Let’s Blow It Up

 

In a recent comment, Ricochet member @DonG wrote, “The drug industry in the US is a giant racket enabled by a corrupted regulatory system.” After over 20 years of working in medicine, and doing occasional part-time work for pharmaceutical companies in the cardiovascular field, I find that statement to be precise and accurate. Fascism is an explosive word, almost like Nazi. But this is, precisely, fascism. It’s not socialism. Our government does not want to own the means of production; it just wants to control it. Regulate the heck out of it, get private industry to do what you want, then tax the crap out of it to fund a welfare state huge enough to buy sufficient votes to get you re-elected. It’s simple, really. It’s too bad that the term “fascism” is widely viewed as a pejorative because it’s a perfect description of much of our government.

To get back to Don’s point regarding the pharmaceutical industry: This is what excessive regulation creates. You destroy everybody, except for the few corporations enormous or well-connected (usually the same thing) enough that they can withstand the regulatory pressure with top-flight, very expensive legal departments. Then you control and profit from those few. You can’t control 1,000 drug companies, but you can control six of them; maybe eight. Note that this type of evolutionary pressure selects out those who are good at government, not those who are good at creating new drugs.  As is true in every industry.

Take a new drug that costs $100 per month. How much of that do you think was used, directly or indirectly, as protection money against government regulators? I would suggest that it must be more than half; probably a lot more than half.

And then when people pick up their prescriptions at Walgreens and they’re expensive, they walk out of the store swearing under their breath. And who are they swearing at? Government? Politicians? No, pharmaceutical companies. Those very people, who can’t afford their medications, will then eagerly go vote for politicians who will protect them from those evil pharmaceutical companies by regulating them a bit more intensely. The increased regulation requires more expensive legal departments and lobbying firms, so drugs get more expensive to pay for all this.

And on and on it goes.

This would be horrifying if it were a mistake. But it’s more horrifying because it’s not.

This is intentional.

So how do we fix it? Here’s my suggestion:

First, the FDA is out of control, because its job is so huge it’s impractical. For example, when a drug company develops a new drug, it has to prove a few things to the FDA about their new drug:

  1. Is it safe?
  2. Does it work better than placebo?
  3. Does it offer some advantage (increased efficacy, improved safety, etc.) over the medications currently on the market?
  4. Is there a need for this medication on the American market?

In my view, the only possible purpose of the FDA should be #1 – safety. Once a drug company proves that a product is safe, then they should be allowed to sell it. Then it becomes their job to prove to doctors that there is a reason to use their new medication. The other points are, first, none of the FDA’s business, and second, impossible for a government agency to answer with any certainty.

To illustrate my point, let’s talk about quinine. It’s an old malaria drug, which doctors happened to notice works great for nocturnal leg cramps. We have no idea why. The FDA removed it from the American market, because a) there is no malaria in the United States, and b) there have been no large, multi-center, placebo-controlled, double-blinded studies to establish the safety and efficacy of quinine for treatment of leg cramps. You can see their point, I guess, if you think like a bureaucrat and not a human being. The problem is, there never will be such a study, because, by the time we figured out this interesting little fact about quinine, it was already generic. Nobody is going to do an FDA-level study (involving untold millions of dollars) to try to get a new government indication for a drug that costs five cents a pill.

So it has been banned from the US market, because the FDA can’t find a need for the medication (it’s only government-approved indication is to treat malaria), safety data (it has plenty of safety data, but not when it’s being used to treat leg cramps), or efficacy (again, nobody will ever do that study).

So, since we can’t get quinine anymore, now we use drugs like Requip that are:

  1. Not as safe
  2. Much more expensive
  3. Not nearly as effective

Every time I write that prescription, I thank the FDA for their guidance (using bad words).

Right now, about 80% of prescriptions in the United States are written off-label. That means that the prescription is written for a purpose that the drug has not been approved for. Why is this? Because the FDA makes the studies so expensive. The FDA has made it much more difficult to determine which drugs are safe and effective, because of its overwhelming impact on research.

For example, let’s suppose that Amoxicillin is approved for bronchitis. If you write it for sinusitis, that would make sense, because it’s the same type of bacteria. But that would be an off-label prescription because there have been no large, multi-center, placebo-controlled, double-blinded studies to establish its government approval for sinusitis. This is a hypothetical example. I think it’s indicated for one but not the other, but I’m too lazy to go look it up; and I don’t care, because I know how to treat a sinus infection.

Which leads me to the next problem with this system: I no longer care what the FDA says, because they’ve spent decades working day and night to establish their reputation as ridiculous and irrelevant.

These are people’s lives we’re talking about. I just mentioned drugs for leg cramps and sinus infections, but imagine this in the cardiovascular or cancer realm; it’s much worse than what I’ve described. It’s also more complicated; that’s why I used these examples, and that is also how the FDA gets away with this. Most people don’t understand what is going on, because they don’t understand subendothelial pathophysiology any more than they understand government regulations. The latter is much more difficult to understand than the former, but they’re both complex. It doesn’t fit into a soundbite or a two-minute piece for the evening news; so they can do whatever they want.

This is not silly government goof-ups: This is using the power of government maliciously, hurting people that you don’t care about, to gain money and power. This is vicious. This is not funny.

One really cool thing about being a doctor is that I spend all day talking to people in different lines of work, and I learn a lot. Just in the past couple of months, I’ve talked to people who work in restaurants, concrete, landscaping, roofing, transport, kitchen remodeling, and many other fields. When I ask them about their jobs, they don’t talk about concrete or kitchens – they talk about working around government to attempt to get some actual work done. It’s not just pharmaceuticals – this affects everything that happens in the United States. Everything.

This problem is so huge it’s difficult to comprehend.  It’s amazing that our economy works at all.

Imagine what would happen if the government would just…stop. Start over. Try to figure out what its proper role is. How much are we really willing to spend in regulatory costs to be sure that our mattress label is sufficiently safe?

It’s so ubiquitous that we don’t even see it anymore; that’s the idea. That’s just the way things are.

You might wonder why things are this way. It’s because we’ve voted for it, ever since Woodrow Wilson.

Trump’s attacks on regulation are critical. There may be no more important issue in American politics. Many Americans in this day and age would trust Angie’s list more than they would trust the FDA. And the problem is, they have a point. We built this system in the early 1900’s and have expanded it ever since.  It’s no longer helpful.  If it ever was.

Heck with it. Blow it up. Let’s start over. Or at least try to move in that direction. What we’ve been doing is not working, unless you’re a CEO or a congressman.

I’m not. So let’s blow it up. Rebuilding from rubble would be easier than working in the framework we’ve built. It feels very odd for a conservative such as myself to talk this way.

But let’s blow it up. Please.

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  1. Dr. Bastiat Member
    Dr. Bastiat
    @drbastiat

    CarolJoy (View Comment):

    Kozak (View Comment):

    So recently had a young woman who was suffering from hemorrhoids . I know not exactly life threatening, but trust me if you have them you can really suffer.

    So I wrote her a Rx for Anusol HC suppositories until she could see the surgeon. She said ” this won’t be expensive will it, I don’t have insurance”. I said “naw, they are generic and have been around for ever”.

    We get a call from the pharmacy a little while latter. ” She can’t afford it”….

    24 suppositories were 435 dollars.

    2 years ago they were 30 dollars.

    And for those here who might call your experience anecdotal, or for those here who might start the litany chant of “free market” I looked into one company’s development of a breast cancer treatment. The Fed government offered up some 300 million dollars as a grant to help this Big Pharma company help women. When everything was done and over, the Pharma conglomerate started charging huge amounts to the breast cancer patients who could afford it. Then if not finding success in Year One, the breast cancer patient could continue the treatment for Year Two. If they had not reached their insurer’s $ 100,000 drug limitation.

    Oh but not to be accused of being “anti-free market” let me point out that the drug company did benevolently bestow on our Fed government a 30 million dollar amount. Which I guess is all they could afford on their 6 billion dollars worth of profit.

    I agree that government money and regulations do a great deal to corrupt any system they touch.  

    • #61
  2. dnewlander Inactive
    dnewlander
    @dnewlander

    American Abroad (View Comment):

    This is a super post. Disheartening and enraging, of course, but top-notch stuff. The story about quinine is one that I will tell to my lefty friends who vehemently defend government bureaucracy. Also, Dr. Bastiat, thanks for encouraging my habit of a gin-and-tonic nightcap–I wouldn’t want to cramp up at night!

    Quinine was added to tonic water specifically to fight malaria. So of course the FDA limits how much can be added and recommends against using it for leg cramps. Because they can, basically.

    • #62
  3. American Abroad Thatcher
    American Abroad
    @AmericanAbroad

    dnewlander (View Comment):

    American Abroad (View Comment):

    This is a super post. Disheartening and enraging, of course, but top-notch stuff. The story about quinine is one that I will tell to my lefty friends who vehemently defend government bureaucracy. Also, Dr. Bastiat, thanks for encouraging my habit of a gin-and-tonic nightcap–I wouldn’t want to cramp up at night!

    Quinine was added to tonic water specifically to fight malaria. So of course the FDA limits how much can be added and recommends against using it for leg cramps. Because they can, basically.

    Before a trip to Southeast Asia many years ago, I read in a travel guide that I should take malaria pills.  I distinctly remember that the anti-malarial drug cost $10 per pill.  I had some vague understanding that the English had used quinine to prevent malaria in India, so I was shocked that I was asked to pay $10 per pill when a couple cans of tonic water would have done the trick.  This is only one of the very small reasons we have to legitimately despise government power and cronyism.

    • #63
  4. Chris Campion Coolidge
    Chris Campion
    @ChrisCampion

    I Walton (View Comment):

    OmegaPaladin (View Comment):
    The FDA should have a role in at least certifying studies for effectiveness. I do not trust drug manufacturers to actually deliver what they claim is inside the pill. We already know they regularly try to massage data.

    You trust the government? It is a self serving monopoly with no incentive to be honest because it is remote and non accountable, it enjoys no real information advantage, cannot self correct and once it makes a mistake will not correct that mistake because interests build up around it. The point about any private sector produced outcome is that if it doesn’t work or does harm the company will be damaged and the drug won’t remain on the market. Market outcomes with time move products toward what works and sells. While there are always firms that will sell bogus products, do phony studies and make false claims these are easily researched and are driven more by the perverse incentives created by the obscene costs imposed by FDA requirements. Would you buy a cheap generic or knock off Chinese drug were the US product not priced several thousand percent higher? The FDA could be replaced by an independent private public funded entity that reviews evidence and reports on findings, explores claims and reports on findings that has no authority to grant or withhold approval. The biggest asset a large pharmaceutical firm has, or should have, is its brand name. It’s biggest threat is, or should be, tort. Instead it’s the FDA. That’s crazy on the surface.

    This is one of the things that bothers me about the argument for regulation – the USG has no vested interest in the outcomes.  The primary motivator for large organizations is to promulgate the large organization, not to deliver a good.  There is no USG deliverable other than FDA approval, which takes just as long as required to keep FDA people employed for a decade while the pharmaceutical runs up hundreds of millions in sunk costs in the hope that something they think can serve their market will come to actual fruition, and they’ll sell some pills.

    The fact that a company can sink hundreds of millions into a product, and idiots on the street think that company would bypass normal safety considerations in order to get it to market, risking the inevitable lawsuits if they’re found negligent, means simple logic and math takes a holiday.

    In the same way that Hans Gruber had a response to Theo, when Theo said they’d need a miracle to open the time lock:

    Theo:  “We’d need a miracle to get this drug that will alleviate pain and suffering on the market to the people who truly need it”.

    Hans:  “You ask for a miracle, Theo.  I give you the F. D.  A.”

    See the source image

     

     

     

    • #64
  5. Kozak Member
    Kozak
    @Kozak

    DonG (View Comment):

    I recommend this EconTalk episode on how drug companies game the system.

     

    I’ll add a story. I take generic omeprasole (a PPI for reflux). It costs about $5 per 90 days. One day my doctor recommends I try an improved version called “Zegarid”. That prescription cost $1300 for 30 days. What is the great innovation for $15K/year ? They added a pinch of baking soda. Yep, just like your grandma does with pancakes. Some drug company combined a generic medication with a some chemical found in kitchen pantries for 200+ years and charged a fortune. I could not tell the difference. My doctor had no idea what the cost was.

    So, after we blow up the FDA, let’s work on price transparency and making most meds available over-the-counter.

    My daughter is pregnant.  Early on she had fairly severe morning sickness.  Her OB wrote her an Rx for Diclegis.  A months supply was 800$.  I did a little sleuthing. It’s active ingredients are Vit B6 and Doxylamine.  A 90 count bottle of B6 is about 8$. Doxilamine is an antihistamine available OTC., also known as Unisom for 7 dollars.   Again, no new product development, just a new packaging form.  

    • #65
  6. Kozak Member
    Kozak
    @Kozak

    American Abroad (View Comment):

    dnewlander (View Comment):

    American Abroad (View Comment):

    This is a super post. Disheartening and enraging, of course, but top-notch stuff. The story about quinine is one that I will tell to my lefty friends who vehemently defend government bureaucracy. Also, Dr. Bastiat, thanks for encouraging my habit of a gin-and-tonic nightcap–I wouldn’t want to cramp up at night!

    Quinine was added to tonic water specifically to fight malaria. So of course the FDA limits how much can be added and recommends against using it for leg cramps. Because they can, basically.

    Before a trip to Southeast Asia many years ago, I read in a travel guide that I should take malaria pills. I distinctly remember that the anti-malarial drug cost $10 per pill. I had some vague understanding that the English had used quinine to prevent malaria in India, so I was shocked that I was asked to pay $10 per pill when a couple cans of tonic water would have done the trick. This is only one of the very small reasons we have to legitimately despise government power and cronyism.

    Quinine isn’t very effective against some of the more virulent forms of Malaria. 

    CDC Malaria Recommendations 

     

    • #66
  7. American Abroad Thatcher
    American Abroad
    @AmericanAbroad

    Kozak (View Comment):

    Quinine isn’t very effective against some of the more virulent forms of Malaria.

    CDC Malaria Recommendations

    Perhaps not, Kozak, but if quinine were easily available, it might have at least provided some price competition for the more expensive pills.  This was way back in 2001 on a trip to Vietnam, and I was only a poor backpacker at the time.  The cost of my malaria pill per day was literally more expensive than my daily budget for beer and food.

     

    • #67
  8. Kozak Member
    Kozak
    @Kozak

    American Abroad (View Comment):

    Kozak (View Comment):

    Quinine isn’t very effective against some of the more virulent forms of Malaria.

    CDC Malaria Recommendations

    Perhaps not, Kozak, but if quinine were easily available, it might have at least provided some price competition for the more expensive pills. This was way back in 2001 on a trip to Vietnam, and I was only a poor backpacker at the time. The cost of my malaria pill per day was literally more expensive than my daily budget for beer and food.

     

    I get that, but malaria is nothing to screw with.  It’s a leading killer in the third world and causes a lot of morbidity.   Oh course you can thank Rachael Carson for getting DDT banned.  She is one of the worlds great mass murderers …..

    • #68
  9. American Abroad Thatcher
    American Abroad
    @AmericanAbroad

    Kozak (View Comment):

    American Abroad (View Comment):

    Kozak (View Comment):

    Quinine isn’t very effective against some of the more virulent forms of Malaria.

    CDC Malaria Recommendations

    Perhaps not, Kozak, but if quinine were easily available, it might have at least provided some price competition for the more expensive pills. This was way back in 2001 on a trip to Vietnam, and I was only a poor backpacker at the time. The cost of my malaria pill per day was literally more expensive than my daily budget for beer and food.

     

    I get that, but malaria is nothing to screw with. It’s a leading killer in the third world and causes a lot of morbidity. Oh course you can thank Rachael Carson for getting DDT banned. She is one of the worlds great mass murderers …..

    @Kozak:  great point about Carson and DDT.  But it takes two to tango.  Carson might have done the research, but the bureaucracy banned it causing untold misery.  Just another example of how government bureaucracies are counter-productive.

    • #69
  10. Annefy Member
    Annefy
    @Annefy

    Terrific post and comments. Thanks all

    Thanks to anonymous’s review, I read Drug Lord earlier this year. It’s the second in a series called The High Ground. (The first book is called The Speculator and I recommend you read it first, but it’s not necessary)

    Terrific books. 

     

    • #70
  11. Guruforhire Inactive
    Guruforhire
    @Guruforhire

    I don’t know that I am completely on board with mass deregulation of pharmaceuticals.

    I think regulations for both safety and efficacy are perfectly reasonable.  You would be amazed at the amount of trust that this creates in medicine in general, and creates the ability for people to be rationally ignorant and increase their specialization in their own disciplines.

    • #71
  12. MarciN Member
    MarciN
    @MarciN

    I saw a link on the Drudge Report to this August 18, 2018, article “The Doctor Is Out? Why Physicians Are Leaving Their Practices to Pursue Other Careers.”

    If we, as a nation, fail to take some drastic action soon, we will see our excellent health care system devolve into incompetence.

    • #72
  13. Ontheleftcoast Inactive
    Ontheleftcoast
    @Ontheleftcoast

    American Abroad (View Comment):

    dnewlander (View Comment):

    American Abroad (View Comment):

    This is a super post. Disheartening and enraging, of course, but top-notch stuff. The story about quinine is one that I will tell to my lefty friends who vehemently defend government bureaucracy. Also, Dr. Bastiat, thanks for encouraging my habit of a gin-and-tonic nightcap–I wouldn’t want to cramp up at night!

    Quinine was added to tonic water specifically to fight malaria. So of course the FDA limits how much can be added and recommends against using it for leg cramps. Because they can, basically.

    Before a trip to Southeast Asia many years ago, I read in a travel guide that I should take malaria pills. I distinctly remember that the anti-malarial drug cost $10 per pill. I had some vague understanding that the English had used quinine to prevent malaria in India, so I was shocked that I was asked to pay $10 per pill when a couple cans of tonic water would have done the trick. This is only one of the very small reasons we have to legitimately despise government power and cronyism.

    Probably would have taken more than a couple of cans unless they still make the original stuff in country. Despite having been used successfully for hundreds of years, its antimalarial action is not completely understood, and it can have nasty and unpredictable (meaning someone can use the drug for a while and then they can’t) adverse effects.

    If you’re dealing with Falciparum malaria which can kill you rapidly and painfully, or even Vivax malaria which can just make you pretty sick, the tradeoff of using a drug that can be risky makes a lot of sense.

    In some cases leg cramps can be bad enough that a similar tradeoff may well apply.

    • #73
  14. Doctor Robert Member
    Doctor Robert
    @DoctorRobert

    Kozak (View Comment):

    My daughter is pregnant. Early on she had fairly severe morning sickness. Her OB wrote her an Rx for Diclegis. A months supply was 800$. I did a little sleuthing. It’s active ingredients are Vit B6 and Doxylamine. A 90 count bottle of B6 is about 8$. Doxilamine is an antihistamine available OTC., also known as Unisom for 7 dollars. Again, no new product development, just a new packaging form.

    There’s more to it than that, Kozak.  Diclegis was sold in the 1970s as Bendectin until there were lawsuits about congenital anomalies.  Despite the lack of scientific proof of association, the makers of Bendectin folded.  Those of us dealing with early pregnancy have used B6 and Unisom cocktails for almost 40 years.

    Thanks Dr Bastiat for an illuminating post.  Since Obamacare the costs of many of my commonly-used drugs have gone up tens or hundreds fold.  Lidocaine 5% creme used to be $10-15, now it’s more than $100, but the 4% creme is OTC for $8.  Epi-pens, estradiol, estra-test, micronized progesterone, hydrocortisone, clomiphene, bromocriptine, all of these things used to be as cheap as dirt and now no one can afford them.  You can’t make me believe this is an accident.

    One end run is to have the drugs compounded at a specialty pharmacy, which you can do so long as it is not in a commercially-made size (another FDA rule).  So I write for 1.25 mg of estradiol instead of 1 mg or 2 mg, my patients get a 30 day supply for 30 or 40 bucks.

    • #74
  15. Chris Campion Coolidge
    Chris Campion
    @ChrisCampion

    MarciN (View Comment):

    I saw a link on the Drudge Report to this August 18, 2018, article “The Doctor Is Out? Why Physicians Are Leaving Their Practices to Pursue Other Careers.”

    If we, as a nation, fail to take some drastic action soon, we will see our excellent health care system devolve into incompetence.

    See @DocJay.

    • #75
  16. CarolJoy Coolidge
    CarolJoy
    @CarolJoy

    Dr. Bastiat (View Comment):

    CarolJoy (View Comment):

    Dr. Bastiat (View Comment):

    Hang On (View Comment):

    I Walton (View Comment):

    Susan Quinn (View Comment):

    My fear is that with the insidious influence of the Left, it would be even worse if we blew it up. They’d get their hands on the re-make and put even more restrictions in. And we wouldn’t even realize what they were doing it until it was too late. Sigh.

    The left’s influence is exercised through these institutions, by mob rule which the media feeds off the artificial demands, and centralized interests created by them. If blown up they’d be weakened and if we don’t respond to mob hysteria, they’d be radically diminished. I think we have to blow it all up.

    How do you implement this? It will take legislation, will it not?

    I would suggest we pass a Constitutional amendment which states:

    “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

    That should fix it. Piece of cake.

    Yep, piece of cake. providing a person doesn’t live in California.

    The beauty of federalism. Leave.

    Oh it is being considered, and perhaps is in process. We are both from places where it rains in the summer. These recent fires have been more than enough to persuade us it is time to go.

    • #76
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