Contrary to Wikipedia and its source - pseudo-economist Paul Samuelson, who was the "key to Keynes' influence" - there isn't any such thing as a natural monopoly. Any monopoly that comes about and maintains its power does so solely through government intervention (e.g., regulations, subsidies, laws). In other words, the only monopolies that exist are the ones that government creates or allows to exist. Competition will always exist unless the government prevents it.

Take drugs, for example. There's a drug pregnant women take who are at risk of delivering prematurely. The government's National Institute for Health did all the initial development at the taxpayer's expense and it sold for about $10 per shot. That is... until the government gave the exclusive rights to a drug company purportedly in exchange for "full clinical and regulatory treatment." As a result, the drug company now has a monopoly on the drug and, when you have a monopoly, you can command a higher price because there isn't any definition. The treatment will now be sold for $1,500 per shot.

Putting aside for a moment that the former CEO of this drug company was banned last year from doing business with the US and was just sentenced to 30 days in prison, there are many doctors who claim that "FDA regulation of the medical industry has suppressed and delayed new drugs and devices, and has increased costs, with a net result of more morbidity and mortality." Is this one such example? Is a 15,000% increase in price worth the value of an "FDA-approved" label? This is a drug that has been around since 1956 - is it really worth the increased price to put it through "full clinical and regulatory treatment?" Is the Food and Drug Administration actually increasing the costs of drugs to us, in addition to death and harm, without the benefit? Should we expect the infant mortality graph at the right to see a dramatic increase in future years, all thanks to the FDA?

FTA:

Preventing preterm births just got 150 times more expensive, now that KV Pharmaceuticals has gained exclusive rights to produce a progesterone shot used to prevent premature births in high-risk mothers.

Although the shot has been available in unregulated form from specialty compounding pharmacies for years for $10 a pop, the Food and Drug Administration recently granted KV Pharmaceuticals sole rights to produce the drug, which will be marketed as Makena and cost $1,500 per dose -- an estimated $30,000 in total per pregnancy...

Though KV Pharmaceuticals plans to offer financial assistance to low-come households in need of the drug, how private health insurance companies and Medicaid will respond to this price spike remains to be seen, leaving many doctors fearing that access to this treatment will become severely limited or interrupted for those currently mid-treatment.

And because FDA laws prohibit compounding pharmacies from making FDA-approved products, doctors will be legally obligated to stop using the cheaper version of this drug, a representative for the company told ABC News...

Hydroxyprogesterone caproate injections have been around since 1956, and were commercially available up until 1999 when Squibb, the pharmaceutical company making them, withdrew the product from the market. In the past few years however, studies have shown that these injections had a positive effect in preventing pre-term birth among women who had previously had a spontaneous pre-term birth in the past. Since then, doctors have been able to fill prescriptions for the synthetic progesterone using compounding pharmacies at a price of $10 to $15 per injection.

Most health insurances did not cover these shots as they were not FDA approved, but given the low price of progesterone, women were able to pay out of pocket for the treatment, says Moritz...

Many doctors are particularly frustrated with the price hike because to date, KV Pharmaceuticals has not had to bear the cost of the clinical trials used to get the drug approved, but they have announced plans to conduct further trials in the future.

"All the upfront development of the drug was done by the National Institute of Health. You and I paid for that with our tax dollars, it's not like this pharmaceutical company is trying to recoup its investments in research and development, as is usually the reason for the price of new drugs," says Dr. Kevin Ault, associate professor of gynecology and obstetrics at Emory University School of Medicine.

Price of Preventing Premature Births Skyrockets. KV Pharma Gains Sole Rights to Drug, Ups Price by 10K Percent

DISCUSS!

Original posting by Braincrave Second Life staff on Mar 16, 2011 at http://www.braincrave.com/viewblog.php?id=502