January 29, 2013
The NYT tells us that biotech firms want the government to prohibit pharmacists from giving patients generic substitutes for biological drugs. This is a great story for a couple of reasons.
First it is a great example of the sort of abuses that economic theory predicts would result from having the government grant patent monopolies. When companies call sell drugs for prices that are a hundred or even a thousand times their cost of production, we should expect that they will lie, cheat, and steal to expand their market. And the drug companies largely act exactly as economic theory, if not economists, predicts.
The other reason this is a great story is that it shows the complete indifference to free market principles held by big business. Are the folks who want to arrest pharmacists for substituting generics “market fundamentalists?”
Note that the sums of money involved in the industry swamp the chump change that many liberals fight over. The article cites data showing drug industry sales at $320 billion a year. They would be around one-tenth this amount without patent and other protections provided by the government, a difference of $290 billion. By comparison, the entire food stamp program cost $87 billion in 2012, less than one-third this amount. Federal spending on TANF is around $17 billion, less than one-tenth of this amount.
This is a great example of how the rich rig rules to get all the money. Then they let the loser liberals run around saying that we need the government to help the poor.
Addendum: Zev Arnold pointed out in his comment that I orginally had the number of beneficiaries (47 million) rather than the amount of spending for Food Stamps.
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