Broback's Blog

Broback's Blog header image 2

Pharmaceutical Prices Too High? Don’t Blame the Market

January 2nd, 2012 · No Comments · Economics, Iatrogenesis

DoctornickIt’s not just housing bubbles that are caused by good intentions and market intervention. Mungowitz reports on yet another prime example of Soviet-style meddling in the U.S. pharmaceutical market.

While the Food and Drug Administration monitors the safety and supply of the drugs, which are sold both as generics and under brand names like Ritalin and Adderall, the Drug Enforcement Administration sets manufacturing quotas that are designed to control supplies and thwart abuse. Every year, the D.E.A. accepts applications from manufacturers to make the drugs, analyzes how much was sold the previous year and then allots portions of the expected demand to various companies.

How each manufacturer divides its quota among its own A.D.H.D. medicines — preparing some as high-priced brands and others as cheaper generics — is left up to the company.

Gee, setting production quotas based on brainy insights of a handful of technocrats. Much better than letting supply and demand determine a market clearing price. After all, those unwashed masses have no idea what they really want, right?

Naturally, the response to the limited supplies and resulting high prices will be… wait for it…. demand for more intervention!

I’m adding a new category to this blog. It’s Iatrogenesis. This is the formal term for what’s better known as the situation where the cure becomes worse than the disease.


0 responses so far ↓

  • There are no comments yet...Kick things off by filling out the form below.

Leave a Comment