Greed Might Not Be Good But It Must Be Protected

After everyone else had already done the hard work for her and after she had been conspicuously silent, Megan McArdle finally came up with a post on Mylan and the EpiPen. It took a threat from Hillary Clinton to get her to respond; she was uninterested in discussing Mylan until it looked like the government might actually do something about drug company price gouging. Hurry, McArdle! A corporation needs protection!

McArdle begins her little plea by telling her readers that if they don't know about EpiPen they must have been living under a bushel. (Or they must read her column.) McArdle, however, knows everything and now that someone else has reported, digested, and printed the information, she is here to tell you all about it.

McArdle flatly states that greed made Mylan raise prices. Actually, a person raised prices, a person who should be unable to go out in public without hearing hisses and boos. McArdle usually adores talking about CEOs and their brilliant business skills but for some unknown reason she does not discuss Heather Bresch herself.  McArdle explains that the reason Mylan raised prices was the lack of competition, and because the FDA made it too difficult for competitors to get to market.

These artificial barriers to entry are why we keep seeing huge price spikes for various drugs. Now, it’s worth noting that these spikes don’t necessarily last very long. With the exception of some new, expensive and very valuable drugs, such as Opdivo for cancer or Sovaldi for Hepatitis C -- drugs for which there isn't a good alternative -- competition eventually becomes a problem for price-hiking drugmakers. Patients and doctors will eventually switch to another product if the price gets too high, and I’m sure that in the wake of all these news stories, there are now a lot more doctors asking patients whether they want an EpiPen or an Adrenaclick. Eventually, that competition should push the price down even if the government doesn’t do anything.

This paragraph is stuffed with lies and deception but it would take about two hours to research and correct every error and lie, and I have work to do. Unlike McArdle, I can't have someone else do the preliminary work for me while I drink, shop, and google my name looking for compliments, and then write up a blindly pro-free market tissue of lies and hit print.

McArdle's post(s) on Sovaldi were as filled with deception as all her other posts. The price of Sovaldi went down only after the government investigated them and mandated discounts. The drug company solution for astronomical prices is to hand out coupons, but most people would rather use coupons for things like soda and shampoo, not life-saving drugs.

But now that we know greed will check itself, what about Clinton's plan? McArdle says we should do what Alex Tabarrok tells us to do, having no thoughts of her own. McArdle also repeats her lies about drug innovation depending on the high cost of drugs in the US, because being a hack means never having to say you're a liar. Tabarrok says that we can solve these problems with FDA reciprocity with Europe. Any drugs approved there will also be approved here, and the government can temporarily buy European drugs when the price in the US to high.

These solutions would do nothing to solve the problem of greedy drug manufacturers, they would only make the greed more palatable for voters/customers. The government should always negotiate when buying drugs, but the pharmaceutical lobby is too powerful. It's odd that McArdle would ignore their lobby, as she was so very concerned with prison guard lobbies. But eradicating the problem would cut profits, so what is a Free Market Fairy to do?

As always with McArdle, the only thing that counts is eradicating regulation.

Beyond that, we should have a good long think about what the FDA does. A lot of the reason that it can be so hard to get new drugs and devices approved is that the FDA too often wants those drugs and devices to be perfect -- at least as good as anything already on the market and preferably better. And it does not really consider factors such as “It’s cheaper,” or “It will keep the other companies honest” when passing judgment.

We should learn a lesson from this episode. But the lesson is not, “We need more government and less market.” The lesson is, “We need more market -- which means we need better government.”

It seems that the free market might not be entirely free after all, therefore we should continue to regulate only enough to let CEOs kill the poor and rake in billions without interference.