The Economist's Cookbook

Recipes For A More Free Society

  • "The curious task of economics is to demonstrate to men how little they know about what they imagine they can design."

    - F.A. Hayek

*sigh* I found this on TCS Daily:

Wow ... Just wow. the FDA procedure is hampering the creation of drugs which could potentially be used to treat any number of devastating diseases ... because the cost of wading through all of the FDA red tape and FDA requirements is too high.

Nearly a BILLION dollars to go through all the FDA crap, NO WONDER DRUGS ARE EXPENSIVE!

And now the FDA is rejecting a drug because there are other drugs like it on the market ....

Wait ... so .... the FDA is deciding that consumers don't need another option when it comes to certain drugs. Congratulations, the FDA now knows what's best for you, and it's a smaller choice set.

Let's assume that we have Disease A. Now disease A isn't deadly or debilitating, but it's a painful condition and people want treatment for it. Now let's assume that three different companies produce drugs X, Y, and Z.

Now Another company develops drug P and drug P treats disease A, much like drugs XYZ do.

If Drug P were allowed to enter the market, competition between the four companies for market share would increase and we'd see a fall in price, provided that the market is free enough to allow for price shifts (i.e. no Gov't price ceilings or floors, no predatory pricing laws, etc). We should see a drop in the prices of all the drugs which treat disease A. If drug P isn't allowed into the market, the prices of drugs XYZ will remain higher than if P entered the market and the consumer's choices will be more limited.

"The FDA: Screwing you hard, fast, and hard ... for your own protection"


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