Generic Drugs
Any sane person would agree that recent drug prices are hard to afford for low-income families an example, would be the elderly who need drugs like Lipitor. President Obama saw this and wanted to help, so he made a promise. He promised to prevent drug companies from blocking generic drugs that offer the same drug for a lower price. He said that this would lower prices on drugs that imitate drugs like Lipitor so that low-income people could afford their medication again. Why did he make this promise? He, like any politician want to get votes and found this to be a great way to endear himself form a low to middle income individual who use expensive name brand drugs like Lipitor.
John Stossel’s special on the FDA brought to light questions people often don’t think about. The FDA does save people from harmful drugs. Sometimes just by the 15 years on average it takes to process a drug. However it takes so long to get a drug approved by the FDA many companies won’t even try because it is not cost effective and people miss out on new drugs that could save their lives.
So these companies are helping low-income families by getting these drugs researched and approved even though many times the drugs getting proved get short down by the FDA. But, how are the companies making enough money to stay out of debt and bring more drugs like Lipitor to the market? They get what’s called a patent on drugs that allow them to sell their hard won drug approval without worrying about generic drugs undercutting their profits. This patent also lasts for a relatively short amount of time compared to the time it takes to get approved. For example a company called Pfizer released Lipitor in 1996 and now in Nov. 30, 2011 they are facing the end of their patent. That’s less time than it took to get approved. Not only this but to stay afloat after their patent time runs out. They pay companies like Indian generics manufacturer Ranbaxy Laboratories and Watson Pharmaceuticals and others to not sell generic drug versions of their drug.
The generic drugs looking to cheaply replace Lipitor and that sell for a low price, are the drugs that President Obama is supporting. He wishes to make it illegal for Pfizer and other companies that sell important drugs to pay generic drug brands not to sell their drugs. The problem with the President’s plan is he is acting on a fatal flaw of Keynesian economics, looking at the short run but not the long run. In the short run the generic drugs will create cheap ways for any individual regardless of income to buy medications but for much less, the public will see it as him following through on a promise. However what he is missing is that in the long run the loss in profits in the businesses that get drugs like Lipitor through FDA testing will be so low they will shut down and there will be no new drugs. The cure for cancer, Alzheimer’s or any disease will be too expensive to put through the FDA much less research and create in the first place. So it won’t ever be created or tested and either no one will ever be cured of anything new or it will severely slow down both processes while people die in the mean time.
