Minor Thoughts from me to you

Why Daraprim went from $13.50 to $750

Andrew Pollack wrote a shocking expose of corporate greed, revealing that Turing Pharmaceuticals jacked the price of Daraprim from $13.50 a tablet to $750 a tablet. This is a 62-year old drug.

Pollack spent 21 paragraphs writing about the importance of this drug and the shockingly unapologetic greed demonstrated by Turing Pharmaceuticals. I spent 21 paragraphs wondering how a company could increase the price of an unpatented drug by 5,500% without being undercut by a competitor.

In paragraph #22, Pollack finally decided to toss off a few sentences about that.

With the price now high, other companies could conceivably make generic copies, since patents have long expired. One factor that could discourage that option is that Daraprim’s distribution is now tightly controlled, making it harder for generic companies to get the samples they need for the required testing.

Oh-ho. It's government regulation. Manufacturers of generics need to compare their own prototype pills to Daraprim, before they can get government permission to market and sell a generic. Prescription laws make it hard to obtain Daraprim without a prescription and Turing's control over its own supply chain ensures that nothing leaks out. In essence, government restrictions on trade are giving Turing a monopoly on a patent free drug. Turing's price hike would be impossible without this government protection.

The New York Times article frames this as an issue of greed. But greed is a universal constant. It's always with us. Greed is never an explanation for unpleasant behavior. The real question is why nothing is acting as a check on greed. In this case, the government is blocking that market based check. I can see two solutions.

  1. Stop restricting access to pharmaceuticals. If the FDA didn't tightly control drug distribution, generic manufacturers could easily obtain their own supply of Daraprim and start cranking out much cheaper copies. Turing would be forced to lower their prices to match and greed would be kept in check.
  2. If you are going to restrict access to pharmaceuticals, there should be an exception in the law that allows generic manufacturers to easily obtain access to the main drug, for the purposes of cloning it. I see no good reason to give Turing Pharmaceuticals a government enforced monopoly on the drug's distribution and supply once the patent protections have expired.

Once again, the New York Times has made the free market into the villain of the piece. I think the real villain is the government restrictions that give Turing Pharmaceuticals power it doesn't need and shouldn't have.