My Facebook feed is alive with Hillary Clinton fans complaining about the price of an EpiPen and also about the high income of the CEO of the company that makes the EpiPen. Here are some samples:
It’s one thing for a new experimental drug to be expensive to pay for all the failed attempts. Makes perfect sense. But buying up long established technology that by all rights should have come off patent by now and price gouging consumers is just hideous and I don’t think you want to be defending that kind of behavior? The original epipen patent is from 1977. Patent lengthening is one of many games pharma companies play to extend their monopolies as long as possible. As for regulation preventing competitors, safety matters, otherwise any snake oil salesman could sell you a would be epipen (see e.g opioid epidemic). So making blanket claims against regulation doesn’t really help here. This is a specific example of this problem and it could be solved by the government treating it as an unfair monopoly and forcing them to break it up by e.g. licensing their remaining patents to competitors.
[after a commenter pointed out that competitors couldn’t get FDA approval for their devices] Maybe, but we still have anti-trust laws. Whether the market or government regulations prevent competition is irrelevant. At some point the greater good requires the destruction of the monopoly.
[after a question about why there isn’t competition] Various alternatives have been tried but none have passed regulatory muster. Free-market zealots like to depict this sequence of events as “government regulations killed the competition.” Consumer safety advocates might use a different spin on the same phenomenon: “government regulators prevented inferior and potentially unsafe alternatives from hurting consumers.” Who’s right? Who cares? If there is a monopoly, and if the current product is the only version deemed safe and effective, nothing prevents the government from forcing the monopoly to break apart. Two companies selling the identical product could still drive down prices, just as is the case with e.g. automobiles (is a Honda Accord really that different form a Toyota Camri?). The original patent expired long ago, but follow-on patents allow the monopoly to artificially continue. The drug itself is dirt cheap but a rapid and safe delivery mechanism is critical to efficacy.
Monopoly is defined by pricing power. In this case the company happens to be abusing the patent system. But that’s irrelevant. The evidence is not that they have a patent, the evidence is that they are price gouging, and that no reasonable competition exists or can come into existence quickly enough to prevent them from price gouging. The government is under no obligation to protect your monopoly just because you have a patent. The government can decide that you have recouped your investment and profit and are now just exploiting the patent system at the expense of consumers.
Friends who love to complain that women don’t get paid as much as men (i.e., that you could make near-infinite money by starting a company that hired only women) then began to complain about Heather Bresch, the CEO of Mylan, getting paid $19 million in one year. Yet their complaint was not that, like virtually all other American women, underpaid. Apparently, despite having successfully moved Mylan to the low-tax Netherlands via an inversion, Bresch was overpaid.
[Given her family connections to the rich and powerful, could she have made more money without working at all? Wikipedia says that she has four children so let’s assume she wanted four children and had each of those kids with a different father, thus maximizing child support profits. Assuming that she keeps $10 million after taxes each year, she needs to get $2.5 million from each father in order to match her Mylan income. If she could have had sex with four men, each earning $14.7 million per year, in Wisconsin, for example (child support is 17 percent of gross income, without limit), she could have matched her most recent Mylan compensation.]
Hillary Clinton says “I am calling on Mylan to immediately reduce the price of EpiPens.” (statement)
How can we explain this? The same folks who want The Great Father in Washington to regulate drugs are now objecting to a company being compensated for navigating the regulatory labyrinth? People who think The Great Father in Washington should give out monopolies via patents object to whatever particular monopoly enables the EpiPen to sell at a high price? So an official such as Hillary Clinton should decide which patents should have economic value and which should not?
Readers: Why is it that Mylan can charge a high price for these EpiPens? Why aren’t there profits sufficient to attract competitors competent to romance the FDA bureaucrats into approving a substitute?