July 03, 2012
Today GlaxoSmithKline is offering up evidence, coughing up $3 billion as a fine for having lied about the safety and effectiveness of several of its big drugs. Yes, this is the incentive that we give to drug companies when the government grants patent monopolies that allow them to sell drugs for hundreds or even thousands of times the cost of production.
Economic theory predicts that this form of government intervention will lead to enormous economic distortions, including the sorts of misrepresentations about the quality of drugs that GlaxoSmithKline fessed up to yesterday. Why can’t the NYT or anyone else ever mention this fact. When there were shortages of milk and meat in the Soviet Union were they prohibited from mentioning that it might have something to do with central planning?
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