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Buspirone Shortage In Healthcaristan SSR

(Epistemic status: Unsure on details. Some post-publication edits 5/1 to make this less strident.)

I.

There is a national shortage of buspirone.

Buspirone is a 5HT-1 agonist used to control anxiety. Unlike most psychiatric drugs, it’s in a class of its own – there are no other sole 5HT-1 agonists on the market. It’s not a very strong medication, but it’s safe, it’s non-addictive, it’s off-patent, and it works well for a subset of patients. Some of them have been on it for years.

Now there’s a national shortage. My patients can’t get it, or have to go hunting from pharmacy to pharmacy until they find one that has it. I’ve told people find a source to stockpile a supply so they don’t run out. It feels like we’re living in the Soviet Union.

How did this happen? The New York Times writes:

The main reason for the buspirone shortage appears to be interrupted production at a Mylan Pharmaceuticals plant in Morgantown, W.Va., which produced about a third of the country’s supply of the drug. The Food and Drug Administration had said the facility was dirty and that the company failed to follow quality control procedures.

So the FDA shut down a major buspirone factory. But government agencies – ones that are a lot less nice than the FDA – shut down methamphetamine factories all the time without creating methamphetamine shortages. Why is the buspirone market so vulnerable? The Times again:

Rock bottom prices for some generic drugs are also contributing to the crisis. Consolidation among wholesalers has led to the creation of three buying consortium behemoths that purchase 90 percent of the generic pharmaceutical products in the United States, said Adam Fein, a consultant and chief executive of Drug Channels Institute. These “monster” buyers have squeezed manufacturers on prices, and “some of those generic manufacturers are deciding the profit is so low they can’t make money, and they’re exiting the category,” Dr. Fein said.

Is this really how economics works? There’s a medicine that millions of people desperately need? But nobody will produce it because they can’t make a profit? Huh? Isn’t the usual solution to just raise the price? And people will buy it at the higher price, because they need it so badly? And then you will make more profit, and can keep on making the medication? Isn’t “nobody will supply this product, it’s too cheap” just the economics version of “nobody goes there anymore, it’s too crowded”?

Sure, generic drug manufacturing is pretty consolidated. Most individual generic drugs are now manufactured only by one or two companies. If one of those few companies gets greedy (like Martin Shkreli did with Daraprim), they can increase prices by orders of magnitude without a lot of competitors to push back. And if one of those few companies suffers a shock (like the FDA closing the buspirone factory), it makes sense that there might not be enough competitors to pick up the slack.

But how come this is only happening in pharmaceuticals? How come (in capitalist countries) there are almost never meat shortages, bread shortages, laptop shortages, or chair shortages? Is there something unusual about the pharmaceutical landscape that predisposes it to this sort of thing?

I am not an expert in this area and may be getting some of it wrong. But from Berndt, Conti, and Murphy (2017) and a Berndt, Conti, and Murphy (2018), I gather that a big part of the story is the Generic Drug User Fee Amendments (GDUFA) of 2012 and 2017.

The story goes something like this. The FDA demanded that generic drug manufacturers pass FDA inspection before setting up shop. But the FDA didn’t have enough inspectors to review manufacturers in a timely manner. So companies kept asking the FDA for permission to enter the generics market, and the FDA kept telling them there was a several year waiting period. In 2012, Congress recognized the problem. Politicians, FDA officials, and industry leaders agreed on a new policy where generic drug manufacturing companies would pay the FDA lots of money (about $300 million last time anyone checked), and the FDA would use that money to hire inspectors so they could clear their backlog of applications.

The good news is, the FDA hired lots more inspectors and they are now pretty good at responding to generic drug applications in a timely way. The bad news is that the fees to the companies were designed in a way that subtly encouraged monopolies in generic drug markets. I don’t understand all the specifics, but there seem to be two main problems.

First, if you manufacture a drug, the FDA will charge you a fee, but the fee doesn’t scale linearly with how much of the drug you produce. So suppose Martin Shkreli owns a very big Daraprim factory. The FDA might charge him $1 million per year to fund their inspectors. Suppose you are a small businessman who is angry at Martin Shkreli’s fee hike, and you want to open a competing Daraprim factory in your small town, using your small amount of personal savings. Probably your factory will be much smaller than Martin Shkreli’s. But the FDA will still charge you the same $1 million per year. At worst this means you make no profit; even at best, Shkreli’s economy of scale gives him a big advantage over you. So you may decide not to enter the market at all. From the second paper:

President of the Pharma & Biopharma Outsourcing Association, Gil Roth, remarked, ‘We have a single generic client that we do a short run of production for. Why are we charged the same as a Teva facility that pumps out a billion tablets?’ Another commented, ‘At least a flat tax is based on a percentage, either of revenue or profit. This is a flat fee, which makes it a regressive tax on smaller businesses, both contract manufacturers and small generics companies’

I think the fee might even be per factory, which encourages companies to concentrate all their manufacturing at a single site – like the Mylan one that just got shut down, thus affecting the whole country’s buspirone supply.

Second, traditional economics suggests that if some company has a monopoly on a product that people really need (like a medication), they will charge very high prices. But many generic drugs are produced by only one company each – and Shkrelis aside, most of them charge affordable prices. Why? Berndt et al argue it is because of the possibility of competition: if Shkreli raises his prices too high, some other company can move in and undercut him. But FDA licensing procedures make this undercutting harder than it could be: it will take months to years, and thousands to millions of dollars, for the other company to move in (at which point Shkreli can just say “Haha, no” and lower his prices again, meaning the undercutter would lose all the money they put in).

Historically, the system has worked anyway – because lots of companies are sitting on pre-existing FDA approval to make certain drugs. If a company had ever made a drug in the past, they had FDA permission to make it again whenever they wanted. So if Shkreli raises prices on Daraprim, some other company that made Daraprim ten years ago can set up a new factory tomorrow and undercut him. This helped prevent would-be Shkrelis in most markets, and provided a safety valve for shocks like the one creating the buspirone shortage today.

But GDUFA weakened this system by mandating that any company with FDA approval to manufacture a drug pay yearly inspection fees to the FDA, whether or not they were actively manufacturing it. That turned FDA approval for drugs you weren’t actively manufacturing into a liability; you were paying fees, but not making a profit. Companies started voluntarily cancelling their FDA approvals for older drugs so they wouldn’t have to pay the fees. That meant monopolists lost a lot of their potential competition. And that cleared the way for people like Shkreli to hike prices.

You get more of what you subsidize and less of what you tax. Unfortunately, the FDA is inadvertently taxing companies for being in the generic drug business. And it’s taxing them more if they’re not a monopolist with economies of scale. That means we get fewer companies in the generics industry, and more monopolists.

So my very tentative guess as to why buspirone is more plagued by shortages than bread or chairs is because number one, the need for FDA approval makes it hard for new companies to enter the buspirone industry, and number two, the FDA’s fee structure favors large-scale monopolies over small-scale competitors.

II.

The price of insulin is much too high. Vox argues that this is because of the “lax regulatory environment” and the “free market approach”, and that if we could just become socialist like all of the cool countries, everything would be fine.

Insulin is off-patent. It was discovered almost a hundred years ago. But somehow, all the insulin sold in the US is brand-name. This is shocking and obviously the root of the problem. What’s going on? Vox links NEJM’s Why Is There No Generic Insulin?, but summarizes it by saying it’s “because companies have made those incremental improvements to insulin products, which has allowed them to keep their formulations under patent” and because “older insulin formulations have fallen out of fashion.”

I am not diabetic. But if I were, I don’t think I would worry that much which kinds of insulin were vs. weren’t fashionable. What’s really going on?

Here my source is partly the NEJM paper above, but also Health Affairs’ Biologics Are Natural Monopolies. Both agree that the key point is insulin’s nature as a “biologic”. It’s not a simple molecule you can make with a chemistry set. It’s a complex peptide hormone of about seven hundred atoms, arranged in a series of helices and threads and tentacles. The only way to manufacture it is to genetically engineer some microorganism to make it for you.

The FDA usually requires generic manufacturers to prove that their drug is identical to the brand name drug they’re copying. But genetic engineering is hard, microorganisms are uncooperative, and insulin is too complicated to say with certainty that any one insulin molecule is “identical” to any other. So the FDA has lowered their standards for biologics to require proof that a generic biological is “similar”.

But even proving biosimilarity is orders of magnitude tougher than anything that small molecules have to go through. From the Health Affairs article, slightly transposed for readability:

The typical [small molecule] generic drug takes firms 1-3 years, $1-$5 million, and no human clinical trials to introduce. [In contrast], the entire biosimilar development process has been projected to span 8-10 years and cost upwards of $100 million. Human clinical trials involving hundreds of patients can cost $20-40 million to simply confirm that the candidate biosimilar generally replicates the reference product’s short-term positive and negative clinical effects.

Brand-name insulin companies make a bad situation worse by patenting their manufacturing techniques, using different patents than the drug patent, which may still be in effect when a generics manufacturer is trying to copy their drug. For example, Sanofi has somehow managed to get 74 different patents on their Insulin Lantus, which this I-MAK report describes as a “patent thicket”. Many of these patents seem to be totally illegal, and exist only so that it would cost a generics company time and money to challenge them in court. Most generics companies look at the process of trying to prove their hideously complex molecule is “biosimilar” to Sanofi’s hideously complex molecule, without using any of the 74 different manufacturing processes Sanofi uses to make it, and decide against entering the market.

Then the FDA mandates that biosimilars have a different name than the product they are replacing (ordinary generic drugs may not use the trade name, but can use the same chemical name). This makes it harder to have prescriptions for one cover the other, and doctors may have too much inertia to switch to a new drug with a new name. This limits potential sales for these products.

So the reason companies aren’t making generic insulin is that the FDA approval process for generic insulin is very onerous, brand name companies have excessive and illegal patents that make the approval process even worse, and companies’ ability to sell what comes out the other end is limited.

I realize my political slant makes me blame poor regulatory choices for these sorts of things pretty often. And the Health Affairs article I’m drawing from makes a different argument than I do, arguing that their biological properties make insulins “natural monopolies” and that policy choices are only secondary to this. You should consider my biases before you necessarily take my words at face value.

But the NEJM article mentions that plenty of poorer countries do have biosimilar generic insulins, including such gleaming-high-tech bastions of cutting-edge pharmaceutical excellence as Peru. Which of the following do you think is true?:

1. Peru has better technology than the US, and so is able to make cheap biosimilar insulin using processes that our own scientists and engineers can’t manage.

2. Peru has a bigger market than the US, so there’s more money in creating generic insulin to sell to Peruvians than there is selling it to Americans.

3. Peru has a better regulatory environment than the US, and this is enough to make producing biosimilar insulins cheap and easy.

Extreme fringe libertarians have a certain way with words. For example, they call taxes “the government stealing money from you at gunpoint”. This is a little melodramatic, but words like “patent loopholes” and “onerous review processes” sound a little bloodless for something that probably kills thousands of diabetics each year. So I would like to take a page from the extreme libertarian lexicon and speculate that the problem with insulin costs is that the government will shoot anyone who tries to make cheap insulin.

And then Vox writes an article saying that the problem is “the free market” and we need more government intervention. Fine, whatever. I have despaired of anyone ever analyzing this topic in any greater depth than that. The drug situation is going to keep getting worse – for small molecules, for biosimilars, for whatever. People are going to keep blaming “the free market” and implementing more poorly-thought-out regulation. And so the cycle will keep going, ad infinitum. Vox will keep writing this article once a year or so, and I’ll keep telling them they are bad and wrong, and we’ll both get some clicks out of it. The system works!

I want to clarify that I’m not criticizing the current FDA administration. The FDA has recently done a great job trying to shift their processes marginally in the direction of approving more medications, approving more companies entering the generic market, promoting more competition, and generally doing everything right. Even the GDUFA was a step in the right direction, in that it was necessary in order to get generics approved at all. This is probably part of why drug prices are starting to drop (note that there’s a complicated debate over how true this is and what statistics to use, but I think even the skeptics agree the trend is positive, and they are rising less quickly than they have in the past). There are probably some small steps they could still make to improve things – I get the impression that having the government pay for FDA inspections using tax dollars instead of having the distortionary GDUFA system would help. And patent reform would be great. But a lot of this is concessions to political reality that are probably outside the FDA’s control.

The current trends are good, and further small fixes could be better, but they probably aren’t enough to make drugs affordable and consistently available to patients. If this is even possible, it’s going to require more dramatic changes – not just having good regulators who try to make the best of the current system, but reforming the system entirely. This is a tough order (and I’ll try to blog later about what might be involved). But it’s the only thing that I can imagine allowing us to eventually catch up to Peru.

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486 Responses to Buspirone Shortage In Healthcaristan SSR

  1. Douglas Knight says:

    A lot of this seems to be role play. Generic manufacturers play a role as generic manufacturers and part of that role is low prices. As the industry contracts they have the option of raising their prices, but most of them don’t take it. Most of the world has generic insulin, thus cheap insulin. But while America doesn’t have generic insulin, it does have several manufacturers. When the second brand of fancy insulin entered the market, it refused to play the role of generic and compete on price. It was a company that makes new drugs and thus it was entitled to charge just as much for its insulin. And the two raised prices in lock step year after year, just as fast as the first had been doing. And when the third entered the market, no change.

    Maybe it’s explicit collusion and price-fixing, but I think the idea of role play also helps explain the behavior of generic manufacturers.

  2. benf says:

    Ah, Mylan Pharmaceuticals. Why is it pretty much every time there’s a pricing scandal or shortage issue, it’s Mylan that’s involved?

    See the case from the 90s, when Mylan cornered the market for a lorazepam precursor, starved out its competitors, and then raised its own prices because of “raw material shortages”. Sure the drug is off-patent, but if you can make sure none of your competitors have what they need to make it, you can price it as if you had a patent. They wound up having to give back 100 million in a settlement.

    The EpiPen fiasco is more recent and well-known and of course that’s Mylan as well.

    So when I see “Mylan” and “drug shortages” in the same sentences, my first thought isn’t “those dastardly regulators” or “Wow there is some hidden incentive in fee structures”. The most likely explanation is “Mylan is up to some behind-the-scenes fuckery to restrict supply so they can crank up the price”.

  3. mwengler says:

    If we could just make it legal to buy drugs online from overseas sellers, the worst consequences of bad regulation would be competed away.

    • greenwoodjw says:

      There wouldn’t be any domestic sellers. Who would go through FDA approval if you can could just ship from the Philippines?

  4. angularangel says:

    Well, this is a very good post, but I have a few quibbles. First, you mention in the beginning that “Consolidation among wholesalers has led to the creation of three buying consortium behemoths that purchase 90 percent of the generic pharmaceutical products in the United States,” and “These “monster” buyers have squeezed manufacturers on prices”, which seems like a classic example of a monopsony (Like a monopoly, but on the buying end, not the selling end), and an important detail that should be looked into further – and then you completely ignore it for the rest of the post. If this is a monopsony, that’s it’s own variety of market failure, yes? Now, you might very well be able to pin that side of it on government regulations – I know there are plenty on who can buy drugs, and when, and where, and they might very well be monopsony creating. But I still feel it should be looked into, or at least noted “Hey this might be important but I don’t want to look into it now”.

    Second, I feel like skipping straight from “These regulations are bad” to “All regulations are bad” is a bit of a jump. It’s like, imagine someone started selling a new model of car, and it turned out these cars had engines that exploded. Some evidence suggests that these engines may have been specifically designed to explode on purpose. Then, in the ensuing debate, everyone spent all their time arguing about whether or not cars should have engines, based purely on this one example.

    I feel that’s where we are in our politics discussions, and I hate it. And I mean, hey, maybe cars shouldn’t have engines! Maybe they should all go electric, or we should use trains or something. That’s a point worth considering. But we should do so based on ALL the evidence, not just this one exploding engine.

    On the flip side, of course, it is important to consider that engines can be badly or maliciously designed, and that regulations may be bad, either because they were designed to support a monopoly, or because they were just poorly designed. This doesn’t necessarily mean they should all be gotten rid of, but it does mean that some of them should be, or should be replaced.

    Essentially, I’m arguing for more nuanced positions in our politics, and annoyed that you didn’t do the same. Don’t get me wrong, it’s still a good post and I’m glad you wrote it, and I don’t want to be that guy telling you “You need to put in even more work!” when you’re already putting a lot of work in and writing some really good posts, but I feel like it could have been a lot better with not that much more effort.

    A/N: This is a rewrite and slight expansion of a post I made on Mastodon, you can find the original here.

    • angularangel says:

      Huh, I think I wrote this before the edits on 5/1, and missed them. The current version looks a lot more agreeable.

  5. Galle says:

    Extreme fringe libertarians have a certain way with words. For example, they call taxes “the government stealing money from you at gunpoint”. This is a little melodramatic, but words like “patent loopholes” and “onerous review processes” sound a little bloodless for something that probably kills thousands of diabetics each year. So I would like to take a page from the extreme libertarian lexicon and speculate that the problem with insulin costs is that the government will shoot anyone who tries to make cheap insulin.

    And then Vox writes an article saying that the problem is “the free market” and we need more government intervention. Fine, whatever. I have despaired of anyone ever analyzing this topic in any greater depth than that. The drug situation is going to keep getting worse – for small molecules, for biosimilars, for whatever. People are going to keep blaming “the free market” and implementing more poorly-thought-out regulation. And so the cycle will keep going, ad infinitum. Vox will keep writing this article once a year or so, and I’ll keep telling them they are bad and wrong, and we’ll both get some clicks out of it. The system works!

    Surely the proper solution here is to 1, stop treating “government regulation” as something you can quantify seriously how did we ever think this was a good idea, and 2, try to figure out which regulatory environment will in fact promote the best outcomes?

    I don’t think that “we need regulations different from the ones we currently have” and “we need to get rid of the regulations that we currently have” are mutually exclusive.

  6. RomeoStevens says:

    My priors have been making their way over to ‘if you have a serious medical condition you should try to leave the US ASAP.’
    Other than rare and highly specialized diseases where you have to go to wherever the few specialists in the world are, are there exceptions to this?

    • rlms says:

      If you’re rich?

    • Nornagest says:

      My priors generally are that anything reported in the media is 2-3x less bad than the media’s making it out to be, 4-5x if it has a political valence matching the editorial line. It’s not perfect — sometimes the problem is exactly as bad as the media says, and sometimes a story turns out to be essentially made up — but I think it’s a good rule of thumb.

    • Cliff says:

      What possible reason could there be for you to leave the U.S.? You mean if you’re uninsured and can’t declare bankruptcy? That’s the only situation that I can think of where that might make sense.

  7. grendelkhan says:

    In other insulin-related news, I saw this, almost as an afterthought, in “Eli Lilly Will Sell Half-Price Version of Humalog, Its Popular Insulin”, a recent New York Times article.

    Over the years, industry intermediaries known as pharmacy benefit managers have negotiated ever-deeper discounts for insulin, yielding savings for the insurers and employers that pay the bulk of drug costs. Insulin manufacturers have responded by raising their list prices in an effort, they say, to please the benefit managers, who keep a percentage of the discounts they pass along.

    The list price of insulin has gone from about $20 per vial in 1996, when Humalog entered the market, to about $275 per vial today. Humalog patients typically use about two vials a month, Lilly said.

    The result is a yawning gap between the list price of insulin — which people who are uninsured must pay — and the net price that insurers and employers pay.

    To recap: the sticker price goes up so that the benefit negotiators can claim that they’re scoring ever-deeper discounts while the manufacturers maintain the same real prices for the insured. The only downside is that the uninsured have to pay the sticker price, so they wind up rationing their insulin and dying in droves… because the incentives were a little weird, because some badness leaked out around one side of this equilibrium.

    What a nightmare! It’s like misplacing a decimal point, or switching an ‘and’ for an ‘or’, and accidentally burning down an orphanage as a result.

    • Douglas Knight says:

      Incidentally, “insured” is not a binary. Typical insurance covers one of the three brands of insulin (or, rather, doesn’t cover, but negotiates a cheap price), but they aren’t quite identical and some people really need another brand.

  8. theredsheep says:

    Oddly, my pharmacy in FL can get buspirone just fine. We got a couple of bottles of 5 and 15 mg in today. NB, however, that back-orders generally make no damn sense at all; things roll in and out of availability for unpredictable periods, at unpredictable intervals, for reasons which are seldom if ever given, and never with any advance warning. I don’t know what causes it.

  9. Nootropic cormorant says:

    Your regulation doesn’t work the way you would like because converting money into political power is a sacred right in America and the holders of the biggest companies just wield the law as a weapon to kill the competition with.

    I expect future iterations to also open more opportunities for graft, special privileges and other ways of syphoning public money.

    • Mark Atwood says:

      is a sacred right in America

      You sneer, but you’re not wrong. It is. As John quoted above:

      “Congress shall make no law […] abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.” First Amendment, abridged.

      It’s a good rule, and I have a meta-rule about it: “Anyone who thinks it’s not a good rule is a bad person, and this is a good way to know who my enemies are.”

      • John Schilling says:

        And just to be clear, saying “you can’t spend filthy money to petition the government…” is a restriction and abridgement of that right. Printing presses cost money. Saying “you can’t peaceably assemble to spend money to petition the government…” is right out.

        So yes, it is a sacred right for Americans, including but not limited to CEOs, to join together and pool their money to hire experts to talk to congressmen and their staffers and to various regulatory agencies about how to resolve the grievances they have with proposed laws and regulations, and if the grievances are unresolved to pay for campaign advertisements to see new congressmen elected to address those grievances.

      • Nootropic cormorant says:

        Yes, I am aware that liberalism is a well fortified and intellectually appealing position.

        Your worldview may be fair and coherent, but it produces problems above described that I tell you you will not be able to solve.

        The people who will solve these problems will be your enemies and “bad people” and I will be cheering them on.

        • Mark Atwood says:

          What would you change?

          • Nootropic cormorant says:

            What needs to happen is a change by which the production is determined by society and not private individuals, such a change can only happen through a political struggle that will, like all revolutionary processes, develop along its own lines that I could hardly foretell in terms of specific policies.

            In such a society, production of a medicine would be something that citizens who need such a medicine could command, be it through a consumer organization or through some other channel.

          • greenwoodjw says:

            How?

          • Mark Atwood says:

            Oh, a neo-tankie. Nevermind.

        • Galle says:

          This is a bit off-topic, but I have to admit, I always find it amusing that socialists insist they’re not liberals because liberals aren’t liberal enough.

      • Galle says:

        Free speech is a good rule, sure. But what about expensive speech?

        …that’s a joke, of course, but not entirely. Free speech is supposed to be a human right. I agree with that principle. But it also means that if you consider taking away a thing to be abridging freedom of speech, then you also have to believe that that thing is itself a human right.

        Is taking away someone’s internet access censorship? If so, then internet access is a human right.

        Is refusing to interview someone on a news program censorship? If so, then being interviewed on news programs is a human right.

        Is preventing people from donating more than, say, a million dollars to a politician censorship? Then donating over a million dollars to politicians is a human right, which means that having a million dollars to donate is a human right.

        Economics places soft restrictions on freedom of speech that we’re not good at dealing with.

        • The Nybbler says:

          Is preventing people from donating more than, say, a million dollars to a politician censorship? Then donating over a million dollars to politicians is a human right, which means that having a million dollars to donate is a human right.

          The positive liberty to donate a million dollars to politicians does not follow from the negative liberty not to be prevented from donating a million dollars (that you already have) to politicians. The pattern you’re using here is just a form of equivocation.

  10. albatross11 says:

    An aside here: In a previous thread, brad proposed that one place where it was good to have social disapproval on stating true things in public involved putting a price on a human life. When we’re talking about drug approvals and development and FDA rules public funding of medicines and such, this is exactly the kind of thing we need to be able to think about. If it’s socially unacceptable to note that there’s a price at which a life isn’t worth saving, then those discussions will run aground.

    • Douglas Knight says:

      Yeah, but that’s relevant to new drug development and rationing, not so much to generics. Buspirone is super cheap. There is no excuse for people not getting it.

      (Even fancy insulin should be cheap, but it is a more complicated situation, a sign of how drugs are getting more difficult and the line between new drugs and generics will blur, and regulations become harder to write, as Nabil said)

  11. theredsheep says:

    Since we’ve attracted a number of pharmacy professionals here: does anybody know why pharmacy management software (for retail pharmacy) is always poorly programmed and archaic rubbish? I’ve worked at two stores; the first was Walgreens, which uses Intercom+. IC+ is deeply primitive and frustrating to work with–most notably, you have to repress two or three sequential (and useless) popup error messages EVERY TIME you try to fix an insurance rejection. If the first attempt fails, which it usually does, you are kicked back to the previous screen and must click on the script again to suppress the same three popups. This consumes about 10 seconds per attempt, IIRC, counting the lag time between popups. This is not fun when the patient is standing right there getting annoyed because his script wasn’t processed on time after insurance hangups.

    While I was working at Walgreens I often griped to coworkers about IC+’s crappiness, but was assured it’s actually one of the better ones. Sure enough, the store I now work at uses an even more primitive DOS-like program with loads of counterintuitive idiosyncrasies–like a “pull up the last script/patient” function that fails to work in the single most common instance when you would want to use it (rebilling a script). Thankfully my current store has a much lower workload than Walgreens, so you can work around it.

    Meanwhile, the hospital I worked at between the two had a nice, clean, and largely bug-free modern program.

    It seems like you could cut a lot of costs by investing in less crummy software. My guess is that this does not happen because all these programs have to interface with a bunch of others and there are a lot of regulations that make testing improved programs impractical. Or possibly it’s just that the larger companies resent the already-high overhead of their pharmacy departments, and since pharmacies basically exist (from their perspective) to get customers in the store so they can be sold sodas and dental floss, there’s no strong incentive to make them run more efficiently and thus get customers out of the store faster. Insurance contracts and the like limit customer choice anyway so being competitive at that level might be a losing game. But I have a limited perspective, and am bitter and cynical.

    • The Nybbler says:

      Software like that is optimized to cover every jot and tittle of regulations (both government and insurance company imposed), not for end-user efficiency. If the end user is frustrated, the employee can suck it up; if a reg isn’t fulfilled to the letter, big lawsuits happen.

    • johan_larson says:

      There are a number of reasons why software is crappy. Some common ones:
      – it serves a function that does not have to be done efficiently
      – the people hired to make it work were incompetents
      – the people hired to make it work were not given what they needed (time, staff, appropriate priorities, access to users, …)
      – the people who chose it are not the people who have to work with it
      – there is no realistic alternative
      – the software is being used for a purpose it was not designed for

      There are others.

      • Nornagest says:

        Enterprise software always sucks. I’ve never even found a bug tracking system I was happy with, and you’d think that would be the enterprise software segment that software developers were most invested in making painless.

        I think it’s because software like this is bought en masse by high-level IT managers. Those guys may or may not be technical but definitely don’t talk to development teams (in a large company, they’re probably not even in the same building), so they’re basically guessing about their needs. That selects for systems that look impressive on paper (hence all the bug tracking features that take up screen real estate but no one ever uses) but are bloated, clunky, and poorly integrated in practice.

    • Edward Scizorhands says:

      While I do not enjoy Amazon getting ever more control of my consumer life, I am going to be sorely tempted to switch over to them for prescriptions, because the processes at CVS and Walgreens each treat me like a hassle, even if their employees are surprisingly friendly and willing to help.

  12. ajb says:

    Shortages happen in commodity markets all the time. The preconditions are when economies of scale mean that there are a few small manufacturers rather than it being economic to have lots of small ones, and for most factories to be running at capacity.

    We don’t get shortages of chairs, because a small manufacturer of chairs can start up and not be too much more expensive than a large one, so if there is a shortage, the price will go up a bit and it will be worth some factory owner shifting into the chair market.

    We do, however get shortages of RAM. The RAM market alternates between glut and shortage. (You don’t see people failing to buy any RAM, because RAM demand is a bit elastic – you find that a computer or phone which last year would have come with 2GB, this year only comes with 1GB).

    RAM fabs cost billions of dollars, so there are only a few of them. Fab owners are engaged in a game of billion dollar poker. When there are too many players, they all make a loss while waiting for enough players to chicken out (or go bust) for the remainder to, ahem, cash in the chips.

    Note that so far no government regulation is involved. This phenomenon is purely one of the free market. But, it is consistent with your Buspirone theory, since regulatory costs can serve in the same way as the capital cost of building a fab.

  13. beanjamin says:

    Second thought, since I work at a compounding pharmacy. You can get compounded buspirone at just about any compounding pharmacy. It’s going to be MUCH more than $7.75 per prescription, probably more on the order of $50-$100 per month, but if someone needs it and has the cash, just look up your local compounding pharmacy at https://www.pccarx.com/Resources/FindACompounder and you should be set.

  14. beanjamin says:

    Pharmacist here:

    I think you are missing the point of Adam Fein’s post about generic drug PURCHASING. This issue is not (primarily) that FDA inspections and GDUFA regulations are particularly expensive. The issue is that if you decide to make buspirone, you won’t be selling it to a competitive marketplace of thousands of pharmacies and dozens of wholesalers. You’ll be selling it to THREE massive conglomerates that then distribute that product to all of those thousands of pharmacies and THREE wholesalers. The three conglomerates are called Red Oak Sourcing, WBAD, and Econdisc solutions. Red Oak Sourcing is a joint venture of Cardinal Health (which itself supplies 90% of the hospitals in the country, as well as about 1/3-3/8 of all the pharmacies), and CVS/Health, which owns about 1/6 of all the pharmacies in the country. So you, small Buspirone manufacturer, are faced with the decision to sell at a price that Red Oak, WBAD (a division of Walgreens), and Econdisc want to pay for your buspirone, or you don’t sell any drug at all.

    As a result of the concentration in purchasers (technically a “monopsony”) Factory prices for most generics are WAY down from 5 years ago. Unfortunately for the local pharmacy (my pharmacy included), insurance companies have cut RETAIL prices even further, to the point that my average buspirone prescription sold to the patient for a total payment (insurance pay + patient pay) of $7.78 since january 1. My overhead (labor + supplies + rent etc) is about $14 per prescription, so my employees paychecks are not getting paid by dispensing buspirone. And that’s the RETAIL price. My WHOLESALE price is $5.75 – so you can imagine that the little buspirone manufacturer is getting probably $2 per bottle of buspirone they produce. When prices are that low, you have to have a HUGE market share to meet the fixed costs of producing buspirone (of which a not insignificant one is the GDUFA fee). Hence once company at one factory produces 1/3 of the supply, gets shut down, and now you can’t find it anywhere (except my store. I have like 3000 tablets).

    • Edward Scizorhands says:

      Thanks for this experience.

      Are the monopsony buyers willing to raise what they pay to get buspirone, since their customers are presumably demanding it?

      Separately (or maybe not), insurance being involved in a $10/month drug is nuts.

    • benf says:

      One sector’s monopoly is another sector’s monopsony. Break em all up.

  15. scpantera says:

    “But if I write “insulin glargine” on a prescription pad, then even if there were a biosimilar version of insulin glargine available, a pharmacist would have to use the branded product.”

    Chain retail pharmacist here, this isn’t strictly true. In fact, glargine insulin is the rare example of where it’s not since Basaglar and Lantus (both generic of glargine insulin) are verifiably interchangeable without adjusting doses and come in the same concentration and size as both injectable pens and vials. I’ve personally swapped one for the other a few times, though always at the insistence of the patient’s insurance provider.

    A lot of what holds interchanging insulins back is where the dose conversion isn’t clear, and a lot of the profession is very skittish about making any adjustments without copious documentation that THIS IS EXACTLY 100% WHAT THE DOCTOR WANTS (IS A NOTARY AVAILABLE? NO? OKAY WELL I’M WRITING EVERYONE’S NAME DOWN HERE) and with insulins it isn’t typically as clear cut as it is for most other meds. And it gets extra weird: for example, Toujeo (incidentally also glargine but only in pens at triple the concentration) comes as Toujeo and Tojeo MAX. The difference? Size of the pen, 1.5mL vs 3mL. Maddeningly, the doses are not technically 1:1 convertible, per the prescribing information: “If the previous dose was an odd number, the dose should be increased or decreased by 1 unit.” Which is apparently scary enough for it to be a rule that it’s completely unacceptable to mistake Toujeo for Toujeo MAX and vice versa.

    Anyways, felt I needed to point this out since Scott made a similar claim regarding EpiPens way back in https://slatestarcodex.com/2016/08/29/reverse-voxsplaining-drugs-vs-chairs/ that I was unable to verify the legal authenticity for (at least in California) at the time. Looking back at it now he links to an ABC article that mentions it only applies to 29 states so maybe CA just isn’t one of those, but we’ve definitely done some renegade substituting since. I can’t imagine there’s even anyone in the doctor-patient-insurance-pharmacy axis who would even care to report it in the case it’s true anyhow, though a lot of insurance only covers the Mylan generic anyways.

    • Scott Alexander says:

      Thanks. I don’t prescribe insulin myself, but the Health Affairs and NEJM articles seemed to imply this. It’s possible they are saying something true and I just misunderstood it or picked a terrible example. I’ve mostly edited it out of the post until I can confirm.

      • SCPantera says:

        Thanks a ton for the insight in parsing the rising insulin prices, it’s an insane issue at retail and there’s not a lot of clamoring within the pharmacy profession to ask why. Nothing quite like seeing people hit the donut hole in January solely from insulin prices.

        For the sake of additional clarity, this paragraph also kind of doesn’t make sense with some pharmacy context:

        “Then the FDA mandates that biosimilars have a different name than the product they are replacing (ordinary generic drugs may not use the trade name, but can use the same chemical name). This makes it harder to have prescriptions for one cover the other, and doctors may have too much inertia to switch to a new drug with a new name. This limits potential sales for these products.”

        Drugs and biologics have a generic name as a base, trade names are how they’re marketed so it’s less that it’s mandated that those are different so much as everybody’s legal team ensures that there’s only one cartoon mouse named Mickey.

        But names aren’t the issue, as long as there’s no “brand neccessary” specified we’ll do all the substituting we need to do to get paid, which means frequently it’s the insurance providers making the call. Their PBMs are usually contracted with a particular manufacturer for a discount off the drug price in exchange for telling all the pharmacies they’ll only get paid if they dispense a particular brand. This gets silly in all kinds of ways too; the archetypical example of this used to be albuterol inhalers, since they only came as Proventil, Proair, and Ventolin and each individual PBM is arbitrarily contracted to only pay for one of those three. All three of them just went generic (they’re all considered interchangeable but I think like the propellant is different or something, they’re identifiable by the grams of the inhaler) so now in addition to arbitrary brand contracting, there’s arbitrariness with regards to whether they’re covering the generic yet. It’s also funny because Teva and GSK, manufacturers of Proair and Ventolin respectively, scrambled to put out their own generics so you’ll end up with situations where an insurance demands Proair but won’t cover literally the exact same inhaler with a different color plastic.

        But that’s how Basaglar and Lantus get swapped per above usually. Basaglar’s new-ish so there’s a lot of not-too-with-it doctors who think it’s something entirely new and it’s definitely not. I don’t get the sense that health insurer shenanigans are highly responsible for insulins being nuts but I would very much expect that they’ll at least interfere with any attempt to fix it.

    • Douglas Knight says:

      Before we get into the weeds, note that Scott’s hypothetical is wrong. If there were a biosimilar available, that’s as good as a generic. Generic insulin is possible and his “patent thicket” article says that it’s scheduled for 2023.

      But he chose a terrible example. In addition to getting it wrong, he tripped over a crazy loophole. Basaglar should be biosimilar and European pharmacists do have the right substitute it for Lantus. But the FDA did not approve it as a biosimilar, only as its own drug, though via streamlined “follow-on” protocol. (Maybe because there was no biosimilar status at the time?)
      I guess if the doctor wrote “glargine,” that’s vague, so you could choose Basaglar. But if he wrote Lantus, you aren’t supposed to substitute it. (Just as if he wrote “adrenaline auto-injector” you can substitute, but if he write “EpiPen” then you might not be allowed to substitute a different physical mechanism.)

      The “patent thicket” article Scott links to implies this distinction between biosimilar and follow-on biologic, but here is a clearer statement.

  16. PeterDonis says:

    Your economic analysis of these cases seems to leave out an obvious factor: the scarce resource is not the manufacture of the drug but the FDA action. And since that action is not provided by a free market, customers have no way of signaling that more of it is needed by bidding up its price.

  17. Yair says:

    It seems clear that to steelman this argument, the systems in other developed countries (say Australia, UK, Germany) need to be examined.

    It seems (at least to me) that the current post is just saying that because the USA does government regulation badly, then government regulation is bad.

    Many of the comments do discuss what happens in countries like Australia but I really think that discussion needs to be incorporated into the original post.

  18. zzzzort says:

    Possible stupid question(s):
    There’s a lot of talk about international differences in regulations, but where does international trade fit into all of this? A lot of the drugs consumed in the US are produced elsewhere, and the US exports a lot of drugs elsewhere. Is Canada having a buspirone shortage right now as well? And if not, where are they getting their drugs from? Do drug factories in other countries have to pay the generic tax? It seems like the US has factory safety reciprocity (very distinct from drug approval reciprocity) with several countries, e.g. switzerland. What is stopping factories in these jurisdictions from competing for the US generic market?

  19. Virriman says:

    What is the rationale for prescriptive high minimum standards rather than a system of low minimum standards with grading and labeling of pharmaceuticals based on how much scrutiny they’ve endured? Higher grades could be reserved for products where the manufacturer has paid the FDA to apply extra scrutiny and bends over backwards to heed every suggestion. Middle grades could apply to products where the manufacturer is only subjected to an annual “free” FDA inspection and haven’t bothered to run clinical trials on their generic formulations. Low grades could apply to products produced in factories that often fail their inspections, or to novel products of unproven efficacy, or to expired product, as long as they aren’t literally going to poison the customers.

    High minimum standards have some justification in cases like shoddy automobiles or airplanes causing negative externalities for people sharing the roads or sky with them. But why pharmaceuticals? If a person wants to treat themselves with a cheap “F” grade drug that was brewed in somebody’s bathtub, they usually wouldn’t be putting anyone else at risk. We generally allow people to engage in a broad range personally risky behavior, and even allow commercial entities to cater to that behavior, so why not allow people to choose to treat their medical conditions using minimally vetted drugs?

    • MilfordTrunion says:

      “What is the rationale for prescriptive high minimum standards rather than a system of low minimum standards with grading and labeling of pharmaceuticals based on how much scrutiny they’ve endured? ”

      because not everyone has a mass spectrograph in their basement

      and the failure mode for a lot of this stuff is “die”, not “worst ham sandwich I’ve ever had in my life, not going back, 4/5 stars”

      “We generally allow people to engage in a broad range personally risky behavior”

      yeah, so, about that

      • baconbits9 says:

        The failure mode for food is clearly sometimes death, and everyone eats multiple times a day, making the failure mode much more dangerous.

        Still we don’t force food producers to jump through as many hoops to start producing as we do drug producers.

        • The Nybbler says:

          Still we don’t force food producers to jump through as many hoops to start producing as we do drug producers.

          Not quite. But still enough that the answer to “I want to sell something I cooked?” is “That’s a damned shame”.

      • Virriman says:

        because not everyone has a mass spectrograph in their basement

        No need for that. The FDA would still enforce labeling and any drug’s grade would be clearly displayed.

        and the failure mode for a lot of this stuff is “die”

        The failure mode of skydiving is SPLAT, but we don’t require every model of parachute to have a billion dollars of testing behind it proving safety and efficacy.

        • MilfordTrunion says:

          “The FDA would still enforce labeling and any drug’s grade would be clearly displayed.”

          The issue is not notification of labeling, the issue is what each label level actually does, and what the effect of a lower-grade label is going to do. “is less effective”, fine, but that’s not actually what the OP is complaining about–they’re upset about a factory being closed down because it might be selling tainted products, not less-effective ones, and maintaining a clean shop isn’t something that’s going to be affected by a letter grade indicative efficacy.

          As for insulin, if you want less-effective insulin you can already buy it at Wal-Mart so that line of discussion was over before it started.

          “we don’t require every model of parachute to have a billion dollars of testing behind it proving safety and efficacy.”

          Parachutes are as simple as a stone ax compared to pharmaceuticals. I mean, you can see whether or not a parachute is doing anything, and you know pretty well whether or not it worked.

  20. Douglas Knight says:

    Sure, these FDA fees are a fixed cost that encourages consolidation. But there were already lots of fixed costs, such as factories. And there aren’t actual monopolies in generic drugs. There are many manufacturers of them, such as in Europe. Why don’t they enter the US market? They’d have to pay the FDA fees, but they’re in a better position than the companies that were sitting on the rights to sell drugs but not actually making them (the companies that dropped out), because they’re already paid the fixed cost of building a factory.

    • Edward Scizorhands says:

      I don’t think the factory costs are significant, because these companies already have factories, and have the domain expertise to switch from drug A to drug B.

      But it’s still a good question: a company in France is making Buspirone right now and could crank up their production by 10% and ship units to America. They are presumably already meeting France’s first-world manufacturing standards. What’s stopping them from getting approval?

      (And even if there are per-factory costs for getting FDA approval, then one factory could just dedicate production towards the US, and all other factories turn up production by 10% to make up that factory’s shortfall.)

      • John Schilling says:

        But it’s still a good question: a company in France is making Buspirone right now and could crank up their production by 10% and ship units to America. They are presumably already meeting France’s first-world manufacturing standards. What’s stopping them from getting approval?

        France’s first-world-standard drug regulators approved Thalidomide, and the US FDA is never going to let them forget it.

        • Douglas Knight says:

          Sure, arguing that the FDA should approve all drugs approved by the EMA is a hard sell. Arguing that the FDA should approve all factories approved by France should be a much easier sell.

          But we’re not talking about changing policy! We’re asking why European manufacturers don’t jump through the existing hoops. Also, when the FDA publicly threatened Mylan last year, why didn’t it reach out to an existing manufacturer. If the FDA was playing chicken, that would give it more leverage.

    • Douglas Knight says:

      Actually, the question I should be asking is:
      Since this factory only produced 30% of the US supply, why didn’t the FDA reach out to the other factories and encourage them to increase production?
      Were they also Mylan factories?

      • broblawsky says:

        I’d assume because the factories can’t increase production – they have no excess capacity.

      • Douglas Knight says:

        I think that the answer is that the factory is big and the FDA didn’t know which drugs would be affected.

        @broblawsky: as I say elsewhere, I think that this is backwards, but I don’t really know.

  21. Nornagest says:

    government agencies – ones that are a lot less nice than the FDA – shut down methamphetamine factories all the time. But you never hear about methamphetamine shortages.

    I’ll be the first to admit that half of what I know about meth comes from Wikipedia and the other half comes from Breaking Bad, but I’m fairly sure that tweekers do sometimes have a hard time finding meth, and that this is sometimes because the government’s recently come down on supply or distribution. It’s just that it’s easy to spin up a new operation to meet demand, because all setting up a meth lab takes is some bootleg glassware, a three-hundred-pound biker calling himself “Tiny”, a line on the precursors, and a space you don’t mind setting on fire occasionally. That’s a far cry from the FDA approval process. It’s even a far cry from getting an environmental impact statement approved.

  22. Bugmaster says:

    The problem with disbanding the FDA is that it would make the process of creating new drugs way too cheap and easy. You’re going to see lots of essential oils sold as a cure for cancer, and lots of cheap Chinese blood pressure pill knock-offs that cause cancer, and that’s just for starters. Sure, the Libertarian approach has a solution for this: the free market. After a bunch of people die, word will get around, people will stop buying those drugs, and the manufacturers will go out of business — only to be replaced with the next round of scammers. Problem solved !

    One less Libertarian option would involve cracking down on patent trolls, and relaxing patent restrictions in general. For example, we could mandate shorter terms for drug patents, and make it much more difficult to patent functionally identical drugs as replacements for drugs whose patent terms are about to expire. Yes, doing so will reduce the incentives for performing drug research somewhat; however, it will also incentivize actual drug research instead of just pushing random molecules around for no reason, so it’s probably going to be a win/win in the long run.

    At the same time, we could take an even less Libertarian option, and massively expand the funding for the FDA (as well as overhauling its management structure, which I suspect is, shall we say, sub-optimal). Yes, this sounds counter-intuitive, but if the FDA can afford to run 10x more drug tests per year at 0.1x the cost per test, that would lower the barrier to entry for small drug manufacturers. Obviously, under the current regime, the new and improved FDA will just be flooded with 100x pointless molecule adjustments, but — see above.

    • greenwoodjw says:

      Part of the Libertarian solution is private review companies along the lines of Underwriter Labs, not simply “Let a bunch of people die and go from there.”

      • albatross11 says:

        Bugmaster:

        There is a *lot* of middle ground between utterly abolishing all regulation on drugs, and getting rid of (or just reforming) regulations that we can *see* are allowing companies to game the rules to charge insane prices for stuff that’s been off-patent for decades.

        For example, I think simply allowing drugs to be sold when they’ve passed the safety review, without requiring them to show efficacy for some specific thing, would decrease the cost/delay of getting through the process by quite a bit. This might be good or bad policy, but it wouldn’t be the wild west. Similarly, making the FDA’s regulation entirely voluntary and relying on legal liability to avoid misuse of unlicensed drugs would be another alternative–probably rather similar to how various nootropics get used now. Some patients would go buy snake oil to treat their cancer, just like happens now. Some patients would even make themselves miserable by doing ineffective last-ditch things to cure their incurable cancer, just like happens now. Or having a rule that made the default cross-licensing of any drug approved in Europe, Canada, Australia, or Japan, with the FDA able to reject them on a case-by-case basis if they thought it was a terrible idea, would probably work quite well. And so on.

        • Bugmaster says:

          For example, I think simply allowing drugs to be sold when they’ve passed the safety review

          I might be on board with that, but on a case-by-case basis. If this drug is supposed to lower your blood pressure, then maybe that’s ok. You can take the drug, check your blood pressure, and verify for yourself if it’s lowered or not. Also, most people can survive with high blood pressure for at least a while (I know I did). On the other hand, if the drug is supposed to cure cancer (or even pneumonia !), then by taking this drug instead of a real treatment you are potentially killing yourself; and the company who is selling you this drug is thus endangering your life. I feel like saying “yes, but we never promised our drug would be actually effective” is a bit of a hollow excuse in such cases.

          Similarly, making the FDA’s regulation entirely voluntary and relying on legal liability to avoid misuse of unlicensed drugs

          Ok, but how is that legal liability going to work ? Let’s say that a person has some serious disease; he has the choice between drug A or drug B, and he picks A. He dies. Who is going to determine whether company A is liable ? And how is that determination going to be made ? If the answer is “a judge” and “in the court of law”, then I would strongly prefer the current system — where we can leverage scientific evidence and formalized testing methods. I want to know whether drug A is actually better than drug B, for real, not just for legal liability reasons.

          Or having a rule that made the default cross-licensing of any drug approved in Europe, Canada, Australia, or Japan, with the FDA able to reject them on a case-by-case basis if they thought it was a terrible idea

          Agreed, as long as we stick to those countries and exclude, say, Belarus.

          • albatross11 says:

            If you’re not a complete idiot, a diagnosis of cancer is going to lead you to seek out doctors with the right specialty (sometimes oncologists, but sometimes other specialties, depending on the type and stage of cancer), who are going to offer you some choices about what treatments to try. You could imagine the survivors of a cancer patient suing the doctor who treated him with unapproved drugs. Though I think I might want to allow a safe harbor if the cancer patient has a really bad prognosis on approved drugs, and the treatment details are recorded and made available in a public database so people can figure out what works.

          • Bugmaster says:

            @albatross11:
            I think you might be vastly overestimating the medical acumen of regular people. Especially desperate regular people.

          • abystander says:

            Safety is relative and expensive to characterize. A 0.1% increase in the chance of a heart attack may be reasonably safe for a cancer drug and unsafe for an arthritis drug. And trials have to be much bigger to find rare but serious side effects.

      • broblawsky says:

        I’ve worked with UL to qualify products, and I suspect they’re at least as good at sucking cash out of corporate checkbooks as the FDA is. I don’t think you’d get better, cheaper review processes out of this – you’d get a handful of finicky ultra-expensive reviewers who would drive up costs for reliable data and far more fly-by-night reviewers who would rubber-stamp drugs without any kind of real clinical studies required.

        Also, what would prevent private review companies from being suborned by larger corporations to loosen their standards for some products? This sounds a lot like the setup we had for reviewing the quality of mortgage-backed securities before the financial crisis. Could any private review company afford to turn down Pfizer?

        • Cliff says:

          Is that what happens with UL? Lots of competitors with low standards, bribery by big corporations?

          • CatCube says:

            To be fair, UL standards are required by many building codes. if you wanted to open your own and undercut them, you’d have to convince the people who write the model codes that you’re just as good. Since the sector is non-profit, you’re not going to be taking home that sweet, sweet, IPO money; you’re going to have to extract value through salaries using the corruptions common to the non-profit sector, which aren’t usually as lucrative. Similarly with ASTM specifications.

    • You’re going to see lots of essential oils sold as a cure for cancer,

      In practice, can’t that still happen under present institutions? The manufacturer can’t claim on the package that the oil cures cancer but a friendly third party is free to write a book, or set up a blog, claiming that it does, and pointing people at where to buy the oil.

      I am currently giving serious thought to paying more than a thousand dollars for a series of tests and recommendations based on a medical theory that, as best I can tell, is not officially endorsed by any governmental authority (Dale Bredesen’s procedures for preventing or reversing cognitive decline with age). As best I can tell there is nothing illegal about Bredesen selling that service. The reason I will probably buy it as that I checked on Bredesen with someone I know who is a prominent professional in the relevant field and he thinks well of him.

      But that was my precaution, not anything required by existing law.

      • Nornagest says:

        I have no idea if this is a legal dodge or not, but I see a lot of packaging saying that the product’s nineteen secret herbs and spices are e.g. “respected in [exotic foreign land] as a traditional treatment for [cancer, impotence, the common cold, general malaise, unemployment]”.

        That’s not saying that it cures what ails you, but it’s sure as hell hinting at it.

      • Scott Alexander says:

        I saw the Bredesen post on the subreddit and was pretty concerned.

        While I have no problem with people being speculative, Bredesen seems to believe some things that have been actively proven false, for example the theory that mercury dental amalgams are bad and chelation therapy helps diseases other than acute mercury poisoning. These strike me as pretty big red flags that someone comes from a bad part of the alternative medicine community.

      • albatross11 says:

        David:

        Just as an aside, there’s a danger here w.r.t. typical-minding. The probability that you can meaningfully evaluate some medical theory via independent reading and asking people in the know is much higher than the probability that an average person can do so. I don’t want to prevent you doing what makes sense for you, but it’s important to remember that we could end up with rules that work out ok for people on the far right tail of the intelligence distribution, but mostly serve to enrich snake-oil vendors when applied to the middle and left ends of the distribution.

    • Scott Alexander says:

      While I’ve sometimes speculated about ideas like disbanding the FDA, nothing in this post is relevant to it. This only deals with the FDA’s generics work, which is for medications that have already been approved. If the FDA doesn’t approve essential oils as a cancer treatment, it will never become a generic medication and none of this will ever apply to it.

      I’m still trying to figure out to what degree your concern is accurate. As far as I know, vitamins and supplements (like melatonin) are very loosely regulated compared to medications, and I don’t know of anybody ever dying from these (except for one case of contaminated 5-HTP from Japan about twenty years ago). In a very optimistic view, in an FDA-less world our medications would be about as safe as melatonin is now, i.e. enough that nobody would worry about it. I’m not sure if this perspective is right and I want to look into it more and write a post on it sometime. But for every system that people predict will result in rampant poisoning and scamming and a total collapse of social trust, there’s some industry or country somewhere that already has that system and it works just fine.

      I agree that increasing funding for the FDA, so that it pays more of the costs instead of passing them on to pharma companies, would be a good move.

      • Bugmaster says:

        Regarding vitamins/supplements, I’ve actually been prescribed (!) a wondrous natural holistic snake oil by an urgent care doctor before; and I’ve had to switch prescriptions when my (along with hundreds of thousands of other patients) Valsartan formula was found to be carcinogenic (and also made in China). I’m not sure how safe melatonin is, but I sure hope it’s more safe than that.

        • Scott Alexander says:

          Again, my proposal isn’t about abdicating the FDA’s medication-approving function to allow snake oil, it’s to allow factories to make existing FDA-approved drugs.

          Valsartan is already monitored by the FDA and a product of the current system, so I don’t know what to tell you about that one.

          • Bugmaster says:

            Right, yes, I was mostly agreeing with you; sorry if that was unclear. As I said though, if the current system does let through carcinogenic Chinese drugs, then perhaps a little more regulation is still in order; I can’t imagine it’s any better for generics. And, as I said in the other comment, some sort of patent reform will go a long way toward allowing factories to make generics cheaper.

    • Cliff says:

      Patent trolls are pretty rare in pharma, as far as I know. A “patent troll” is a person who doesn’t practice an invention but tries to get other people to pay a license to practice it.

      • Clutzy says:

        Patent trolling is not a thing in pharma because no one can practice an invention without investing way more than a simple license/purchase of a patent would be.

        Trolls, as properly understood, buy a bunch of low quality patents that the USPTO shouldn’t have issued, but now they have the presumption of validity and they attempt to leverage the vagueness of the claims so they cover entire fields of invention. An actual famous case involves the game of bingo, played on a computer. Thats the whole “invention” so it obviously shouldn’t have been granted, but it took until an appellate court for that determination to come about.

  23. John Schilling says:

    OK, it looks like Megan McArdle has linked to this piece, which means we’re going to get a lot more low-effort “Capitalism BAD” posts than normal. And possibly a few new high-quality members of the community, but as always, probably best not to feed the trolls.

  24. 420BootyWizard says:

    I can’t help but feel like you’re squinting trying to find the tree that’s the FDA’s fault and managing to successfully miss the forest that is the mess that happens when you try to apply market economics to health care. Like Shkreli gets mentioned a bunch of times but greedy CEOs are obviously the outlier, the real problem is the evil evil FDA insisting that factories be reasonably clean???

    • Sniffnoy says:

      Note that this isn’t “health care” in general — this is, specifically, drug manufacturing. Is there any problem with applying market economics to drug manufacturing that would not also apply to, say, food? Can you explain, by your logic, why we don’t constantly see price hikes and shortages when it comes to food in the US, given that the people making it are, surely, no less greedy?

      • 420BootyWizard says:

        When Chipotle has a shortage thanks to it’s umpteenth salmonella outbreak, people just go to the burger place across the street; Chipotle loses out, but I still ate dinner. Likewise if the CEO of Chipotle decides he wants a third solid gold hot tub and doubles prices, I can still go to the burger place across. Or if I really insist on a burrito I can go to the grocery store, grab some ingredients, and make my own. Once again Chipotle loses out, but I still eat dinner

        Compare to medication: If there’s a price hike, what am I going to do? Find a way to pay the new price or perish. I have no alternatives. A burger is just as good as a burrito, but aspirin is not just as good as insulin. Since most people have a strong preference against dying, they pay the higher price and “Chipotle” wins.

        • Sniffnoy says:

          When Chipotle has a shortage thanks to it’s umpteenth salmonella outbreak, people just go to the burger place across the street

          …because there is a burger place across the street, because it’s easy to set one up.

          Compare to medication: If there’s a price hike, what am I going to do? Find a way to pay the new price or perish.

          And if every food manufacturer hiked the price on all their food at once, it would still be the case that you’d pay the price or die. Why doesn’t that happen? Because there’s competition. If there were adequate competition in drug manufacturing you’d just go to the other manufacturer.

          (And of course, sometimes the price of food does go up across the board, because, say, there’s a drought or something. And then, as you said, people find a way to pay the new price or they perish. And yet once again, despite this, it’s still not subject to arbitrary hikes.)

          Like, everything you’re saying seems to implicitly assume that the market for food has adequate competition, and the market for drugs does not. Which, presently, is often the case. But that’s not some immutable fact of nature. That’s a result of government policy. Nothing you’re saying gets at some underlying difference, or demonstrates that the same fundamental economic logic does not apply.

          • 420BootyWizard says:

            …because there is a burger place across the street, because it’s easy to set one up.

            “Easy” is relative. Burger places get shut down for being dirty just the same as the buspirone factory in the opening section. It’s not like burger places are in some kind of regulation-free libertarian utopia. In fact part of the reason the FDA exists is because once upon a time burger places were a regulation-free libertarian utopia with predictably disgusting results.

            And if every food manufacturer hiked the price on all their food at once, it would still be the case that you’d pay the price or die. Why doesn’t that happen? Because there’s competition. If there were adequate competition in drug manufacturing you’d just go to the other manufacturer.

            Like, everything you’re saying seems to implicitly assume that the market for food has adequate competition, and the market for drugs does not. Which, presently, is often the case. But that’s not some immutable fact of nature. That’s a result of government policy. Nothing you’re saying gets at some underlying difference, or demonstrates that the same fundamental economic logic does not apply.

            Sure, I guess. But I suspect we mean very different things with “government policy”. There are examples galore of governments handling this correctly, and none of them involve disbanding the FDA so that Chipotle can sell it’s excess salmonella lettuce as a cheap cancer cure.

          • Edward Scizorhands says:

            There is a lot of room between “regulation-free libertarian utopia” and whatever we have now.

            Make the company send samples to the FDA to run through a spectograph. Let the FDA pull random samples off the shelf with serious fines if they don’t match. Let the facilities be inspected to make sure they are clean.

            I’ve read this thread and I don’t remember people being upset that the FDA shut down the Mylan factory in the first place. (I may have missed one.) People are bugged that the FDA, maybe[1], is making it too hard for anyone else to get in and take care of the market demand.

            [1] People are debating possible other causes in this page.

          • Sniffnoy says:

            I didn’t suggest disbanding the FDA at any point, nor did I claim that burger joints are completely unregulated, seeing as the latter is obviously false? I was rebutting your claim that there is some problem with applying usual market economic principles to this situation (and later what I read as your implicit claim that there is some fundamental natural difference between food on the one hand and generic drugs on the other). What the correct course of action is is another question entirely (and not one I really have any good answer to in general). But it sounds like you do in fact agree that your initial claim was mistaken?

            Note, by the way, that your burger example serves to illustrate the point that one can have regulation and also adequate competition. It does not illustrate that one should depart entirely from market principles!

    • Scott Alexander says:

      My position is that market economics works fine for providing bread, chairs, etc at prices that even the poorest people can afford. If it doesn’t work for providing medications, the answer isn’t “lol capitalists bad”, it’s to look at how the health care market is different from markets that work. The main difference seems to be the totally different regulatory structure e.g. the FDA.

      As support for this, free market countries with different regulatory structures have much lower prices and better supplies.

      • 420BootyWizard says:

        I take issue with this comparison of medication to ordinary stuff. Bread is bread is fungible; poor college students successfully (temporarily) live off of packets of cheap noodles or whatever, so if bread prices rise they have cereal to fall back on. Chairs are fungible; if I can’t afford even the cheapest chair at IKEA, I’ll sit on a stump, or a box, or the floor, and I may be less comfortable but not in a way that’s incompatible with life. Medication is extremely not fungible, if people can’t afford medication, then they either start a GoFundMe or more likely take out loans and go into debt until they either get better or more likely die, but whatever the case the pharmaceutical company got paid and there are enough layers and middlemen that everyone can avoid thinking about it all and sleep soundly at night. There is no alternative (Well, no working alternative. Let’s assume that homeopathy, etc is no good). It’s almost like that Ezra Klein tweet you deleted was on to something.

        More to the point though, this is a topic where closer attention to the details of the other countries you’re comparing to will reap huge benefits. Sure other “free market” countries have lower prices and better supplies, but are they (relevant to this discussion) “free market” if they have a single payer system? How many of those “free market” have anything in place that even remotely looks like an HMO? Hell, do decidedly not free market countries also have those better results? Which actual countries are we talking about, and what are the idiosyncrasies of their systems? An actual exploration of this would serve better than “lol Peru is doing better because alpacas are better the FDA”

        • Ghillie Dhu says:

          The post is specifically about generic medications, which are literally fungible.

        • Scott Alexander says:

          Buspirone costs $4 per month when it’s available. I don’t think anyone is taking out a GoFundMe for it.

          In fact, buspirone costs less than food – even beggars can scrounge together $4 per month, but not all of them can get three meals a day.

          I’m not sure your argument is right – people realistically can’t forgo having a computer, or wearing clothes, or having air conditioning in Phoenix. Or at least, forgoing them is hard but not impossible, the same way forgoing an anxiety medication and choosing to be anxious instead is hard but not impossible. Yet clothing companies don’t jack up the price of shirts to $100,000 and go “Haha! You must buy from me or go naked!” And I know people hate to hear this, but the reasons for this pretty much are the ones you learn in Econ 101. If a market isn’t a monopoly, companies can’t do that, no matter how much they would like to or how vital their product is.

          I am arguing that if we tried to make sure that generics markets weren’t monopolies, instead of subtly promoting the opposite, the same arguments would hold.

        • The essential difference is that we accept that the rich will get “better” food than the poor, but not that the rich will get “better” medicine than the poor. Though we might accept that the rich can afford a hospital with better food than the poor, we would balk at the idea that the rich can afford an operation than the poor cannot. Thus the demand that everyone have health insurance, and that the health insurance has to cover everything a doctor thinks is useful. If we thought the same about gadgets as we do about medicine, you would hear about “shortages” of the latest 700$ IPhone.

          As to all the questions you raise, I would agree that the answers would be valuable. Do you have them, or do you merely suspect based on priors that a particular answer is out there to be found? I do hear that these problems with healthcare don’t exist in countries with socialized medicine. Yet anyone who is passably familiar with British politics knows that the NHS, and the belief that it is “under-funded,” is a huge issue. My vague impression is that it’s not as big a deal in continental Europe, but maybe that’s just because the complaining there is confined to languages I can’t read. If you look at the rich countries as a whole, all have seen the pattern of healthcare spending rising faster than GDP over time:

          https://randomcriticalanalysis.com/2018/11/19/why-everything-you-know-about-healthcare-is-wrong-in-one-million-charts-a-response-to-noah-smith/#rcatoc-further-perspective

          The essential problem comes from the psychology of healthcare. People think that healthcare is about health, when in reality it’s primarily about signalling that you care about people. Grandma is sick? You get her healthcare to show you care about her. You can’t afford the healthcare? You don’t just take it with resignation, you jump up and down and scream that someone else like the insurance company or the government should pay for it. I personally suspect that if by some miracle we managed to to cut the price of all the current healthcare procedures in half, the total amount of spending on healthcare would barely budge, as the medical establishment would find new procedures that people “need to have.” They wouldn’t need to prove that they really work to push them on people. Already we have a lot of evidence that the current level of medicine which is provided is excessive:

          https://www.cato-unbound.org/2007/09/10/robin-hanson/cut-medicine-half

          Yet people collectively shrug at this, why? Because the point isn’t to make people healthier, it’s to show that you care. It seems uncaring to advocate cutting medical spending. It’s similar to Valentine’s Day chocolate. It’s a feature, not a bug, that it costs a lot more than a Hershey’s bar.

          • Nootropic cormorant says:

            How is caring essential here? Can’t grandma jump up and scream herself? I understand that if people never cared for any problems beyond their own, we could create a fascist deathcamp libertarian utopia much easier, but I can’t understand why would you think that relations between people are a core issue in the problematics of healthcare politics.

          • Edward Scizorhands says:

            Can’t grandma jump up and scream herself?

            Not from her walker.

            I have heard the “medicare care is just about caring” theory for over a decade and I’ve never really bought in. But I’ve never been able to show it false, either. There are many parts of the medical system that default to maximum effort and getting off that path can be difficult or impossible.

            This is this famous essay about how doctors work very hard to avoid the system that they see every day.
            https://www.rte.ie/radio/mooneygoeswild/pdf/How%20Doctors%20Die.pdf
            (It’s gotten edited and remarked upon and corrected/updated a few times, so I’m not sure which version I’m linking to. Search for “how doctors die” for more, including people who disagree.) There is a lot built-in, culturally and perhaps from evolutionary biology, that makes it hard to say “yeah, this procedure could save your life, but it’s not worth it.”

          • Nootropic cormorant says:

            Googling for confirmation of the central thesis (that doctors avoid terminal care), it appears that the effect may be real but not that strong.

            https://www.webmd.com/palliative-care/news/20160119/doctors-choose-less-aggressive-care-at-end-of-life-studies-reveal
            “Compared with the general population, physicians were less likely to die in a hospital (28 percent versus 32 percent), less likely to have surgery (25 percent versus 27 percent), and less likely to be admitted to the ICU (26 percent versus 28 percent), the findings showed.”

            It would be good if people were better informed about the treatments and how viable they are. I would also like it if the public was better informed about nutrition, but I would support an anti-gluttony campaign as an answer to food shortages.

        • baconbits9 says:

          if people can’t afford medication, then they either start a GoFundMe or more likely take out loans and go into debt until they either get better or more likely di

          No, most medication in the US is not life or death, most is quality of life related.

    • Conrad Honcho says:

      Closing the factory for being unclean is fine. But what’s stopping a new, clean factory from opening up? That’s the point of the article.

      • 420BootyWizard says:

        Scott wrote, seemingly disbelievingly, “nobody will supply this product, it’s too cheap”. But this rings true to me. Compare to a field I’m infinitely more familiar with; video games. Once a video game publisher reaches a certain size (We call them “AAA Games Publishers”, for reasons unknown and unimportant) you start to see an abandonment of reasonably-sized projects in niche (Which tend to be safe but almost never lucrative) genres, and instead see huge “bet the bank” sized projects chasing whatever was the big trend 6-12 months ago.

        This is standard greedy capitalist thinking. It’s not enough to make money. If you’re not making all the money, it’s a failure and / or not worth doing. I have no reason to believe drug manufacturing is any different. Who gets into drug manufacturing to make generics at affordable prices? More to the point: What kind of shareholder invests in drug manufacturing that makes low generics?

        • Scott Alexander says:

          “This is standard greedy capitalist thinking. It’s not enough to make money. If you’re not making all the money, it’s a failure and / or not worth doing.”

          In standard capitalist thinking, companies will chase whatever their own best use of money is. If a video game publisher can make more money investing its resources into one blockbuster than ten minor projects, they’ll go for the blockbuster. But if the minor projects are profitable at all, then somebody will make them (probably small companies or individuals who can’t get the resources for a blockbuster). If blockbusters are more profitable for literally everybody, then competition will heat up until the blockbuster industry is too crowded and profits even out again. This isn’t even a theoretical prediction. I know that a bunch of small videogame projects get made every year!

          If the market for drugs was open, then even if every company switched to something other than buspirone, then given that there are a lot of people who want buspirone and are willing to pay for it out there, someone else would enter the buspirone business.

          Predicting this wouldn’t happen is like saying “Nobody will work in vacuum cleaner manufacturing anymore because there’s more money in tech.” Yes, there’s lots of money in tech. Yet vacuums get made all the same.

        • baconbits9 says:

          Once a video game publisher reaches a certain size (We call them “AAA Games Publishers”, for reasons unknown and unimportant) you start to see an abandonment of reasonably-sized projects in niche (Which tend to be safe but almost never lucrative) genres, and instead see huge “bet the bank” sized projects chasing whatever was the big trend 6-12 months ago.

          How did they reach that size? What was their plan? Where were their successes? Does their new size prevent other companies from developing in the mid sized niche?

        • abystander says:

          You have manufactures in other industries choosing to make low end furniture and then you have manufactures like Herman Miller making high end chairs.

          The niche genres]may be less lucrative than you think. Also I suspect the growing video game publisher is as interested in producing a high end product for its own sake as it is in money. Sort of like an actor who could always get some work in a regional theater but wants to go to Hollywood.

  25. Doug S. says:

    Go look at your Times quote again. It’s saying that middlemen have formed a monopsony in the generic drug market, and they’re the ones who are refusing to pay higher prices, not the consumers who actually want the drug.

    • Sniffnoy says:

      Yeah, what’s up with that? I was expecting the post to get back to that and it never did.

    • MilfordTrunion says:

      you’re assuming that consumers would be willing to pay higher prices for drugs, which, they are not.

    • Douglas Knight says:

      It says that, but is it true?
      I see a lot of articles blaming all sorts of pricing problems on PBMs, which is a similar complaint, possibly the same complaint. But it seems like PBMs exist to obscure drug prices. Maybe that’s an even worse problem, but it makes me pretty skeptical of claims of what’s actually going on. Especially claims of where the money is going, but even claims of who’s negotiating.

  26. DinoNerd says:

    What a crazy country. It has rules, and doesn’t adequately fund the agencies that enforce them. Bad things happen, and the answer is to make those being regulated pay for the regulators, in a way rife with perverse incentives. Farther bad things happen, and the only answer many of the locals can see is “less regulation”.

    Are Americans unusually inept/clueless at e.g. getting something sane out of their political process, or is there a “conspiracy theory” answer, perhaps involving people who want to (e.g.) endanger the public, sell unsafe products, etc. etc. encouraging maximally stupid regulations to encourage the too common “all regulations are bad” attitude.

    • greenwoodjw says:

      The problem in the US is that there is the Progressive movement (maximalist state power for the good of the public) and the original premise of America (minimalist state power to prevent violence, otherwise allowing people to solve their own problems, either individually or in voluntary organization).

      These two groups are in conflict, so the Progressives can’t go all-out “We’re running this industry” and the Constitution’s due process provisions make it illegal to directly manage separate companies doing similar things under different standards.

    • Nabil ad Dajjal says:

      Neither, it only appears that way due to our unusually free press.

      Since you’re not an American, you may not be familiar with the “Florida Man” meme. The gist is that a lot of American news stories about bizarre man-bites-dog crimes like tackling pelicans come from Florida. So much so that Florida has acquired a reputation for the absurd misbehavior of its residents.

      The thing is, Floridians aren’t actually that much crazier than other Americans. The entire phenomenon traces back to Florida’s unusually open public records laws which allow journalists to find strange arrest reports with minimal effort. The perception only exists because every other state is more careful to hide their dirty laundry.

      Likewise with America as a whole.

      • albatross11 says:

        And yet, there is an *immense* amount of groupthink in our media, much of it apparently ideologically driven. You can have huge stories go unreported/almost unreported for years (Bill Cosby’s drugging-and-raping women hobby, widespread fraud in writing mortgages in the years before the 2008 meltdown) until someone starts reporting it, and then the whole pack converges on the story and everyone reports it. And sometimes they converge on the wrong facts (George Zimmerman as a big fat white guy who murdered a little black kid in cold blood) and don’t really ever manage to correct themselves.

        • Nabil ad Dajjal says:

          There’s no contradiction here.

          The mainstream media in the US is awful and perfectly willing to lie for ideological reasons. As is the mainstream media everywhere else in the English-speaking world, very likely the entire world, but without nearly as much competition from alternative media that rely on America’s robust speech protections.

          Would the New York Times like to be America’s Pravda? Sure. But as long as there’s a threat of Breitbart et al eating their lunch they can’t completely memory-hole a major story the way they would like.

          • DeWitt says:

            That really isn’t too different from media elsewhere in the first world.

          • greenwoodjw says:

            @dewitt

            France 2 had another journalist (Philipe Karsenty) charged for claiming France 2 misrepresented and/or staged the death of Muhammed Al-Durra. He was fined 7000 Euros.

            That’s literally impossible in the US.

    • Bugmaster says:

      Are Americans unusually inept/clueless at e.g. getting something sane out of their political process

      Pretty much, yeah. American politicians make a big show about caring about the issues, etc.; but in reality, something like 70% of our laws are directly written by large corporate interests. This isn’t a metaphor — a corporate lobbyist would literally write the law, and then someone in Congress would change the header on the Word doc and rubber-stamp it, end of story.

      Most of the media events you see are basically just political theater — with the possible exception of major policy changes, such as whether we should go to war with another Middle-Eastern country or not. Stuff like drug approval policies is way, way below the radar, and the average citizen has zero impact on such policies. Call me cynical if you want, but from what I’ve seen, this system is incredibly stable, and changing it is impossible in practice.

    • AlesZiegler says:

      I don´t think United States are unique in this regard.

      Yes, US healthcare appears to be unusually screwed up, but other countries on the peak of global development also have some policy areas which are badly mismanaged. E.g. France has good healthcare, but it also has giant unemployment problem persisting for decades. And Britain, well..

    • Clutzy says:

      The US isn’t a lightly regulated country. It is actually has bad scores on the human freedom indices in those related areas.

      • greenwoodjw says:

        ^ This. People don’t realize how incredibly regulated banking and medicine are in the US.

  27. mrr says:

    Scott – I agree in general, but I think you underestimate how often shortages occur when disruptions occur. For instance, the 2011 Thailand floods led to a big disruption (and temporary shortages) in hard drive manufacturing. Gas prices routinely spike if a hurricane hits a refinery. Part of the reason a drug shortage is so noticeable is that prices typically don’t get adjusted in a dynamic way, so you get rationing or pharmacies running out of supply rather than managing the situation through price signals.

  28. Hendi says:

    So what are your complicated feelings about Klein’s tweets, because I don’t see them in the article. Is he wrong? Are diabetics dying because of insulin shortages in Germany and France? Are diabetics there going bankrupt? What are they doing that we’re not, because it seems evident that (on the narrow point of providing insulin to diabetics) they are doing the correct thing and we are doing the wrong thing.

  29. albatross11 says:

    The Rent Seeking Is Too Damned High.

  30. baconbits9 says:

    There are a lot of issues comparing other countries regulatory structures to the US, functionally almost every country has some regulatory structures that work ‘well’ and some that work ‘poorly’, and it is sort of just assumed that you can import one working structure and plug it in without importing the poor ones, or damaging the good ones. How many people would support a Nordic style welfare state if it necessitated a massive reduction in immigration to the US for multiple decades to make it work? How many people would support UK prices for medicines if it also meant a 25% increase in prime age labor force participation?

    When people say ‘the US can’t do regulation right’ I think they often miss the issues that other countries have dealt with in their own idiosyncratic ways, or tacitly assume that the positives in the US aren’t due to quality regulation.

    • Walter says:

      Yeah, people being like ‘we spend so much on the military, look at how well things go in this tiny country that relies on us for protection, and they don’t spend a fraction of that!’ drive me nuts. Like, stuff is different in different places, different policies might be best.

  31. theredsheep says:

    Have to go to work at my pharmacy soon so I can’t effortpost a big comment, but THANK YOU for now.

  32. albatross11 says:

    How much of this problem would be resolved by allowing Americans to buy drugs approved in any first-world country over the internet? If there’s no regulation-induced shortage of insulin in Japan, France, Germany, or Canada, why not just buy it there?

    • Clutzy says:

      A lot for now, none in the future.

      • Edward Scizorhands says:

        Canada and all the other countries know that they lose their bargaining power to get lower-priced drugs if they are simply re-imported back to the US. You need a resistor between PWR and GND or else the system shorts out.

  33. Scchm says:

    Now, buspirone is extensively metabolized and its real-life action mainly depends on hydroxylated metabolites, which are D4 receptor antagonists. Although buspirone itself is a weak partial inhibitor of 5-HT1a receptor it is unlikely to work through this mechanism. If you want a drug acting through 5HT1a receptors that would be vilazodone.

    Scott should brush up on his psychopharmacology. If you are not up to date in your profession, how good can you be outside of it, dabbling in economics and public policy?

    • Scott Alexander says:

      UpToDate, DrugBank, and the package insert at FDA.gov all disagree with you – can you provide a source?

      • Scchm says:

        1. 6-Hydroxybuspirone is a major active metabolite of buspirone The money quotes, “In two human positron emission tomography studies, little or no occupancy of 5-HT1A receptors has been observed after administration of clinically efficacious doses of buspirone (Rabiner et al., 2000; Passchier et al., 2001)… In humans and rats, buspirone is extensively metabolized and has low oral bioavailability (5%)… Plasma levels of 6-OH-buspirone have been recently reported to be 40-fold greater than those of buspirone after oral administration to humans (Dockens et al., 2006).”

        2. Modification of cocaine self-administration by buspirone (buspar): potential involvement of D3 and D4 dopamine receptors Table 1 gives affinities of buspirone and its metabolites for the D2-like receptors: Buspirone D2 – 484 nM, D3 98nM, D4 29 nM. 6-OH Buspirone D2 – 5390 nM, D3 795 nM, D4 40 nM.

        3. Occupancy of Dopamine D3 and D2 Receptors by Buspirone The money quotes, “Eight healthy participants underwent [(11)C]-(+)-PHNO scans after single oral dose administration of placebo and 30, 60, and 120 mg of buspirone in a single-blind within-subjects design. [(11)C]-(+)-PHNO binding in DRD2- and DRD3-rich areas was decreased by the highest (60-120 mg), but not the lowest (30 mg), doses of buspirone. The maximal occupancy obtained was ~25% in both areas… Overall, the modest occupancy of DRD2 and DRD3 even at high acute doses of buspirone, yielding high levels of metabolites, suggests that buspirone may not be a good drug to preferentially block DRD3 in humans.”

        REASONING: If buspirone does not work through 5HT1A, D2 or D3 receptors, then it probably works though D4 receptors, for which buspirone and its metabolites have the highest potency. Keeping in mind the 20-fold higher potency of 6-OH buspirone for D4 vs D3 receptors, and 25% occupancy of D2/D3 receptors by oral buspirone, it is likely that significant (>50%) occupancy of D4 receptors is achieved even by moderate doses of oral buspirone.

        FURTHER NOTE: The general problem with the drugs claiming to work through 5HT1A and D3 receptors is that these receptors are high affinity for, correspondingly, serotonin and dopamine. This means that in the body the drug has to compete against the endogenous neurotransmitters. To do so, as a rule of thumb, the drug has to be considerably more potent than the neurotransmitter at the receptor, and buspirone is not more potent than serotonin at 5HT1A receptor (serotonin K, as far as I remember, is about 10 nM vs buspirone or 6OH buspirone of about 20 nM) or dopamine at D3 receptor (dopamine K on average 25 nM vs buspirone 98 nM or 6-OH buspirone 795 nM). On the other hand, vilazodone (Viibryd) has 0.2 nM affinity for 5HT1A and does achieve significant occupancy of 5HT1A receptors in human occupancy studies. In addition, vilazodone has a higher efficacy as the partial agonist than buspirone.

        ON SOURCES: I have found Up-to-Date to be a quite superficial source; probably, good enough for a general practitioner but not for a specialist. Drug labels: I worked for a couple of years at the FDA CDER Clinical Pharmacology Office, and I can say that FDA do not update even the outrageously obsolete labels. Likely reasons for that are a) every person or group is assigned to a specific project or task. I know of no group or person assigned specifically to update old generic drugs labels; b) technically, drug labels are the property of the drug manufacturer. So, FDA believes it is the responsibility of the manufacturer to update the label. Of course, generic drug manufacturers cannot care less. As for the DrugBank, I do not consider it to be a serious source.

        Sorry for a late response, but the system did not notify me of the follow up comments.

        • Scott Alexander says:

          Thanks, this is really interesting, but would like to hear your answers to a few questions:

          – Buspirone has antiparkinsonian properties usually associated with 5-HT1A agonists. How do you square this with your claim of lack of 5-HT1A receptor occupancy (or did I misunderstand your claim)?

          – The pro-sexual effects of buspirone would make sense in a 5-HT1A context, do you think those are enough to demonstrate it has clinically significant 5-HT1A agonism?

          – Some other azapirones (and other 5-HT1A agonists) seem to be more 5-HT selective but still have buspirone-like anxiolytic and pro-sexual properties; do you think that’s just a coincidence?

          – Are there any published papers or commentary by anyone else supporting a D4-based theory of buspirone?

          • Scchm says:

            First of all, it is not my “claim” that buspirone lacks 5HT1A occupancy. It is a fact, established in two PET studies I cited above. These PET studies directly measured the occupancy of 5HT1A receptors in humans, which in my book is the highest level of proof, as compared to studies in rats or indirect calculations based on in vitro inhibition constants.

            Secondly, does buspirone really have antiparkinsonian properties? Pubmed search for buspirone and parkinson’s dredges up some 50 papers, most of them are about buspirone attenuating levodopa-caused dyskinesias in rat models of Parkinsons. These studies begin with the presumption that buspirone is a 5HT1A agonist and so attribute the effects they find to 5HT1A agonism. Needless to say, they do not prove much. There are four human studies on about 10 patients each. Two of them https://www.ncbi.nlm.nih.gov/pubmed/8149361 and https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3934188/ found that at 20 mg buspirone reduced levodopa induced dyskinesias without aggravating Parkinson’s symptoms. Two other studies https://www.ncbi.nlm.nih.gov/pmc/articles/PMC488507/ https://www.ncbi.nlm.nih.gov/pubmed/3026624 found that higher doses are needed to attenuate levodopa or apomorphine (a D4 agonist) caused dyskinesia’s and these doses often aggravate Parkinson’s symptoms, which is consistent with the hypothesis that oral buspirone is predominantly D4-antagonist.

            It is a separate issue, but do 5HT1A agonists really alleviate levodopa dyskinesias? Two previous large-scale, double-blind, randomized placebo-controlled trials, PADDY-1 and PADDY-2, failed to show an effect of the 5-HT1A agonist sarizotan in relieving levodopa dyskinesias.

            As for the “pro-sexual” effects of 5HT1A agonists, I think you mean counteracting the sexual dysfunction caused by SSRI’s. If so, the reputed effects of buspirone are rather weak and I am not sure they were ever confirmed in a well-designed controlled trial. Nor it seems that real 5HT1A agonists have significant “pro-sexual” effects. The manufacturer of vilazodone, an SSRI and much more potent 5HT1A ligand, tried to pursue the claim of less sexual dysfunction than other SSRIs but FDA disallowed that claim citing insufficient evidence.
            Presuming that “pro-sexual” effects of azaspirones do exist, it may be a coincidence but flibanserine, a hypoactive sexual desire drug, which is claimed to work thorough 5HT1A receptor is also a partial agonist of D4 receptor (efficacy of 20%, so it is rather an antagonist).

            As for the review work, there has been an activity (which subsequently failed) of repurposing buspirone for drug addiction based on its D3 and D4 antagonism (for example https://academic.oup.com/ijnp/article-abstract/16/2/445/624171 https://www.sciencedirect.com/science/article/pii/B9780124201187000081). But there does not seem to be a review linking D4 antagonism and buspiron’s anti-anxiety and anti-depressive action. Scott, I apologize for saying that you neglected your psychopharmacology. Since the original papers are more than ten years old and are well-cited, I presumed that someone would put two and two together and reflect it in a review. However, it is not the case.
            If you want more specifics or have other pharmacology questions, please feel free to email me pauleug at yahoo dot com. The alerting system of this blog does not alert me of the follow up to my comments, instead it alerts me of every new comment. I had to turn it off, and I found out of your reply only because you noted my comment as a comment of the week.

  34. Quixote says:

    Seem like you described a problem with patent trolling, and then instead of patent reform you went on a rant about the FDA. You also described a poorly designed fee structure and then went on a rant about the FDA’s health and safety regulation. Do you honestly think the drug supply in Germany is substantially less safe of clean than in the US? Do you think they pay anywhere near what we do? What is the difference? Its not that Germany has less regulation.

    • John Schilling says:

      Seem like you described a problem with patent trolling

      Buspirone hasn’t been under patent since 2001. Perhaps you could explain how the Buspirone shortage “seems like” a problem with patent trolling?

    • Scott Alexander says:

      I think the regulatory process causes/exacerbates the other problems.

      I understood the sources as saying that one reason why Sanofi’s patent trolling is such an issue is that generics companies have to prove to within a certain tolerance that their insulin is exactly like Sanofi’s, but they can’t use any of the same methods to produce it.

      Likewise, the FDA levies fees to fund its inspection activities, and those fees are poorly structured.

      I agree one can imagine solving all of the other problems individually, and then making sure no new problems pop up, but at some point it becomes the same kind of argument as “a dictator would be good as long as they made only good decisions”. Probably true, but a dictator won’t make only good decisions, so we might as well sum this state of affairs up as “dictatorships are bad”. Likewise, a regulatory agency would be good if it didn’t distort things or make it easier for big companies to push little companies around, but in real life regulatory agencies are at pretty high risk of promoting those things.

      • Guy in TN says:

        but at some point it becomes the same kind of argument as “a dictator would be good as long as they made only good decisions”. Probably true, but a dictator won’t make only good decisions, so we might as well sum this state of affairs up as “dictatorships are bad”. Likewise, a regulatory agency would be good if it didn’t distort things or make it easier for big companies to push little companies around, but in real life regulatory agencies are at pretty high risk of promoting those things.

        The reason why we say “dictatorships are bad” is not because they don’t do exclusively good things (no system has exclusively good effects), but because there is an unused alternative (democracy) which is superior.

        So is your unused superior alternative a world without the FDA? Have you really investigated what a world without the food and drug regulations would look like?

        It’s one of those Chesterson’s Fence situations: Every modern nation, across the world, adopted food and drug regulations sometime over the past few centuries. No country is seriously thinking about abolishing them. Perhaps you truly have discovered a superior, untried, paradigm shifting alternative.

        Or perhaps, all the good effects the FDA has have become so normalized for you, that you are having difficulty even noticing that they are there. “You only feel the wind when you’re riding against it”, and that sort of thing.

        • John V says:

          I don’t think he is literally calling for the abolition of the FDA.

          But there is a tradeoff and a lot of times it is not recognized or not acknowledged. X drug passes the FDA process, it later turns out it wasn’t safe or wasn’t effective.

          People demand more regulation, more lengthy and expensive trials, more red tape to make sure it doesn’t happen again. Repeat 1000 times and eventually you potentially end up in a scenario where the extra cost and delay in getting good treatments to people who need them far outweighs the marginal benefit from sometimes catching more bad drugs. Or worse, extremely valuable drugs are never developed because it would no longer be cost-effective.

          I understand that some people think that we are not close to that point. But people who fail to recognize that there is a tradeoff at all or who think that the mere existence of drugs that might be bad justifies arbitrarily difficult FDA approval process are very misguided.

          • albatross11 says:

            Scott is calling for the abolition of the FDA in exactly the same sense that people protesting a pattern of police brutality are calling for the abolition of the police force. (That is, in both cases, some rare people are making the more extreme demand, but they’re a tiny fraction of the total.)

          • Guy in TN says:

            Is there anyone who doesn’t recognize the trade-off? Is that a real position serious people hold?

            If you were to ask: “Hey Ezra Klein, do you think think the FDA approval process adds any additional cost or delay?”, he’s be like “Nope, there’s no additional cost or delay added, no downside whatsoever.”

            If Ezra doesn’t seem to spontaneously mention the costs or delays very often, that is probably best explained by the incentives Scott lays out in this very good post.

          • rlms says:

            Although if you look at the last paragraph of the Vox article, he does mention them:

            There’s also “extreme regulatory complexity” around bringing follow-on generic insulins to market, Luo added. And that’s something regulators, such as the Food and Drug Administration, have been working to streamline. History has shown that their efforts are worthwhile: When cheaper generic options are introduced to the market, overall drug prices come down. A century after insulin was discovered, it’s about time we had one.

        • Walter says:

          Wan’t the alternative to the USA’s overactive FDA kind of spelled out in the article? Like ‘the thing that Peru uses to approve drugs without squandering all this money and lives’?

        • It’s one of those Chesterson’s Fence situations: Every modern nation, across the world, adopted food and drug regulations sometime over the past few centuries. No country is seriously thinking about abolishing them.

          You could say pretty much the same thing about war making. Every modern (and past) nation across the world spends significant amounts on the military (probably a few exceptions, but not many). No country is seriously thinking about abolishing its military and never being involved in warfare in the future.

          Hence a world with armies and warfare must be a good thing, otherwise everyone would have gotten together to abolish war.

          To put the point more generally, there are situations in which each individual actor correctly acting in his own interest produces net negative results—market failure is not a problem limited to ordinary private markets. The fact that all countries do something is evidence that there is a reason to do it, but not that doing it is desirable.

          For a simpler example, all modern countries have a non-zero murder rate. It does not follow that … .

          Chesterton’s fence implies that if there is a rule there is some reason it exists and you should figure out what that is before deciding whether to abolish it. The claim that if there is a rule it’s because it is a desirable one is considerable stronger, loosely speaking the Whig theory of history.

          • Guy in TN says:

            Chesterton’s fence implies that if there is a rule there is some reason it exists and you should figure out what that is before deciding whether to abolish it. The claim that if there is a rule it’s because it is a desirable one is considerable stronger, loosely speaking the Whig theory of history.

            Well yes, I’m not espousing a vulgar interpretation of Chesterson’s Fence, i.e. “the FDA is good because it exists“. I’m questioning whether Scott has done the due diligence in investigating why practically every country at some point abandoned their no-regulatory-agency policy, in favor of a policy of having a regulatory agency.

          • Nornagest says:

            No country is seriously thinking about abolishing its military and never being involved in warfare in the future.

            Costa Rica abolished its army in 1949, following a period as a military dictatorship. But it did retain some coast guard- and border patrol-type forces. Most of the other countries without standing armies are microstates.

        • Clutzy says:

          On the other hand, one might look at the creation of the FDA and other such regulatory agencies and see their their establishment was, in fact, a violation of the principles behind Chesterton’s parable.

          • greenwoodjw says:

            I don’t see how, since it doesn’t apply to building fences.

          • Clutzy says:

            Easy, it effectively dismantled the old vetting systems. Its just like if the government decided to start creating databases of lemon cars and cars with bad user history and made it free to buyers. This would kill Carfax, even if Carfax is more efficient than the potential government system. The only way carfax could stay in business is if the government system was almost totally useless, or substantially useless (like some city restaurant inspectors which is why there are still independent reviewers in the sanitation space).

  35. Walter says:

    “I realize my political slant makes me blame the FDA for these sorts of things pretty often.”

    Hmm, I’ve always thought your political slant was something like ‘progressive, but wishes that the social justice folks would be less terrible about it’. I sort of presumed that you’d generally be favorable to big healthcare things like the ACA, single payer, etc, though perhaps I got the idea from your support for UBI.

    It is definitely heartening to hear that you are also critical of our bureaucratic overlords. I’ll talk to my overseers in the Vast Right Wing Conspiracy, see if we can’t put this towards getting your libertarian creds reinstated.

    • albatross11 says:

      Note that there’s no inherent contradiction between wanting to use market mechanisms instead of command economy mechanisms wherever possible, and wanting generous welfare systems (perhaps including medicare for all or some such thing). This is basically how most of the first world has managed to be wealthy and innovative while not having a huge number of people starving on the streets.

    • Chevalier Mal Fet says:
  36. J Mann says:

    I haven’t seen this mentioned yet – sorry if I missed it.

    This article argues there’s plenty of blame to pass around on insulin, then raises what looks like a new point – FDA regs provide that starting in 2020, when insulin begins being regulated as a biologic, they will cancel any pending applications and require the manufacturers to start over. As a result, for the last few years, there hasn’t been much reason to apply to make insulin, because it’s unlikely you will be approved by 2020.

    policymakers in Washington didn’t have a framework for regulating biologic drugs and their copycat counterparts, biosimilars, until 2010, when Congress laid out the start of that framework in its Biologics Price Competition and Innovation Act. As part of that law, Congress said insulin — which had previously been regulated like any other drug — would be regulated as a biologic beginning in 2020.

    Congress left the logistics of that transition up to FDA — and the agency’s transition plan wasn’t as flexible as generic makers had hoped, at least for encouraging a generic insulin.

    The FDA’s policy decrees that any insulin application that’s still pending before the agency on March 20, 2020, will be rejected. Any applicant would then have to start over and reapply under a new biosimilar pathway.

    Given the lengthy timeline for drug development — along with an uncertain and often timely FDA approval process — the hard stop in 2020 has made it dicey for drug makers to submit a potential generic insulin application for several years now.

    Even companies who have insulin products in development and are ready to file their applications with the FDA are now waiting to apply until after 2020, given they want to avoid going through the time and money of applying in 2019, only to be rejected on the March 20, 2020, date

  37. deciusbrutus says:

    There is no way that the tax scheme isn’t an intentional feature of the FDA written in by the large companies that benefit from the lowered competition.

    The solution is to find a site in China that will produce buspirone by the ton, import it as bulk chemical, assay it for quality and then sell it to patients in a way that either uses a loophole to be legal or doesn’t.

    • Scott Alexander says:

      You can’t sell anything “to patients”. You can only sell things to pharmacies. Patients haven’t even figured out goodrx.com exists yet, they’re definitely not going to know about your weird buspirone smuggling scheme.

  38. benquo says:

    Now a bunch of my anxiety patients are panicking because they can’t get the medication that they need to function.

    This is the most elegant double-entendre I’ve seen in a long time. I feel a bit dirty about appreciating it so much, though, because of the panicking anxiety patients.

    • woah77 says:

      So I wasn’t the only one who caught and appreciated that wordplay. My other favorite was

      …arranged in a series of helices and threads and tentacles…

      To which I want to reply “How do you know what kinds of entertainment I enjoy?”

  39. belvarine says:

    Why bother with enforcing a distinction between brand names and generics? If we do away with the patent system for medication, will people stop creating new ways to extend their lifespan?

    • benjdenny says:

      Yes, probably. The effective groups extending lifespans (I.E. making new drugs) aren’t so much “people” as “gigantic corporations spending massive amounts of money they will only spend if they are allowed to make that money back”. “People creating new ways to extend their lifespan” is sniffing essential oils and putting jade eggs in genitals, for the most part.

      Will medical research just stop? No. Will an amazingly steep decline in funds used for medical research occur, and a corresponding decline in research and release of new drugs? Almost for sure, based on basically any common-sense assessment of how markets work.

      The US currently makes about as many new drugs, year to year, as the rest of the world combined. That’s either because there’s more science in our air or something, or that US citizens are just much smarter than everyone else, or because of some peculiarity with our market. If it’s the last (spoiler: it is very likely it is) then doing what you want has the effect of ceasing the US subsidization of the global medical research market.

      • Murphy says:

        “makes about as many new drugs, year to year, as the rest of the world combined.”

        That’s a remarkably meaningless statement.

        Scientific discovery doesn’t stay within one country.

        When EU health agencies fund research into stuff there’s no magical wall that stops people from doing drug trials in the USA to get market approval from the FDA.

        If you live in some random country, anywhere , and you find a cure for something unpleasant you’re not gonna only sell it in that country.

        You’re gonna patent it everywhere you can, in every country in the world you can.

        The USA, thanks to having a deeply deeply screwed up drug market is the most profitable market in the world.

        So if you invent a new drug in Thailand… you’re basically certain to go and try to patent it in the US.

        Though I’ve been seeing this absurd narrative more and more from a subset of americans. There seems to be some kind of nationalistic thing that a bunch of people seem to be buying into where they convince themselves that the world somehow owes the USA for running it’s health industry inefficiently. Trying to argue against people cleaning up the mess by trying to make the mess some kind of symbol of national pride.

        • John Schilling says:

          That’s a remarkably meaningless statement.

          Then how about a more meaningful statement? The United States pays for, vastly more new drugs year to year than the rest of the world combined. Because,

          if you invent a new drug in Thailand… you’re basically certain to go and try to patent it in the US.

          and that’s about the only reason anyone in Thailand ever would invent a new drug, because the money they get from the Thai market will never cover their R&D costs and that remains true even if we throw in all the markets Murphy would tell us are wise and enlightened and doing it right, and only the US will actually pay pharmaceutical companies in Thailand enough to develop new drugs.

          Which Murphy’s favorite countries can then copy for free, because the US lets them do that even though it doesn’t have to. But whatever country the scientist who invents the new drug lives in, it’s a safe bet that it was the United States who paid him to do that.

          Not that this should matter for Busiprone, which was invented in 1968, or insulin as discovered in 1921. We were mostly talking about drug manufacturing rather than drug development. But since you asked…

          • Edward Scizorhands says:

            European drug companies get noticeably more revenue selling across an ocean to America than they do to the just-about-the-same-sized home-grown economy.

          • Murphy says:

            “lets them do that even though it doesn’t have to”

            Fortunately the nationalists in the USA aren’t correct when they tell themselves that they can control physics or control the whole world. They don’t have to “let” anyone do anything because their opinion is irrelevant.

            If your government offers free money in a badly designed program, nobody else suddenly owes you for it.

            Not that this should matter for Busiprone, which was invented in 1968, or insulin as discovered in 1921. We were mostly talking about drug manufacturing rather than drug development. But since you asked…

            I responded to the absurd “new drugs” quip.

          • Cliff says:

            Murphy,

            Actually it seems to be your statement that is nonsensical. Most new drugs are developed in the U.S. The fact that other people get to take those drugs after they are developed is really a non sequitur. It seems like you’re just making the comment that EU free-rides on the U.S.’s drug development which seems very consistent with the original post.

            And I’m not sure which drug payment system is “badly designed”, the one that free-rides on the U.S. and would drive all drug developers out of business without the U.S. playing along, for Moloch-type reasons, or the U.S system where people pay “market” prices

        • benjdenny says:

          The statement is meaningful, and here’s why:

          You said, essentially “let’s take away the ability to patent drugs”. OK. Now that’s gone. The ability to patent drugs doesn’t matter very much in countries that negotiate drug prices; they pay much lower prices (read: closer to generic prices). Their market is subsidized by the US, who pays full price for those goods.

          Now since you’ve taken away the ability to make as much money on drugs in the US, it’s not that different from the rest of the world. So now the part where the US is unique comes in to play – either we are just smarter than everyone else, or there’s magic in the soil, or we make drugs here because we can make money on them here.

          So now let’s look at population distribution a bit. 15% of the world, about, lives in developed nation. The amount of drugs that are produced outside of the developed world are 0 or near it. Out of that 15%, 4.4% is us. So really at the most we should produce about a third of the drugs the world uses – but we don’t, we produce about half.

          So that’s near 20% that’s gone if we are like the rest of the world, right off the bat; the magic in our soil disappears and now we are the UK, that’s what you get. But that’s not all you get – the rest of the world, as you point out, was making money off our patent system too, and that motivated them to make drugs. Now the only people who pay full price are gone, and they can be outcompeted. It’s not the best innovators who survive, it’s the best imitators.

          We can argue about the amounts in play here, but you are going to have to give something up. You can give up progress, and a lot of it. You can give up regulation, and an awful lot of it. But you can’t have something for nothing, that’s not how this works.

          This isn’t just how drugs work – it’s the reason patents exist in the first place, and are very similar in most developed countries. People won’t work for free, especially when the work itself costs an enormous amount of money, as drug development does. If you take away the rewards, you take away much of the desired behavior.

          • Murphy says:

            You said, essentially “let’s take away the ability to patent drugs”.

            No I didn’t. that was the GP post. I objected to one of your arguments as being nonsensical.

            You said

            The US currently makes about as many new drugs, year to year, as the rest of the world combined.

            Where are you even getting that metric/numbers from?

            Whether the FDA approves a drug has little or no relevance to whether it was discovered in the US or as the result of funding in the USA.

            You seem to jump back and forth between talking about drug production and drug discovery as if you don’t see any distinction.

            Trying to make the claim coherent : You could look at NCE’s per year per capita based on the home country of the inventing firm over the last few decades… a very stilted metric since it likely depends more on the tax regime of the parent country… but hey lets play.

            The USA comes out at 1.49 NCE’s per million
            The UK comes out at 1.56 NCE’s per million

            Japan seems to be doing something right because they come out at 1.88 NCE’s per million

            Number of NCE’s seems to be basically tied to population in the developed world.

            Though that seems to line up pretty well with an SSC post:

            https://slatestarcodex.com/2019/04/22/1960-the-year-the-singularity-was-cancelled/

          • benjdenny says:

            First: Yeah, definitely thought you were the original dude; my bad.

            Second: I’m never mentioned FDA approval in the US as making something be “made” in the US. That’s a weird metric nobody is using.

            https://www.hbs.edu/faculty/Pages/item.aspx?num=35991

            http://assets1c.milkeninstitute.org/assets/Publication/ResearchReport/PDF/CASMIFullReport.pdf

            The first report you have to get fancy to access, but it’s summarized on page ten of the second as concerns NCEs.

            If you look, you will find the US made 57% of major nations NCE’s, despite being populated at an about 4/15 “population of US/population of developed world” ratio.

            It gets worse when you look at clinical trials; we conduct them at a rate roughly times as high per-capita than the closest country – NCE being a weird metric that is only tangentially related to “released drug” and cuts out the “were there resources to create workable ideas, and then the resources to actually do anything with them?” metric completely.

            Or we could look at drugs that actually get used; in terms of the 75 leading global medicines, 54 of them were developed in the US.

            So, again: We are either just fundamentally smarter than everyone else (unlikely), or magic elves do our work at night (culturally unlikely, you’d expect the UK to have an edge here) or something unique about our market encourages us to make drugs. It might be money, if you think businesses are motivated by a desire to make money. Because in terms of NCE’s actually being developed, and those NCE’s eventually finding mouths, we are (conservatively) 2/3rds of everything.

            And, again, this is disregarding that our market is the only market in which anybody can sell drugs at their actual market price – killing our system effects other systems in a global market, probably.

          • Murphy says:

            “57% of major nations NCE’s”

            Funny they should pick that particular number set.

            They’re cherry picking by decade for the decade with the largest disparity.

            And for a decade when, there were the least NCE’s discovered overall.

            Which is major sign that someone is trying to mislead you.

            it’s like pointing to the speed of runners only during a single 3 second segment of a race and ignoring the rest.

            “But our guy ran faster than any of the other runners, that means he won!”

            “He only ran faster for 20% of the race, yes he moved fast for that one bit but that wasn’t his average speed, that was how fast he ran for those few seconds”

            My NCE’s per million figure are for the whole race, though from the same table you cherry picked from.

            Comparatively the US discovered less than expected taking population into account.

            Unless there’s something unusually unproductive about the American population and unusually productive about the Japanese. Or japan and the UK had a fundamentally better regulatory system for encouraging creation of new drugs.

      • RalMirrorAd says:

        There’s a natural minimum window of monopoly that a company can attain by simply being the first mover, though that probably won’t be enough.

        Patent protection is tricky, too little and nobody may wish to participate in research, too much and nobody will be able to participate in research. Patents can make research profitable but they can also make lobbying for more patents (without more research) profitable as well.

        If noticeable numbers of lifespans are being cut short by a lack of medicine that was invented decades prior I find it unlikely that a new variant of that medicine is capable of offsetting that fact. So I think it’s fair to say we’re firmly on the side of ‘too much patent protection’

        • Murphy says:

          I think it’s more complex than that still.

          drug company incentives and what’s actually good medical practice diverge.

          For example with antibiotics.

          Patent-wise they’re a terrible investment. Particularly if they work really well.

          because the most sensible thing to do with a new amazing antibiotic…. is to lock it up and only use it as a last line intervention when all else has failed and someone has something remarkably drug resistant.

          Then decades later, if bugs have developed resistance you might let it be more generally used.

          But that’s terrible for the patent holders who need it to be heavily used in the first 12 years for them to make any ROI.

          • Edward Scizorhands says:

            You are correct that antibiotics respond poorly to the patent system. We need prize funds for antibiotics. WHO or the FDA or BillAndMelindaGates foundation can pay $1 billion to however develops the next antibiotic which is then hidden away until needed.

            (. . . so what are they waiting for? The patent system does not block prize funds at all. Get to it!)

            But most every other area of drug discovery responds well to the patent system.

          • albatross11 says:

            Edward:

            It also doesn’t pay anyone to get unpatentable stuff through the gazillion-dollar FDA approval process, so nobody does that unless they can patent some approximately equal thing.

          • Murphy says:

            The incentives can still be poor.

            The patent system strongly incentivizes drug companies to mislead doctors as much as they can get away with.

            Is their new drug a good option for half the patient population and would improve patient health? Well just doing what’s best isn’t doing what’s most profitable so even if it’s a worse option than an alternative for the other 50% their incentives solidly line up with getting that other 50% of the patient population on the drug regardless of whether it’s good for them.

            Ditto for drugs which are dangerous, or just lack efficacy. When there’s already a significant sunk cost the incentives line up strongly behind doing anything possible to fudge the results because once you have a patent and approval, whether the treatment actually helps or hurts patients isn’t nearly so big a deal. Bonus points if it takes 10 years + for others to prove it ineffective or dangerous.

            Related to the above it incentivizes polluting the scientific literature with ghostwritten papers and falsified results.

            Patents work acceptably badly as a system. They work but they’re a long way from optimal.

          • Edward Scizorhands says:

            The patent system is the one that has proven effective at inventing new drugs. I would very much like to see prizes work, if for no other reason than that we need new antibiotics, but they don’t have a track record yet. 50 years from now, all the drugs we fight about today will be part of the public commons. Spending too much is a problem, but so is not growing our knowledge base.

            Bill and Melinda Gates are trying to pre-pay for a “universal flu shot”: https://www.theverge.com/2018/4/27/17293160/bill-gates-announces-12-million-for-universal-flu-vaccine-research

            They tried once before and ended up suing the people they gave the money to https://www.healthcarepackaging.com/article/bill-melinda-gates-foundation-sues-vaccine-grant-recipient

            Will this work? Maybe. There are some things about a prize system I would prefer, like the fact that the national health care systems all over the world know right now how much they would pay for a cure for a given disease and could pre-commit to paying that, instead of fighting after-the-fact. (A problem with this is that you seldom ever get a complete cure, and instead something that might 65% cure it, and how do you fairly determine that that number is 65% and not 62% or 66% when each percent might represent a billion dollars.) But I’d like evidence the new system works.

          • Murphy says:

            ya, it’s hard to make a prize pot work. I’d love to see them too.

            If someone turns up with a cure for something deadly… but it has horrible but non-deadly side effects that are so horrifying that patients go “I’ll take death instead please” do they get the prize pot?

            it’s also awkward re: what happens if the drug doesn’t meet the requirement for the prize pot but comes close.

            Also it flips the incentives around, once the R&D is actually done the incentive then falls on the prize pot awarder to act like a car salesman judging a trade-in. “Sure it cures all forms of cancer and grants patients perfect pitch but it causes slight skin discoloration so we’re refusing to give the prize”

        • albatross11 says:

          I think there’s a tradeoff between:

          a. Length and strength of patent protection.

          b. Length and cost of approval process.

          We’ve made the approval process incredibly expensive and long. There may be good reasons for that, but it means that drugs take forever and cost a fortune to get through that process, and there are a lot of opportunities for your drug on which you’ve already spent several million dollars to fail in a stage 2 trial and thus become worthless.

          If you shorten or weaken patent protections, then you will have fewer drugs developed, because the only way a profit-making company is going to spend $X developing a new drug is if it expects to make back $X + market rate of return on the drug. If you weaken/shorten the approval process, you will get more drugs developed but they will more often be things you later wish hadn’t made it to the market. (I strongly suspect we’d be better off with a less cumbersome approval process, but I don’t know enough to hold that opinion very strongly.)

          • belvarine says:

            Instead of making it easier to clear the review, why don’t we allocate more funding to the people performing reviews? Keep existing safety standards and hire more people to examine findings. Put money into consolidating inefficient processes and integrating with other departments. That way we get more new treatments and higher confidence in their safety and efficacy. Plus, companies wouldn’t have to foot the bill, so it would incentivize more companies to take part and innovate.

          • MilfordTrunion says:

            “why don’t we allocate more funding to the people performing reviews? ”

            When you file an NDA (New Drug Application) with the FDA, you’re required to pay for the review.

          • I strongly suspect we’d be better off with a less cumbersome approval process, but I don’t know enough to hold that opinion very strongly.

            We at least have some (old) data on part of the issue. The conclusion was that an expansion of the regulation (the Kefauver-Harris amendment) reduced the rate at which new drugs came to market roughly in half with no detectable improvement in average quality.

        • Cliff says:

          There are plenty of problems with the patent system (I’m a patent lawyer) but pharmaceuticals is where the patent system works BEST. For pharma, I don’t think there a reasonable case that there is too much patent protection. Pharma research just can’t work without patent protection or some equivalent.

          Patents can make research profitable but they can also make lobbying for more patents (without more research) profitable as well.

          This isn’t a thing that actually happens. Pharma companies do favor strong patent protection but you have many more companies lobbying against it because they disproportionately help small companies.

          The patent system strongly incentivizes drug companies to mislead doctors as much as they can get away with.

          I don’t understand the connection here. How do patents affect this in any way?

    • Nabil ad Dajjal says:

      Going from drug discovery to FDA approval takes on average 12 years and costs $1.8 billion dollars.

      How are you planning to convince pharmaceutical companies and the investors they turn to for capital to develop new drugs when anyone in the world can manufacture and sell a generic of your FDA approved drug at a lower price because they didn’t pay any of the costs of developing it?

      Even if the FDA approval process for drugs was an order of magnitude cheaper and faster it would still be a losing proposition.

      • Even if the FDA approval process for drugs was an order of magnitude cheaper and faster it would still be a losing proposition.

        I’m not sure. There are first mover advantages which to some degree substitute for patent protection.

        And they asked me how I did it; and I gave ’em the Scripture text,
        “You keep your light so shining a little in front o’ the next!”
        They copied all they could follow, but they couldn’t copy my mind,
        And I left ’em sweating and stealing a year and a half behind.

        From one of my favorite Kipling poems.

    • deciusbrutus says:

      Moloch says yes, because no group of people can coordinate well enough to raise enough money to produce medical research that will raise their own lifespan significantly. If they can expect to recoup the cost of research, then investors will join in with money that they wouldn’t have spent to extend their lifetime.

      If you have anxiety and have a choice to fund a study that can produce results in five years, it’s much less valuable than the ability to buy drugs from a study funded five years ago. But if the people who funded the study five years ago and developed the drug last month can’t recoup any of the study and development expenses (because GeneriCo is selling the same drug for 1% over the production cost), they didn’t develop the drug.

  40. RalMirrorAd says:

    Do you think it’s possible that Drug *manufacturing* regulation (I.e. not development) could be handled through some kind of insurance scheme?

    So suppose the FDA outlines the specific kinds of malfeasance for which a manufacturer could be held liable in a lawsuit either class action or directly being sued by the government. The FDA in turn requires the company purchase insurance or a catastrophe bond or some kind of security/guaranty that can cover a certain level of liability that scales linearly with production. It would then be up to the manufacturers and insurers to establish best practices for risk mitigation so that the premium paid is economical.

    The assumption is that obviously poor manufacturing would constitute an uninsurable risk, higher premiums would offset the benefits of cutting corners even if the manufacturer could get insurance. The FDA’s job becomes easier as it only need proof of insurance, if necessary can ask for copies of the underwriting that was done by the insurer which would likely take far less time to review than the underwriters spent inspecting the factory, but I don’t think that last step should be a requirement.

    Seeing as the FDA doesn’t perform its own drug research but merely reviews research done by others, this isn’t without precedent.

    The only problem is that insurance regulation is a state-level phenomenon, I also have no direct experience with product liability. The biggest risk would be negligent insurers. One would like to think that insurers wouldn’t competitively undercharge risks but it has happened in the past (though less so now) and the FDA would have to leverage the expertise of another governmental body to determine whether that was going on.

  41. DeWitt says:

    Which of the following do you think is true?:

    1. Peru has better technology than the US, and so is able to make cheap biosimilar insulin using processes that our own scientists and engineers can’t manage.

    2. Peru has a bigger market than the US, so there’s more money in creating generic insulin to sell to Peruvians than there is selling it to Americans.

    3. Peru has a laxer regulatory environment than the US, and this is enough to make producing biosimilar insulins cheap and easy.

    4. Peru set a price that isn’t ridiculous, and it gets met well enough that they now don’t have a shortage

    5. Peru subsidises or even runs insulin production facilities so shortages can’t really happen

    I don’t know which one is true, but neither do you, Scott. Did you research the matter? Did you look into this? Or did you pluck a random country from a list and decide it must be libertarian paradise?

    I’m not very fond of regulation or deregulation in particular; the Shkrelis of the world are very good at being statists when regulation suits them, and other companies suddenly cry foul with the libertarians when there’s environmental regulation or somesuch going on. But I do know that there’s a right way of doing things, a wrong way of doing them, and that advocating for a position when the case study you refer to (Peru) isn’t one you seem to even know much about is irresponsible to say the least.

    • Scott Alexander says:

      I did search for a while to see what I could find about the Peruvian system before posting the essay. I can’t find much, but what little I did find suggests the Peruvian system isn’t nationalized and doesn’t do much price regulation. This fits my general understanding of Latin American health systems.

      If you have information otherwise, let me know.

      • DeWitt says:

        I was going to do this when I got home, but Guy in TN may have beaten me to the punch below here, though I can’t currently comb through his source

        His point about prices in general also rings true; a pound of flour costs several times as much in the US than it does in India, but this difference in price doesn’t mean more Americans than Indians happen to starve.

    • Guy in TN says:

      4. Peru set a price that isn’t ridiculous, and it gets met well enough that they now don’t have a shortage

      Ding ding ding! Peru has a set price list for all medicine bought by the public sector.

      I’d also like to add a possibility, that is perennially useful for any argument along the lines of “look at how much cheaper things are in third world countries”
      6. Price is set by supply and demand, and less money to spend means less demand. All else equal, poor countries will have cheaper everything.

      • Scott Alexander says:

        The thing Peru has that we don’t isn’t “cheap insulin by forcing Sanofi to accept their price”, it’s biosimilar insulin. Whatever price they get for biosimilar insulin is downstream of allowing biosimilar insulin to exist in the first place, which is not a price-setting issue.

        • Guy in TN says:

          So is the synthesis conclusion: Peru has a stronger regulatory environment for most medicine. But on this narrow point, it regulates less than the US in a way that produces better outcomes, because the US regulates on this point in a way that produces worse outcomes?

          It seems like the overall “level of regulation” is not a particularly useful metric here.

          • Cliff says:

            Peru has a stronger regulatory environment for most medicine.

            What’s your source for this?

  42. Nabil ad Dajjal says:

    First and foremost, I want to say that this description of a tentacled insulin peptide made me smile.

    It’s not a simple molecule you can make with a chemistry set. It’s a complex peptide hormone with about seven hundred atoms, arranged in a series of helices and threads and tentacles.

    Anyway, the problem with biosimilars is only going to get worse as time goes on if the rules aren’t changed.

    Immunotherapy using engineered antibodies has been growing in importance, and every one of those proteins has it’s own “tentacles” in the form of secondary and tertiary structure. And now there are CAR-T therapies which use the patient’s own cells modified to express artificial T-cell receptors: I don’t have even the slightest clue how a generic manufacturer would prove that their process is similar to the approved therapy without going through the entire FDA approval process.

    A lot of this stuff is new and likely still under patent so there’s probably time to figure out a sane way to address it. But that won’t happen if half of the people involved are LARPing as Marxist revolutionaries.

    • MilfordTrunion says:

      It leaves me wondering whether this kind of extremely-customized therapy will stop being seen as pharmaceutical and start being seen as surgical…

  43. Murphy says:

    The buspirone industry has said no to the government’s regulations around buspirone. It’s said no by ceasing to exist in a useable form. Now a bunch of my anxiety patients are panicking because they can’t get the medication that they need to function.

    Funny side note, here’s the NHS’s info on buspirone.

    In the UK exactly this model is followed.

    The government negotiates and the company has the choice to sell at a reasonable price or not.

    There seems to be something special about how unusually badly america/americans seem to cope with this kind of problem.

    https://bnf.nice.org.uk/medicinal-forms/buspirone-hydrochloride.html

    I count 23 companies producing it.

    BUSPIRONE HYDROCHLORIDE
    Tablet All products
    Buspirone 5mg tablets (A A H Pharmaceuticals Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) £5.63 Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Actavis UK Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) £6.10 Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Alissa Healthcare Research Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) — Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Alliance Healthcare (Distribution) Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) £4.88 Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Almus Pharmaceuticals Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) £4.88 Part VIIIA Category M £4.88
    Buspirone 5mg tablets (DE Pharmaceuticals)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) — Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Mawdsley-Brooks & Company Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) — Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Mylan)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) £13.30 Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Phoenix Healthcare Distribution Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) — Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Sigma Pharmaceuticals Plc)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) — Part VIIIA Category M £4.88
    Buspirone 5mg tablets (Waymade Healthcare Plc)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 5 mg

    30 tablet (POM) — Part VIIIA Category M £4.88
    Buspirone 10mg tablets (A A H Pharmaceuticals Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) £7.50 Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Actavis UK Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) £5.86 Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Alissa Healthcare Research Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) — Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Alliance Healthcare (Distribution) Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) £5.86 Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Almus Pharmaceuticals Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) £5.86 Part VIIIA Category M £5.86
    Buspirone 10mg tablets (DE Pharmaceuticals)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) — Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Mawdsley-Brooks & Company Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) — Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Mylan)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) £15.62 Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Phoenix Healthcare Distribution Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) — Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Sigma Pharmaceuticals Plc)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) — Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Teva UK Ltd)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) — Part VIIIA Category M £5.86
    Buspirone 10mg tablets (Waymade Healthcare Plc)
    Active ingredients Size Unit NHS indicative price Drug tariff Drug tariff price

    Buspirone hydrochloride 10 mg

    30 tablet (POM) — Part VIIIA Category M £5.86

    “Regulation” isn’t some monolith.

    The sollution likely isn’t “more regulation” or “less regulation” any more than the sollution to software bugs is “more code” or “less code”.

    It’s very very likely that the solution involves taking intelligent, careful actions to fix the problems.

    or think of it as like software where sometimes the solution is to ditch a messy almost impossible to fix system shitty system and import a working alternative whole from somewhere else.

    • Murphy says:

      Correction. 12 companies. I accidentally double counted for 5 and 10 mg.

      (A A H Pharmaceuticals Ltd)
      (Actavis UK Ltd)
      (Alissa Healthcare Research Ltd)
      (Alliance Healthcare(Distribution) Ltd)
      (Almus Pharmaceuticals Ltd)
      (DE Pharmaceuticals)
      (Mawdsley-Brooks & Company Ltd)
      (Mylan)
      (Phoenix Healthcare Distribution Ltd)
      (Sigma Pharmaceuticals Plc)
      (Teva UK Ltd)
      (Waymade Healthcare Plc)

      • Is there a reason why American customers cannot buy from one or more of those companies?

        • greenwoodjw says:

          Teva sells in the US (They were in a recent SCOTUS case.) So it’s probably a import issue.

        • beanjamin says:

          Yes – consumers buy from pharmacies (usually through their insurance), who buy from wholesalers who buy from those companies. The way that drug payment systems are set up here, the pharmacy will be out of business in a hurry if they buy a drug that costs $0.05 more per tablet than the cheapest one, because the insurance company will only pay them the price of the lowest priced drug (even if it isn’t available).

          • Clutzy says:

            Which is yet another demonstration of the lack of freedom in the market. Insurance paying for a $16/month drug is a huge market inefficiency caused by various distortions.

    • johan_larson says:

      There seems to be something special about how unusually badly america/americans seem to cope with this kind of problem.

      Sometimes it seems the Americans sent every single smart person to med school, law school, high tech, or Wall Street, leaving no clever sensible people to do the unsexy jobs like running high schools, building roads and bridges, and enforcing health&safety regs. It’s a terribly uncharitable thing to say, but I can’t help but wonder if there might be something to it. Are civil service jobs, and in particular senior civil service jobs, just a lot more attractive in other countries, and therefore draw more capable people?

      • The Nybbler says:

        Put smarter people in those jobs and they’ll do them in the same way, because that’s the way the incentives are structured. Except instead of making occasional headline-making mistakes because they’re not too bright, they’ll make them because they’re bored or frustrated.

      • rlms says:

        There are probably also cultural differences, but I expect the fact that American doctors and top lawyers are paid more (taking into account GDP/capita difference) than those in e.g. the UK is probably relevant.

      • Garrett says:

        Part of it is that there’s also the model of pushing down civil service pay and benefits in the US as well. Under the model that civil servants shouldn’t get to be fat cats on the taxpayer’s dime. This works well when you’re talking mostly about a large number of clerks and very few policy makers. But we’re at the point where being involved in regulation involves a lot of domain-specific knowledge. At which point you can go make a lot of money in the private sector. And due to civil service protections and unionization it is really hard to fire the less good ones.

        There’s also quality-of-life issues. Just about every piece of government correspondence comes in an envelope marked that there’s a $200 fine for personal use. Because using an envelope is sponging off the taxpayer. Yet in my job as a software developer my employers have never cared if I use an occasional envelope for personal use. Indeed, they’d rather I get back to work than try to waste time figuring out where/how to get the few that I need.

      • Murphy says:

        Looks like Senior Civil Service (SCS) positions vary mostly between £69,620 and £90,500 ($118,000 USD ish) base salary.

        For reference there are around 45,000 hospital consultants who are mostly paid between £74,504 a year and £100,446 a year

        For reference, doctors in the UK aren’t typically rolling in cash… but they’re extremely comfortable financially.

        But there’s definitely a fair bit of social status to senior social service positions in the UK with various honors, titles and invitations to events at the palace and similar.

        I suspect it may be partly a cultural thing along with the ways your legislature works.

        When a big chunk of your political establishment want government programs to fail and the structure of your government allows them to inject poison pills into bills… it’s not exactly surprising that so many things just barely work in the US.

        it’s like if you had a car where half the design team believed cars were evil and wanted to demonstrate it by making sure the model they were designing failed. It wouldn’t be a big surprise if the mess that you ended up with was an awful car. it would be even more absurd if their supporters then pointed to the barely functional monstrosity that results to argue that cars are intrinsically unworkable.

        • baconbits9 says:

          This is pretty heavy projection, its not like the British have been running around nationalizing industries and having it work out every single time without every having to back track, nor like they have managed to avoid long periods of persistently high UE, nor has its better governance prevented the uncertain mess of Brexit. Pointing to a few examples and then declaring that the US regulatory problems are because of X, while ignoring broad issues that occur in Britain seems pretty weak.

          • Murphy says:

            Not everything works in the UK. But we’re not talking about things that failed to work.

            If a model fails, don’t base your own attempt on the model the failed when others tried.

            We’re talking about systems that did work, continue to work and continue to outperform the US across most important metrics.

            When big government programs start out as proposals with simple systems modeled on successful implementations abroad… and then get loads of obviously stupid stuff attached by people who make their living declaring that government programs are evil … you’d have to be kind of blind to believe it was anything else other than attempts to make them fail.

            Alternatively it can boil down to lobbying from companies already in the market. For example from scotts post: any time you see a significant fixed-cost barrier to entry that doesn’t scale based on size of the operation involved…. look carefully at the guys with the biggest facilities and who they donated money to [aka bribed] vs who supported the change.

            A fixed cost harms small players in the market the most while being almost irrelevant to the largest.

        • gbdub says:

          Exactly which of the issues described by Scott here do you believe are due to regulatory systems intentionally designed to fail? Which of the FDA regulations Scott points to are failing due to “poison pills” (either in the rule that passed, or prevented a better rule getting passed)?

          Or are you just saying “the only reason to oppose nationalized ( or more heavily regulated) health care is because you want government programs to fail”?

        • bean says:

          For reference, doctors in the UK aren’t typically rolling in cash… but they’re extremely comfortable financially.

          I don’t think this is true. Scott’s written on the plight of junior doctors under your system, and there’s a reason so many flee to greener pastures. Yes, the Consultants make decent money, but that’s not the majority of doctors.

          • baconbits9 says:

            Its also generally not so great to discuss salaries alone, without PPP or tax adjustments. UK GDP per capita is ~$42k a year, with ppp adjustments its $39k, and disposible income is a smaller percentage of GDP (iirc) than in the US. Making $120,000 in the UK is not the same as making it in the US.

          • Murphy says:

            @Baconbits

            Sure, it’s not quite the same. typically it’s way better on the same income (until you get pretty high) since there isn’t all the weird little local/state/city taxes on top and there’s no post-tax health insurance or other healthcare related bills other than a few pounds for prescriptions.

          • baconbits9 says:

            The UK is typically not way better on the same income unless you have extremely idiosyncratic preferences, and enjoy small living spaces and public transportation over owning your own vehicle.

          • Murphy says:

            I remember someone a while back, I think it was on SSC talking about a law school that was bottom of the big school rankings…. except for their own special rankings that basically picked out anything the school would score well on and weighted it higher than anything else.

            So while the law school did terribly on things like how well graduated earned or how likely they were to have a job… their library sure had a lot of chairs and their grounds had a lot of hardwood trees… so guess what got ranked really really highly in their own special ranking that ranked them number one, you guessed it:

            graduate outcomes? pish posh. Nobody cares about those things.

            chair count and broadleaf trees on the grounds? most important measure ever

            So, identically, when you’re comparing the UK to the US :

            Who cares about trivial things like how likely your baby is to die in it’s first year of life. Nobody cares about that kind of trivial stuff. Babies are highly replaceable.

            What people really care about it how many CC’s their car has! most important measure ever USA number one! Number one! Number one! Number one! OORAH!

          • DeWitt says:

            I don’t really care for the lack of charitability there, but yeah, crime and life expectancy and childraising seem perfectly good reasons for not wanting to be in the US.

          • rlms says:

            I don’t think the post you are thinking of gives an accurate reflection of the situation. It’s definitely true that junior doctors have horrible working conditions (although it sounds like the same is true in the US), and also that they aren’t paid very well. But it’s not a winner-takes-all system like e.g. law. NHS doctors are about 50/50 “junior” doctors and consultants/GPs. Although GPs aren’t paid as highly as consultants, they’re not poor. I believe the intense competition among junior doctors is for positions as consultants, not GPs.

          • baconbits9 says:

            I don’t really care for the lack of charitability there, but yeah, crime and life expectancy and childraising seem perfectly good reasons for not wanting to be in the US.

            Which would be a reasonable point if those were the only differences between the two, Murphy is representing it as if the British system is clearly superior based on a tiny slice of reality.

          • baconbits9 says:

            Who cares about trivial things like how likely your baby is to die in it’s first year of life. Nobody cares about that kind of trivial stuff. Babies are highly replaceable.

            Well since you brought it up I hope that when you are ready to have kids, assuming that you are white, you move to Connecticut, Massachusetts or New Jersey who have infant mortality rates under 3.0 per 1,000 for non-Hispanic whites. The US also has a substantial rural/urban infant mortality split, and significant issues that smaller, both geographically and demographically, countries don’t have.

            More to the point all decisions have opportunity costs, and some people are going to choose larger homes, more or more expensive cars or other consumer goods over certain types of medical coverage and restricting those purchases can free up resources that will get spent elsewhere giving different outcomes. The only way that a country restricting outcomes is ‘better’ in this discussion is if you specifically pick a set of preferences and hold them up as being objectively better.

          • DeWitt says:

            Well since you brought it up I hope that when you are ready to have kids, assuming that you are white, you move to Connecticut, Massachusetts or New Jersey who have infant mortality rates under 3.0 per 1,000 for non-Hispanic whites.

            Well gee, breh, I sure wonder if those states and races were picked at random. You surely couldn’t have any motives for deciding race or state should factor into it. I’m surely not allowed to arbitrarily define stuff to strengthen my argument either.

          • baconbits9 says:

            Well gee, breh, I sure wonder if those states and races were picked at random. You surely couldn’t have any motives for deciding race or state should factor into it. I’m surely not allowed to arbitrarily define stuff to strengthen my argument either.

            The argument is that system X is better at producing results than system Y, to maintain that argument you have to believe that instituting an NIH style system in the US would either cure the race divide in the US or pretend that it doesn’t exist. My argument was never that the US had better, or as good, infant mortality outcomes, it was that Murphy was the one taking arbitrary measures and presenting them as evidence on their own.

          • Cliff says:

            Ironically, the U.S. is probably superior on all the metrics you point to as important. Crime? UK has higher crime rates. U.S. has more homicide but its heavily concentrated in places you wouldn’t live. Infant mortality? U.S. has the best neonatal care in the world. If you adjust for the population demographics we’re probably doing quite a bit better. In other words, the chance that YOUR baby would die is lower in the U.S. than UK.

          • Edward Scizorhands says:

            I’m not fighting you, but I want to know what you mean by “best neo-natal care in the world.”

            https://www.healthsystemtracker.org/chart-collection/infant-mortality-u-s-compare-countries/#item-infant-mortality-declined-u-s-comparable-countries

            NB: I’m not on the “US child mortality sucks ha ha go to universal health care you idiots” train. There are several confounders (how different countries define an underweight fetus failing to survive for a week; why is Canada so bad; why are Asian-Americans so good and does it have anything to do with why Japan is so good; chromosomal and congenital disorders account for the entire difference between the US and Canada and is that really the fault of our obstetricians being paid so much they are rolling in cash). But I’m wondering where that measure comes from.

          • Randy M says:

            This wiki page has some useful things to keep in mind when comparing infant mortality. US CDC alleges that we count live births differently, with some European countries not counting all preterm births as live births, with preterm births being the most fragile of course.

            Overall, lifestyle choices probably affect these rates far more than the medical system, smoking and diet especially. Unless you assume that the medical system will be able to inform/pressure mothers of/into healthier behavior.

          • baconbits9 says:

            Overall, lifestyle choices probably affect these rates far more than the medical system, smoking and diet especially. Unless you assume that the medical system will be able to inform/pressure mothers of/into healthier behavior.

            I believe that the largest non racial divide in the US for infant mortality is the urban/rural split. The US has some places remote enough that you aren’t making it to a hospital in time for certain complications if you aren’t already there when the complication arises.

          • Edward Scizorhands says:

            At the bottom of my link, they break down the cause of infant mortality.

            Congenital malformations, deformations and chromosomal abnormalities: 1.19
            Short gestation and low birth weight disorders: 1.05
            Maternal complications of pregnancy: 0.4
            Sudden infant death syndrome: 0.39
            Accidents: 0.29
            Complications of placenta, cord and membranes: 0.24
            Bacterial sepsis: 0.14
            Respiratory distress: 0.12
            Neonatal hemorrhage: 0.11
            Circulatory system diseases: 0.11

            Being too far from the hospital look like it’s part of the #3 cause.

          • Cliff says:

            It’s hard to know what to make of a data source that says the U.S. has a 4/1,000 neonatal mortality rate and then the very next graph says it’s 1.5/1,000. I think the best measure of the actual quality of neonatal care is to compare the outcomes of equivalent newborns. I.e. a premature infant of European ancestry born at 24 weeks, etc., is it more likely to survive in the U.S. or elsewhere? My understanding is the U.S. is tops in such comparisons.

        • greenwoodjw says:

          I vaguely recall, back when Yes Minister was on the air, the episode where there was a hospital fully staffed with bureaucrats and maintenance staff but no medical staff(The Compassionate Society) caused someone to look into it and they found FOUR hospitals in the UK running that way. (I was just able to confirm this on Wikipedia and the number was actually 6)

          That’s not a small thing, and it’s weird that I have to find it through a comedy.

          • Murphy says:

            (6 counting not just whole hospitals but also things like a closed wing of a hospital)

            Wasn’t there a Scrubs episode revolving around a wing of the hospital being shut off to save costs as well?

            Though I can find no other sources about it other than the one anecdote.

          • greenwoodjw says:

            6 counting not just whole hospitals but also things like a closed wing of a hospital

            That doesn’t make sense. Shuttering a hospital wing except for occasional janitors is fine and sensible. Having an entire hospital 100% staffed and running, except for medical personnel and admitting patients, is insane.

          • acymetric says:

            @Murphy

            Sure was, I believe it was the roof toilet episode as part of the arc with Michael J. Fox as a guest star. Although that wing was entirely shut down, not full of administrators but no doctors/nurses.

            @greenwoodjw

            I think that’s the point…things were not sensible. None of it makes sense. I don’t get the impression that the wings in question were “a janitor from time to time” but rather “the wing was fully staffed, except with no doctors and no patients”.

        • Edward Scizorhands says:

          For reference, doctors in the UK aren’t typically rolling in cash… but they’re extremely comfortable financially.

          I wouldn’t object that hard to a system that crammed down doctor salaries in the US.

          But doctors sure would. Doctors who have a salary of 400K and have accumulated a lifestyle that needs at least 350K a year to maintain are going to fight like cornered weasels if you try to cram their wages down to the “extremely comfortable” level of 200K.

          NB: I am not saying that doctors “deserve” their incomes or making any kind of moral argument. Lots of industries, and their workers, have had their incomes crammed down by globalization, and it definitely happens, and I won’t cry for doctors, who could handle a halving of their incomes much better than machinists or woodworkers or unskilled assembly line workers. But I am just telling you how hard they are going to fight. Long after you close this window and return to your day job, the doctors and those they hire to fight on their behalf are going to be putting out study after study showing that you are trying to murder patients.

          • albatross11 says:

            Path dependency is a thing. Once thousands of people have shaped their entire lives based on an existing system continuing to function as it currently does, they’re going to:

            a. Fight like hell to keep that system functioning as it currently does.

            b. Cause all kinds of other problems if changes to that system is crammed down their throats.

          • Scott Alexander says:

            Where are these doctors making 400K? Is that place hiring?

            (unless you mean surgeons or dermatologists or something)

          • Edward Scizorhands says:

            I made up the numbers.

            Plug in whatever you want for “Doctors in the US are making [rolling in cash] and you want to force them down to [extremely comfortable financially] but their lifestyle has hedonically adapted to [number between those two].”

          • DeWitt says:

            The ridiculous amounts of debts Americans need rack up to become doctors is just going to make this even worse. What are you going to tell someone expecting to make X amount of money when their income is halved and they get to choose between paying off six figure debt or feeding their kids?

          • rlms says:

            Sure, but it’s probably necessary if you want to reduce American healthcare costs to be more in line with other developed countries. You can maybe get some improvements from fiddling with policy, but ultimately if you’re spending more on doctors’ salaries that money has to come from somewhere.

          • DeWitt says:

            Yeah, I’m not really disagreeing. Offering immediate dischargement of student debt in return for substantially lower salaries seems like it could remove the worst of the sting.

            More importantly for the cynical, perhaps, it gives an opportunity to make the doctors look like the greedy ones.

        • Cliff says:

          Government workers in the U.S. get paid more than their equivalents in the private sector, plus they get better benefits, more job security. This is true except at the very top.

          I’m a little unclear on why people think U.S. government/bureaucracy is especially bad or being sabotaged. I always got the sense that Europe was a bureaucratic hellhole.

          • rlms says:

            What is your basis for that sense? DMVs sound vastly worse than any bureaucracy I’ve experienced in Europe.

          • acymetric says:

            Most DMV criticisms are either false, outdated, or localized issues that somehow became a national joke. There can certainly be long lines at some DMVs, but there can be long lines virtually anywhere during peak times.

          • greenwoodjw says:

            Mitch Daniels made reforming government service a major part of his campaign, and a lot of people I met in Indiana talked about how much the DMV had improved. Maryland’s DMV is still terrible and soul-sucking, so improvement can be described as spotty at best.

          • The Nybbler says:

            The NJ DMV is keeping the nightmare alive. The nearest one’s extra special insult is a parking lot with a two-hour limit and wait times considerably longer than two hours. Also they make you stand in line outside.

          • Cliff says:

            Well, I know a lot of people in Europe, there’s very high unemployment in a lot of places because of all the excessive labor regulation, there’s so much over-the-top environmental regulation, in places like Greece and Italy opening a business is impossible because they put so many barriers in your way, which I have read articles about. I don’t get the sense that EU is way better at regulation but I don’t claim to be an expert.

            DMV works fine for me. They have a website that tells you how long the wait is and when to come to reduce the wait. There are special DMV selects you can go for title and registration issues so you don’t have to deal with the lines for people getting driver’s licenses, etc. I’ve never had a problem. You also rarely have to interact with the DMV. License renewal every 10 years, registration renewal every few online.

          • Clutzy says:

            The DMV is notorious in some places, and fairly good in other places. I moved to VA once and had to change my drivers license and my employer advised me to use an actual service where people hold your place in line. Coming back to IL I did it in a few minutes.

          • rlms says:

            @Cliff
            Greece, Spain, Italy and to some extent France do have high unemployment and that can be blamed partly on worse regulations around employment than the US. But I was interpreting “bureaucracy” in your original comment as meaning the government is unpleasant to interact with, which is different. And also, issues with regulations are confined to employment (e.g. France and Spain have good healthcare systems) and those countries in particular (e.g. the UK and Germany don’t have problems with unemployment).

          • Jaskologist says:

            In the US, the DMV is a state-level agency, so there are 50 different DMVs even before we account for variation between different physical offices. I’m sure that provides more than enough variation for people to select whatever horror or success stories they want to tell.

          • Cliff says:

            How often does someone interact with a bureaucracy in any country unless they are a business owner? I certainly hear from the UK about children being forbidden treatment and forced to die by the NHS, that sounds rather unpleasant. Isn’t bureaucracy a common joke in British comedy?

            I’m not an expert on EU bureaucracy but what is supposed to be so terrible about U.S. bureaucracy? The DMV and healthcare? Isn’t the U.S. healthcare system now rather similar to some EU countries like Germany? I guess you have to fill out extra paperwork relative to single payer countries, of which there are a few in the EU. The IRS?

            To me the problems in the U.S. seem to be poor regulations, not poor bureaucracy, and my understanding was that the EU has some pretty poor regulations as well. Maybe not as bad overall but I’m sure there are some rankings somewhere that try to answer that question and I don’t recall the U.S. being markedly terrible, am I wrong? (That said I am well aware that there are many, many terrible and useless anti-competitive regulations for businesses in the U.S., many state-level)

          • Clutzy says:

            @cliff

            I would say the problem in the US is both. Our constitutional system is, frankly, not designed for a bureaucracy. Its a functional system with a bureaucracy slapped onto it. The senate/house system is functional when Congress is functionally stronger than the President, but with the addition of a huge administrative state that the President essentially has unlimited power over, it makes lawmaking (where often you would want to trim regulations) really hard. This is because it essentially results in large inertia effects. The US government was intentionally designed with large inertia effects, but with a bureaucracy added to the executive, it gives that inertia as well.

          • rlms says:

            @Cliff
            Yes, I was thinking of the things in your second paragraph.

            Children are forbidden treatment everywhere; no country has infinite resources. The only difference is that in the UK etc. you have two chances to get healthcare (either persuade the government to provide it, or pay for it yourself), whereas in the US in general there’s only the second.

          • Jaskologist says:

            The only difference is that in the UK etc. you have two chances to get healthcare (either persuade the government to provide it, or pay for it yourself)

            I flat-out don’t believe this is true. It was only last year that they declared that Alfie Evans was to be deprived of nutrition until dead, and they threw up a wall of guards to make sure nobody could save the kid.

          • rlms says:

            @Jaskologist
            I’m pretty sure that the fact Alfie was being treated in an NHS hospital was irrelevant; the situation would have been the same if he had been privately treated in the UK. And note that similar cases have occurred in the US.

          • Edward Scizorhands says:

            I’m not a fan of brining up Alfie Evans, but Alfie’s parents wanted to take him to other professionals and were forbidden from doing so. Sam Hudson?

            Hudson was given 10 days from written notice to find a new facility to accommodate the infant, but was unable to do so.

            This is the entire point of why Alfie was brought up. Alfie’s parents wanted to take him someplace else, had several offers, and were forbidden by the government. Sun’s mother couldn’t find anyone else who wanted to do it.

            You can change the subject and say that Hudson’s inability to find another doctor is a problem with the US health care system. And it is. But the complaint about Alfie Evans is that the parents had other professional doctors willing to step up and try to help Alfie, and the government forbade it at gunpoint.

            Like I said, I’m not a fan of bringing up Alfie Evans. I think it focuses on the wrong problem. But don’t pretend it isn’t a problem.

          • rlms says:

            @Edward Scizorhands
            Yes, I recognise that. But the prompt for the discussion was Cliff saying “I certainly hear from the UK about children being forbidden treatment and forced to die by the NHS”, and my point is that if you accept that the government’s behaviour in that case was wrong* then that’s a mark against the British legal system but not the NHS (see my previous comment). That the NHS hospital wanted to turn off life support *would be* a mark against them, but that’s not unique to the UK (Sam Hudson).

            *which I’m not sure I do, descriptions like “forced to die” and “make sure nobody could save the kid” are at odds with my understanding of the consensus of doctors at the time.

      • MilfordTrunion says:

        as Freddie DeBoer pointed out elsewhere, what if this is what it looks like when smart dedicated people do their job?

        The FDA’s job is not, actually, to get everyone in the USA exactly the drugs they want at whatever price they feel is affordable. Their job is to keep you from eating poison. If you don’t eat poison then they have done their job. They warned Mylan about the shit that was going down last year–and, I’ll bet, they had people on site before that, telling Mylan to shape up, and Mylan gave them a whole sob story about how they’re the only manufacturer of this critical drug and they’re trying really hard to do their best and you can’t shut them down. (although on the other hand they fired a whole shitload of people from the factory so it’s not like they were going balls-out to fix the place up.)

        • Edward Scizorhands says:

          Their job is to keep you from eating poison

          Then they can just deny every drug, go home, and be happy that no one is eating poison.

          This is exactly the seen vs unseen problem. If the FDA approves something it shouldn’t, the FDA gets in trouble and individual employees hauled before Congress and asked why they like eating babies. If the FDA doesn’t approve something it should have, as far as we know everyone gets to see their kids sleeping soundly, except for the unseen people who died unnecessarily but we don’t know who they are.

        • baconbits9 says:

          Who is setting guidelines for what the FDA does? Whose job is it to interpret those guidelines. If the answer to both of those is ‘no one in the FDA has influence’ then the point stands, if not you have the same basic problem.

    • Edward Scizorhands says:

      There seems to be something special about how unusually badly america/americans seem to cope with this kind of problem.

      Scott pointed out how Peru has way more manufacturers of the drug than America, and then went on to describe the American policies in place that drive the US towards very few producers, and then you wonder “lol why does America suck?” with the implicit follow-up of “America should be more like Europe, and, just, like, regulate more.”

      • Murphy says:

        The solution likely isn’t “more regulation” or “less regulation” any more than the solution to software bugs and inefficient processes is “more code” or “less code”.

        • sharper13 says:

          We see a common pattern at work here where a politician or bureaucrat decides they know better how things should work than hundreds of millions of people making decisions for themselves do, so they pass a regulation to “fix” it. Then that regulation causes this other problem, so they pass another one to fix that. Then the combined regulations cause yet another problem, so they make an adjustment and “fix” the problem they discovered.

          This continues until we have a thicket of regulations, to the point where no one can possibly know what they all are, at which point “the market” is blamed for all the problems.

          So yeah, seeing that pattern in action, the solution is “less regulation”. That less regulation would also qualify as “better regulation”, but the idea that you’re going to create “more regulation” to fix the problems created by the previous regulations has already been tried in this case hundreds of times already, so people are understandably skeptical that somehow “this time it’ll be different”, unless you have a suggestion which plausibly suggests some mechanism for how or why it’ll be different this time than the last time they tried to fix it.

          Without getting rid of the root causes of health care/health insurance costs in the U.S., at best you’re going to be making minor incremental improvements, like has already happened in the last couple of years with the slow rollback of ACA associated regulations and their negative impacts on people and costs.

          • Murphy says:

            This seems to be a common narrative that almost always seems disconnected from any concrete statements about the regulations in question.

            “Regulation” is not a monolith.

            It gets used as a bogeyman, it gets used by a bogeyman by people who can’t even name any regulations that bother them the most.

            Imagine you go into a meeting with an exec in a company.

            They’re upset because they brought in the bosses 14 year old cousin to write some code for them.

            it’s full of bugs and is poorly thought out.

            So you point to a bunch of other companies that have dealt with the exact same problem.

            They have much simpler software systems that are much better designed and and run much much smoother.

            You suggest either importing such a system wholesale… or building a replica using sane design methodology.

            The exec goes red in the face and starts screaming:

            “this problem is because of LINES OF CODE and you’re trying to fix it with LINES OF CODE and every time we added more code it just made it worse!! I say we ban lines of code in the company!”

            How much respect do you have for this exec after his outburst, especially in regards to their levels of common sense?

            find-replace code->regulations

            A majority of your countrymen appear to disagree with you re: ACA and see many of the major advantages it brought. Looking from outside it looks like an ugly hack-job patch over an already poorly thought out, poorly designed, poorly implemented system but refusing to patch bad code and threatening to delete the whole codebase without any replacement lined up is among the few worse options.

          • Cliff says:

            I don’t see how health care systems in other countries work any better. The U.S. has free healthcare for the poor, the nearly poor, and the elderly, as well as veterans. It has world class outcomes. Costs are high but so are incomes- notably, government prices are not any lower so nationalizing healthcare would help 0% to improve that issue.

          • rlms says:

            sauce plox

          • greenwoodjw says:

            This seems to be a common narrative that almost always seems disconnected from any concrete statements about the regulations in question.

            Of course not. People aren’t looking at various regulations and saying “Oh that one!” They’re trying to solve a problem, they find a good solution, and then an official comes over and says it’s illegal. Or stuff is more expensive and they’re just told “new regulations”.

            Cato’s trying to raise public awareness of the Jones Act, as it makes shipping within the US more expensive then it needs to be, but it’s several steps removed from it’s impact on the average person.

          • sharper13 says:

            @Murphy,

            My specific personal expertise and experience with regulations is in small business, telecommunications, finance, health care, and education. Those do happen to contain some of the highest regulated areas, so my viewpoint may be distorted, but here’s what I see specifically in each area:

            Small business: I’ve started a few businesses in the past. This tends to be death by a thousand cuts. Every individual regulation seems somewhat reasonable and only a little onerous, but the combined total means you really need to hire an accountant, a lawyer and an outsourced HR company in order to do it right and comply with everything. Even then, you’ll occasionally get letters from the SBA, or a random regulator informing you that you missed form X, or to get permission for action Y. Either way, you pay a significant portion of your cash flow in order to comply with them all.

            Telecommunications: When I started an ISP, it was back in the dial-up days, but I’ve worked in Internet/E-Commerce areas much of the time since then. This area fluctuates from being somewhat open (in terms of online sales tax collection requirements in the old days), to being highly regulated (Mostly at the State Commission level, dictating pricing, locations for different types of service/technologies, anything which involves physical cables). Much of the growth here has significantly been in what I’d consider a lighter-regulated area.

            Finance: I work in technology here right now. This is incredibly regulated, from what can be sold, to how much of what type of product. I literally take a dozen classes every year about the specifics of various regulations, even when they obviously don’t apply to my job. Risk Management and regulatory compliance is 50% of everyone in the company’s raise and bonus determination for this year. Virtually everything we do is driven by regulators. There is one level where you try to comply with all the pre-written regulations, but we also have multiple groups of regulators who make their own decisions on a regular cycle specific to the company and what they want to see changed. So everything must be patched twice a year, then every quarter and now monthly in order to be compliant. Everyone has to reset all their passwords every 60 days or else we’re out of regulator compliance. Every month part of your access gets revoked because they did a regulatory review and decided that X job titles usually don’t have that access, so they’re not going to allow it anymore, even if you have a business case justifying it. Change management requirements which change over time. Separation of duties requirements which literally forbid Devops and certain types of otherwise valuable automation. I could go on and on, but the bottom line is that if the entire company spends the majority of it’s time doing activities which are regulatory-compliance related, I wouldn’t be surprised.

            Health care: This is the only field which rivals finance for compliance. The big ones here are major distortions like subsidizing employer-tied insurance plans, letting the supplier groups like the AMA dictate the regulations around supplying health care, and others mentioned in other threads in this discussion. Like finance, the regulation tends to be “comprehensive”, dictating in the end how almost everything is to be done.

            Education: I started a non-profit Charter School once (it’s still going, but I moved out of the area for work-related reasons). Most of the effort involved in starting it revolved around compliance with the State Charter School Board’s requirements to get going. Even then, there was a big divide between the State Board’s members who were willing to approve something innovative (competency-based individualized classroom instruction), rather than just schools which followed the exact same model they’d seen before. We had fun dealing with things like being mandated by the State to do one thing (collect some paperwork, which costs parents a fee), which thing was in violation of a court order a Federal Court had issued (no required school fees allowed in the State Constitution) against the whole State’s education system. The sheer number of regulations weren’t as bad as finance or health care, but because everything in a public school was paid for by one grant or government funding source or another we had to hire a full-time person just to deal with all the paperwork involved in tracking and showing the right stuff went to pay for the allowed things. We had to adjust our educational plans (you want cooking classes for middle schoolers? Hah! have you seen the requirements for building a commercial kitchen? You can warm things up, no actual cooking allowed, the science lab was easier, that just needs a chemical wash shower), spend a lot of time and money on things which didn’t really matter (vending machines, you say? No we don’t have those right now. Still legally need to pass an official board policy regarding what may be inside them which complies with the regulations, though!). Whenever the State legislature was in session we typically got 1-4 new regulatory items per day which we needed to figure out how to comply with.

            So yeah, regulation isn’t a monolith, but it’s totally out of control.

            Economic growth in the United States has, on average, been slowed by 0.8 percent per year since 1980 owing to the cumulative effects of regulation.

            As @greenwoodjw says, plenty of people run into this thicket of regulations while they’re trying to actually accomplish things.

            If the FDA’s (or other regulator’s) incentives are to never approve anything with the slightest risk of harm, then they slowly choke out any useful activity, because life and change always have risks.

    • Scott Alexander says:

      I’m pretty surprised to see this, especially since many of these are American companies (or companies that also operate in the US). Do you have a good sense for how the UK manages this?

      • Murphy says:

        Perversely since people aren’t complaining about it much there’s less articles about it:

        https://www.britishgenerics.co.uk/about-generics

        http://www.pharmtech.com/europe-pushes-global-easing-generics-approvals

        Here’s the UK governments help page:

        https://www.gov.uk/guidance/apply-for-a-licence-to-market-a-medicine-in-the-uk#DCP

        Apply for a licence to market a medicine in the UK

        How to license a medicine for sale in the UK and Europe, including applications through national, centralised and decentralised procedures.

        there’s some elements which I would have expected to make it harder: individual states often have some of their own approval processes (imagine if US drug companies had to get approval from every state on top of the FDA approval) … but whatever they’re doing it seems to promote a reasonably healthy market for generics.

        also the EU seems pretty keen on developing it’s own generic drug exports industries.


        EDIT: I just found they have a fee calculator on the UK government website:

        For a national application, active substance previously authorised, well established use, single strength fees are £35K

        If I want to get a “decentralised” approval so that I can sell my generic to other EU countries with a mutual recognition setup with the UK, again for something with “well established use” the fee is £51K

        Course that’s just the marketing approval… but the pages on that site go into more detail about costs.

  44. Freddie deBoer says:

    Truly scandalous that the FDA would fulfill its explicit societal function and shut down a factory for being potentially contaminated.

    • luxagenic says:

      Don’t be disingenuous. The problem is every seemingly reasonable upstream decision that means shutting down one factory cuts a third of the supply from the market.

    • Furslid says:

      Yeah. I remember when the health board shut down the only restaurant in town and people started starving. It’s just them doing their function, and it was the right decision given the horrible hygienic standards.

      That didn’t happen. Probably because the health board allows lots of food suppliers, has reasonable requirements for opening new restaurants, and didn’t slam every restaurant in town with huge fixed costs that forced most of them out of business.

      You can’t just look at one decision out of hundreds in isolation and proclaim everything reasonable.

    • whereamigoing says:

      The issue is not (necessarily) shutting down the factory, but the overall system in which a reasonable decision like shutting down a factory backfires so badly.

    • Scott Alexander says:

      I agree with previous commenters that the shutdown was not a focus of this post.

      But I do wonder whether, given that the factory was clearly crucial for production of a necessary drug, and that there haven’t been any reported problems which makes me think they violated standards but not to a degree that actually caused harm – whether it was possible to take some less extreme action. I’m not even defending the company here – fine Mylan arbitrarily high amounts of money if you want – I’m just wondering if they could have found a way to keep the factory partly open, for patients’ sake.

  45. rlms says:

    how easy it is to get FDA approval/open a new factory etc. would be good. It seems a lot less likely that changes of that sort would be either necessary or sufficient to fix the problems. I don’t know how comparable countries with fewer drug problems differ on that axis, but would be surprised if they have significantly less regulation. On the other hand, I’m pretty sure those countries are significantly Voxward in terms of the government setting prices. Maybe they’re succeeding despite worse FDA-equivalent approval policy, and the US would be even better than them if it combined lax regulations and controlled prices. But that would be evidence in favour of controlling prices, not against it. Or maybe the (AFAIK) hitherto unexplored area in policy space of Glorious Libertarian Paradise with lax regulations and uncontrolled prices is actually optimal. But I don’t see a way to get there, and even if there was one it would seem unnecessarily risky.

  46. eric23 says:

    The interesting thing to me is not whether regulation works in the abstract, but how much worse it seems to work *in the US* than in other countries. I think one would find the same thing in other fields, not just pharmaceuticals. The question is why.

    • ARod1993 says:

      I mean, my guess would be that if there is a major deficit in the US it’s a question of trying to dictate process rather than outcome. If you dictate a specific process to achieve the outcome spread you want, then you wind up writing all the side effects and unforeseen issues with that process into the landscape, and if you try to patch those errors with more process regulations you’ll find yourself needing an infinite series to get a handle on things or just destabilizing the whole system; if you focus more on dictating outcomes and require reasonable burdens of proof that people’s processes meet the desired outcome spread but leaving process development up to individual actors then theoretically at least the most effective/least shitty processes should rise to the top of the pool, and that in turn means you can achieve better outcomes with much less knowledge of the system than would be necessary to make direct process edits.

      • etheric42 says:

        HIPAA is a nightmare in the healthcare industry.

        HIPAA is a law dictating an outcome and not a process.

        Because nobody knows what the process is, everyone is afraid they are doing it wrong driving themselves crazy (and into the arms of overpriced, poorly performing consultants).

        Or maybe I’m confusing what you mean by legislating outcome vs process.

    • Ursus Arctos says:

      If I had to guess I would say weak independence of the civil service leading to regulatory capture. The sheer size of the country and the difficulties that creates for government (by far the largest first world democracy) may also play a role.

      Plus there is, cynically, an element in American political life that doesn’t want regulation to succeed. Such people exist everywhere, but they are unusually strong in the US.

      • greenwoodjw says:

        Plus there is, cynically, an element in American political life that doesn’t want regulation to succeed.

        Hi! AMA

        • TDB says:

          AMA loves regulation, as any cartel would.

          • greenwoodjw says:

            Sorry, was a joke. I meant I’m part of the

            cynical element in American political life that doesn’t want regulation to succeed

            ask me anything

    • Jaskologist says:

      I think this is mostly due to believing the grass is greener on the other side. Other countries probably have plenty of problems you simply don’t hear about.

      • whereamigoing says:

        Of course each country has its own problems in general, but in terms of bureaucratic inefficiency, I think the US is uniquely bad. Cost disease affects public schools, college, health insurance, public transportation and housing more in the US than in other countries. Paying taxes is complicated. And anecdotally, I’ve always found dealing with bureaucracies more of a hassle in the US (not just the government — also banks, private schools, etc). So I see this post as more of an example of US bureaucracy being bad than regulation in general being bad.

        It almost makes me wonder whether Americans are more likely to prefer libertarian solutions because something about the culture prevents non-libertarian solutions from working.

        • Nabil ad Dajjal says:

          It almost makes me wonder whether Americans are more likely to prefer libertarian solutions because something about the culture prevents non-libertarian solutions from working.

          My guess is that it’s down to the first amendment making it harder for the government to lean on or censor those who report on government failures.

          In most of the Anglosphere the primary news agency is a government-run operation, either the BBC itself or a national equivalent like the CBC. And the nominally independent news agencies still have to contend with both direct government regulations on speech and indirect regulation through the way courts enforce libel laws.

          The calculus on reporting a failed government initiative in the US is simple. If you oppose the initiative, report on its inevitable failure; if you support the initiative, report on how wreckers have caused it to fail. In the rest of the English-speaking world there’s the additional consideration that reporting on the government’s failure may constitute a civil or even criminal offense depending on how embarrassing the failure was. Even if the penalties are rarely enforced, they exert a chilling effect on anti-government speech.

          • albatross11 says:

            Nabil:

            If your model is a good description of reality, it should apply very broadly to government failures–we should see little media coverage of government or policy failures. My impression is that this isn’t true of the UK or Spain (the two foreign countries where I might notice due to my own media diet). I suspect there are places where hate-speech laws can be brought to bear to silence some policy criticisms (immigration and law enforcement), but probably not failures of the health care system or other bureaucracies.

            I’m curious what non-US SSCers think.

          • Lambert says:

            Even if the Beeb didn’t want to rock the boat, there’s still Channel 4, the papers etc.
            And people complain about the government (very much including the NHS) all the time.
            Stronger protections on free speech would be nice, but it’s hardly NK over here.

          • DeWitt says:

            Thirding what the prior two guys said; criticising the government happens widely where I live, and we never even bothered taking down dumb laws on blasphemy and what have you. I don’t watch the news, but the papers very cheerily scream bloody murder at all the government gets up to when they feel like it and this isn’t a new development or anything like that either.

          • Tom Ash says:

            Knowing the UK, that’s definitely not true.

          • whereamigoing says:

            I guess control of the media could make it easier to enact efficient regulation in Japan or Singapore, but in Estonia I don’t think that’s the case, so in general I don’t think that’s the most salient factor.

            To be clear, I’m not necessarily arguing for more regulation. Maybe the US should just accept its libertarian nature.

          • Aapje says:

            In my country, the second most-watched newscast is from a commercial network, at half the viewership of the main newscast from the government-funded network.

            The main threat to journalists from the government is violations of their right of non-disclosure, including wiretapping and them being ‘held hostage’ in jail for some time to force them to disclose sources. Libel seem to not be a problem.

        • RalMirrorAd says:

          In the post Scott shared about infrastructure [with special emphasis on rail] the author noted that many progressives are simply unaware or unconcerned with what constitutes best practices (wrt regulation) in other OECD countries that ostensibly perform better than the US.

          We should be careful how we word things. To say that the ‘bureaucracy is bad’ but ‘regulations are not’ seems to contradict the observation that the US regulatory bodies implement rules in a way very different from ‘best practices’

          ‘Bad regulators’ seems to imply you could reshuffle the regulatory staff without changing high level procedures or mandates on the regulated entities and get an improvement

          ‘Bad regulations’ implies the FDA is being made or is making others behave in a malproductive or needless fashion and a totally different approach would be preferred, and that the current crop of staff would be capable of implementing that approach if given the chance.

          The two things aren’t unrelated though. Bad hiring practices can lead to bad procedures, but hiring practices is in itself a procedure which is presumably regulated in some fashion so it comes full circle.

        • AlesZiegler says:

          Of course each country has its own problems in general, but in terms of bureaucratic inefficiency, I think the US is uniquely bad.

          I think you are very wrong about that. But US appears to be really uniquely bad at healthcare delivery.

        • beanjamin says:

          The Utopia of Rules by David Graeber is a fantastic read about this. It’s pretty quick too.

        • TDB says:

          Which direction does causality go – bureaucracy causes libertarians, or libertarians cause bureaucracy? Or both ways, positive feedback! BOOM!!!

    • I’d really recommend *Political Order and Political Decay* by Francis Fukuyama for a long in depth look at that question. The short version is that the US ran on the Spoils System for a long time which was eventually mostly quashed but the methods of the quashing had their own unintended consequences.

    • Paul Zrimsek says:

      In the specific case of drug regulation, it may be important that the one historical example that’s invariably trotted out to excuse the FDA’s sins is of a drug that the FDA refused to approve, while their counterparts in most other developed countries did and soon regretted it.

    • christiankl says:

      In the US saying that you are a government bureaucrat is lower social status then it’s in Europe. As a result you likely get better people to apply in Europe.

      In the US the kind of position that Humphrey Appleby has in ‘Yes, Minister’ isn’t done by a life-time government employee with a first from Oxford but via a political appointment.

      Government funding of elections in Germany means that it’s not a big deal to German members of parliament whether or not a lobbyist likes them. They have to keep fellow party members happy to get support from their parties but there interaction with lobbyists is fundamentally different then the US congressmen who spent hours cold-calling lobbyists to beg for campaign donations.

      Not funding political parties so that congressman spend a lot of time cold-calling lobbyists is likely the most stupid penny foolish aspect of the US political system.

      • Anthony says:

        Congressmen don’t need to cold-call lobbyists, they need staff to screen the cold-calls from lobbyists.

        Candidates challenging incumbents need to call lobbyists.

  47. Lancelot Gobbo says:

    The insulin situation used to irritate me tremendously when I was in practice. I could still prescribe cheaper insulins from my office, but new diabetics in hospital had to be prescribed the new expensive versions in hospital as they were the only drugs stocked by the hospital pharmacy. Why? The manufacturers would sell them to hospitals for such a low price that they undercut the traditional insulins, then charge full price to the consumer after discharge at a retail pharmacy. And after carefully adjusting the regime, is a doctor going to start afresh with the patient (himself new to the game and nervous about the complexities of being insulin dependent) out in the community? Shortly after that the older formulations became unavailable and thus there was no choice at all any more. Smug smiles from the Eli Lilly execs.
    I have long advocated that in Canada the federal government ought to set up a generic manufacturing system, and sell the products at cost to the provinces. You can’t make money selling and save money buying when you are both seller and buyer. This has to be balanced by proper patent protection for new drugs so that the industry will continue to research new agents. Ten years is plenty. The losers here are the existing generic companies, but they have done extremely well for themselves and Apotex and Novopharm have been among the largest donors to political parties in Canada, presumably in order to protect their interests. The safe, continuous supply of generic medications at reasonable cost is just like our utilities: it will cost us much more if people aren’t treated properly, just as unsafe electricity, gas, water or sewerage systems are of such overarching importance that we either nationalise them or regulate them to such an extent that they are, in effect if not technically, Crown corporations.

    • Edward Scizorhands says:

      I made a comment elsewhere (since deleted because others were making it) that the drug companies have big initial costs but low marginal costs.

      However, you point out this also applies to doctors and patients.

  48. white_squirrel says:

    Another aspect of this is that companies don’t maintain excess manufacturing capacity for most generic drugs because the profit margins are so low. Especially for rare specialized drugs, if there’s a fire at the factory there’s no excess capacity to make up for it in the short run.

    Ironically, this problem exists because the consumer benefit of many drugs is vastly disproportionate to the profit their manufacturers make. In most products occasional shortages are acceptable. The impact of drug shortages can be literally life and death. There’s also often no good substitute for individual drugs. If there was a chicken shortage people could just eat beef or pork or tofu, less so with Buspirone.

    I’m not sure what the solution to this is. Maybe the government or insurers maintaining a strategic stockpile or paying to maintain some level of excess capacity? Possibly allowing imports or making it easier to ramp up production at a new facility?

    • Douglas Knight says:

      don’t maintain excess manufacturing capacity for most generic drugs

      My understanding is that they actually have huge excess capacity for any particular generic drug. The factory makes lots of drugs with flexible equipment. Maybe one line makes 12 drugs in a year, one per month, so it would be easy to make much more of any particular one, at the expense of all the others.

  49. ARod1993 says:

    (Reposting my reply to HoopDawg with slight edits)

    What about having a public option for drug manufacturing and research? Essentially you’d set up drug factories under a similar model to the post office where profit wasn’t part of the equation and you could target something reasonably close to breakeven pricing on the medications themselves; you’d then fund medication research and clinical trials directly (ie something like Brookhaven National Labs for pharmacology and then financially self-sustaining or very marginally profitable satellite facilities doing manufacturing).

    The beautiful part about this is that you could set it up, hold it to its mandates and then let the markets/universe sort out the rest. If it turns out that private companies are actually leaner and better than a federal operation then the federal operation wouldn’t be able to stay self-sustaining and would wind up withering away, whereas if the government could compete you’d wind up with a baseline floor for quality and corporate efficiency set by the government.

    You could probably also break up some of the sadness around research by having the national labs release all of their findings as open-source would then create a system where the government would carry a lot of the research weight but a small, lean eager company would still have room to take some of the government research in a new direction and make some money.

    Now, instead of prescribing a specific way of doing things (which is vulnerable to regulatory capture and nasty second- and third-order effects) you’re effectively setting a standard for price, quality, and efficiency that the markets will enforce on their own (and hopefully by judo-ing the laws of market economics rather than trying to fight them directly you’ll see fewer nasty side effects).

    • greenwoodjw says:

      The post office is not self-funding, has historically had terrible service, and is noncompetitive even with a monopoly on regular mail. Without the profit motive, how would you motivate the development of new drugs? How would you prevent deadweight from infesting the organization and creating a culture of make-work and circular activity? How would you stop it from just being another piece of Congressional patronage?

      • ARod1993 says:

        You motivate the development of new drugs by providing direct funding, much the same way that projects at Brookhaven National Lab are currently funded. I really wish I knew enough about how that worked to be able to give an honest critique and suggest tweaks to the funding system accordingly, but I don’t have the information to do that and feel like it would be a useful way of starting; I’d also love to keep the option open of people with specific medical needs donating to fund trials in parallel with the main funding mechanism as a way of improving research speeds in niche areas.

        As far as make-work and circular activity are concerned I’m not entirely sure how to do that, at least partially because I don’t have enough domain expertise to look at the sort of safety procedures that would be involved with manufacturing drugs to honestly look at the lowest-overhead way of implementing them, and I don’t really see a huge problem (at least on the research end) with “we pretend to work, you pay us” culture. Now on the manufacturing floor that gets a bit more difficult, and I’m not sure how to strike a balance between worker protection/decent wages and leanness (or more specifically I think the optimal point on that curve is probably at least partially a moral value judgement; I’d tend to lean toward the “strong worker protections, reasonably high wages” end of the curve on the grounds that there’s real tangible good created by having secure middle-class jobs that we shouldn’t undervalue).

        As far as congressional patronage, having an open competitive civil service exam is a useful way of weeding that sort of thing out for entry-level positions, and having higher level things filled by the traditional civil service system for managers would probably do a pretty good job insulating jobs from political nonsense.

        • greenwoodjw says:

          Except that middle paragraph,

          I’d tend to lean toward the “strong worker protections, reasonably high wages” end of the curve

          has already created a new constituency for vote-buying.

          • ARod1993 says:

            Except the question becomes how big that constituency is in comparison to the constituency of people whose lives depend on these medications being available cheaply and easily; you’d probably be looking at something like 20-30k employees that you could buy votes from, as opposed to 50-100 million people who don’t like paying taxes and a more specific 3-5 million at least for whom low prices may literally be life or death. I suspect that do-nothings making a bunch of money off the system would likely create an outrage spiral that backlashes against the workers pretty hard.

          • greenwoodjw says:

            Distributed costs, concentrated benefits. The 20-30k + empire-building will have as their primary concern their continued employment. The 50-100 million have a large number of other concerns in addition to low taxes and “scientific medical research” is eminently defensible.

        • MilfordTrunion says:

          That you propose this shows that you don’t actually understand how expensive it is to develop, test, get approved, and produce new drugs

          The FDA mostly runs on user fees. Filing an NDA to get your drug study reviewed costs several million dollars.

    • Edward Scizorhands says:

      How is the government deciding which drugs to discover? What is the feedback mechanism if they aren’t doing a good job at it?

    • Scott Alexander says:

      I’m also confused why this hasn’t been tried, as far as I know, anywhere.

      Having the government competing with private companies is a weird situation with potential pitfalls, but AFAICT hasn’t been a disaster with private mail carriers, private bus lines, or private schools.

      My guess is existing pharma companies just lobby against it really hard.

      • greenwoodjw says:

        AFAICT hasn’t been a disaster with private mail carriers

        The Post Office is in a weird position where it’s almost private, but gets regular bailouts and a monopoly, but is so regulated that it has no competitive advantage.

        private bus lines

        For local mass transit, it’s all public. Some folks tried, several years ago, to run a van service that was better than the buses somewhere, and the government swiftly shut them down. Stossel covered that, I think.

        For long-distance travel, there is no public competition.

        private schools

        There are two types of private schools currently in most areas – the Catholic schools because the Church didn’t want their children getting a Protestant education, and the schools for people with enough money to get out of hell. Public schools don’t compete with anyone else (and compete with no one for middle-class and poor people without a religious option), and they can say “Take it or else” because of truancy laws.

        • albatross11 says:

          There are also other religious schools, and there are many private schools that aren’t explicitly religious. Sometimes, those schools are used to “get your kid out of hell,” but other times, parents just have some notion that the school will be a better fit for their kid. There’s also homeschooling–I know several people who’ve homeschooled their kids, apparently successfully. And there are also selective public schools where you can apply and/or test in.

          In good neighborhoods, the public schools tend to be quite good. The parents are overall pretty smart and functional, and so the kids tend to be, as well. Most of what people actually mean by “good schools” is “good kids in the school.”

          • greenwoodjw says:

            Well, the schools in areas with money and political influence are better than the schools without, but that’s another failure mode of the public system.

          • acymetric says:

            @greenwoodjw

            It seems like that is a problem that would exist under an entirely private system as well. It seems like the public option is the only solution to that particular problem (obviously it is not accomplishing that as implemented).

          • greenwoodjw says:

            Yes and no. A huge reason for the public system, supposedly, is to compensate for that outcome.

            While there will probably be a difference, I don’t believe the difference in a private system would be nearly as large as it currently is.

          • Clutzy says:

            @greenwoodjw

            Well, the schools in areas with money and political influence are better than the schools without, but that’s another failure mode of the public system.

            That isn’t really true. D.C.’s schools have some of the highest spending in the nation, and they notoriously are among the worst. Chicago public runs a bunch of schools with huge expenditure in bad neighborhoods, they also stink.

            The teachers and facilities don’t affect student outcomes all that much. They are like an oven. You can have an oven that is soo bad that it burns your cakes or doesn’t get up to temp, but most ovens are basically the same. The difference comes before you put the cake/pie in the oven.

          • greenwoodjw says:

            “Money and political influence” refer to the population, not the school system. You tend to find school systems in poor areas are getting more per student because there’re less people demanding results, and throwing money at a problem is an easy way to “do something”

          • Clutzy says:

            I dont think that is really a rebuttal though. “Good” schools are good because of the kids in them, not because of the adults in them or the adults in the political system. Advocacy related to a school system gets little improvement, if any.

          • baconbits9 says:

            You tend to find school systems in poor areas are getting more per student because there’re less people demanding results, and throwing money at a problem is an easy way to “do something”

            If fewer people are demanding results then why is money being thrown at them?

          • albatross11 says:

            It’s not the political power of the parents, it’s the intelligence and diligence of the kids. All over the country, Asian kids from poor/middle class families are doing better than white, hispanic, and black kids from wealthy families. A few generations ago, the story was the same, but with Eastern European Jewish kids.

            The quality of the students is so powerful that it probably swamps any real differences in quality of the schooling. Utterly mediocre public schools with smart, well-behaved students will get better results than lavishly funded and staffed public schools with dumb, badly-behaved students.

            Plenty of awful school systems (DC being an example) spend lavishly on public education; plenty of great ones (most Catholic schools) spend substantially less per student to get far better results.

          • greenwoodjw says:

            The teachers and facilities don’t affect student outcomes all that much. They are like an oven. You can have an oven that is soo bad that it burns your cakes or doesn’t get up to temp, but most ovens are basically the same. The difference comes before you put the cake/pie in the oven.

            It’s not the political power of the parents, it’s the intelligence and diligence of the kids. All over the country, Asian kids from poor/middle class families are doing better than white, hispanic, and black kids from wealthy families. A few generations ago, the story was the same, but with Eastern European Jewish kids.

            I don’t buy this. Sure, you can’t train people to be Einstein, but there’s a huge gap between that and “basic literacy and student safety” and if schools can’t land somewhere in the middle, why do they even exist?

            Keeping the school from ending up gang-controlled, removing violent students, expelling people who threaten students who try to learn, teaching kids to read or perform basic calculation and not suppressing the instinct to learn are all things public schools routinely fail at.

          • sorrento says:

            For the most part, public schools in the US can’t “remove violent students” or “expel people who threaten students who try to learn.” Expelling students is extremely difficult, to the point where it’s probably easier to convict them of a crime.

            As for gangs, if the cops can’t shut down gangs, how can teachers possibly have a chance? Or generally spending on schools in general? ipads for every student, or a new building, are not going to help with gang problems or disruptive students.

        • spacecommie says:

          “For local mass transit, it’s all public. Some folks tried, several years ago, to run a van service that was better than the buses somewhere, and the government swiftly shut them down. Stossel covered that, I think.”

          Private bus lines are pretty common in Latin America and they work pretty well, at least in Lima.

        • dumky2 says:

          > but is so regulated that it has no competitive advantage.

          USPS has at least one competitive advantage: it has exclusive access to mailboxes.

        • Blueberry pie says:

          Please remember that the US is not the only example. My country (Czech Republic) does a bunch of stuff that from far apart seems to be well above the US level. For example, we have a reasonable-ish system of public transport that has mix of private and public providers and it is cheap-ish and efficient-ish.

          Or you can run a private school where the kids don’t pay crazy prices, because the government usually gives them similar financial support per kid as the public schools get.

          We also have a lot of problems, and some stuff is easier because we are a small country, but I think competition between public and private companies can definitely not be a disaster.

      • Guy in TN says:

        Doesn’t the National Institute of Health already do this? Or am I missing something obvious?

        • John Schilling says:

          The NIH frequently does (or hires universities to do) some of the clever parts of drug development. Which is mostly identifying drug targets, e.g. “The XYZ receptor is critical to the progression of Alexander’s Disease; a molecule whose business end is shaped thusly might block the XYZ receptor in a way that alleviates the symptoms of Alexander’s Disease without killing the patient! (unless the molecule also does some completely different thing that kills the patient)”

          The brute-force parts of drug development are usually left to private industry. Testing bignum random chemicals which kind of sort of look like the proposed XYZ-receptor-blocker to see if they actually block the XYZ receptor, and then if they can be made into a pill rather than something that has to be intravenously dosed every fifteen minutes, then whether or not they kill mice, then dogs, then people, then whether they cause really bad side effects in people, and only then getting a chance to find out whether the theory that blocking the XYZ receptor actually alleviates Alexander’s Disease. Which it probably doesn’t so you just wasted fifty million dollars and a couple years of about a hundred peoples’ lives, but the NIH has another clever idea to try and eventually one of them will work.

          Figuring out how to lay out a facility to produce the new molecule on an industrial scale while maintaining pharmaceutical-grade cleanliness and purity, then actually setting it up and doing it, are almost always left to the private sector.

          There are exceptions where government labs take the process the whole way, or nearly so – Penicillin during WWII being the most famous. But they’re really best at the early, clever-idea stage and it’s probably best to let them focus on what they do best. And anyone who then says “It was the NIH that discovered the Cure for Alexander’s Disease; we don’t need no stinkin’ pharma companies, they’re just stealing the NIH’s genius for mere profit”, needs to be laughed at or ignored.

          • albatross11 says:

            Yeah, there’s a really stunning amount of brute-force in drug discovery.

      • christiankl says:

        Pharma companies justify their expenses by providing goods to all countries on the planet. On the other hand a bus line only provides benefits to a particular city. Given that the benefits are concentrated on the city it makes much more sense for the city to pay for the benefits then it makes for the city to pay for the world wide benefits of a new pharma company.

    • Anthony says:

      There’s research, and there’s research.

      The government already funds a lot of basic pharma research – either in-house, or through grants to universities. They develop lots of promising drug candidates that way. It’s not terribly expensive.

      Two-thirds of which are worthless.

      The pharma industry does the expensive research – verifying that the drug candidate developed in a university lab can actually be produced the way it’s described, that it actually has the reported effect in vitro, and only then, doing animal and human safety and efficacy testing. Those latter two cost about one billion dollars per successful drug, and depending where the failure occurs, up to hundreds of millions for failed drug.

      I have serious doubts that having the U.S. government do that in-house would be any more successful or efficient than having it done privately.

      Relatedly, you, and anyone else who wants to talk about drug development, really should read Derek Lowe’s blog, In The Pipeline. Derek is in the industry, and has a good perspective on how drug development works, and how it doesn’t.

      Then, for entertainment value, read his “Things I Won’t Work With” entries. (Google “Sand Won’t Save You This Time”.)

  50. simbalimsi says:

    I usually find your posts very insightful (that’s why I’m filled with joy when my RSS reader says you have a new article) but a few select topics, you just reject to look at them from different angles.

    Maybe it’s not that there’s a 2 axis regulation vs drug prices graph in which prices increase as regulations increase like this article suggests, but there are different ways you can go with regulation and at the current moment drug regulation in USA is regulating to protect the big pharma profits and not the customers.

    This would mean less regulation might mean lower prices than current status where huge companies are getting protected (and that’s because big corporations and rich people have influence on people who make or apply laws/rules/etc) but the better way is to have regulation, maybe more maybe less than today, but protecting the public and not the rich business owners.

    • gbdub says:

      How do you think the laws are designed to “protect big pharma profits”? They were intended to protect the public, but they were written by people who don’t seem to have had a great grasp of what the second and third order effects their regulation would have on the market, and the unintended consequence is that the combination of market forces + current regulatory scheme = encouraging monopolies and weak defense against gouging.

      Example: There is a perfectly valid “protect the public” justification for the yearly fees charged to maintain an approval to manufacture. Inspections protect the public, the fee pays for more inspections, and increases the potential throughput of new facilities. Per site / per manufacturer flat fees even make some sense – presumably the inspection cost is driven more by the number of sites to inspect than by the size of each site.

      I’m not saying there is no such thing as corruption and/or regulatory capture, just that I don’t think they drive nearly all of problematic regulations. Instead, you have a lot of well-meaning laws with unintended consequences, often passed in response to real problems with the unregulated system. Or caused by misunderstandings due to a non-specific expertise issue (making sure generics are identical to the brand name makes sense to “protect the public” – applying that to insulin creates unique problems that clearly were not fully anticipated)

      Part of the issue is of course incentives to the regulators – “10 people killed by bad insulin that the FDA approved!” is going to get a lot more press than “10 million lives improved by more affordable insulin!” In reality, that’s probably a good trade off (heck those 10 million probably include >>10 people who would have died at the higher price). But god help the FDA official dragged in front of Congress to defend that trade off.

      • albatross11 says:

        There’s not a lot of effective feedback to the people making the regulations. Congress passes a new law, and several years later there are complicated bad consequences that nobody in Congress really understands very well, but eventually they try to pass a different law to fix the previous law. The lag time and the complexity of the situation seems like it almost guarantees bad results.

      • greenwoodjw says:

        John Nestor, famous in the 70’s for shutting down DC Beltway traffic every day when he left work because he would hog the left lane, also never approved any new drugs during his tenure in that part of the FDA. His rationale for both was the same, essentially “Why should I risk inconvenience to benefit someone else?”

        • etheric42 says:

          I did some googling on this guy and I’m not seeing anything about him not approving any new drugs (maybe I’m just not looking in the right place) and also your quote being a strawman version/context. I usually see it represented as “why should I invonvenience (not risk) myself to aid someone who is acting selfishly/recklessly/lawlessly (in the car case, a speeder).”

          Also famous for being kicked out of the FDA, being a huge whistleblower, and then being returned to the FDA with an apology.

          I’d like to know more about your perspective and facts.

          • greenwoodjw says:

            http://www.jpands.org/vol15no4/kazman.pdf

            Money quote that stuck with me:

            In fact, in 1972 he had been transferred out of FDA’s cardio-renal-pulmonary unit because that division “had approved no new chemical entities…from 1968 to 1972, an experience that contrasted with the experience of every other medical [sic] modern nation and with the experience of other divisions of the FDA.”

          • etheric42 says:

            @greenwoodjw

            Thanks for the response and link. I still have a minor reservation that a responsible individual walking into a corrupt environment could legitimately halt all approvals with the goal of decreasing the corruption and improving submissions moving forward. A sacrifice of the new in the favor of the future (or depending on the level of the corruption, maybe not even a sacrifice of the now if what was being proposed wasn’t really an improvement). But yeah, doesn’t seem likely.

            In my neck of the woods, Nader is still seen as a great crusader during that time period. You may not be visiting this thread at this point, but do you happen to have any other counterfactuals or was this just a bad shot of his.

          • greenwoodjw says:

            Nader?

            Government studies demonstrated the Corvair was a safe car, at least per Milton Friedman, and since that made Nader’s career…

            Nader’s mostly outside of my knowledge base, (I didn’t even know he was involved with Nestor) so I don’t have a lot on him to draw from.

            The general style in his field, though, is to claim things are “dangerous” or “unsafe” for unspecified values of each, falling back to “Well it’s not perfectly safe” as the model. John Stossel used to ask folks if they would be OK pumping a highly flammable, pressurized gas into their homes despite the risk, they would object, and he would ask them the kind of stove they had. (The answer was normally (natural) gas).

            But it’s easy to demonize and focus on the risks, and much harder to make the case that any kind of risk is acceptable.

            @DavidFriedman, you probably know more about Nader than I do, do you have any examples?

      • simbalimsi says:

        I cannot bring myself to believe that the regressive taxation effect is an really an unintended consequence. I’m not saying that unintended consequences do not exist, but in this specific case it seems more like collusion. I don’t believe those people cannot see such easy to see complications with that logic. It sounds like they found a good enough explanation for the regressive taxation (as you said, it even makes some sense) and went with it.

        It seems like we agree on the principles, but rather have differing thresholds about how much governing bodies are prone to well meaning unintended consequences vs collusion. Not even being an American, I cannot insist on my gut feeling about your institutions of course. It’s just that generally I believe people at positions of power or making decisions are more likely to be greedy and intelligent than well meaning and naive.

        • Watchman says:

          I think you’re assuming two things here:

          1. Politicians have the same level of intelligence and understanding as someone reasonably smart and well-informed: say a SSC reader.

          2. Politicians apply that intelligence and understanding in a logical way guided by established scientific and economic principles.

          If either of those assumptions fails, I think we can viably suggest unintended consequences rather than maleficent motivation are more likely:most politicians try to do the right thing as they see it but don’t realise that the world reacts is both predictable and unpredictable ways to new laws.

          • simbalimsi says:

            But the people running these institutions are bureucrats that are hired for their intellect and not politicians, right? And still, I’d expect both of them to be at least as comparably intelligent as a SSC reader as myself and also should be guided by positive science.

            Maybe I’m biased because ignorant people at positions of power sounds scarier to me than outright malicious ones but still I cannot apply the razor of Hanlon here.

          • Nornagest says:

            bureucrats that are hired for their intellect

            *snort*

            Maybe things work differently in your country, but rank-and-file public service work isn’t a well-paying, competitive, or prestigious job here. No doubt the FDA would like to be hiring the smartest people around, but they’re not going to get them.

          • John Schilling says:

            But the people running these institutions are bureucrats that are hired for their intellect and not politicians, right?

            They are hired for their expertise in running institutions smoothly enough that any problems are not visible to outsiders and/or can be blamed on someone other than themselves or their bosses. That’s a kind of intellect, but it probably isn’t the kind we are looking for here.

          • sorrento says:

            In the United States, bureaucrats are not hired for their intellect. In fact, it’s more-or-less illegal to give IQ tests to job applicants.

            Some people in my family work for US government bureaucracies, and they report that the most important things to do to succeed there are: stay there a long time (seniority is very important). Don’t make your boss look bad. Get a graduate degree of some sort (Masters, etc.)

          • Cliff says:

            Interestingly, until relatively recently bureaucrats in the U.S. were hired based on IQ- they were administered the civil service exam and placed largely based on the results. That’s how my grandfather got his position. That has since been banned as discriminatory. Now the government applies explicit racial discrimination (“affirmative action”) in the hiring process.

        • Sniffnoy says:

          Hanlon’s razor, dude.

          • etheric42 says:

            Can we make a push for switching it to (back to?) Heinlein’s razor?

          • The Nybbler says:

            Wikipedia claims there is a Hanlon and he is the source of the razor, though others (including Heinlein) have expressed similar sentiments.

            I don’t have the book so I don’t know where the name “Hanlon’s Razor” comes from

          • Doctor Mist says:

            Interesting!

            A little googling suggests that Hanlon expressed it c. 1980 while Heinlein’s version goes back to “Logic of Empire” in 1941 — but that the usual formulation, “Never attribute to malice that which is adequately explained by stupidity”, is closer to Hanlon’s version than to Heinlein’s “You have attributed conditions to villainy that simply result from stupidity.” Heinlein’s context makes it clear that he is describing a general error, and I would give much to know whether Hanlon had read Heinlein. It’s also intriguing that their names are so similar; I wonder if this has contributed to an intertwining of the credit.

            But Wikipedia says the principle goes back much farther, quoting Goethe (1774): “Misunderstandings and neglect occasion more mischief in the world than even malice and wickedness.” And Heinlein (especially as Lazarus Long) has so many laws to his credit that leaving it with Hanlon would make it easier for somebody to drop a reference as Sniffnoy did.

            Some people claim Heinlein’s is, “Never attribute to malice that which can be adequately explained by stupidity, but don’t rule out malice.” But I can’t find anybody with a citation for that version. Goodreads, for some reason, claims it was Einstein, but it seems rather more in character for Heinlein. (And again, there is a certain similarity in the names!)

            Scholarship is hard.

          • Gerry Quinn says:

            Another version is that when something bad happens, it’s more likely due to a cock-up than a conspiracy.

      • It’s important to analyze these things not just as “intended” or “unintended” but in terms of “who intends what.” It may be that legislatures were aware of the problems they needed to solve and cast about for solutions. Drug industry lobbyists saw an opportunity and proposed plans that would fix the problem the legislators wanted to solve. The plans worked and fixed the problem but also had the effect of concentrating power that the lobbyists foresaw but didn’t communicate to the legislators. Our Senators and Representatives don’t have much in the way of resources to evaluate laws independently so they’re always reliant on someone with ulterior motives to tell them what should be in laws. The long term fix would probably be to give Congress the budget to hire experts to evaluate laws but that would take a while to get bootstrapped. Though of course doing that gives openings to political entrepreneurs to complain about how much money Congress is giving to itself, as Newt Gingrich did.

        • etheric42 says:

          Another example: the family glitch from the ACA.

          It’s stupid. It makes no sense. Pretty much everyone wants to fix it. It was necessary to get the appraised costs lower and the law passed in order to do good elsewhere (steelmanning).

          I wouldn’t call that malicious, and I don’t think it was unintended, since I am pretty sure it was mentioned before passing, but it is still something negative that was done by people with good intentions because it was necessary in the situation and they did not have another idea that accomplished their other goals.

      • vV_Vv says:

        How do you think the laws are designed to “protect big pharma profits”? They were intended to protect the public, but they were written by people who don’t seem to have had a great grasp of what the second and third order effects their regulation would have on the market, and the unintended consequence is that the combination of market forces + current regulatory scheme = encouraging monopolies and weak defense against gouging.

        People who write these laws are heavily lobbied by the very monopolies that end up benefiting from them, it would be quite of a coincidence if this was unintended.

      • fluffykitten55 says:

        If you wanted to be help provide affordable quality drugs you would have the inspections paid out of general revenue or funded via some profit or turnover tax, not a poll tax. This is elementary.

        Either the regulators are morons and/or the large firms helped get a poll tax as the funding mechanism because they liked the anti-competitive effects. Likely the regulators are idiots but they were not called out on their error as al the large firms they are tight with had no problem paying the fee.

    • John Schilling says:

      but the better way is to have regulation, maybe more maybe less than today, but protecting the public and not the rich business owners.

      That’s not a “better way”, that’s a desired outcome. To constitute a “better way”, you’d need to have a plan for how to achieve that outcome. Lots of people have wanted government regulations to be better at protecting the public, including lots of congressmen and government regulators. You can see what we wound up with. What’s your plan for actually doing better, as opposed to just wanting better?

      • simbalimsi says:

        I’d start with making lobbying illegal, in the same class as bribe maybe?

        • Doctor Mist says:

          Define lobbying.

        • Mark Atwood says:

          Skydivers, private pilots, and ham radio operators all have professional lobbyists. Who’s main job is to prevent those interest groups from being “accidentally” overlooked as enabling legislation gets revised.

          Bike trails, pea patch gardens, seeing eye dogs, wheelchair access ramps, all exist and continue to exist because of interest groups paying professional lobbyists to represent their interests.

          If you “ban” lobbying, what remaining interface between the people and the government would you still permit?

          • rlms says:

            Bike trails, pea patch gardens, seeing eye dogs, wheelchair access ramps, all exist and continue to exist because of interest groups paying professional lobbyists to represent their interests.

            If you “ban” lobbying, what remaining interface between the people and the government would you still permit?

            I don’t think banning lobbying would be a good idea, but the obvious answer to this is “ban lobbying by for-profit organisations and puppets thereof”.

          • Lambert says:

            I could start lobbying in a few weeks if I wanted to.
            Just take a train to Westminster, hang around in the Central Lobby, and hope I can get the attention of some poor MP.

            Should it be illegal for any company to express any opinion to the Government?
            How should the legislature know that a law isn’t inadvertently going to screw over a whole industry, for reasons that only industry insiders can be expected to know?

          • Mark Atwood says:

            ban lobbying by for-profit organisations and puppets thereof

            Back to my examples: skydivers and private pilots have companies that hyperfocus on manufacturing and marketing gear for those markets. Those companies are heavily involved in the associated lobbyest orgs. Are those lobbyests “puppets” of those companies? What is the the clear simple bright-line unbiased rule that says yes or no?

          • rlms says:

            @Mark Atwood
            Does there need to be one? There isn’t usually, laws are complicated.

          • Mark Atwood says:

            Does there need to be one?

            In this case, yes. Because otherwise, what the law will actually be is “any group I don’t like is banned”.

          • rlms says:

            That’s a very general argument. Does the blurry definition of obscenity make the First Amendment worthless?

          • Mark Atwood says:

            make the First Amendment worthless?

            That’s a good bad example, or a bad good example.

            It just about did, in the realm of writing about and talking about sex. When the rule was blurry, the rule as it was actually really implemented was “would trying this case help someone win an election?”, or framed a different way, “anything I don’t like is banned”, to call back to my post upthread.

            That blurry rule got beaten back, one expensive lawsuit after another, all predicated on the hard and unyielding rock of “there is no obscenity exception in the text”, until it has been forced back to a small handful of much clearer and easier to articulate rules: mostly now just CSAI and invasion of privacy, both of which at their deeper foundation are based on the same clear principle.

            Robert Charles Joseph Edward Sabatini Guccione is a hero. Period.

            Sadly, no victory is forever, and so now today we have the spiritual successors to Ed Meese this time with an idiotic fake moral panic about “trafficking”, which is literally nothing more than a warmed-over retread of the worn out “white slavery” idiotic moral panic of our great-grandparent’s era, painted shades of light brown.

          • baconbits9 says:

            I don’t think banning lobbying would be a good idea, but the obvious answer to this is “ban lobbying by for-profit organisations and puppets thereof”.

            Then what do you do when the environmental lobby is the sole voice discussing air pollution and the US economy gets crushed when 1/3rd of its power generation is suddenly wildly unprofitable?

          • rlms says:

            @Mark Atwood
            Interesting! I don’t know that much about the history of US obscenity law so I’m not going to argue really, but I think most people would still regard the First Amendment as being effective/useful/important even when obscenity laws were stronger and limited those things.

            @baconbits9
            I imagine the hypothetical person who gave that answer would say “I don’t think that would happen”.

        • John Schilling says:

          “Congress shall make no law prohibiting or abridging the right of the people to petition the Government for a redress of grievances”
          – United States Constitution, 1st Amendment (abridged)

          You may have some misconceptions as to exactly what lobbying is, but no, you can’t ban it. And you really wouldn’t like the consequences if you did.

        • christiankl says:

          Making lobbying illegal results in regulation being made by people who don’t know when a regulation they are written mistakenly kills an industry.

          You want a person who writes complex regulation of drug companies to actually talk with the involved companies to understand the effects that the regulations would have on those companies.

          Getting actors in a complex system that’s opaque who each understand some part of the system well to stop talking to each other about how the complex system could work is not likely to make the system better.

  51. Ursus Arctos says:

    Reposting what I posted as a reply to someone else’s comment with a few edits: When it comes to government action in healthcare you can do it well or you can do it badly, and for pretty much every type of action there are examples around the world of both. Drug price negotiation for example works fine in Canada, New Zealand, the UK and Australia and fails elsewhere.

    There’s a lot of debate about the efficacy of market interventions, negotiation, regulation etc. in healthcare, but as a general rule it seems to me what matters more is not so much whether the government regulates, intervenes and negotiates more or less, but how good they are at it. As policy advice this isn’t very useful (“Do the good thing instead of the bad thing!”) but it seems to be true.

    The US seems to bugger up regulation quite a lot. The easy way to try and deal with this problem is with slogans like “Government isn’t the solution, it’s the problem”. The harder way, but ultimately necessary, is to try and get better at regulating.

    • Furslid says:

      Get better at regulating isn’t a prescription. There are a lot of possible approaches to regulation, and it seems that we don’t even have the right regulatory framework. It’s like saying to the doctor whose patient is stuck in a cascade of medications to treat symptoms of medications, “You just need to prescribe the right medication.”

      Also, there is the possibility that certain types of regulation aren’t needed. In Scott’s example, the problem is not that Topamax is the wrong diet pill. The doctor shouldn’t be in the business of prescribing diet pills to that patient. I’m worried that we’re stuck in the cascading intervention and the arguments are “We need to switch diet pills” against “We need to proscribe another drug to treat anxiety.”

      • Ursus Arctos says:

        Suppose there was the unfortunate patients of a doctor who wasn’t very good at treating his patients. She spoke with her friends about what she should do to improve her situation.

        One friend said “Well I’ve listened to all your stories about your doctor’s treatments and it sounds like he’s not very good, in fact he may well be doing you more harm than good. You should stop going to doctors”

        The other friend said. “That’s crazy. You just need to get a better doctor. We know this because most other people have good experiences with doctors.”

        This is the point of saying ‘regulate better’. It’s not as uninformative as it sounds. It’s based on the observation that regulation works better elsewhere, thus the US is not at the ceiling of regulatory capacity, thus there are presumably things the US can do- consciously and deliberately- to build regulatory capacity. To achieve that good old administrative rationality.

        Concrete steps need to be taken. A public enquiry into the causes of the widespread failure of regulatory systems in the US. A comparative study of what works in other countries. Consideration of strategies used by other countries, like a greater emphasis on a neutral civil service. Not relying on tort law to fulfil what is done through regulation elsewhere. All of this is will take specific action, and is to some degree counterposed to the other common proposal of “try to avoid the problem by regulating less.” All of this is also far from uncontroversial- both those who benefit from existing regulatory regimes, and those who would prefer that regulation stay bad to motivate that there be less regulation will resist it.

        So yes, ‘do better’ sounds flippant, and in one sense it is, but in another sense it’s no more vacuous than the common ‘actually existing regulations are failing so we should just cut regulations across the board’. Which treats ‘regulation’ as a fungible quantity, rather than something which varies in quality- with degree of quality mattering far more than quantity.

        • dionisos says:

          Yes, and Alexander gave some examples of what was seem bad with the actual regulation.

          By example the fact that there is a costly flat fee and not a proportional fee, make me think there are probably a lot of ways to improve the current regulation, before thinking all regulations will backfire and the only way is to have less/none of it.

        • Furslid says:

          For a long period of history “Don’t go to doctors” was the right advice. I don’t think “Keep trusting your doctor who subscribes to the four humors theory and hope he improves his practice. Make him switch from cupping to leeches.” is good advice. So why is “Keep trusting incompetent regulators and hope they make minor changes that fix a broken system” the only option we have.

          I agree that there could be better regulation. I agree that regulation isn’t on some universal axis where the only options are more and less. Attempts to regulate better seem to just add more regulations that make the system worse. We need to switch regulatory frameworks somehow, and I don’t think that “regulate better” is a fair description.

          • dionisos says:

            For a long period of history “Don’t go to doctors” was the right advice

            It seems to me that “finding ways to improve doctors knowledge and practices” was the right choice, as opposed to “given up on the idea to have doctors at all”.

            (But maybe this analogy go too far)

            Attempts to regulate better seem to just add more regulations that make the system worse.

            I don’t really believe this. And I am fearing you are thinking about cases where the main idea was “the system is broken, regulate it [more]”, and not cases where the idea was “the regulation is broken, learn why and fix it”. (could be completely wrong, it is just my current guess).

            We need to switch regulatory frameworks somehow

            I believe this too.

          • Watchman says:

            I doubt not going to the doctors was ever good advice. Whilst they may have not been brilliant they were generally better than the alternatives, and a doctor who didn’t make people better at least some of the time would not be able to attract patients anyway.

          • albatross11 says:

            Watchman:

            Before the germ theory of disease, doctors:

            a. Didn’t know what was causing your illness (in nearly all cases)

            b. Had a theory for what was causing your illness that was completely wrong.

            c. Had no idea that they were carrying illnesses around.

          • DeWitt says:

            Before the germ theory of disease:

            Doctors still could set bones, amputate limbs, and treat illness.

            Still had more practical experience with the sick and therefor sheer empirical knowledge on what to do and not to do

            Absolutely weren’t all educated on humor theory and even when they were, weren’t the clueless idiots about it you’re making them out to be

            Premodern doctors being horror shows is a popular meme, but it is one born of the inevitabiloty of such matters before doctors have the scientific method to work with. We don’t dismiss ancient Chinese architects as incompetent for adhering to feng shui, and we really shouldn’t dismiss all ancient medicine out of hand just because they got it wrong at times

          • albatross11 says:

            DeWitt:

            Where would we look for empirical data to settle the claim? One thing that would be interesting would be to try to look at paired-for-similarity small towns where a doctor happened to move into one but not the other, say, in 1820. That would give us some kind of comparison.

            My understanding is that pre-germ-theory doctors delivering babies raised the rate of infections in both mothers and babies quite a bit, relative to midwives. Assuming that’s true (I’ve heard it many times but don’t know the source), it’s probably due to the doctors carrying germs from one patient to another. If we can chase down the source of that, we might use that as a datapoint.

            (Note that amputating limbs before germ theory probably involved the non-sterilized instruments carrying infections from one person to the next.) Amputation was better than nothing if you were going to die of gangrene otherwise, but I imagine the fatality rate was high either way.

            Where else might we look?

          • DeWitt says:

            I would count midwives under the greater umbrella of medical people, as our current distinction of nurses and doctors isn’t really one that existed prior to modern times.

          • sorrento says:

            Premodern doctors absolutely were a horror show.

            One of the first people to learn about the role doctors had in spreading disease,
            Semmelweis
            , had a mental breakdown and ended up dying in an insane asylum because he couldn’t handle the guilt of killing so many people (even if unintentionally). And he wasn’t the only one.

            If you got sick in premodern times, the worst thing you could do was see a doctor. The best options were usually doing nothing and hoping for the best, or relying on some folk remedy which MIGHT (or might not) be effective.

            There were a few rare exceptions where doctors might have made a positive difference. Perhaps sawing off limbs in wartime was a net positive. Removing kidney stones is another. But on the whole, they probably did more harm than good, up until the 20th century.

        • greenwoodjw says:

          A lot of what makes “regulate better” work in other countries is that fact that the US market exists. You can have price controls/”negotiations” that barely cover the cost of manufacturing when the US picks up the tab for research. You can have a regulatory scheme favorable to generics when companies selling in the US can treat it as a secondary market.

          It’s true that the FDA is generally terrible (but trying to be less so in fits and starts), but it’s also true that it’s much easier to do something when someone else has already done the hard parts.

          • vV_Vv says:

            You can have price controls/”negotiations” that barely cover the cost of manufacturing when the US picks up the tab for research. You can have a regulatory scheme favorable to generics when companies selling in the US can treat it as a secondary market.

            I’ve seen this claimed a lot by libertarian types, but is there any evidence for it? As far as I know, countries with universal health care might be effectively subsidizing research in the US and elsewhere by increasing consumption.

          • nyc says:

            As far as I know, countries with universal health care might be effectively subsidizing research in the US and elsewhere by increasing consumption.

            Suppose it costs five billion dollars to develop a particular drug and there are half a million customers in the US. Then each one would require a margin of ten thousand dollars to cover the development.

            Suppose there are another half million customers in countries with universal healthcare. Then there are a million total and the average margin would only have to be five thousand dollars.

            If the countries with universal healthcare then dictate margins of four thousand dollars, people in the US would have to pay at least six thousand to make up the difference. That’s less than ten thousand, but it’s still the US subsidizing the other countries in the amount of a thousand dollars per patient.

            If the EU market didn’t exist the US would have to pay ten thousand each, but if the US market didn’t exist the EU would have to pay ten thousand each. Adding population lowers the unsubsidized cost per person, but it’s not the US subsidizing the EU or vice versa, it’s just the size of the overall market. A subsidy is when one party is paying less than their proportionate share of the fixed costs.

            Moreover, if the US and the EU were to try to dictate the same four thousand dollar margins at the same time, there wouldn’t be enough to cover the R&D.

          • greenwoodjw says:

            This is exactly correct

          • vV_Vv says:

            Resurrecting an old thread, just seen the answer

            Suppose it costs five billion dollars to develop a particular drug and there are half a million customers in the US. Then each one would require a margin of ten thousand dollars to cover the development.

            Suppose there are another half million customers in countries with universal healthcare. Then there are a million total and the average margin would only have to be five thousand dollars.

            If the countries with universal healthcare then dictate margins of four thousand dollars, people in the US would have to pay at least six thousand to make up the difference. That’s less than ten thousand, but it’s still the US subsidizing the other countries in the amount of a thousand dollars per patient.

            You are making the assumption that consumption stays the same with and without universal healthcare. But clearly it does not: in countries like the US many people who would benefit from a given drug often can’t afford it.

            It’s quite probable that in countries with universal healthcare, even with the price controls, drug companies make more profits per capita than in the US just because more people buy their drugs.

          • Edward Scizorhands says:

            If the pharma companies knew they could cut the price in half and bring in more revenue, the probably thing is that they would do that.

        • Watchman says:

          Note that the US is on a different scale to any other advanced democratic country and therefore what might work in Sweden or New Zealand might not be practicable in the US. And the larger the regulatory system the greater the incentive for fraud and regulatory capture.

          I’d suggest you might get better regulation at state level (albeit probably not in California sorry Scott: still very large). You would at least be able to see which different regimes worked best and act accordingly, assuming everyone didn’t just do the same two things on a red-state/blue-state basis.

          • DeWitt says:

            I can’t really comment on the US’ size, but is California too large? France and Germany are larger; are their systems known to be uniquely terrible?

          • sandoratthezoo says:

            But California, for better or for worse, doesn’t have its own healthcare system. It gets one from the US government. It can add on its own subsystems, but it can’t practically behave like a sovereign nation.

          • Anthony says:

            California’s regulatory competence is *lower* than the U.S. average. While it has a lower population than France, Germany, or the UK, and in theory is in scale to European democracies, it is highly unlikely to come up with a better system, even if granted the scope to do so.

      • vV_Vv says:

        Get better at regulating isn’t a prescription. There are a lot of possible approaches to regulation, and it seems that we don’t even have the right regulatory framework.

        It’s seems quite likely that in the US regulation has been captured by a small number of oligopolists, hence it furthers their interests rather than the interests of the general public. Other countries seem to have avoided this level of regulatory capture.

      • TDB says:

        Or it’s not.

    • Conrad Honcho says:

      The easy way to try and deal with this problem is with slogans like “Government isn’t the solution, it’s the problem”. The harder way, but ultimately necessary, is to try and get better at regulating.

      Can we agree that the Klein/Vox take that the problem is the free market, and we need more regulation/government intervention is definitely wrong?

      • DeWitt says:

        Countries with more regulation than does the US do not have these issues, so no, I don’t think it’s the full or only answer.

        • Conrad Honcho says:

          But they have different regulation. So adding more regulations, to our already poorly regulated regime will definitely not work, correct? If the regulation is bad, you can remove regulation, or you can change regulation, but adding more regulations will not work.

          • DeWitt says:

            No, because my belief is that the US lies in an uncanny valley. You can not regulate a thing, and you’ll likely get a world where thalidomide is but one of many mishaps but also you cure cancer by 1980. You can regulate a whole lot, and you still haven’t cured cancer but look as does Germany, say. Or you have a country with parties split neatly between wanting to regulate everything and wanting to see all of it burn taking turns in trying to decide whicj approach to take and things not turning out to well.

    • fluffykitten55 says:

      It is fine advice because it is easy to spell out the details regarding what is a good or bad intervention. Things are bad because it is acceptable according tot he most powerful players, not because it is hard to work out what needs doing.

  52. johan_larson says:

    If you have drug prices negotiated at the national level between a government and pharmaceutical companies, does it ever happen that one side or the other just says no, because the price the other side is sticking on is just too low or too high? And then, presumably, the drug in question just isn’t available in the country until the next negotiation interval?

    • Paper Rat says:

      I would assume, in most countries generic drug market isn’t heavily monopolized, so it’s likely pretty rare that all the different competitors (some of which will be foreign companies) just say no at the same time.

      • johan_larson says:

        I guess it would be more of an issue for drugs that still have patent coverage.

    • Garrett says:

      As long as the price offered exceeds the marginal cost of production/delivery, the company will always say yes. Some profit is better than no profit.

      But that doesn’t cover R&D costs, which are predominantly borne by the US market.
      I’m of the opinion that the US should cap the amount which can be charged for drugs covered by any patent to the maximum price negotiated in $LIST_OF_RICH_COUNTRIES. So if the drug company wants to make money off of the US, it needs to persuade other companies to pay more as well. Or make lots of money in the US but not sell the drug to the other rich countries.

      • John Schilling says:

        As long as the price offered exceeds the marginal cost of production/delivery, the company will always say yes. Some profit is better than no profit.

        Not if “some profit” comes at the expense of a reputation for being willing to settle for some profit when you could have got a lot of profit.

        If I’m running a pharmaceutical company that has a steady business selling the Healthcareistani NHS off-patent Gliscor at a 100% markup and generic Altaria at an 80% markup and brand-name Azurill at a 250% markup, and they demand that I start selling them Vibrava at a mere 10% above cost, I’m probably going to say “No”. Because if I do that, then next year they’re going to demand everything in my catalog at 10% over cost and I’m going to lose most of that sweet, sweet Gliscor and Altaria and Azurill profit, and the pittance I’d get from Vibrava isn’t worth it.

        It would be good to have data on how often the various possible outcomes manifest in practice. But the Econ-101 level theory that says the government can always get whatever it demands at 10% over cost because 10% profit is still profit, isn’t even true at the level of abstract theory.

        • DeWitt says:

          I mean, this works if/when you don’t want your existing profits to be eaten up. What keeps someone hearing this from starting up a company of his own and producing Vibrava instead?

          • John Schilling says:

            The startup costs of building a pharmaceutical manufacturing plant from scratch, as aggravated by the requirement to prove to bureaucrats that said plant is Perfectly Safe. Which is why it really matters to the outcome, just how many expensive hoops the bureaucrats can make you jump through to open a new plant.

            Also, Vibrava may still be under patent; I deliberately left that vague. If so, the government negotiators would be particularly daft to make that one their test case for demanding steep discounts, but governments sometimes do stupid Econ tricks so maybe.

          • DeWitt says:

            Yeah, the article is (mostly) about unpatented stuff. Fair enough despite it.

    • fluffykitten55 says:

      In Australia if there is a deal under the PBS then the government pays the gap between the wholesale and government fixed retail price. If there is no deal then the supplier can charge whatever they like, but far fewer people will buy you product. In practice many suppliers will agree to huge reductions in the ticket price in order to get the subsidy.

    • Radu Floricica says:

      The answer is “depends”. In a simple model, the company would sell at any price that’s above production costs. In practice, the opportunity cost is almost always a higher consideration. Production capacity, marketing resources, logistic resources, competing products, competing markets…

      The last one is hitting us pretty hard in Romania – we’re a moderate-sized market in a union of many markets. Why bother selling with x profit here, when you can sell at 3x profit in most of the other markets. But the same applies to the others – why have your marketing department work on a small profit drug, when you can work on a high profit one.

      And in the meantime people are literally dying because they don’t have cytostatics, and the government is proud that it stopped price gouging.

    • NostalgiaForInfinity says:

      Yes. Happens in the UK occasionally.

      Recent example:

      https://www.bbc.co.uk/news/health-47115039

  53. meltedcheesefondue says:

    These two things can be true at once:

    1) (Some) centralised health care systems can make a lot of medication efficiently and cheaply available to their populations, moreso that many private systems, and
    2) In the US, at the moment, marginal improvements come from decreasing regulations.

    Comparing the US to the UK, it seems that 1) is true; this article demonstrates that 2) is also true.

    In fact, I get the impression is that the US’s problem in healthcare is too much regulation, and not enough government buying. Pay money for stuff, rather than trying to get it indirectly. A better version of “the drug company can’t say no. You either sell at a reasonable price, or you lose the whole market.” is “if you undercut your competitor, the government offers you the whole market”.

    • Ursus Arctos says:

      I’d agree that “Act as directly as possible or not at all” probably isn’t a bad maxim at least in many cases. A lot of the US’s tangles seem to come from a “Subsidies for tax credits but only on Wednesdays during the harvest moon and if you put 50% corn products in it.”

      • Worse than that, a lot of the US health inventions come in the form of “make X illegal and hope that this results in people doing Y.” If we were just taxing people and spending money that would be so very much more direct than the present system. Instead we’ve worked hard to hide the costs of health provision from voters in exchange for less efficient processes.

    • TDB says:

      Are there any private systems?

    • sharper13 says:

      not enough government buying

      Would it affect your analysis to consider that the U.S. government buys more health care per capita ($4,197) than any other OECD country except Norway ($4,981) and the Netherlands ($4,495)?

      The U.S. government managed (VA) and paid (medicare/medicaid) health care systems aren’t known for significantly better performance than the private side of the system.

      There are an entire range of legal changes which would improve drug research, time to market, costs and availability in the U.S., but common-sense has never been something Congress is known for.

      Besides Scott’s, here’s a couple other examples:
      1. Accept evidence from other “trusted” first-world countries regarding the safety and effectiveness of drugs. If something has been legal in the EU for a decade with no issues, maybe we can shorten (or get rid of) the FDA approval process for it, rather than starting from scratch with a completely different set of clinical trials?
      2. Create a “safety-only” track, where you can’t claim the FDA buys off on your effectiveness for a particular purpose, just that something has only the side-effects reported for it.

      Both of those would require a change in the law, however, not just an FDA Administration willing to improve the process via basic rule changes.

      • rlms says:

        It buys more healthcare, but it (as in medicare) doesn’t directly buy drugs, and in fact is forbidden from doing so (as in negotiating in bulk).

  54. Blueberry pie says:

    As a single data point, I live in Czech Republic (EU) and here, the government has a large say in prices for drugs and it actually seems to be going pretty well. I am not a medical professional and I might be missing something, so take this with a grain of salt.

    EDIT: We actually currently have a shortage of a different antidepressant, Bupropion, that is taking a few months already, so it probably is not going that well.

    AFAIK the big picture is that the a reasonably independent government agency, pharmaceutical companies, insurance companies (quite strongly regulated themselves, everybody is insured), patient groups and professional organizations of medical professions are all able to have a say in a structured process, the prices are regularly updated to reflect market situation.

    The process regulates the amount of money insurance companies are obliged to pay per dose of the medication as well as the final prize the patient pays. Speaking to a pharmacist I know, there are occasional shortages of specific drugs (for example when a factory closes), but those usually get resolved fairly quickly. Also the agency can be a bit proactive as the pharma companies have to let it know in advance that they will stop supplying a drug. There is also a quite reasonable process for importing drugs that are available in other countries but not here. If I understand it correctly, for such a “special import” local drug registration may in some cases not be necessary, if the drug is approved in other developed country.

    The end result is that almost everybody can afford almost any drug – like even homeless people can easily get basic medication. Which I think is great.

    So my takeaway is that a regulated system can work well.

    • Scott Alexander says:

      Thanks.

      After thinking about it, I realized that the meat of this post was a discussion of the regulation surrounding insulin and buspirone, and that tacking on me being angry with Ezra Klein for saying the government should regulate prices was not super-relevant. If I want to argue that, I should probably have a different post about why that in particular might be bad. I have deleted that part of the post.

      • NoRandomWalk says:

        But you being angry with Ezra Klein was 100% of the emotional payoff I used to motivate thinking critically about the rest of the content. Sigh.

      • gbdub says:

        It may not have been as well put together as the rest of the post, but the point and the annoyance were fair.

        It’s an oddly common blind spot among otherwise smart people who should know better: a belief that when it comes to health care, the only source of bad incentives and bad outcomes is corporate greed / the market, and this is so obvious that it’s cool to be condescendingly snarky to anyone who disagrees (to be fair that second part applies to a lot of positions across the political spectrum).

  55. Radu Floricica says:

    Other countries solve this by having the government negotiate the prices

    I’m in the enviable position of being able to offer all sorts of negative examples from my corner of the world (Romania). Among them… you guessed it – our government decided to negotiate the prices for us. I can’t find the words to express the brilliance of our governing party.

    Anyways, in completely unrelated news, there are classified-like facebook groups dedicated to helping people bring drugs from other countries. “Looking for somebody flying from Vienna to Bucharest this week to bring n doses of drug X”. It’s not a small phenomenon either.

    • ARod1993 says:

      It seems like the larger issue with that is that by leaving the government to negotiate in that way without any connection to what actually drives costs you have perverse incentives to be The Politician Who Drove Drug Prices Down For Everyone and so (as long as you can keep the shortages out of the public eye) you don’t really have any incentive to keep the business self-sustaining and you can paint the people into a corner and be out of office with a pension by the time the results catch up with people.

      I think part of the reason this resonates less in the US is that we haven’t traditionally had problems with the government being short-sighted and venal enough to run honest corporations out of business but rather of large corporations running roughshod over and/or outright capturing regulatory apparati.

      • albatross11 says:

        You also have perverse incentives to make a very generous deal with a company that’s going to be hiring you as an executive director for $2M/year after you leave your civil service job.

        • Radu Floricica says:

          That’s the generic regulatory capture argument, and it’s VERY good. Some failure modes are so common that authorities should be forced to at least explain how they intend to deal with them when proposing a solution.

    • Ursus Arctos says:

      You can do it well or you can do it badly. Drug price negotiation works fine in Canada, New Zealand, the UK and Australia.

      There’s a lot of debate about the efficacy of market interventions, negotiation, regulation etc. in healthcare, but as a general rule it seems to me what matters more is not so much whether the government regulates, intervenes and negotiates more or less, but how good they are at it. As policy advice this isn’t very useful (“Do the good thing instead of the bad thing!”) but it seems to be true.

      • luxagenic says:

        I mean, drug price negotiation works okay here in New Zealand. Except the variety of medications available for some problems is very limited, and the different subsidies for medications depending whether it’s on- or off-label use leads to inaccurate medical records because doctors do try to be nice and prescribe bupropion for their depressed patients, on paper as an anti-smoking aid, and then that makes its way through the various systems and suddenly someone’s insurance is more expensive because they are apparently a (former) smoker. Which isn’t to say it’s a bad system, just that even when it’s done well it has its flaws.

        I still don’t trust the US government as a whole to do anything adequately ever. Which includes deregulation if I’m being honest, but at least it’s potentially a step away from needing to be competent.

        • Ursus Arctos says:

          If the US is worse than other countries at regulation (which I agree seems to be true), it seems to me deregulating would be a pretty knee jerk reaction to that. Trying to find out what makes it a bad regulator and if possible fixing it would be a better approach.

          • Paul Zrimsek says:

            Why not a hybrid approach? Recognizing that the government is bad at regulation now, and that anything we do to fix that is likely to take time to bear fruit, we roll back regulation at the margin in the short term, in the meantime monitoring what’s left of the regulatory regime for signs of the increased quality we’re hoping for. Once we’ve seen enough of those. then we can look for more ways to put our new-and-improved regulators to work.

          • Squirrel of Doom says:

            I have to disagree. The obvious reaction to being bad at something (regulation) is to stop doing it, and instead focus your efforts on something you’re good at.

            The only reason to not follow that path is if you thing the “something” is inherently good. Like if you’re bad at breathing, quitting breathing is not a great way to address that.

            So, to me, when you say this, you’re mostly revealing that you think regulation is inherently good.

        • greenwoodjw says:

          If the solution to problems in the system is fraud, and that’s widely seen as ok, you have a bad system

          • Valdarno says:

            For what it’s worth, fraud is not widespread in the system. I don’t think that’s what the parent poster was saying.

            Of course, I’m sure it happens sometimes – but I spent most of my childhood in the healthcare system and then did a degree closely adjacent, and I never saw any evidence of that.

        • Anthony says:

          Some parts of the U.S. aren’t even competent at “deregulation”. See California’s power crisis of 2003 – things were so bad that the Governor was recalled.

          Of course, it wasn’t actually deregulation, it was a massive regulatory reform which either wasn’t well thought through or was captured by special interests. But it caused rolling blackouts when there wasn’t actually a shortage of electricity.

        • Valdarno says:

          It does have flaws, but honestly I’ve been pretty impressed so far. I think it’s very very dependent on triage: if something’s important then the system moves quickly and efficiently, but if it’s non-urgent then you can be stuck in a bureaucratic eddy for way too long.

          The broader issue, I think, is the latter point that the US government seems to be catastrophically bad at regulating everything. I’m not sure why that is.

    • So, if the government were to negotiate prices with drug companies with the ability to say “no deal” if the prices on offer were too high then this would be a good idea. Currently we mandate that the government must buy drugs for people who need them and in that case negotiations just result in the government being charged as much as it can afford to pay. What protects us from ‘must purchase’ resulting in super high prices right now is that the law says ‘must purchase at $X’ where X is based on what the private sector prices are. This isn’t a great system, but it works.

      Now, if we let the government were able to say “That treatment is too expensive, we’d rather let a person die than pay the $Y you’re asking” then that could work. But that’s not how the US is currently set up and given the recent outrage over “death panels” I don’t think voters would accept it. So probably the best thing to do for now is to continue to not negotiate drug prices.

  56. Hoopdawg says:

    You prescribe drug manufacturing by for-profit companies, but then the patients are getting unsafe, ineffective medication. So you prescribe strict FDA regulations…

    • ARod1993 says:

      That does pose the question of what would happen if you had a public option for drug manufacturing and research, set up under a similar model to the post office where profit wasn’t part of the equation and you could target something reasonably close to breakeven pricing on the pills and then fund medication research and clinical trials directly (ie something like Brookhaven National Labs for pharmacology and then financially self-sustaining or very marginally profitable satellite facilities doing manufacturing).

      The beautiful part about this is that you could set it up, hold it to its mandates and then let the markets/universe sort out the rest. If it turns out that private companies are actually leaner and better than a federal operation then the federal operation wouldn’t be able to stay self-sustaining and would wind up withering away, whereas if the government could compete you’d wind up with a baseline floor for quality and corporate efficiency set by the government.

      You could probably also break up some of the sadness around research by having the national labs release all of their findings as open-source would then create a system where the government would carry a lot of the research weight but a small, lean eager company would still have room to take some of the government research in a new direction and make some money.

      • RalMirrorAd says:

        In practice I suspect FDA regulations would persist and the public option would simply be free of all of them, or it wouldn’t be free but would operate at a significant loss. Either way it would likely drive the vast majority of the private sector out of existence at which point people would become accustomed to think of private manufacturing of medicine as a niche for the wealthy much as it is regarded with education. [never mind the lower marginal operating costs]

        I think the smart move politically is to basically have your staffers and lawmakers agree to an internal taboo on the any term that sounds like it spawned from some free market think tank [including the word free market] — Make it sound like the companies are getting regulated *more* to the public but communicate the law changes in clear but neutral sounding language to industry professionals.

      • Jaskologist says:

        It is illegal to compete with the Post Office.

      • Watchman says:

        By analogy with every other public provider, it would be expensive and unresponsive to public needs as the signals that make manufacturers aware of these (pricing and demand) would not be as important as whatever political imperative was then dominant. Say producing a cure for a disease that was already treatable because it happens to be politically attractive.

        That’s assuming the lobbyists didn’t win control and manipulate the state-run centre to benefit their clients, doing expensive basic research that leads to products one (patentable) step away from useful products…

        I may have a bias against stategrun companies though.

      • John Schilling says:

        and then financially self-sustaining or very marginally profitable satellite facilities doing manufacturing

        It sounds like you arr planning to have the government do the manufacturing, directly, with e.g. civil servants on the factory floor rather than farming that part out to contractors. And then asserting that it will be cheap and “financially self-sustaining” because reasons.

        Do you have any other examples you can point to so that we may see how this approach works in practice, both in terms of cost and of the all-important “yes the factory is actually producing the desired good in adequate quantity and quality” metrics?

    • John Schilling says:

      You prescribe drug manufacturing by for-profit companies, but then the patients are getting unsafe, ineffective medication

      Is this a problem in, say, Peru?

      • ARod1993 says:

        Our thread won’t let me reply so I’m replying here:

        We’ve done it before in a wartime context; I also suspect that most of the key to building an operation good at X is to build a founding team with a lot of experience doing X and provide them with an incentive structure that encourage building good procedures from the beginning. Now, the question of what “good procedures” look like is a fun multivariate tradeoff that I’m only half-qualified to opine on and not qualified at all to lay out due to a lack of domain experience, but I believe it should be doable, and should in some ways be easier in a non-profit-driven context. My comment on that has to do with time I spent at a place with questionable food safety standards and procedures, because we were trying to get in the black quickly and impress investors, and so time/money dedicated to food safety wasn’t what it should have been.

        • John Schilling says:

          We’ve done it before in a wartime context;

          If you’re referring to WWII, almost all US war materiel in that conflict was produced by private contractors. There were a few specialized cases where that wasn’t the case, things like battleship guns and atom bombs, but these things were built only in small numbers and weren’t cheap.

          I also suspect that most of the key to building an operation good at X is to build a founding team with a lot of experience doing X and provide them with an incentive structure that encourage building good procedures from the beginning.

          Almost all of the people with lots of experience manufacturing e.g. drugs are working for the private sector and don’t want to change. Civil service pay scales, set by law and union contract not easily changed, will prevent the government from offering the good ones more money than they are currently earning in the private sector. And the bureaucracy is worse, which is a powerful negative incentive to the kind of people who want to Get Shit Done.

          So to the extent that you have correctly identified what is required to create an efficient, low-cost manufacturing enterprise, you have identified the reasons why the U.S. government (and really, any modern government) is the wrong institution to task with the job. Manufacturing is not what governments are good at. Which is why, when the U.S. government was faced with an existential crisis if it couldn’t suddenly manufacture a shitload of tanks, planes, guns, bullets, combat boots, and everything else, farmed it out to the private sector.

          • bean says:

            It wasn’t just battleship guns. It was also battleships. A lot of vessels were built at government-owned naval facilities on both sides of the Atlantic, and at least during the era I’m familiar with, costs were only a little bit higher at the Navy Yards. (Of course, I mostly know about pre-1920 British construction, at least where costs are concerned. I couldn’t find a detailed breakdown on the SoDaks, some of which were the last US BBs to be built outside the navy yards.)

            All that said, the situation probably isn’t the same with drugs today. The government has no in-house expertise in drug manufacture, while they’d been doing naval construction for centuries by the time WWII broke out. More than that, they don’t any more. The US stopped building in Navy Yards in the 60s. (Of course, that was under McNamara, which almost certainly means it was a bad idea.)

          • Mark Atwood says:

            Civil service pay scales, set by law and union contract not easily changed, will prevent the government from offering the good ones more money than they are currently earning in the private sector.

            No kidding. At the start of the current administration, I was actively recruited to apply for a “senior adviser to the director” type position in one of the smaller and more more technical agencies. (Hilariously, this was part of a cascade of events stemming from Scott being asked to arrange an introduction between two other people.)

            I considered it for about two hours, until I looked at the payscale. Even with all the adjustment bonuses they could possibly offer, it would still be over a 30% pay cut, and I would have had to move to the District, with resulting miserable housing and even more miserable commute, far worse than the worst of the west coast. No, thank you.

            This reinforced my opinion that people go in the senior civil service only 1) if they are not qualified for anything else, 2) they like having power-over but lack the skills to get it any other way, or 3) as a “missionary trip” where instead of dispensing mosquito nets in Africa they are dispensing not-stupid in the District, or 4) as a career investment so they can then pivot through the revolting door to some much better paid cushy lobby gig.

            I think most of the people involved in the US Digital Service started in the previous administration were originally of type #3, and good on them. Much cudos. Yay. But lots of them were early Googlers, and could afford it. And now many of them are turning into type #4.

          • albatross11 says:

            There are also scientific agencies where the government jobs are pretty good–no need for spending years struggling to get a tenure track job and then years struggling to get tenure, more time doing science than writing grant proposals, etc.

          • Thomas Jorgensen says:

            Government research orgs can get top tier talent, because while good scientists do care about money a whole lot, the money they care about is very often “The lab budget” with any salary that lets them pay their student loans and not live solely on ramen being acceptable if the lab budget is shiny.

          • Valdarno says:

            I have to disagree about that characterisation of US production in the war. Yes, most of it was technically done by contractors, but there was a huge amount of government control: people like John Kenneth Galbraith were deputised to literally go out to the factories and say “nah, we need you to start building tanks now, we’ll sort out payment some time later”.

            The division between government and private was very blurred in the war, mostly because there was the risk that if the private sector didn’t fold to whatever Roosevelt wanted he’d nationalise them. They very much acted as an arm of the military.

        • Doctor Mist says:

          Our thread won’t let me reply

          (FYI the comment system limits indefinite nesting because deep nesting makes things hard to read (especially on small screens like phones), so the usual technique is to reply to the parent comment, perhaps including enough quoted material to make it clear what you’re responding to.)

      • Hoopdawg says:

        No, because Peru has a drug regulatory agency. It was a problem in the US up until early XX century.

        (I just realized Scott edited out the part I referred to, so now my earlier comment makes little sense.)

        • John Schilling says:

          Having “a drug regulatory agency” and having “strict FDA regulations” are not necessarily the same thing.

          • vV_Vv says:

            Are drug regulations actually less strict in Peru than in the US or are people in this thread just assuming that Peruvians are noble savage libertarians of some sort?

          • theredsheep says:

            I don’t have a strong opinion about Peru’s drug policy in general, but when we had our first kid there we could walk into a pharmacy and buy methylergonovine without a script. That’s a med used to deal with postpartum bleeding; my current retail pharmacy doesn’t even carry it, but it’s a standard hospital supply. I looked it up just now to check the spelling, and Wiki claims it’s also a hallucinogen similar to LSD at higher doses. Make of that what you will.

          • Squirrel of Doom says:

            My impression is that FDA regulations are the strictest and perhaps even dumbest in the world. At least on a systemic level. I’m sure there are individual drugs that are treated better in the US than some other country.

            But I’d be genuinely happy to see any proof to the contrary!

    • Matthew Green says:

      The problem here seems to be that Scott is treating government regulation as a single variable, where you can be “in favor of more regulation” or “in favor of less regulation” and the insulin situation is an argument for one. His own post seems to indicate that the situation is much more complex: that there are hundreds of regulatory variables — biosimilarity regulations being just one. And the problem is not the amount of regulation, but the fact that nobody is properly managing these variables to bring about best outcomes. In other countries with national health systems, it might be argued, someone *is* managing those variables systematically, since there is a national interest in doing so. While in the US, the controls are being set by a combination of regulatory agencies, political influence, and Moloch. So the ‘pro regulation’ argument Vox (and others) are making isn’t necessarily as simple as Scott makes it out to be.

      • thevoiceofthevoid says:

        that there are hundreds of regulatory variables — biosimilarity regulations being just one. And the problem is not the amount of regulation, but the fact that nobody is properly managing these variables to bring about best outcomes.

        I feel like you might have the causality a bit confused here. The default state of all regulatory variables in a laissez-faire economy is zero, and doesn’t require active management. When you create a giant regulatory agency and give it vast power over an entire industry, it will make sure to find as many things as it can that “need” regulation. How do you define the “best” outcomes? How do you think anyone could even in principle anticipate the precise outcomes of the vast web of regulations, let alone optimize over it?

        In other countries with national health systems, it might be argued, someone *is* managing those variables systematically, since there is a national interest in doing so. While in the US, the controls are being set by a combination of regulatory agencies, political influence, and Moloch.

        Is there not a “national interest” in the quality of healthcare in the US? Does nationalizing healthcare somehow make a country immune to the influence of “regulatory agencies, political influence, and Moloch”?

  57. Douglas Knight says:

    No, it really is fashion. Diabetics are dying because they don’t know that dirt cheap insulin is available.

    Fancy insulin is for insulin pumps. Diabetics these days probably don’t know how to dose old-fashioned insulin. But if they knew that it existed, they could learn.

    • ARod1993 says:

      Just out of curiosity, how difficult would it be to make old-fashioned insulin play nicely with a looped rig (ie something like this: https://tcoyd.org/2018/03/diy-looping/ ) because my impression is that you could probably build a reasonably good model of how your body manages glucose from some guided experimentation and then essentially use a continuous-time state-space controller to manage blood glucose? Also (and I realize how much this likely lines up with Scott’s arguments about the FDA) it would be amazing if this were more available to people 🙂

      • Garrett says:

        You can use obsolete insulin pumps to make an artificial pancreas. However, not all insulin can be used in such systems. I know that even in a hospital, only certain types of insulin can be given via IV as opposed to subcutaneously.

        • eccdogg says:

          To me this is an even worse example of how bad the FDA is.

          These looping systems are quite simple, so simple that they can be configured by working in your garage amateurs. And the downside risk is very minimal , yet external pancreas systems are just coming to market now and only with a few brands of pumps. This is something that could have been done years ago.

        • Andrew Cady says:

          Insulin pumps aren’t intravenous, they’re subcutaneous. For an IV you just use normal human insulin. The whole delay issue with insulin has to do with rate of absorption into the blood. Human insulin, injected into body fat, does not make it into the blood fast enough. Through an IV, it does.

      • myers2357 says:

        Closed-loop systems require insulin which works quickly: Looping is a feedback system: (1) blood glucose increase -> (2) CGM Monitor records the increase -> (3) CGM signal read by $CustomDevice -> (4) $CustomDevice uses CustomAlgorithm to calculate insulin needed -> (5) $CustomDevice tells insulin Pump to shoot X amount of insulin -> (6)Insulin reduces Bloodsugar.

        For the system to work (which I define as “preventing Blood Glucose from increasing above 180”), then steps 1-6 must occur quickly-enough to counteract the rise in Blood Glucose. steps 1-5 can happen very quickly: less than 1 minute for sure. step 6 is the issue, it needs to both: (A) start working in less than 10 minutes, and (B) work faster than the rate at which carbohydrates increase Blood Glucose. (I’m simplifying it).

        Put simply, “dirt-cheap insulin” (i.e. Humulin R), even if it works in a pump, takes a long time to start working (~30 minutes), and works at a slower rate than the rate at which carbohydrates increase Blood Glucose..

        In a closed-loop system (where the signal to shoot insulin is the blood-sugar uptick itself), this delay would always result in high Blood Glucose levels, and the attendant ketoacidosis.

        Cheap insulin can keep you alive, but without clinical levels of life-planning (shooting insulin 30 minutes before any food, using a formula based on exact knowledge of the food-to-be-eaten), the daily ketoacidosis will significantly reduce your lifespan.

      • jimrandomh says:

        I use a looped rig and have worked on open source looping software. Old-fashioned insulin fundamentally won’t work at all.

      • Andrew Cady says:

        how difficult would it be to make old-fashioned insulin play nicely with a looped rig

        ‘Granting your argument,’ he said, ‘and supposing the funds are available, there’s another question you have to answer. Why should you do better than the, what is it, three hundred and twenty-six robot probes that have already made the trip?’

        ‘I am better qualified than they were, as an observer, and as a pilot. Especially as a pilot. Don’t forget I’ve more experience of lighter-than-air travel than anyone in the world.’

        ‘You could still serve as controller, and sit safely on Ganymede.’

        That’s just the point! They’ve already done that. Don’t you remember what killed the Queen?’

        Webster knew perfectly well, but he merely answered: ‘Go on.’

        ‘Time lag, time lag! That idiot of a platform controller thought he was using a local radio circuit. But he’d been accidentally switched through a satellite. Oh, maybe it wasn’t his fault, but he should have noticed. That’s half-second time lag for the round trip. Even then it wouldn’t have matered flying in calm air. It was the turbulence over the Grand Canyon that did it. When the platform tipped, and he corrected for that it had already tipped the other way. Ever tried to drive a car over a bumpy road with a half-second delay in the steering?’

        ‘No, and I don’t intend to try. But I can imagine it.’

        ‘Well, Ganymede is a million kilometres from Jupiter. That means a round-trip delay of six seconds. No, you need a controller on the spot to handle emergencies in real time.

    • Plumber says:

      @Douglas Knight,
      Just an anecdote:
      I’ve heard many deputies speculate that some inmates are committing crimes to get free treatment for their diabetes.

      Whether that’s true or not I can’t tell, but what I can tell is that every day there’s a crowd inmates waiting their turn at the jail clinic which happens to be by a plumbing chase entrance, and I’m told most of them are diabetic.

    • theredsheep says:

      I am not diabetic, but I work in a pharmacy and have seen people wince and pay staggering prices for insulin. These people are neither rich nor dumb. I suspect it is a little more complicated than you are letting on.

    • Dedicating Ruckus says:

      A close family member of mine is diabetic, and I’m pretty sure this is just not true.

      He doesn’t use an insulin pump, still on the old-fashioned hypodermic kits. He checks blood sugar using manual finger-pricks. Years ago, he used cheap, chemically-based test strips and cheap insulin. Neither of these are available on the market anymore; he’s stuck with fancy new test apparatus with disposal electronics all over, and still-under-patent insulin that’s not noticeably better than the formulations from twenty years ago. There is not a place to buy the old, cheap stuff.

      • Doug S. says:

        Actually there is. You *can* get the old crappy insulin from Walmart, but it’s significantly worse at controlling blood sugar than the modern, long-lasting insulin variations that doctors actually prescribe. So you really don’t want to have to rely on it.

        • fnord says:

          It seems reasonable that old-style, cheap insulin doesn’t work as well as more recent versions, but that seems to explain the “insulin is off-patent and should be cheap” issue. If there’s an old, off-patent drug that’s inexpensive but not-so-great, and a new, patented drug that works better, no one should be surprised that the new better drug is more expensive, nor that everyone uses it despite the expense. If that’s what’s happening, perhaps there’s nothing special about insulin pricing (beyond general medical-sector cost disease) except for the confusing fact that both the old drug and the new drug are referred to as “insulin”.

      • albatross11 says:

        The nonexistence of the cheap stuff seems like the place where there’s an interesting story. Does anyone have a good explanation of why nobody is making the old, cheap stuff? I mean, every insurance company on Earth would presumably prefer this, as would organizations like the VA, Kaiser, etc. So why isn’t it still being made?

        • eccdogg says:

          They do make it (you can get it at Walmart). The old cheap stuff just works quite a lot worse than the new stuff.

          And by worse I don’t necessarily mean worse at keeping you healthy but worse for allowing you to lead a normal life.

          • MilfordTrunion says:

            Yes! Very much so.

            Wal-Mart insulin will get your blood sugar down. You’ll have to spend a lot of time and care monitoring it to make sure it’s actually coming down, and you’ll have to be so stringent about carbohydrates that keto people will tell you to tone it down. But it does work. It’s not true that you HAVE to buy Humalog or you die.

    • Douglas Knight says:

      To be more precise, a vial of old-fashioned insulin costs 1/10 that of fancy insulin. But to get that price you need to either go to Walmart or know about goodrx (or maybe have any insurance?). Maybe that’s not dirt cheap, but when I read stories of diabetics dying after rationing their insulin, it sure sounds like they don’t know this.

      Is vial to vial a fair comparison?
      Here’s a journalist who thinks so, but that’s not saying much.

      • eccdogg says:

        It is fairly comparable. No one should be dying because they can’t afford insulin. That does not mean that insulin pricing does not have problems, but the old insulin + a regimented procedure is still available just like it was many years before the new insulins were invented.

        And heck the “old stuff” is not even the original insulin. That stuff was created from pig and cow pancreas and is easy enough to make that these folks https://www.diabetes.co.uk/blog/2015/06/diabetes-legends-one-eva-saxl/
        were able to make it in a Shanghai ghetto during WW2 and save the lives of 400 people.

    • jimrandomh says:

      No, this is incorrect.

      I’m a (type 1) diabetic. I’ve also use and have done some development on OpenAPS, an open source closed-loop insulin pump control system. All type 1 diabetics end up being experts at insulin dosing, because it’s a complicated thing with a strong feedback loop that you do every day. The modern, branded insulins really are better, in a way that is easily recognizable to everyone who uses them. This is true regardless of whether you’re using a pump, or multiple daily injections. The difference is not subtle.

      On the other hand, you can get the same stuff 10x cheaper, with the same brands and probably even from the same factories, by driving over the border to Canada or Mexico. But then you won’t have insurance pay for it, so this only pays (from a patient perspective) if insurance isn’t paying anyways.

      • Douglas Knight says:

        Diabetics are dying because they don’t know that dirt cheap insulin is available.

        Do you dispute that?
        Or are you just offended by the word “fashion”? Take it up with NEJM.

        • jimrandomh says:

          Yes, and also disputing your claim that “fancy insulin is for insulin pumps”. The main difference between the cheap insulin and the good insulin is that using the cheap insulin imposes major dietary and lifestyle restrictions, makes errors significantly more harmful, and produces worse outcomes.

          • Douglas Knight says:

            Yes, and

            Not a very useful response. Do you dispute that diabetics are dying? Or are you saying that they’re making a rational calculation?