http://www.nytimes.com/2009/09/02/business/02drug.html
“The pharmaceutical industry has developed thousands of medicines that have saved millions of lives, but it has also used its marketing muscle to successfully peddle expensive pills that are no more effective than older drugs sold at a fraction of the cost.”
If the doctors weren’t so greedy, they would prescribe one of the cheap alternatives.
And how does this represent a “market failure”–if there could even be such a thing?
That’s funny. My greedy doctor went to great lenths to find an affordable BP medication for me.
And, put bluntly, anyone who applies the term ‘market’ to anything relating to the US health care system, much less ‘free market’, belongs in a rubber room.
All suppliers of goods and services, including me a supplier of labor, want to sell their products at the price that maximizes their satisfaction. In my case that is a combination of cash, benefits and work environment, for big pharma it is much simplier: CASH. Unlike me, big pharma has to pay hundreds of millions to engineer, test, manufacture and market (mostly test) their products. So when they get one through this process, big pharma is always interested in informing the public of the benefits of the product.
As for muscling customer, there is an old and very true addage on sales: NO NEED, NO SALE!!! So the doctors prescribing this chemical over some other are not doing so for any other reason than it works best for the current patient.
The NYT like other big pharma critics assume all patients are the same when the opposite is true. For example: I did not like a cheap drug and instead went for the more expensive drug because of side effects.
The one area where I am critical of big pharma is in their cozy realtionship with the FDA. I do not believe the FDA should exist as it just increases the paper work, does nothing to reduce liability and applies their version of risk on the drugs or devices when that is up to the patient.
The best way to reduce drug and medical device prices, and food too for that matter is to eliminate the FDA and reduce or eliminate the patent protections on these businesses.
So you’re saying that greed is something that only exists in the free market?
From the NYT:
That doesn’t sound anything like a “market” failure to me. In a free market, there are no such things as patents.
Hmm, another example of government failure, not “market” failure. The FDA is a government monopoly on food and drug testing. It’s because of the FDA that this drug got through; in other words, this isn’t a market failure but a failure of the FDA, a government agency run by g-men bureaucrats. The market handles testing of other products much more efficiently, see, for example, Underwriters Laboratories.
Now let’s finish off this NYT article with this example of high idiocy:
All “education” is inherently biased. Everyone teaches and explains everything from their own biased point of view. To suggest otherwise is not only counter factual, but insane. Is it better for no information to be presented to consumers, or at least some information to be presented via marketers? Surely, some information is always preferable to no information. And what if that information is false? Then it clearly represents an attempt at fraud, which is already illegal.
All in all, this NYT article does nothing but expose the failures and inefficiencies created by government action and regulatory agencies. First, the very existence of Lexapro is due to government intervention via the patent system. Without government, Lexapro would never exist. Secondly, the reason Forest Laboratories has been able to get away with this is because government bureaucrats at the Food and Drug Administration approved Lexapro, something that a free market third party testing firm like Underwriters Laboratories would not tolerate.
Lastly, there is one giant glaring hole in the NYT article. According to the article, many physicians agree that Lexapro is superior in some way, shape, or form. However, the NYT article does not explain what their arguments are for the superiority of Lexapro over its chemical cousin, Celexa. Perhaps it is true, after all, that Lexapro is superior. The New York Times, though, completely ignores any pro-Lexapro arguments in its zeal to blame something on the “free market.” Maybe that fine piece of yellow journalism was paid for by a medical company that competes against Forest Laboratories? If there is one thing the bankrupt rag known as the New York Times does well, it is unfounded hit-pieces. I wouldn’t put it past them to be corrupt. But again, at least it is some information that is being spread to the market, more than the government could do.
Huh?
A quick search on drugstore.com shows that Lexapro is the cheapest of the Top 5 prescribed antidepressants.
Price for a 30-day supply…
Also, if doctor’s are so greedy, why are 4 of the 5 above also available as generics?
If the price was “high” (which is subjective), then I’m sure that intellectual property laws are having some effect…
and FDA regulation…
Let’s see what this thing called market “failure” is, shall we? It is a concept evoked by ignorant people, typically whining about market outcomes that diverge from what they want personally, even if they’re not personally involved in the transaction, and really have zero comprehension of economics.
But the price is subjective so IP and regulation have no effect. You can’t have it both ways.
My macro economics textbook has a whole chapter on market failures, and why the government is needed to correct them. My textbook also said that an “active, but limited” government is one of the key features of pure capitalism.
hehe - And what is the name for a system in which market and government are truly separated ?
I don’t want to derail this thread, but the idea of an “active but limited government” is possible. The term “limited government” doesn’t imply small government, it simply implies a government that has its powers limited. So a government that only provides national defense, security (police), a court system, roads, some form of social security or safety net, and money supply could certainly be limited, as long as the government is barred from doing anything else (like nationalizing industries). Of course, such a government would not be small in any sense of the term, as the power of controlling the money supply is essentially the power to control the direction of the economy.
Those textbooks are basically Chicago/Keynesian.