A rejoinder worth reading on labor markets by George Mason economist Bryan Caplan to the pseudonymous “Scott Alexander,” who writes the popular Slate Star Codex blog [Caplan first, second, third posts, all responding to this critique-of-libertarianism FAQ] If you don’t read Alexander, some of his top posts are here (especially strong on questions of medicine/health care and the way social justice language has developed into a tool of power). Also check out his recent post on the Daraprim mess and the wider failure of generic drug regulation [earlier on which].
As you probably know if you follow the news, a man named Martin Shkreli in charge of a startup firm called Turing Pharmaceuticals bought the rights to a drug called pyrimethamine (brand name Daraprim), used in the treatment of AIDS and malaria, and announced that he was jacking up its price from $13.60 to $750. Massive outrage resulted, which has echoed through social media for the past week.
Pyrimethamine is long since off patent. It is not difficult to manufacture, and sells cheaply in Europe. But under the distinctive food and drug laws of the United States you can’t just start turning out pills in your factory to compete with Shkreli, at least not without compiling and submitting a huge pile of regulatory paper with the U.S. Food and Drug Administration. This calls on the services of lawyers and scientists, costs a lot of money, and takes time, and you might or might not be able to recover the costs from the relatively small pool of users.
The FDA grants market exclusivity to companies that are willing to take “grandfathered” compounds into compliance with their current regulatory framework, and that’s led to some ridiculous situations with drugs like colchicine and progesterone. (Perhaps the worst example is a company that’s using this technique to get ahold of a drug that’s currently being provided at no charge whatsoever).
Among laws that used the “marketing exclusivity” technique to award monopolies on older drugs, on the logic that otherwise no one would step forward to handle the heavy costs of getting those drugs regulatory clearance, were the Drug Price Competition and Patent Term Restoration Act of 1984, better known as the Hatch-Waxman Act, originally introduced by Sen. Charles Mathias (R-Md.), and the Orphan Drug Act of 1983, introduced by Rep. Henry Waxman (D-Calif.) (We covered the issue briefly in this 2011 post.) In various ways that backers appear not to have foreseen, opportunistic actors have succeeded in seizing the legal-monopoly status made available for various compounds without always providing as much public benefit in return as had been expected. To enforce their legal monopoly, some of these companies sue rival drugmakers to force them to pull their competing offerings off the market.
Underlying it all — but seldom asked — was whether the gigantic costs of regulatory approval are really a necessary evil. Libertarian-minded critics were especially inclined to question whether hugely expensive studies and paperwork should really be required in the case of grandfathered or “generally recognized as safe” drugs, many of which have been familiar to the medical profession for decades or even centuries, allowing for a collective sense to emerge of their safety and effectiveness. But the view that progressives tended to champion — which prevailed — was that older compounds and those used for rare diseases should be held to no less stringent a standard than any other, and should either be withdrawn from the market or have their safety and effectiveness proved at someone’s expense.
At the Niskanen Center, Will Wilkinson ties together several of these themes. “Martin Shkreli… bought himself a monopoly made entirely of health-and-safety red tape,” he notes. The most-hated businessperson of the year is “cashing in precisely because the American pharmaceutical market is so far from free.”
Meanwhile, today’s moralistic politicians denounce the resulting fiasco without acknowledging the role of yesterday’s moralistic politicians in helping to bring it about (cross-posted in adapted form at Cato at Liberty).
More: “if another company wanted to compete to sell the same medicine [Daraprim], it would need to apply for a new generic drug approval, by submitting an ‘Abbreviated New Drug Application’ to the FDA. Filing one of these applications with the FDA used to cost as little as $1 million; today it can run as high as $20 million, sometimes more. …On average, it takes about 50 months for the FDA to approve a single generic application.” [Scott Gottlieb, WSJ] To clarify what I should have spelled out above: while exclusivity grants under the 1983 and 1984 laws have been associated with price jumps for a range of older drugs, the ANDA obstacle to entry by itself accounts for Shkreli’s monopoly position, which he cleverly amplified by sharp practices described by Ronald Bailey: “First, he apparently talked Impax [a predecessor holder of the sole FDA rights to market Daraprim] into starving the wholesale market of the drug, so that when Turing completed its purchase of the rights there were no extra pills floating around. Next, he set up an exclusive distribution network as a way of preventing potential competitors from obtaining enough Daraprim to conduct [the equivalence] trials for the FDA” necessary to develop an ANDA so as eventually to challenge his regulatory monopoly. And Scott Alexander at Slate Star Codex adds the Daraprim episode to a list of calamitous failures of generic drug regulation.
- Study of Type I, Type II error finds FDA much too conservative in drug approval [Vahid Montazerhodjat and Andrew Lo via Tabarrok]
- Behind push to license/regulate personal trainers in Washington, DC and elsewhere: ACA opened spigot of publicly channeled wellness money [Aaron Davis/Washington Post via Tyler Cowen, Peter Suderman]
- “Medical lending”: financiers “invest in operations to remove pelvic implants, [reap] payouts when cases settle” [Alison Frankel and Jessica Dye, Reuters]
- War on Some Drugs again collides with cancer therapy: “Psilocybin, it appears, targets this existential and spiritual distress.” [Ann Althouse]
- Citing First Amendment, federal court enjoins FDA from prohibiting truthful speech by drugmakers about off-label uses [WSJ, Alex Tabarrok (in recent years, federal government “has extracted billions of dollars in settlements from pharmaceutical firms for engaging in what appears to be constitutionally protected speech”), Beck and Sullivan, Drug & Device Law on Amarin v. FDA]
- SEIU 1199: “The union that rules New York” [Daniel DiSalvo/Stephen Eide, Daily Beast and City Journal]
- Controversial therapist who is also anti-vaccine expert witness loses court challenge to Maryland medical license revocation [Beck, Drug and Device Law]
- Tufts doc who wants to “eliminate” sweetened drinks is senior author on flawed new study on their health effects [Gil Ross, ACSH]
- Nick Gillespie interviews celebrity chef Geoffrey Zakarian (“In Praise of Free Enterprise Food”) and Whole Foods’ John Mackey. “Despite the strength of our local food movement, Kentucky joins Delaware and Rhode Island as the three most restrictive states in the country for cottage food sales.” [LEO Weekly, Louisville]
- Fears of toast-spread homebrew in remote communities: “Australia suggests Vegemite sales limit amid ‘alcohol abuse'” [BBC] More: less-sensational followup coverage h/t reader Mark N. in comments;
- You really ought to give Iowa-defiance a try: Rand Paul is latest candidate to oppose ethanol mandate [Rare]
- “Next Time Government Gives You Dietary Advice, Consider Doing the Opposite” [David Harsanyi] Multiple topping combinations + steep penalties add up to vexation for pizza makers under FDA menu labeling mandate [Savannah Saunders, Economics21; Veronique de Rugy, Reason] “Health Canada Gets it Right, While FDA Goes Further Astray, on ‘Added Sugars’ Labeling” [Glenn Lammi, WLF]
- “Federal Judge, Referencing FDA Order on Trans Fat, Permits State-Law Class Action to Proceed” [Glenn Lammi, WLF]
- Plaintiff says he bit into someone else’s gold tooth in his biscuit [Nick Farr]
- “Photos of Your Meal Could be Copyright Infringement in Germany” [Petapixel]
- National Labor Relations Board opts to dodge a fight with college football [Daniel Fisher, Forbes]
- Governor’s commission charged with recommending new redistricting system in Maryland includes possibly recognizable name [Washington Post, Southern Maryland Newspapers; thanks to Jen Fifield for nice profile at Frederick News-Post]
- Trial bar’s assault on arbitration falls short: California Supreme Court won’t overturn auto dealers’ standard arbitration clause [Cal Biz Lit]
- Ontario lawyer on trial after prosecutors say sting operation revealed willingness to draft false refugee application [Windsor Star, more]
- “Vaping shops say FDA regulation could put them out of business” [L.A. Times, The Hill] Meanwhile: “e-cigarettes safer than smoking, says Public Health England” [Guardian]
- I was honored to be a panelist last month in NYC at the 15th annual Michael R. Diehl Civil Rights Forum, sponsored by the law firm of Fried, Frank, alongside Prof. Marci Hamilton (Cardozo) and Rose Saxe (ACLU) discussing the intersection of religious accommodation and gay rights [Fried, Frank] Also related to that very current topic, the Southern California Law Review has a symposium on “Religious Accommodation in the Age of Civil Rights” [Paul Horwitz, PrawfsBlawg]
Pushed by a lawsuit, the Food and Drug Administration has followed through and banned the use of trans fats in processed food: producers have three years to phase out the substance. I’ve got a new piece at Cato making a few basic points: the move is sheer paternalism, it’s setting a precedent (against voluntary consumer assumption of even small risks) that activists are eager to roll out against other ingredients like salt and sugar, it’s not popular with the public (this poll finds a plurality, not majority, going along, while this one finds majorities opposed). And voluntary consumer adjustments (trans fat consumption is down by an estimated 85 percent) have already cut Americans’ average daily intake to half of what the American Heart Association recommends.
Then there’s the sadly ironic history of the whole subject: trans fats were avidly promoted at the time by the same sorts of public health activists and government nutritionists who now push for a ban. CNN:
Dr. Steven Nissen, the chair of cardiovascular medicine at the Cleveland Clinic, praised the FDA for its “bold courage” and said it “deserves a lot of credit” for taking this “enormously important” move.
“In many ways, trans fat is a real tragic story for the American diet,” Nissen said. “In the 1950s and ’60s, we mistakenly told Americans that butter and eggs were bad for them and pushed people to margarine, which is basically trans fat. What we’ve learned now is that saturated fat is relatively neutral — it is the trans fat that is really harmful and we had made the dietary situation worse.”
Or as my colleague Scott Lincicome puts it, “Food tyranny didn’t fail. It just needed better managers”
Now make way for the most popular, and still legal, substitutes for trans fats: tropical palm and coconut oils, each with problems of its own. And an even better prospect — the next panic? –is GMO-derived high-oleic soybean oil.
- Ohio appeals court: code enforcement officers in town of Riverside can be personally liable for towing cars off man’s property without due process [The Newspaper; Vlcek v. Chodkowski, Second Appellate District, Montgomery County]
- “FDA’s proposed cigar crackdown could effectively ban up to 80% of stogies currently sold in US” [James Bovard, Washington Times; earlier here, here]
- Don’t decriminalize subway farebeating, says Nicole Gelinas, it’s a deliberate theft and a damaging one (though “enforcing the fare helps enforce New York gun laws” may not work as an argument unless you admire those gun laws) [New York Post]
- Lawyers take Fifth and (via their attorney) blame paralegal over DUI setup of a trial opponent [ABA Journal; Adams and Diaco, Florida]
- “The Questionable History of Regulatory Reform Since the APA” [Stuart Shapiro and Deanna Moran, Mercatus]
- Did American rebels of 1776 fight for English liberties, or universal Rights of Man? [David Boaz, Cato, taking issue with Daniel Hannan]
- “Appeals court scolds Apple monitor, but does not remove him” [Jeff John Roberts, Fortune; Eriq Gardner, THR; Colin Lecher, The Verge; earlier]
Don’t count on donuts, frozen pizza, coffee creamers, or canned cinnamon rolls to go on tasting the same — and don’t count on the federal government to respect your choices in the matter [Peter Suderman, earlier] And of course it was public health advocates and the federal government who helped push foodmakers into the use of trans fats in the first place. Some choices do remain to you in the realm of food, so say yes to Mark Bittman’s red lentil dal, no to his politics [Julie Kelly and Jeff Stier, Forbes]
Actual cigarette smoking among teens, the kind that requires inhaling carcinogenic products of combustion, is down a startling 25 percent in one year and nearly 42 percent since 2011. The reason is the rapid substitution of vaping or e-cigarettes, which hold singular promise as a harm-reduction measure for those drawn to the nicotine habit. Great news, right? Not if you listen to Thomas Frieden of the Centers for Disease Control, who’s doing his best to disguise good tidings as bad so as to stoke the officially encouraged panic about vaping. New York Times columnist Joe Nocera nails Frieden on the issue [h/t @jackshafer], providing a model of appropriately skeptical press scrutiny of someone who hardly ever gets subjected to that. More on Frieden; David Henderson on how FDA hostility to vaping could slow the shift from more-toxic alternatives; related, Greg Gutfeld on California ads trashing e-cigs.
P.S. Andrew Stuttaford thinks Frieden’s not in denial, he knows better.