julian

          A number of the terrible incidents you note would not have been stopped by regulations because at the time, understanding of those risks was not complete. Blood was not properly screened for hepatitis prior to the contamination because most stake holders in the industry (Regulators, blood companies, etc.) did not think the risk was that high.

          Regulations can only deal with what has already happened, they are not able to imagine every possible scenario that COULD happen (no person or group can, its a fool errand).

        2. youzicha

          Minamata disease was surely not a failure of medical regulation. (Industrial/environmental regulation, maybe). Maybe this is nitpicky, but if your point is that it would be easy to cherrypick examples of medical regulation failures, and you try to list four of them, and can’t even do that, then maybe it’s not so easy after all?

          1. Ariel Ben-Yehuda

            > Is there any credible argument that medical/industrial/environmental regulation are separable domains?

            The problem is exactly that they are *not* separable, but medicine is much more heavily regulated than non-medicine.

            While there are some arguments for this – after all, medicine is *supposed* to have *some* significant physiological effects, and therefore more likely to have others – it does not feel big enough to explain the difference in the amount of regulation.

            After all, it’s not like being poisoned by medicine is worse than being poisoned by pollution.

      2. Chris Thomas

        I am completely in agreement with Scott’s main point here, and I don’t mind the comparison of medicine to chairs in this example. But here’s an annoying nitpick.
        England has 53,000,000 people, so let’s conservatively assume they sit down in chairs once per day. 50 deaths per year is an accident rate of .00000094 times per attempted sit down, or virtually zero.
        Let’s generously assume that 1,000,000 people use epipens per year in England with no deaths. The difference here seems like a rounding error.

        1. Seb Nickel

          But it’s not just the “per attempted sit down” risk that matters.
          If people sit down 10 times as often as they use an EpiPen, then the “per use” risk of chairs would have to be a tenth of that of EpiPens for both to be equally safe in the relevant sense. No?

        2. RCF

          What relevance do you think the number of attempts has? The variance of a Poisson distribution is equal to its mean. So if we approximate both with the sample mean, then zero is about 7 standard deviations from the observed mean. If Epi-Pens also have a mean of 50, then there’s probability of 1.93E-22 probability of observing zero. How does the number of attempts affect this calculation?

          1. Chris Thomas

            I’m not sure I understand the objection, but I was assuming that a fair apples-to-apples comparison would be the number of deaths per epipen use with the number of deaths per chair use, or something like that. Like if I said that more people die driving than die playing Russian Roulette, I can’t then claim that driving is more dangerous unless I know how often people drive, and how often they play Russian roulette.

          2. RCF

            I don’t think that “more dangerous” is the issue. The issue is that there is evidence of chairs being dangerous (people have died), but not evidence of epipens being dangerous. And “per use” is a kind of odd metric. It’s not like people are choosing between using an epipen or sitting down on a chair. If you’re asking “which is lower hanging fruit” for regulation saving lives, then isn’t total deaths a more salient metric than death per use? Shouldn’t improving car safety be a higher priority than reducing deaths from Russian Roulette?

          3. Chris Thomas

            Maybe “per use” is an odd metric. It just seems like the fact that tens of millions of people, each of whom uses chairs all the time, is relevant. Help me understand why that’s not relevant, because I’m not mathematically inclined enough to really follow your earlier reply.

            Also want to reiterate that I’m not disputing Scott’s main point. And I realize this is a silly quibble. I’m having fun though.

          4. InferentialDistance

            It’s not relevant because saving lives is the actual metric, not saving lives per use.

          5. Patrick

            No, the real question is whether chair regulation is likely to have achievable benefits, versus the same for drug regulation. If chair related fatalities occur at a vanishingly small rate relative to the amount of times chairs are used, this suggests that chairs are already about as safe as we can make them.

            By contrast, drugs, particularly drugs intended for administration by consumers, have to not only not kill people- they have to successfully save people where success is possible.

            I don’t have the knowledge base to say whether epipens specifically need the amount of regulation they’re getting. But:

            1. It certainly seems more plausible that meaningful gains could be made by regulating drugs than chairs, and

            2. Given that even Scott doesn’t realize that the failure rate of epipens isn’t how many people are killed by them, but rather how many people are unsuccessfully saved by them (death by epipen looks like death by anaphylactic shock, dudes), I’m not sure anyone in this thread is any better positioned to make that judgment.

          6. InferentialDistance

            the real question is whether chair regulation is likely to have achievable benefits

            As in saving lives?

            Yes, the ability to save lives varies based on what you focus on, but per-use danger is only relevant instrumentally. If zero people are dying per annum to epinephrine device mishap, then no amount of improved safety can save even a single life.

            Chairs may only be more dangerous because a lot more people use them a lot more frequently. But a lot more people use them a lot more frequently means they result in more deaths. So even small improvements in safety reap larger rewards.

            Ease-of-problem is not the only attribute that matters. Size-of-impact also matters, and given scarce resources a balance must be struck between the two in order to maximize lives saved.

    2. Cliff

      Keeping medical devices off the market also causes harm and costs money. Lots of harm and lots of money. I haven’t noticed any epidemics of medical device failures.

      How about contrasting medical devices with cars? There are many many more automobile fatalities than anything the medical device industry could approach, but we see robust competition.

      1. Uncle Ilya Kuriakin

        Cliff says “I haven’t noticed any epidemics of medical device failures.”

        Public ignorance of ongoing epidemics of device failure regrettably prevalent, and implant manufacturers reap vast profits from it.

        For an informal overview, see for example “Metal on metal hip implants causing big problems again” (Medical News Today, 2012).

        For details, consult the (literally) thousands of PubMed articles that are associated to the vast, tragic, and still-expanding worldwide epidemic of metal-on-metal prosthetic joint failure.

        A recent evidence-based, ideologically neutral, much-cited survey of this disastrous epidemic of device failure is Curfman and Redberg’s “Medical Devices: Balancing Regulation and Innovation” (New England Journal of Medicine, 2012).

        A crucial lesson is that an essential yet underdeveloped element of medical device regulation is the tracking and public reporting of device failures.

        Manufacturing organizations are strenuously lobbying against such reporting requirements (needless to say).

        1. Julian

          Yes, hip implants that are created in a highly regulated industry with tons of oversight from the feds.

          So great job regulations on that one.

          Its not possible to prevent all types of errors. Its not possible for regulations to do it and its possible for a totally free market to do it. Its just not possible. You may argue regulations have prevent many errors, and that is likely true. But there is also strong evidence that high prices and scarcity of products has led to many deaths as well.

          1. PSJ

            Julian, I really hope your argument isn’t:
            “There are so few medical device failures we are clearly over regulating”
            then when shown a medical device failure:
            “Look at how ineffective these regulations are we are clearly over regulating”

          2. gbdub

            I believe the argument is that most medical device failures are novel, unanticipated issues that regulation is bad at preventing (which is something of a tautology – we are heavily regulated, so of course the only failures that we see are ones that regulation can’t catch).

            But it could be argued that less-regulated manufacturers would still have a strong incentive to eliminate the easy-to-anticipate failure modes, so if those are the only things the regulations covered, then the regulations aren’t that useful.

          3. PSJ

            ^ I agree completely with that. I just disagreed with the “We don’t see any Japanese spies–they must have a really good spy network” type of reasoning

  93. Will

    But the government pricing regulations under discussion are very different from the FDA regulations that are causing the problem. The writer of this article may oppose those regulations, and be taking them as fixed, saying that given their existence, medical prices must be controlled. This is only hypocritical if vox has an editorial line in favor of all fda regulations.

    I studied this question using the super-scientific method of googling “vox fda” and clicking on the first few articles. There is:

    1 article about a changing regulation that does not seem to be more or less oppressive (changes to nutrition labeling) that is positive (http://www.vox.com/2016/5/20/11719796/new-nutrition-label-added-sugar)

    1 article about an increase in food regulation (salt) that is positive (http://www.vox.com/2016/6/1/11828048/fda-salt-sodium).

    2 article about an increase in e-cigarette regulation that are both positive, but noting criticism (http://www.vox.com/2016/5/5/11595784/fda-rule-e-cigarettes-tobacco, http://www.vox.com/2016/5/9/11608684/mitch-zeller-e-cigarette-fda).

    1 article about a decrease in blood donation regulation that is positive and wishes they did more (http://www.vox.com/2016/6/12/11911994/orlando-shooting-gay-blood-donation).

    1 card about an increase in medical information regulation that is neutral (http://www.vox.com/cards/genetictesting/why-did-23andme-get-into-trouble-with-the-fda)

    This wasn’t very helpful because none of these were about drug regulation, but they were more pro-fda regulation than I expected, especially on e-cigs, and I have to update in that direction.

    1. Scott Alexander Post author

      I understand why you think it’s bad to lump all regulations together in the category “regulation”, but in this case, I think it sort of makes sense.

      I think there’s a general principle that once you pass dumb regulations, it’s going to make bad things happen, and then if you try to solve those bad things by passing further regulations, you’re just going to get caught in an endless trap.

      So first they regulate Mylan into a monopoly on EpiPens. Then they realize that made them too expensive, so they regulate that the government gets to set the price of drugs. Then drug companies stop making EpiPens to switch to more profitable unregulated drugs, so the government has to mandate that you’re not allowed to be a drug company unless you make a certain amount of EpiPens below cost. So drug companies leave the US and headquarter overseas to avoid that law, and then the government regulates that only drug companies headquartered in America can sell drugs in America. Then cheaper foreign drugs start coming in as contraband, so the government regulates that all packages must be inspected at the border. Then drug mules ingest contraband medications into their bodies, so now everyone entering the country needs to have an X-ray…

      I realize some of these steps are probably stupid and would never happen, but I think there’s a risk of this general sort of thing, where you play Whack-A-Mole against the economy, and each mole you whack decreases efficiency and just makes another mole come up somewhere else.

      1. Will

        Sure, but within the heavily regulated haze we live in it’s possible to do better than we are currently doing. Examples are provided by countries like Canada and certain European countries that are doing better with, as far as I know, just as much regulation.

        1. Andrew Clough

          My impression was that there was much less drug regulation in Europe than there is in the US. For instance drug companies just need to prove that their drugs are safe beyond a reasonable doubt to be legal, rather than having to prove both safety and efficacy.

          1. chaosmage

            Not true. There are a lot of drug regulations in Europe as well. The situation is better anyway. I think that is because the approving agencies are national (although they frequently copy each other’s approvals) and everything that can be legally sold in one country is easily transported into another, leading to a kind of competition between regulators.

            I’ve bought medication abroad that would have required a prescription in my country, but I don’t have a firm theoretical grasp on what I’m talking about here.

          2. ChristianKl

            @chaosmage : Marketing Approval is made on the EU level via the EMA but that still leaves national agencies to regulate other things.

        2. Iconochasm

          Doing better would probably involve deleting or replacing existing “bad” regulations. Queue overblown deregulation hysteria.

        3. Wifather2000

          The “heavily regulated haze” is all part of the 1%’s indoctrination, Kool-Aid, of which it seems that you have drank more than one pitcher.

      2. Murphy

        Honestly? This sounds a lot more like a pseudo-libertarian fantasy than reality since we can actually look at the reality in other countries.

        The UK has no problem getting adrenaline injector’s made, companies are not fleeing the country and there’s little problem if you need an epi-pen.

        I think there is some kind of set of local minima, you can regulate properly or you can go full on free market or you can go with a managed free market but somehow the US has ended up teetering on the top of kind kind of mountain in drug-price space with the worst possible combination of strong and weak regulation with the worst market failures.

        I mostly take the position that we should err against regulation unless there’s a good reason and I’m sure a proper free market would be better than what the US currently has but a properly regulated market would also be better than what the US currently has. Because what the US currently has is a clusterfuck.

        1. Gbdub

          I don’t think Scott is promoting a “fantasy” at all – in this case it’s pretty clear that the EpiPen monopoly is not a natural outcome of the free market, it was regulated into existence.

          Your last couple paragraphs make me think we actually mostly agree, but dismissing the idea of “hey, get rid of the dumb rule before adding more rules or you’ll just be chasing your tail forever” as pseudo-libertarian fantasy seems misguided here, since that’s exactly what’s happening! (The tail chasing, not the dumb rule removal sadly)

        2. HeyThere

          This was more or less what I was thinking- it seems to be in an “uncanny valley” of regulation, where regulation up to this point promoted rent-seeking and market power, but the government didn’t go so far as to set price controls or use bargaining power to exert pressure on the price of the pens (see: Canada) and got (some of) the worst of both worlds

        3. Wency

          Thesis:
          Countries tend to be best at what their best people go into. Working for the bureaucracy is less prestigious in the U.S. than in NW Europe, with our cultural disdain for big government and the bureaucracy’s heavy emphasis on affirmative action. Many Americans also go into the bureaucracy because it’s difficult to be fired (which is a motivation with much more appeal to the mediocre than the superb), but in much of NW Europe, it’s difficult to be fired in private enterprise as well.

          Therefore, U.S. bureaucrats/regulators are less effective than in NW Europe, and NW Europe can accomplish things through regulation that the U.S. cannot.

          I don’t know enough about the relative prestige of NW European bureaucracies though to evaluate this thesis.

          1. Matt M

            Wouldn’t this imply that places like China would see the best and brightest go into the bureaucracy? But aren’t the levels of corruption there such that we can conclude this ISN’T happening?

          2. pku

            Could be Chinese bureaucracy is competent but corrupt (which actually matches what little I know about it).

          3. nm. k. m.

            Maybe becoming a corrupt member of bureaucracy is the most profitable thing the best and the brightest could do?

            Just take care of not becoming not too corrupt (so that the bureaucracy still functions) or doing something against the CCP’s interests.

          4. Diogenes von Neumann

            Anecdote: a Chinese woman told me about her former colleague who graduated from perhaps the best medical school in China and was a practicing surgeon but left medicine to work for the government, “because he was too ambitious”.

          5. Wency

            Corruption is another dimension to this. Is someone who is ambitious, intelligent, and utterly self-serving and unscrupulous among the “best and brightest”?

            But China is different from the U.S. in a lot more dimensions than NW Europe is, so the comparison isn’t as effective.

            Other examples of national talent magnets include the KGB in the USSR and the IDF in Israel. Both organizations had disproportionate success, and both countries are now led by their alums.

          6. Jill

            ” Is someone who is ambitious, intelligent, and utterly self-serving and unscrupulous among the “best and brightest”?”

            Definitely yes, in the Libertarian Ayn Randian framework where selfishness is the greatest virtue.

          7. David Friedman

            Not, however, in the actual views of Rand, as you would know if you cared to learn what they were. Nor, judging by casual observation, in the view of any Objectivists.

          8. Jill

            Rand is dead and objectivists are not a powerful force in our economy or our government. I am interested in what affects all of us in huge ways every minute of our lives, in our economy and government. And the fine points of Rand’s philosophy, and the current beliefs of a tiny group of people who currently call themselves objectivists, are not that.

          9. David Friedman

            ” And the fine points of Rand’s philosophy, and the current beliefs of a tiny group of people who currently call themselves objectivists, are not that.”

            And yet you are so obsessed with Rand that you keep insisting that her ideas are responsible for the sad state of the nation.

            Without bothering to know or care what her ideas were.

            As I may have already said, my interpretation is that you cannot imagine that other people actually disagree with you about the consequences of alternative policies, believe, for instance, that policies that you think help the poor actually hurt them. Since you take it for granted that they must agree with you about consequences, the only explanation you can imagine for their being against policies you are for is that they are wicked people.

            Hence all the talk about worshiping St. Ayn.

          10. Edward Scizorhands

            To defend Jill a bit, I have met Ayn Rand acolytes who talk, loudly, about how selfishness is a virtue. It’s pretty off-putting, even to me who loves capitalism. (They were like edgy teenagers, except in their early 30s.)

          11. David Friedman

            Rand wrote that selfishness was a virtue. What she meant by selfishness was acting in your rational self-interest and she argued (I think mistakenly) that it was never in your rational self-interest to violate the rights of other people.

            What the people you encountered meant by selfishness I don’t know.

          12. peter D Jones

            As I may have already said, my interpretation is that you cannot imagine that other people actually disagree with you about the consequences of alternative policies,

            OTOH, it;’s a bit suspicious when peopel rprefer abstract arguemtn about theoretical consequences to emprical evidence of what happens on implementing the policy.

      3. onyomi

        “I think there’s a general principle that once you pass dumb regulations, it’s going to make bad things happen, and then if you try to solve those bad things by passing further regulations, you’re just going to get caught in an endless trap… you play Whack-A-Mole against the economy, and each mole you whack decreases efficiency and just makes another mole come up somewhere else.”

        Isn’t this “whack-a-mole,” like, almost everything the government does anymore? And isn’t ignoring the previous whack, like, the one golden rule of mainstream political reporting?

        1. Aaron Traas

          Yeah. I’m not against regulation, per se, but I’m against the sort of band-aid approaches favored by politicians and regulators today. Something isn’t working? Scrap it and try something else, rather than pile stuff on top of it.

          I honestly think the patent system is largely to blame here. I personally favor doing away with all patents and reforming lots of other IP-related law. Patents are the enemy of innovation, and they only protect very large companies or patent trolls with deep pockets for litigation. It’s pure fantasy that they protect the small-time inventor; he can’t afford to enforce his patents against companies with much deeper pockets.

          1. Cliff

            This is very incorrect. Patent protection is absolutely essential for the pharma industry. Without it there would be very few new drugs. Also patents are tremendously valuable for startups and small businesses. For startups they may it much easier to attract capital since they are a valuable asset. I have seen investors recoup a good % of their money from patent sales after the start-up failed. If you have a valuable patent people will be lining up to buy it or to fund your litigation. Large companies have generally lobbied for weaker patent protection. They have other advantages and can easily copy anything new that comes on the market and experiences success.

          2. peter D Jones

            personally favor doing away with all patents

            Does tha involve ignoring international patent law?

          3. AlexanderRM

            The thing is, EpiPen is out of patent, at least it should be*. Whether or not one subscribes to the claim that patents encourage innovation, the manufacturers are clearly well past that point and are legally recognized as such, so eliminating patents wouldn’t affect them.
            The problem is that for some reason, every company in the U.S. that wants to produce a generic drug *that’s in the public domain* has to get independent FDA approval (TBH I’d like it if Scott had elaborated on the legal details of this if he knows, at least to the point that we have a term for what we want to do away with? When someone buys the rights to a public-domain drug, what exactly are they buying?).

            *patents in the U.S. only last 17-20 years, and it’s been around since at least 1987. I’m not sure what the story is with EpiPen’s lawsuits as mentioned in the article, but in any case at least one of them was thrown out by the courts, followed by the product being stopped by the FDA anyway.

          4. Edward Scizorhands

            Mylan has patents going until 2025. So the question is:

            1. was their original injector system from 1987 inadequate, or obsolete by today’s standards? What if someone tried to do that system?

            2. did they evergreen their patent?

      4. Consumatopia

        “I think there’s a general principle that once you pass dumb regulations, it’s going to make bad things happen, and then if you try to solve those bad things by passing further regulations, you’re just going to get caught in an endless trap.”

        The regulations aren’t “dumb” from the position of the companies making profits over this. You’ve got the causation backwards (or rather you’re missing their cyclic nature). It’s the potential for those profits that causes the companies to lobby for these bad regulations in the first place. It’s not like all those countries with cheap epipen competitors simply let you sell whatever poisonous snake oil you want–we have a uniquely bad drug regulatory system in America because the American system is uniquely profitable.

        If you won’t regulate profits or prices, and you won’t regulate money in politics, then you’re going to have a “dumb” FDA.

        1. gbdub

          And what angels will be regulating the regulators? “The current people are corrupt! We need to give them more power so they’ll stop being so corrupt!”

          This is a problem that a free market would have solved, full stop. We know this because other companies were more than willing to step in and accept a smaller profit to compete in the epinephrine injector market. The regulations are “dumb” from the perspective of everyone except one company, that being the government created monopoly.

          Which isn’t to say that a free market in drugs wouldn’t have its own problems – but this problem isn’t one of them.

          1. Consumatopia

            “Which isn’t to say that a free market in drugs wouldn’t have its own problems “, yes, and much worse ones, which is why none of those other countries listed where epipens have cheap competitors are totally free markets.

            The question isn’t to regulate or not to regulate, the question is which regulations.

          2. Consumatopia

            “And what angels will be regulating the regulators?”

            Presumably the same angels that are regulating the regulators in all those countries where the market for epipens works better than ours.

          3. Deiseach

            This is a problem that a free market would have solved, full stop.

            gdub, what about the patent case? Where the original manufacturers say they have a patent for the design and any knock-offs or things that may be confused with their copyrighted brand are going to get dragged into court?

            You can do away with regulations but if the drug delivery system is hamstrung by “anyone who designs anything that looks like or works like our device is going to be sued”, how does the market solve that? Libertarians, as far as I understand, rely on the rule of law and contracts to sort out disputes, but what do you do if there are six manufacturers who are ready, willing and able to put competing devices on the market, the drug itself can be made for pennies, but anytime a competitor comes along the original manufacturers bring a court case against them?

            Either you have to say patents don’t apply where necessary drugs are at stake (and good luck with that, no manufacturer is now going to bother inventing anything) or you have to force the original manufacturer to permit knock-off designs, and how are you going to get that past a court of law?

          4. gbdub

            I’m limiting myself to this particular problem, where there appear to be alternative, non-infringing designs / delivery methods, and the core medication has long since entered the public domain. The primary hold up appears to be FDA regulations rather than patent court in the specific case of EpiPens. Obviously on the broad scale of the whole medical market there is a lot more nuance and potential issues.

            The major point I take from Scott’s post, a point I support, is that EpiPen is a particularly poor hill to die on if you’re fighting for the notion that an excess of free market capitalism is the major thing wrong with American health care, and that Vox’s take is pretty lame.

          5. CecilTheLion

            This is a uniquely American problem. Prices for EpiPens in Canada, for instance, are $100, which seems to me to be a reasonable price. So no, its not necessarily that government institutions will fail and become corrupt by default, or will always fail, or that the free market will be a better solution (though I don’t deny markets *can* be a solution).

            “What angels will be regulating the regulators?”

            People do the jobs that are assigned to them. If you’re assigned, for instance, to develop and propose legislation that will limit corporate pharmaceutical monopolies from charging extortioner’s prices, then you’ll pursue that to the best of your ability. Perhaps contrary to popular opinion, people do take pride in their work.

          6. CecilTheLion

            @MattM

            Just intuition. Let me delineate.

            i. $100 is affordable for the average individual or family, especially in consideration of how infrequently EpiPens are actually expended. If it’s too expensive, then the Canadian government will come in and pay a larger part of the share.
            ii. The pharmaceutical company, by the fact that this price hasn’t shifted much over time, is clearly still making a healthy and sustainable profit. So the regulations haven’t destroyed the business.

          7. Corey

            @CecilTheLion: People will argue price-controlled systems are just shifting the cost to Americans. That may even be true, but:
            – They still are making *some* profit in price-controlled systems, or they’d just exit the market
            – The numbers involved are such that the USA could just foot the entire R&D bill ourselves and still save money

          8. David Friedman

            ” They still are making *some* profit in price-controlled systems, or they’d just exit the market”

            More precisely, they are selling above marginal cost or they would exit the market. They may be selling below average cost.

            If so, then applying the same price control everywhere would mean that it was not worth bringing the new drug to market.

          9. peter D Jones

            This is a problem that a free market would have solved, full stop.

            Would it create any others? Think about the implications of a compeltely free market in medicines.

          1. Consumatopia

            Because whether a chair is working as designed or slowly killing you is much easier to figure out than whether a drug is doing the same?

            Because keeping drugs safe and effective is a genuinely more difficult problem than chairs, and would continue to be so even if the FDA shut down?

            Because drugs wouldn’t be researched in the first place without either government support or patent protections? (No, this doesn’t directly apply to epipens, but does explain why profits and prices for drugs aren’t comparable to those for furniture.)

            Because people have a much more widely varying need for expensive drugs than they tend to for chairs (at least when those chairs aren’t medical devices)?

          2. onyomi

            It doesn’t follow that the more complicated and/or important x is, the more extensive government regulation and oversight of x needs to be.

            Unfortunately, people think it does. Which is why we get cheap, rapidly improving cell phones, computers, TVs, etc. and rapidly escalating costs for education, housing, and healthcare.

            “Because drugs wouldn’t be researched in the first place without either government support or patent protections?”

            Uh… why not? It would still be profitable. Right now the difficulty of getting anything past the FDA means far fewer potentially profitable avenues are explored. Again, we get state-of-the-art boner pills, but many more severe but less common ailments go underresearched.

            If you’re an established player, be excited whenever the government declares your service or product to be “essential.” If you’re a potential competitor or customer? Not so much.

            And it’s not like the FDA is the only thing standing between unscrupulous drug companies and gullible consumers poisoning themselves. Right now consumers can already look to doctors, hospitals, pharmacists, drug stores and more to help them make informed decisions. Most people don’t bother going to a special ergonomics consultant before sitting, by contrast.

          3. Deiseach

            Because nobody has yet been so foolish as to permit one company, business or manufacturer to copyright or patent the concept of a “chair” as their unique intellectual property.

            IKEA can brand its own specific designs of chairs but it can’t say “We own the very idea of a chair and if you make anything – from a milking stool to an ottoman – you are infringing on our legal property”.

          4. Consumatopia

            “It doesn’t follow that the more complicated and/or important x is, the more extensive government regulation and oversight of x needs to be.”

            It may not “follow”, but it’s obviously true. Otherwise we would be in the days of poisonous snake oil. Or even more significantly, don’t forget the F in FDA–the era of adulterated food. Businesses will kill people to make a quick buck. Emphasis on *quick*–there will always exist businesses that are willing to make a quick profit then go bankrupt, and always exist consumers who are so poor that they’ll grab the cheapest product, especially when the time and attention required to determine which products would be safe and unsafe in a free market is, itself, an expensive resource.

            “Unfortunately, people think it does. Which is why we get cheap, rapidly improving cell phones, computers, TVs, etc. and rapidly escalating costs for education, housing, and healthcare.”

            All of those products are regulated by the government. But the electronics just face basic product safety restrictions–am I likely to hurt myself in basic use, is it going to catch fire? Consumers electronics don’t have to prove that they are safe *for consumption*, because consuming consumer electronics aren’t intended for consumption.

            Also, I find it deeply odd to see such faith in market outcomes juxtaposed