George Rebane
Big pharma has been playing a very dubious game that doesn’t speak well of free markets, and free enterprise. Over the years its lobbyists have convinced Congress to put in place some pretty dodgy laws that allow it to skirt the legal edges of what most people understand about anti-trust strictures in this country. The name for the practice is ‘pay for delay’.
Here’s the short version. As a big pharma’s patent on a very profitable drug approaches expiry, or another smaller pharma has cracked the code on how to circumvent the patent, the big and smaller company strike a deal to screw the consumer by keeping the price high and the market share of the big company intact. We all know that as a drug ‘goes off patent’ other pharmas enter the market with knock-off generic versions of the drug at greatly reduced prices. After all, they didn’t have to pay for developing the drug or the costs to build the market for it, therefore they have no recovery accounting to do in their financial planning.
So what happens? Well, the big pharma company approaches the smaller company that is the presumed threat, and says ‘we’ll pay you $X under these terms to delay your entry into our drug’s market with your generic version, whaddya say?’ Of course the deal works the other way also with the smaller company approaching the big company saying, ‘We’re about to launch a generic version of your big blockbuster drug that will plummet your financials and share price into the mud. We want $X under these terms to delay the introduction of our generic version, whaddya say?’
And what can we make of that? it’s clearly price collusion to the detriment of the consumer. But the involved entities are private companies dealing with their very own intellectual properties. Why should it be anyone else’s business regarding how they settle their affairs?
We all know the socialist/progressive echo chamber here – they don’t think much of private property to begin with – ‘you developed it using public roads for transport and public police for security and …, therefore the damn thing already belongs mostly to the public’. In short, “You didn’t build that!” But let’s put this aside for a moment.
As a conservetarian and dyed-in-the-wool capitalist, I could cite chapter and verse from the Austrian school, and tell the Left to go pound sand. But on second thought, if with what little social consciousness I’m allowed 😉 I consider the situation from the perspective of the (hang on now) capitalist collective, I might come up with a different response. I do want anyone who develops a beneficial drug that helps millions to get one helluva reward, but do I want them to get it forever? Maybe I do, since that will draw other competitors to develop better alternatives to get a piece of that pie themselves.
Or do I want someone to come in from the side (usually carrying a very large gun) and tell the pharma what the ‘fair reward’ will be for their risk, expense, and labors. We kinda already do that with limiting the lifetime of patents – you gotta get it while you still got it. I dunno, it’s a hard problem that SCOTUS is chewing on right now (more here). Thoughts?
H/T to a RR reader for the heads up on this.
rebanesruminations.com 
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