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LIBERTYBLOG:
MUSINGS DURING AN ERA OF DECREASING LIBERTY

FDA's Cronyism and the Epipen Monopoly

8/21/2016

2 Comments

 
Remember when government regulations and cronyism continually degraded our system but everyone blamed unchecked capitalism and pushed for more regulation and larger government in response?   Good times.

A recent report from The Libertarian Republic reveals an increasing cost to Epipens.  An EpiPen is an injection containing epinephrine, a chemical that narrows blood vessels and opens airways in the lungs. These effects can reverse severe low blood pressure, wheezing, severe skin itching, hives, and other symptoms of an allergic reaction.  Needless to say, these are commonly found (and legislation has been passed requiring their presence) in schools.

​The costs are going through the roof and if you're economically literate when the ignorant claim "greedy capitalism",  you already suspect government meddling.  You wouldn't be wrong.
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​While the FDA might have had a role in Upton Sinclair's meat-packing travesty of the early 1900's, entrepreneurs today know that killing and poisoning their customers isn't the path to profits.
​ From the article:
The news has once again rolled around that the EpiPen, a specific brand of epinephrine auto-injector, has risen in price astronomically – far beyond the normal rate of inflation. Most recently, the company behind the EpiPen, Mylan, has reportedly raised their price from $100 to $500 per pack – right when school is about to start. Naturally, this has made things more difficult for working class parents to acquire the item by their own means, and caused outcry (especially in liberal media) about how once again this is an example of “runaway capitalism” at work where greed is allowed and exploitation is real.

After further review, they've determined that the FDA regulations have actually decreased competition which CREATED the same monopoly that allows Mylan the opportunity to raise their prices.

For one thing, Mylan holds a patent on a type of design that meets specific legal requirements hoisted upon schools for auto-injectors. Mylan therefore exploits this. Also, the FDA is reportedly barring competing companies that do manage to meet the same technical requirements by recalling their offerings based on higher standards than set for EpiPen, or by asking them to undergo more arbitrary testing before true consideration is offered.

Insert cronyism here.  Most members of the decision-making board of the FDA are huge stockholders in multiple big pharmaceutical companies. This is a blatant conflict of interest. Any person or entity who benefits financially from the profits of a particular industry should never be allowed to hold a position which exercises regulatory control over that same industry. It should be highly illegal. It probably already is and just isn't being enforced.

At this point, Big Pharma enjoys a government enforced monopoly.  While new drugs should be verified, the fact that it costs an average of $802 million and over 7.5 years before your drug is brought to market and you make your first sale is proof that there are significant barriers to entry created by the government.​
From Encyclopedia.com:
​It would not stretch matters to say that the Pure Food and Drug Act of 1906 (P.L. 59-384, 34 Stat. 768), also known as the Wiley Act, stands as the most consequential regulatory statute in the history of the United States. The act not only gave unprecedented new regulatory powers to the federal government, it also empowered a bureau that evolved into today's Food and Drug Administration (FDA). The legacy of the 1906 act includes federal regulatory authority over one-quarter of gross domestic product, and includes market gatekeeping power over human and animal drugs, foods and preservatives, medical devices, biologics and vaccines. Other statutes (such as the Interstate Commerce Act of 1887, the Sherman and Clayton antitrust laws, and the Federal Trade Commission Act of 1914) have received more study, but the Pure Food and Drug Act has had the longest-lasting and most widespread economic, political, and institutional impact.

​Today, the FDA regulates $1 trillion worth of products a year.  Could the FDA reduce it's regulations and cut it's budget and market effect by 50%?  I think so.  To find out more about the FDA's charter, check out there page here.

2 Comments
Jon
8/23/2016 21:31:48

A lot of this is unsubstantiated. The cited article does not state that the laws require the specific type of auto-injector that Epipen uses, it is just that Epipen has somehow been able to so overwhelm the competition that firms have stopped production of existing alternatives---already approved by the FDA.

There is no information, other than guesswork, that anyhow has presented to show that the FDA's rejection of Teva's new alternative was wrong or was forcing higher standards on the new competitor than demanded of the existing one.

Reply
libertyLOL
8/24/2016 11:44:56

Thanks for the comment, Jon. This blog post wasn't focused on the "How Mylan got here" story, but instead the "effects of FDa cronyism and monopoly".

With the near 700% increase in the Mylan President's salary that was released last night, Please check out a followup to this piece which discusses the $millions in lobbying efforts, the Bills which were supported and the FDA's actions which allowed Mylan to achieve it's 85% market-share monopoly.

I think that's the piece you were hoping for. Let me know what you think.

It's located here:http://libertylol.weebly.com/libertyblog/epipens-rise-to-monopoly-a-history-of-lobbying

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