July 20, 2012
The Post did readers a great service in providing another example of how the government makes rich people rich. The article is about how a set of drugs intended to anemia, turned out to be both ineffective and potentially harmful.
The two companies that had government-granted patent monopolies on these drugs, Amgen and Johnson & Johnson, gained tens of billions of revenue from these drugs over the last two decades. The article points out that they attempted to conceal evidence that their drugs could be harmful and used their political connections to get politicians to lobby the Food and Drug Administration on their behalf. They also designed a payments system that effectively paid off doctors to use large amounts of their drugs.
This is exactly the sort of corruption that economic theory predicts will result when the government puts an artificial barrier in the market (i.e. a patent monopoly) that allows companies to sell a product at hundreds or even thousands of times their cost of production. It might have been useful if the Post had included the views of an economist who could explain this point to readers.
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