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Kliff and Vox for responding to me; it’s always neat to get featured in real news sources as if I were a real writer or something instead of just a guy with a blog.

Earlier this week I wrote about how a lack of drug price regulation in the United States allows pharmaceutical companies — including Epi Pen’s manufacturer, Mylan — to charge exceptionally high prices for their products.

Scott Alexander at the blog Slate Star Codex argues that I’ve got it all wrong: The problem isn’t a lack of price regulation.

Another way we’ve created a favorable regulatory environment, as Alexander writes, is by allowing roadblocks to stand in the way of generic drug makers who want to enter.

More generics can help America’s drug spending problem. Greater use of generic drugs is widely accepted as a way to drive down drug spending.

We’ve set up a system that makes it incredibly easy for drug companies to score high profits and charge exceptionally high prices for their products.

One way it’s favorable is that we let drug companies pick their own prices — in this way the United States is exceptional, as the vast majority of developed companies regulate their drug prices.As long as we’re going to have patented drugs, letting drug manufacturers set their own prices will remain a key driver of America’s higher drug spending.(the above is some excerpts stitched together to provide a taste; you should really read the whole thing) First of all, thanks to Ms.If we didn’t reward pharmaceutical companies for inventing new drugs, then they wouldn’t go through the .5 billion, ten-year hassle of seeking FDA approval with no guarantee of success.The way we reward them is by giving them a twenty-year monopoly when they can charge lots of money without anybody telling them not to. The law says a twenty-year monopoly, but it’s dated from the time the drug is invented.Given the increased interest in a Medicare drug benefit, regulators should be aware of the hidden cost of price regulation for pharmaceuticals.” 7.Vernon (2005) finds that “I simulate how a new policy regulating pharmaceutical prices in the US will affect R&D investment.The FDA has found that drug prices decline to 55 percent of the brand-name price when two generic manufacturers begin making a product.Right now, the United States already uses a lot of generic drugs.To transition fluidly from one to the other, saying we need more price controls for generics and then backing up your argument by saying that you were mostly thinking of brand-names after all – elides a distinction which is the heart of this entire subject.Generic drugs are overpriced because we’re morons who can’t come up with a decent regulatory regime.


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