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Source link: http://archive.mises.org/16987/the-google-pharm-case/

The Google Pharm Case

May 17, 2011 by

People must not be allowed to get prescription medications without doctor approval — or else an entire fake industry could collapse. So the pharms, the docs, and all those who benefit from the current system bandied together and instituted a medieval guild system for the digital age.

FULL ARTICLE by Llewellyn H. Rockwell Jr.

{ 64 comments }

J. Murray May 17, 2011 at 7:52 am

“Congress made spam illegal”

Haha! Basic proof that writing on a piece of paper and calling it a law won’t change the behavior of the world. The greatest method to destroy spam didn’t come from Congress, but from the private market. The spam still comes, but I never see it becuase GMail is so good at knowing what is and isn’t spam.

Freedom Fighter May 17, 2011 at 12:52 pm

And I’ve set my inbox to exclusive, so I only receive mail from those listed in my contacts. All others simply don’t make it, not even to the junk box. I just never see them.

zaq.hack May 17, 2011 at 1:50 pm

Most spam comes from hacked machines. Microsoft was able to shut down a huge bot net just recently which reduced about 1/6 of the world’s spam. It used very un-libertarian means to do so, but since most spam originates with a property violation (a worm on someone else’s computer), it is hard to stand with the spammers.

Havvy May 17, 2011 at 9:38 pm

How’d it do that? Links would be helpful and nice.

zaq.hack May 18, 2011 at 9:26 am

http://www.tomsguide.com/us/rustock-botnet-virus,news-10537.html

Note: They even mention in the article it was used for “prescription drug spam.”

I have worked with “legit” spammers, though (provided bandwidth). It is not necessary to have a virus or to infect thousands of machines to do it. E-mail is relatively small, especially spam messages, and tons of it can be sent with relatively modest pipes.

Dan Ust May 17, 2011 at 8:25 am

Merely another demonstration of why the government must be overthrown.

Freedom Fighter May 17, 2011 at 12:53 pm

And how do you propose doing that ?

Walt D. May 17, 2011 at 8:40 am

Yet another example of creeping fascism. The final goal is for the Federal Government and the Administration is to direct and control everything in the private sector.
Pass Byzantine regulations that can not be complied with then selectively grant exemptions.
http://dailycaller.com/2011/05/17/nearly-20-percent-of-new-obamacare-waivers-are-gourmet-restaurants-nightclubs-fancy-hotels-in-nancy-pelosi%E2%80%99s-district/
Perhaps Obamolini will make Amtrak run on time.

Alex May 17, 2011 at 10:09 am

I know I’m going to be lampooned for going against the flow, but what about Internet crooks selling bad drugs (totally ineffective or harmful)? People buy an ineffective cancer drug on the Internet. Their lives are shortened as a result. It is no consolation to say, o.k. this means they won’t buy it anymore. You could argue that people should know they are taking a chance when they buy such products over the Internet. Or, that if they don’t know they are playing Russian roulette with such purchases they are just plain stupid, and that it should not be the role of the government to protect stupid people. But, I’m somehow uncomfortable with that argument when great harm is potentially involved. As my friend and I often joke, remember half the people have below average intelligence.

Drigan May 17, 2011 at 10:18 am

You’re seeing the effect of government interference: those crooks would quickly be out of business if you were able to do a quick search to find legitimate companies with vaguely similar prices.

J. Murray May 17, 2011 at 10:31 am

Precisely. Why would I want to click a link in a badly misspelled spam e-mail hawking “Candian Drug$” when I can buy from Amazon?

nate-m May 17, 2011 at 11:06 am

If we criminalize the sale of inexpensive drugs… the the only place to buy inexpensive drugs are criminals.

It’s a pretty big ‘duh’ here.

The only thing that amazes me is how people then use the logical end result to the criminalization process to justify the act criminalizing more and more activities.

Grant May 17, 2011 at 11:07 am

I love the Web of Trust add-on for Firefox. It allows users to rate sites based on vendor reliability, trustworthiness, privacy, and child safety. This is an excellent example of how a free market is self-regulating. No government intervention is needed when word-of-mouth is used.

nate-m May 17, 2011 at 11:25 am

What’s worse is that the regulation provides a false sense of security. That is the population believes the government regulation protects them so then all the drugs are automatically ‘safe’.

Unfortunately this is a incorrect assumption. A huge number of people die or are damaged by prescription drugs. Sometimes these problems are intentionally overlooked by regulators for whatever reason.

Thus getting rid of much the regulation can potentially help people because they will no longer assume something is safe because they see it on a commercial on TV or hear a ad for it on the radio.

Plus competing companies that will offer testing and certifications for drugs can potentially do a much better job then the government because their profitability is based on their effectiveness and reputation. They can’t get away with the sort of shenanigans that are common place with state regulators who have a monopoly.

DD5 May 17, 2011 at 11:10 am

So the rights of half the people to make their own choices should be stripped away. And since that would be discrimination, we strip away the rights of the other half as well. Do you and your friend often joke about that too?

AZVick May 17, 2011 at 11:38 am

Alex, your question is completely legitimate, but you need look no further than Rockwell’s post here to find your answer. Your assumption that government protects us is faulty. If it were true, then the SEC regulations would have stopped Bernie Madoff before he could rip off all those people, right? Government intervention does not protect us. The government serves its own interests. Period. As far as the free market goes, even now there are internet crooks willing to dupe desperate people into trying fake cures for their incurable diseases, even though it is already illegal. It is also evil, something which can never be stopped no matter how many laws are passed.

Freedom Fighter May 17, 2011 at 12:58 pm

“People buy an ineffective cancer drug on the Internet. Their lives are shortened as a result.”

Why would you want to shorten the lives of everybody through government regulations just in case a few imprudent individuals make a bad decision ?

Lots more lives would be saved if there was a free market in health care, the current regulations are costing an enormous amount of lives in the name of safety. Benjamin Franklin at it’s best.

Under free market capitalism, instead of having to buy those medicines through badly spelled spams and questionable sources, you could buy your medicines from reputable web sites and suppliers for a fraction of the cost and there would be private agencies investigating the safety and reliability of the medicines and the suppliers and give ratings for consumers to follow. We don’t need the FDA nor the government. Doctors would have to get a real job like flipping burgers.

zaq.hack May 17, 2011 at 2:03 pm

@Alex: Let’s say that there is a company out there selling sawdust wrapped in sugar as blood pressure medicine. The drug is “counterfeit” and not just “generic” for the same molecules.

Don’t you think it would be many orders of magnitude more efficient, less expensive, and free to go after those groups for fraud or actual harm to citizens than to try and scan every bottle of so-called Advil entering the country? Giving someone sawdust instead of their actual med could easily prove out in court with concrete evidence on all sides. It would be highly unusual for someone to be in business to do this, much less get away with it for a prolonged amount of time. Even if it was rumored that such a supplier was providing fake drugs in a truly free market, the effect would be devastating on their business.

Jim May 17, 2011 at 3:01 pm

You have it right. I can’t imagine anyone thinking otherwise.

Donald Rowe May 18, 2011 at 12:03 pm

This is the psychological barrier to acceptance of anarchy. Overcoming carefully trained perception is the battleground. If your perception is that the government is doing all that is humanly possible to prevent harm from visiting its citizens, and anarchy is doing nothing and doesn’t even give a damn, it’s a no-brainer and anarchy loses.

Contrast that perception with another that sees government as being expensive, coercive, inept and even at times counter effectual, while it sees that anarchy, neither costing a penny nor lifting a figurative finger, actually accomplishes the “goal” better than directed efforts by any government, and without there even being a goal, stated or unstated, and making no claims whatsoever that all harm will be vanquished.

Bad outcomes will occur in any case, and we don’t want bad outcomes. We have ingrained feelings that to do nothing — will bring about bad outcomes.

But anarchy is not “doing nothing” it’s about doing much by many and finding all of the solutions to an analog problem in an analog way as quickly and effectively is as humanly possible. The price to be paid is excess effort and many failures, but that price is willingly paid.

Governments use “efficient” sequential processing by a relatively few people, and each failure to find a usable solution resets the process to start over again. This is not really efficient at all because a useful solution may not be found for generations, and repeated failures can result in the loss of the whole civilization. A hard re-boot of a civilization is not a pretty sight.

One approach in the battle of perceptions is to point out the mismatch between the stated goals of the government and its actual outcomes is not an anomaly, rather it is the expected outcome, and asking if there is not perhaps a better way.

zaq.hack May 18, 2011 at 12:27 pm

@Donald

The Psychological barrier to anarchy is that humans crave organization, structure, and leadership. Early America bred the free-est form of government the earth had seen up to that point specifically because the colonists were (1) very self-reliant individuals, and (2) skeptical of central authority. If the US government disappeared tomorrow, but we had to keep the same citizens, a new government based on dependency, corruption, and laziness would spring up immediately – because that’s how the majority behaves. While the people reading this thread probably think they are also skeptical of central authority and self-reliant, the fact is that we are an endangered species in 2011. Only when the freeloaders are fully slaves (and aware of that fact) will people yearn for real freedom, again.

iawai May 18, 2011 at 12:39 pm

You say “the colonists”, but the fact is that only about 1/3 of the population of the colonies supported the revolutionaries.

And what were the incidents that sparked outrage? Small taxes on few items, restraints on free trade, an over zealous crowd control cop, and using the military to patrol the civilians.

All of those are happening in the US and around the world, on an ever increasing basis. I have hope that soon there will be enough who say “no more” to actually undermine the furtherance of statist control.

zaq.hack May 18, 2011 at 12:57 pm

@iawa What’s your point? The other 2/3 were not exactly welfare addicts or looters.

Just to survive in early America, you had to work. You had to be self-sufficient to a much larger degree than people are today. If you were a freeloader, you died early. If you were the town drunk, you spent a lot of time in jail, not roaming Wal-Mart cashing in your food stamps. Productivity was not really optional. That breeds a certain mindset that our society no longer possesses. It doesn’t matter if they supported the Revolution or not: They just wanted to mind their own business and wanted others to do the same.

Dan May 19, 2011 at 8:51 pm

No, have to call B.S. on that. Read volume 3 of “Conceived in Liberty” by Rothbard, he addresses the numbers directly. I don’t remember them exactly, but well over a majority of the colonists supported the secession from Britain.

zaq.hack May 19, 2011 at 9:17 pm

@Dan – That’s still not the point. I’m not doing a good job of making myself clear: Whether they support the revolution or the crown makes no difference to what I’m saying. What I’m saying is that the society was full of people who were trying to be self-sufficient; people who were much more independently minded, even if they supported Britain. They came to a “new world” to try and forge their own destiny. Today, people who support the state have no independence about them whatsoever. If you compare the average loyalist during the revolution to the average Obama voter – it is not even close. As a society, the early Americans were much more capable of producing a free society than we are today.

Freedom Fighter May 18, 2011 at 8:23 pm

We could have organization, structure and leadership in the form of a highly advanced cyberoneiric entity representing a libertarian governor which supercedes governments and nations and which leads mankind to victories against tyranny and scientific and technological victories against the constraints imposed by nature.

Instead of feeding upon the people, such a system would feed on government decay and give power back to the people.

zaq.hack May 18, 2011 at 10:43 pm

If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.

Chris May 17, 2011 at 10:27 am

As to the “government-imposed embargo”, how can we argue against protection of intellectual property, patent and trademark laws? I support the ability of inventors and patent holders to defend their ability to produce “their” product in accordance with the laws that protect that intellectual property. Maybe the laws need revision – undoubtedly they do – but it’s fallacy to assume that “government-imposed embargo” is universally evil.

J. Murray May 17, 2011 at 10:34 am

The arrangement of raw materials and the process of production cannot be owned as it isn’t a tangible object. Ideas can’t be held and can’t be impaired from use by the originator in any way. Cialis can still be produced even if someone produces a generic competitor. The only thing being reduced is the profit potential, and on a free market, no one is guaranteed a profit for what they do. The “protection” you describe is the use of government to ban others from using their own property in a specific manner because it’s similar or the same to what someone else is doing. This is inconsistent with property rights.

zaq.hack May 17, 2011 at 2:40 pm

“Ideas can’t be held and can’t be impaired from use by the originator in any way.”

As I have argued elsewhere on these forums, this is untrue. In a system where there is zero IP protection, a pharma company is more apt to develop a clinic or a spa or some other method of profit besides selling pills on the open market. They would keep their idea a “secret” if they felt that was a more profitable course of action. It would fundamentally change the way new drugs are delivered to the public, but not every aspect of that change would be positive.

This is not to defend the current corrupt and unworkable system of medical patents – but merely to say that the industry has distorted the concept of patents from America’s founding (an incentive to innovate) into a system of suppressing fair competition.

Havvy May 17, 2011 at 9:42 pm

Hmm, I have this great idea that can help society, but I cannot profit monetarily on it, and as such, I will not publish anything about it. Instead I will watch as people suffer.

zaq.hack May 18, 2011 at 9:31 am

Happens. All. The. Time.

A huge example of it just appeared in Wired. Pharma companies won’t support this method because they are not selling you a pill to take every day. The Cartel mentioned in the original article is doing everything they can to block this procedure because it is not “profitable enough.” http://www.wired.com/magazine/2011/04/ff_vasectomy/

Before you judge, Havvy, think of your own motivations: Are you a missionary doctor, helping people for free in foreign countries, preventing them from suffering? Most people would rather work for minimum wage – and so our own personal profits are a key motivator in our lives. If we have an idea that cannot benefit us, and it is not “worth our time” to pursue it, then we often simply let it go. If we cannot compete with Microsoft or Pfizer or Wal-Mart, who just “gives” them the idea? Very few of us are so altruistic. We all want to know “what’s in it for me?”

iawai May 18, 2011 at 12:43 pm

If you can’t profit off of it, then how to you know it helps society?

Free trade is proof that your ideas resonate with people, govt is proof that a few people couldn’t “help society” in their own value scale without pulling guns to change other people’s incentives.

Freedom Fighter May 17, 2011 at 1:04 pm

Chris,

Whenever I hear a music or song that I like, I learn it by heart, I record it in my head and then I “play” it in my head, I don’t need an MP3 player nor a CD nor a DVD.

Am I infringing intellectual “property” by illegally memorizing the song and “playing” it in my head ?

Think about this for a change, why should hardware and software be governed by a different set of rules than wetware ?

czelaya May 17, 2011 at 10:55 am

I’ve helped design drugs. Currently, I’m finishing some work on a drug that may hit the market in the next 5-10 years for prostate cancer and HIV infection. Dealing with the FDA and drug companies is a nightmare. The research that I was primarily doing was funded by a conglomerate of private companies not related to the pharmaceutical industry.

Our primary directive was to understand the primary chemical physics (physical chemistry) of the drug (molecular geometry, chemical kinetics, thermodynamical consideration, electronic configuration of molecules), and find new methods of synthesizing the drug more cheaply. At the beginning of our work, the cost for a single pill cost a little over $20,000.00 to synthesize from a natural product. We got it down to a $1,000.00 per pill. Once scaled up, the price of synthesizing goes down to $10.00 a pill. It’s an effective drug, however, in this industry, at times, this has no merit. Sadly, this drug has the potential to never make it through FDA approval.

Why?

The current system of drug creation is more heavily subsidized than ever (thank Medicare Part-D). The creation of life saving drugs has gone to the back burner, and what’s ensued is how the creation of anything becomes maximized to the least productive and costly (where private companies PAY the FDA to do further research-which quite frankly drives up cost even more. In addition, the FDA is stagnate with their research… irresponsible and answers to no one… ) manner of manufacturing & approval that further keeps subsidized industries afloat and government agencies in power. Then, of course, many drug companies want tax payer’s to fit the bill for research and make contracts for governmental programs, via lobbying, to pay for drugs at prices above market price. Who pays? The tax payer.

I initially wanted to be a scientist that helped design drugs for the advancement of understanding science. Now that I’ve learned the bureaucratic mess that corporatism and governments create, I’ve grown weary and realize the demise of many future drug discoveries. This experience has become a primary motivator on why I’ve become a libertarian. The restrictions for development are a nightmare so horrifically large. It’s no wonder why more companies are leaving the United States.
There are no free markets in drug creation in the US.

nate-m May 17, 2011 at 10:59 am

That’s the way to go. If you have to leave the USA then go for it.

Our government only cares about the profitability of pornographers, sports teams, and music studios. Everybody else is a walking money tree just waiting to get shook down.

It’s really very sad.

Marissa May 17, 2011 at 2:41 pm

I don’t know about the first two. Look at the prosecution of John Stagliano and Roger Clemens to name a few.

Dan May 17, 2011 at 2:41 pm

I know how you all feel. I’m still trying to get used to the fact that we are considerably less free then places like CANADA and AUSTRALIA, places I used to tell socialist jokes about. Now we are more socialist then they are in just about every way (especially at the federal level) I can think of, drugs included.

Good article, Lew, as always. While Google has some issues with colluding with NSA bureaucrats, I wouldn’t wish federal regulators or ridiculous lawsuits on anyone.

Richard Harris May 17, 2011 at 4:50 pm

@Dan In case you’re not aware Dan, Canadians lost the right to freedom of speech several years ago with the introduction of Human Rights Commissions. (Good example of Orwellian doublespeak.) The Human Rights Commission can sentence you to prison if you say something that offends a member of a minority group. The Human Rights Commission is empowered to act outside of the normal criminal justice system. Thus due process can be circumvented. This is totalitarianism incarnate. For more info look up Canadian Human Rights Commissions. Even speech in Parliament has been chilled by this unbelievable twist of legislation. At least we still have the right to offend someone with our speech, including our political speech.

Dave May 17, 2011 at 10:34 pm

Dan,

In Canada there are no property rights in the constitution or any right to own property in the charter of rights. As the previous poster noted you can be dragged before a quasi-judicial human rights commision without having violated any criminal code law. I don’t know about Australia being all that free and democratic either…a few weeks ago they banned the ownership of crossbows.

Dan May 19, 2011 at 8:58 pm

Okay, granted. Economic interventionism is much much more intense here though. But your right: In some areas regarding freedom, they are worse. Owning firearms in aussieland without a license is illegal.

Both of the aforementioned places are certainly democratic, but not free. Some folks (not you guys) seem to think of the two as one in the same, which is of course untrue.

Sounds like the UN has had way to much reign on its leash in the commonwealth countries. We’re next. Argh.

G8R HED May 17, 2011 at 11:13 am

Access to prescription drugs is only as effective as the claims made to any particular drug’s ability to do anything more than address a symptom.

The philosply of conventional western medicine is to diagnose symptoms, drug those symptoms and repeat…. and then add antidepressants and modifiers.
Very little occurs to actually cure disease.

Restoring access to beneficial drugs must first address which drugs are actually beneficial and which drugs are simply a byproduct of the physician/drug cartel/health insurance monopoly.
I think this requires a drastic change in perspective about how individuals think about health; causes and cures. It boils down to a question of “what do ‘they’ have that we really want?”

Integrative medicine is an alternative perspective that addresses cures rather than symptoms.
I believe that integrative medicine is to health what LvMI is to economics. Physicians and patients sharing this alternative perspective are obsoleting much of what is popular in the diagnose; drug; repeat… nightmare.

economics9698 May 17, 2011 at 12:53 pm

It will be so nice when the federal government collapses from a over ingestion of paper dollars and we the people can live in freedom once again.

Alex May 17, 2011 at 3:24 pm

Thanks to Drigan, nate-m, Grant, DD5, AzVick, Freedom Fighter, and zaq.hack for replies to my post. They were pretty much what I expected.

Of course, I don’t believe that the government should protect 50% of the population against stupid decisions, and of course the more the government pretends to protect people the more careless many people will be in their decision making. However, many people don’t make informed decisions the way most of you would, and when life or death is involved… In this regard, Freedom Fighter makes a good argument, nevertheless…

I don’t think the lazy should be protected from bad decisions. We believe, though, that children should be protected from bad decisions because they have not acquired enough information about the decision making process or about the costs and benefits associated with various decisions. Yet some of those beyond the age of maturity do not have the ability to make better decisions than children. Should none of these people be protected from bad decision making? How about people below a 70-75 on the IQ scale? Is there any IQ level below which people should be protected from bad decision making?

Dagnytg May 17, 2011 at 4:35 pm

Should none of these people be protected from bad decision making?

Sure, they should all be protected…and they will by people like…parents, friends, mentors, brothers, sisters, neighbors, etc. and we can also find these people in churches, charities, non-profit or profit organizations etc. But in a society protected by gov’t (we all know how well that works out) the aforementioned people aren’t important or needed.

AZVick May 17, 2011 at 9:47 pm

Dagnytg – excellent point. Do you notice that on the Dem/leftist side the politicians never, never, never speak of family, community, church. In their view, only the government holds the answer to a person’s problems. It is crucial we all keep that in mind. Having said that, there will always be a segment of the population, however small, that does require government assistance because they are unable to meet their own needs and will fall through the above cracks you so ably listed. That government assistance should be at the closest level possible to the individual, and that would not be the federal level. I do appreciate Alex’s concern for them. Really, it’s like the definition of heaven is we all feed each other. Thanks for your posts.

Lct May 17, 2011 at 4:18 pm

Designing new drugs costs a lot – billions in some cases – and is a lengthy process – 10+ years of research. Why would any investor want to risk that much if his blockbuster can be copied even before it hits the street? How could I make proper investment decisions if I have no way at all to secure my reward/risk ratio?

zaq.hack May 17, 2011 at 7:36 pm

The answer is not simple, and they almost never spend 10+ years on research. When you hear drug companies say they have been working on a drug for 18 years and snivel that they only have 2 years of “patent time” left, it is their own fault. Much of that time is “proving” the drug is not harmful so that Uncle Sam believes them. Often, the molecule in question has been designed and patented and then shelved (ibuprofen). There’s endless potholes along the road that cost money, and most of them would be pretty simple to get rid of.

My ideal would be reduce the patent protection to a term of 3-5 years. In 2011, if you don’t have it out there by then, there’s something flawed in your execution. Patents should also be subjected to a more rigorous examination – insufficiently novel (or primarily derivative) pills or products would not get a patent (see Thomas Jefferson’s criteria). This would very likely cause some companies to change their “delivery” of their medicine. Instead of a mass market pill that could be reverse-engineered, they may work with select hospitals or set up their own clinics to try out their more promising products under a veil of secrecy. Today, everyone wants to mass-market everything; if you change the scheme of intellectual property, you will likely change how quickly some of these things reach mass market/affordability.

Seattle May 18, 2011 at 3:18 am

Time out for a second. You’re actually suggesting we take coercive action to ensure the success of investors? Why stop there? Why not just give everyone an inflation adjusted monthly paycheck from the state?

Richard Harris May 17, 2011 at 5:44 pm

This article is an outstanding article and addresses the issue quite well. Any information you need to know about drugs is available in the drug information sheets provided by drug manufacturers. To think that doctors read all of these drug information sheets is extremely naive. The way a doctor learns about drugs is from the drug company salesman, who is usually a pharmacist.

The point is, in the 20 minutes every 2 months that a doctor speaks with a drug company salesman he only learns the most salient bits of information about any drug. Thus doctors are the least informed link in the drug info chain. It’s the pharmacist’s job to know the drugs, not the doctor’s. However, if you read the drug info sheet and possess enough education and intelligence to understand it then you will likely be the most informed person in the chain, because obviously a retail pharmacist doesn’t have the time to read every drug info sheet either.

The same mechanism is at work in the other realm of health care. Physician costs. Congress snaps to attention any time the AMA bellows and restricts the number of physicians that can practice medicine merely by limiting funding for the number of trainee slots in medical schools.

Over 5000 applicants a year are turned away to first year med school programs. Anyone in the top 2% IQ range is considered to be at genius level IQ. That means we have 6 million people in the genius range. We have approximately 300,000 physicians. Thus we have 20 times the number of geniuses than we have doctors. Now not all doctors are in the top 2% IQ range so we really have a larger pool than 6 million people to draw on.

So we could easily increase the supply of doctors if Congress would allocate funding for the additional trainee slots. So instead of paying $200 for a 10 minute office visit we would probably only pay $60 for a 20 minute office visit if the supply of doctors was quadrupled. Doctors would be banding together to run larger clinics in which they could perform a variety of procedures which are currently performed in hospitals.

Thus if doctors actually had to compete for patients the cost of health care would decline to the point where insurance was not needed. We are going to need more doctors anyway due to population increase and aging, but this increase is not currently being provided for.

Havvy May 17, 2011 at 9:49 pm

Supply and demand and cost is not a linear (or even continuous) set of functions, so your second to last paragraph is mere speculation. Speculation I would find false also.

Richard Harris May 21, 2011 at 8:38 am

Your statement belies your credibility. When the supply of an item goes up while demand remains constant then the cost must go down. The AMA is accutely aware that they do not operate in a totally inelastic supply condition. Linearity or continuity are completely irrelevant considerations. Never studied economics or mathematics?

Gugel May 17, 2011 at 8:20 pm

Drugs prices are so high because they have to cover astronomically high research and development costs.

Virginia Llorca May 17, 2011 at 9:31 pm

I disagree with this statement.

zaq.hack May 18, 2011 at 9:35 am

What do you mean by R&D? Actual guys with coats in a lab working out a drug? Most drug companies call all the money they spend on “clinical trials” and other “prove-it-doesn’t-kill-children” efforts “R&D.” The costs are largely waste to get approval from the state. Another big chunk is wasted on patent searches and lawyers to defend the intellectual property in our current nutty patent scheme (a far cry from what our Founders envisioned).

Virginia Llorca May 17, 2011 at 9:37 pm

Buproprion vs. Budeprion One generic form of Welbutrin has been proven ineffective and taken off the market several times. They change the color or the shape or the time release factor (which no doctor or pharmacist has yet been able to explain to me) and it is back. One of four major name pharmacies in my county carry the generic that works. Everyone else carries the crummy yellow ones that off gas and disintegrate and have no therapeutic effect. This is a messed up industry at every level. Everyone knows the pharm companies finance most of the research. That used to be called a conflict of interest, or, at the most benign, a vested interest. It is also a self-perpetuating nightmare.

Freedom Fighter May 18, 2011 at 8:26 pm

It’s the result of too much government involved in the pharmaceutical industry. In fact, from a strictly libertarian viewpoint, there would be no such thing as a corporation, individuals would be responsible. Therefore, the industry could not be that messed up in a libertarian arrangement because there would always be an individual bearing full responsibility instead of a limited responsibility corporation.

victor May 18, 2011 at 1:47 am

As a consumer, I have always been afraid of “spam” pill etailers. They usually begin with a “Buy ________[Schedule II or III drug] online…,” to lure consumers in. As the U.S. government in cahoots with the AMA, FDA, and state licensing boards, have made these items illegal for purchasers in the U.S.–I am afraid of these adverts. The DEA and local law enforcement could easily entrap potential consumers. However, if you pay the medical protection racket of the above monopolists, usually it is not a problem to access medicines from a pharmacy.

As an investor, I’ve seen the protectionism, unfree-market moats, and demographic factors
as an overwhelming reason to invest in the U.S. health sector. The annualized return rates in my healthcare fund have been more than double the broader U.S. market indexes for the 20 year period. Since I can remember, the share of healthcare in GDP figures has gone from perhaps 7-8% to nearly 20%.

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Dan May 19, 2011 at 8:59 pm

spammer ^^^^^^^

Richard Harris May 21, 2011 at 8:26 am

Of course it’s speculation but it’s entirely valid speculation. It’s so valid that the AMA themselves believe it. In fact the AMA testified to that effect before Henry Waxman’s Committee on Government Reform back in January 1998.

El Tonno May 21, 2011 at 11:54 am

From: Declan McCullagh

Date: Fri, 18 Oct 1996 05:20:19 -0700 (PDT)

Subject: FDA Net-regulations — “Drug Lords” from HotWired

http://www.netizen.com/netizen/96/42/global4a.html

HotWired

The Netizen

“Drug Lords”

Global Network

by Declan McCullagh (declan@well.com)

Washington, DC, 17 October

Forget the Communications Decency Act and the censor-happy

Clinton administration.

Instead, it now seems like we have to keep an eye on the pinstriped

bureaucrats at the US Food and Drug Administration, who are hatching

their own schemes to regulate the Net.

I just got back from the agency’s two-day conference in the Maryland

suburbs, entitled “FDA and the Internet: Advertising and Promotion of

Medical Products.” Discussions drifted from troublesome-to-the-Feds

notions of drug use in America Online chat rooms to emerging

international Net-regulatory agreements, but all the talk shared a

kind of benevolent paternalism.

Consumers can’t be trusted to make their own choices. The Federal

government must protect us from reading what only doctors are allowed

to see. Netizens can’t even be trusted to figure out when they’re

leaving a Web site after they click on a link.

Drug industry representatives on the panel this morning appeared less

than overly concerned with regulatory threats to free speech. Jamie

Marks from Body Health Resources said: “It’s very important that drug

companies police the sites they link to.” The panel also discussed how

to prevent sites that celebrate or even talk about illicit drug use

from linking to sites operated by pharmaceutical companies.

Even search engines like AltaVista could be hit by FDA regulations.

Sara Stein from Stanford University noted, “Search engines have begun

to sell links … that’s another area of disclosure that’s required.”

Translation: the FDA is looking to have a say in how to label medical

advertisements on Web sites.

The FDA’s also working the international angle. They brought in to the

conference speakers from France, Britain, Switzerland, Brazil, and the

Netherlands – all of whom were particularly interested in online drug

promotion, since US advertising laws are currently so permissive.

J. Idanpaan-Heikkila, the World Health Organization’s director of drug

management and policies, said that real-world claims promoting

pharmaceuticals should be “in good taste,” adding, “I think this is

applicable to the Internet.”

Cedric Allenou, the French Embassy’s health attache, predicted more

controls: “In France, as in the United States, there is a lack of

regulation on the Internet. But these issues will soon be discussed by

the French government.” When asked what his country would do if a US

server distributes information banned in France, he replied: “If your

Web site is not in France, you’re not under French rule. This is a

problem with French Internet regulation.”

John Rothchild, an attorney from the Federal Trade Commission – which

will announce its own Net-regulation plan later this year – said:

“Based on some hasty research I did last night, I can report it is

feasible to control access to our Web site based on what country the

accesser is in…. I don’t know the technical details, but according

to the technical people at the FTC, non-US domain names have a

two-letter suffix.”

Rothchild apparently didn’t realize that many companies outside the

United States have domain names ending in nothing but .com.

At the end of the two-day conference, meanwhile, the one question left

unanswered by attendees was not whether the FDA should regulate the

Net, but how long it will take them, and how far they’ll go.

El Tonno May 21, 2011 at 11:56 am

From: Declan McCullagh

Date: Fri, 18 Oct 1996 05:20:19 -0700 (PDT)

Subject: FDA Net-regulations — “Drug Lords” from HotWired

http://www.netizen.com/netizen/96/42/global4a.html

HotWired

The Netizen

“Drug Lords”

Global Network

by Declan McCullagh (declan@well.com)

Washington, DC, 17 October

Forget the Communications Decency Act and the censor-happy Clinton administration.

Instead, it now seems like we have to keep an eye on the pinstriped bureaucrats at the US Food and Drug Administration, who are hatching their own schemes to regulate the Net.

I just got back from the agency’s two-day conference in the Maryland suburbs, entitled “FDA and the Internet: Advertising and Promotion of Medical Products.” Discussions drifted from troublesome-to-the-Feds notions of drug use in America Online chat rooms to emerging international Net-regulatory agreements, but all the talk shared a kind of benevolent paternalism.

Consumers can’t be trusted to make their own choices. The Federal government must protect us from reading what only doctors are allowed to see. Netizens can’t even be trusted to figure out when they’re leaving a Web site after they click on a link.

Drug industry representatives on the panel this morning appeared less than overly concerned with regulatory threats to free speech. Jamie Marks from Body Health Resources said: “It’s very important that drug companies police the sites they link to.” The panel also discussed how to prevent sites that celebrate or even talk about illicit drug use from linking to sites operated by pharmaceutical companies.

Even search engines like AltaVista could be hit by FDA regulations. Sara Stein from Stanford University noted, “Search engines have begun to sell links … that’s another area of disclosure that’s required.” Translation: the FDA is looking to have a say in how to label medical advertisements on Web sites.

The FDA’s also working the international angle. They brought in to the conference speakers from France, Britain, Switzerland, Brazil, and the Netherlands – all of whom were particularly interested in online drug promotion, since US advertising laws are currently so permissive.

J. Idanpaan-Heikkila, the World Health Organization’s director of drug management and policies, said that real-world claims promoting pharmaceuticals should be “in good taste,” adding, “I think this is applicable to the Internet.”

Cedric Allenou, the French Embassy’s health attache, predicted more controls: “In France, as in the United States, there is a lack of regulation on the Internet. But these issues will soon be discussed by the French government.” When asked what his country would do if a US server distributes information banned in France, he replied: “If your Web site is not in France, you’re not under French rule. This is a problem with French Internet regulation.”

John Rothchild, an attorney from the Federal Trade Commission – which will announce its own Net-regulation plan later this year – said: “Based on some hasty research I did last night, I can report it is feasible to control access to our Web site based on what country the accesser is in…. I don’t know the technical details, but according to the technical people at the FTC, non-US domain names have a two-letter suffix.”

Rothchild apparently didn’t realize that many companies outside the United States have domain names ending in nothing but .com.

At the end of the two-day conference, meanwhile, the one question left unanswered by attendees was not whether the FDA should regulate the Net, but how long it will take them, and how far they’ll go.

Vanmind May 25, 2011 at 1:33 pm

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