EconLog | Arnold Kling | No Prayer, SorryThe end of that post is this:
I think that (non-classical) liberals and libertarians see the problem of “special interests” differently. Liberals view special interests as exogenous to the policy process. You have to overcome special interests to create good policy. Libertarians see special interests as endogenous. Policy is what creates them.
Most important, liberals will always say that we need government involvement in food policy, energy policy, education policy, health policy, etc. When they observe that a particular policy serves only special interests, they may appear to side with libertarians by supporting a rollback of the offending program. However, while the libertarian will put forth the notions that public policy is often self-defeating and that it is impossible for policy to be immaculately removed from special interests, the liberal is never going to concede those points.Now, keeping that in mind, do read this post at Boing Boing. Be sure not to miss the comments.
Boing Boing | Rob Beschizza | $10 drug now $1500 after FDA grants monopolyTo a first approximation, all of the comments are screaming about how terrible capitalism is. No concern is paid to this being a government program to circumvent competitive market forces. The idea that central planners can ensure quality control by eliminating competition was disproved by the end of the Stalinist era, at the latest. (Really, this was one of the half dozen or so pillar reasons central planning was supposed to be more efficient than the stochastic, iterative chaos of the market.) Yet here the FDA is trying that strategy again. And when it backfire, who's to blame? Surely not the people who used their coercive power to rig the system. No, no, no, it's the market and those nasty people engaged in for-profit medicine. How dare they?!
A progesterone hormone injection, used to prevent preterm labor, used to be $10 a shot. Now that the FDA has assigned an exclusive right to create the easily-made formula to one company, KV Pharmaceuticals, the price has risen to $1500. Almost all of it is pure profit, and KV Pharma did not develop the drug or pay for its trials: the taxpayer did, via the National Institute for Health. It is said to be the only drug proven to prevent pre-term birth, and an expert cited by ABC News suggests that the profession was snookered into supporting the assignment as a quality standardization measure.
I have no idea how KV Pharma got this deal. Maybe luck, maybe graft, maybe some other rent-seeking. I don't want to let them off the hook. But if you put a meatloaf on the ground and the dog eats it, whose fault is that really? Sure, you yell at the dog, but what the hell were you thinking making it possible for the mutt to misbehave like that? The FDA freely and willingly gave them a monopoly, and KV Pharma took it. How is the FDA not to blame for that?
And what the hell did the FDA expect was going to happen when they did this? If the agency is that short-sited or unimaginative or ill-prepared or incompetent why am I possibly supposed to trust them making all of my medical risk-benefit assessments for me?
Edited to add (16 Mar '11) — Alex Tabarrok has a different view about KV and why the FDA granted them a monopoly. In brief, this is a result of a well-intentioned but poorly executed orphan drug act rather than a quality control measure, as I had read. He also links to Derek Lowe's comments, which are good. He says that he major value-add KV has brought to Markena through this program is the ability to put "FDA Approved!" on the label. You tell me who pushes that as a valuable thing more, the pharmaceutical industry, or the FDA.