There are certain practical realities of existence that most of us accept. If you want to catch a bear, you don’t load the trap with a copy of Catch-22 — not unless you rub it with a considerable quantity of raw hamburger. If you want to snag a fish, you can’t just slap the water with your hand and yell, “Jump on my hook, already!” Yet, if you’re a woman who wants to land a man, there’s this notion that you should be able to go around looking like Ernest Borgnine: If you’re “beautiful on the inside,” that’s all that should count. Right. And I should have a flying car and a mansion in Bel Air with servants and a moat.
Welcome to Uglytopia — the world reimagined as a place where it’s the content of a woman’s character, not her pushup bra, that puts her on the cover of Maxim. It just doesn’t seem fair to us that some people come into life with certain advantages — whether it’s a movie star chin or a multimillion-dollar shipbuilding inheritance. Maybe we need affirmative action for ugly people; make George Clooney rotate in some homely women between all his gorgeous girlfriends. While we wish things were different, we’d best accept the ugly reality: No man will turn his head to ogle a woman because she looks like the type to buy a turkey sandwich for a homeless man or read to the blind.
There is a vast body of evidence indicating that men and women are biologically and psychologically different, and that what heterosexual men and women want in partners directly corresponds to these differences. The features men evolved to go for in women — youth, clear skin, a symmetrical face and body, feminine facial features, an hourglass figure — are those indicating that a woman would be a healthy, fertile candidate to pass on a man’s genes.
These preferences span borders, cultures, and generations, meaning yes, there really are universal standards of beauty. And while Western women do struggle to be slim, the truth is, women in all cultures eat (or don’t) to appeal to “the male gaze.” The body size that’s idealized in a particular culture appears to correspond to the availability of food. In cultures like ours, where you can’t go five miles without passing a 7-Eleven and food is sold by the pallet-load at warehouse grocery stores, thin women are in. In cultures where food is scarce (like in Sahara-adjacent hoods), blubber is beautiful, and women appeal to men by stuffing themselves until they’re slim like Jabba the Hut.
Amy Alkon, “The Truth About Beauty”, Psychology Today, 2010-11-01.
December 16, 2015
QotD: The truth about beauty
December 15, 2015
Hillary Clinton’s well-intentioned plans will make the prescription medicine market even worse
Another older post from Megan McArdle on the nice-soundbites-but-terrible-economic-notions from the Hillary Clinton campaign to fix the prescription medicine marketplace:
Hillary Clinton thinks drug development should be riskier, and less profitable. Also, your health insurance premiums should be higher. And there should be fewer drugs available.
This is not, of course, how the Clinton campaign would put it. The official line is that Americans are just paying too darn much for drugs, and she has a plan to stop that:
- Regulate direct-to-consumer advertising more heavily, and strip its tax deductibility
- Require drug companies to spend a certain percentage of revenue on research and development, or face penalty payments and the loss of their R&D tax credit (I am inferring that this is what she is talking about, since the actual language of the proposal is long on paeans to the importance of federal research funding and short on details)
- Cap out-of-pocket costs for drugs
- Reduce the exclusivity period for biologic drugs
- Prohibit companies from making side payments to generic manufacturers to keep generic competition off the market
- Allow drug reimportation
- Require that new treatments be proved to be a substantial improvement over existing treatments — i.e., eliminate the dreaded “me too” drugs
- Allow Medicare to “negotiate” drug prices
Eliminating the side payments seems eminently sensible. (Yes, yes, you can strip my libertarian card, but market-rigging contracts shouldn’t be enforced.) It also seems reasonable to require some sort of comparative effectiveness research. Other provisions will certainly drive down drug prices, at the risk of also driving down innovation.
Still other provisions, however, are simply bad economics. In what other market do we worry about having a second product available that’s merely just as good as the first? Should we really only have one antidepressant, one statin, one blood pressure medication, and so forth? Might there be variation among patients so that drugs that are statistically about equally effective in large groups are nonetheless individually more or less effective for different people? Might one drug’s side effects be better tolerated by some patients than another’s? Might having two drugs in the category help keep prices down?
Then there is notion that we should force pharmaceutical companies to spend a set percentage of their revenues on R&D. This seems to me to be … what’s the word I am looking for? Ah, I’ve got it: “insane.”
[…]
Economically, large parts of this plan make little sense. Politically, many of these items would be very difficult to pass, not least because the Congressional Budget Office would assess the likely effects and would make it sound much less appealing than it does in a gauzy stump speech. But away from those harsh realities, purely as campaign rhetoric, it probably works very well.
Asthma and the “Hygiene Hypothesis”
An older report at the BBC News website discusses recent research into childhood asthma:
Being exposed to “good bacteria” early in life could prevent asthma developing, say Canadian scientists.
The team, reporting in Science Translational Medicine, were analysing the billions of bugs that naturally call the human body home.
Their analysis of 319 children showed they were at higher risk of asthma if four types of bacteria were missing.
Experts said the “right bugs at the right time” could be the best way of preventing allergies and asthma.
In the body, bacteria, fungi and viruses outnumber human cells 10 to one, and this “microbiome” is thought to have a huge impact on health.
The team, at the University of British Columbia and the Children’s Hospital in Vancouver, compared the microbiome at three months and at one year with asthma risk at the age of three.
Children lacking four types of bacteria – Faecalibacterium, Lachnospira, Veillonella, and Rothia (Flvr) – at three months were at high risk of developing asthma at the age of three, based on wheeze and skin allergy tests.
The same effect was not noticed in the microbiome of one-year-olds, suggesting that the first few months of life are crucial.
Further experiments showed that giving the bacterial cocktail to previously germ-free mice reduced inflammation in the airways of their pups.
One of the researchers, Dr Stuart Turvey, said: “Our longer-term vision would be that children in early life could be supplemented with Flvr to look to prevent the ultimate development of asthma
“I want to emphasise that we are not ready for that yet, we know very little about these bacteria, [but] our ultimate vision of the future would be to prevent this disease.”
December 9, 2015
QotD: Masochism and the modern woman
“If He Doesn’t Hit You, He Doesn’t Love You.” So runs an African proverb. Or a Russian proverb, according to other sources. Or a Bolivian proverb, according to still others. Perhaps it is all three. A similar Latin American saying, “The more you hit me, the more I love you,” turns up over 100,000 hits on Google.
It is hardly a new idea that female sexuality has a masochistic component. Indeed, this seems to be part of the folk wisdom of the world; in other words, it corresponds the observations of many persons of both sexes across many generations. Yet it is not easy to find extended discussion of it. Within the past century, most writing on the subject has been beholden to the Freudian tradition, a circumstance that does not inspire confidence. A more hopeful sign may be the sizable feminist literature aimed at refuting “the myth of female masochism.” If nothing else, such literature is testimony to the enduring reality of the corresponding folk belief; no one writes polemics against things that have absolutely no basis in reality.
It is not hard to understand why persons of both sexes are reluctant to talk about female masochism. No one wants to appear to be condoning the abuse of women. A prime component of masculinity is the instinct to protect women. In the European tradition, this has given rise to the principle that “a gentlemen never strikes a lady.” Pushing gallantry to the point of silliness, as usual, Thomas Fleming writes in Chronicles that “there is something unmanly about beating women, unmanly and sickening.”
But what if there is something in at least some women that responds positively to male violence?
F. Roger Devlin, “The Question of Female Masochism”, Counter-Currents Publishing, 2014-09-17.
December 8, 2015
Still more to learn about the human immune system
A brief post at Real Clear Science on a recent discovery in human immunology:
Think again if you thought that doctors had long since identified and described exactly how the body defends itself against microorganisms.
Scientists have recently discovered a whole new side to the immune system: a rapid immune response that kicks in well before any of the other known mechanisms.
“I hate to use the term ‘text books will write about this’, but this [discovery] really is brand new and we will need to write a new chapter,” says co-author Søren R. Paludan, professor of virology and immunology form the Department of Biomedicine, Aarhus University, Denmark.
In collaboration with groups from the US and Germany, the scientists showed that when the body’s outer defence, the mucosa lining that surrounds certain organs, is disturbed by a virus, the underlying layer of cells are the first to react and sound the alarm. They summon the body’s cell soldiers, which attack the invading virus.
Both this alarm system and the ‘soldier’ cells operate completely separately from what were believed to be the first responders to immune system attacks.
December 3, 2015
Medical charities and their prime mission
David Warren is rather a skeptic on the long-term usefulness of big medical charities (and not just because, like any big bureaucracy, sooner or later the primary goal becomes for the organization itself to survive and grow rather than pursuing whatever they were originally created to do):
Medical “research” does similar direct damage. Huge foundations are created to “fight” every imaginable human ailment, and find new ones on which to build fresh fundraising efforts, should any of the old ones go stale. Grand sums are expended on “public awareness” campaigns, to encourage hypochondria and psychosomatic disorders. (I suspect, for instance, that the chief cause of lung cancer today is grisly health warnings on packets of cigarettes.) Money is raised in billions to “find a cure” for whatever. (Snake oil sales were on a much smaller scale.)
At the most elementary level, people should try to understand cause and effect. Vast numbers come to rely upon the metastasis of these soi-disant “charitable” bureaucracies. And if a cure is ever found, they will all be out of their overpaid jobs. Moreover, it is almost invariably some isolated, eccentric, unqualified and unfunded tyro, who makes the fatal discovery. That is why one of the principal tasks of any large medical foundation is to locate these brilliant “inventor” types, and sue them into surrender.
Does gentle reader know that almost all the increase in human longevity, over the last century or so, can be attributed to people washing their hands and taking showers? And most of the rest to better sewage disposal? Or that it took until almost the middle of the last century for life expectancy in the West to rise to levels last seen in the parish records of the Middle Ages? Which was when “modern” hygienic practices were last observed. (Large, centralized hospitals are the most efficient spreaders of infection today.)
Painkillers are nice, and I’m inclined to keep them, only if we realize that the blessing is mixed. They turn our minds away from futurity; they displace faith in God, to faith in doctors. They create the mindset that embraces “euthanasia.”
Of course, the main focus of contemporary liberal “philanthropy” is not on saving lives at all; rather on killing off babies — in Africa, by first choice. It is what the proggies used to call “population control,” until they invented better euphemisms. That is what truly gladdens the peons in the foundations of all the Bills and Melindas; and lights the corridors of the United Nations. That and the (still historically recent) “climate change” agenda.
December 2, 2015
Maximizing Profit under Monopoly
Published on 18 Mar 2015
AIDS has killed more than 36 million people worldwide. There are drugs available to treat AIDS, but the price of one pill is incredibly high in the U.S. — coming in at 25 times higher than its cost. Why is that? In this video, we show how patent rights have created a monopoly in the U.S. market for AIDS medication, causing pills to be very expensive. In other countries, however, such as India, which does not recognize patents on AIDS medication, prices remain low. Using this example, we go over how monopolies use market power to increase prices.
November 25, 2015
Food labelling laws and craft brewing … not a match made in heaven
Eric Boehm on how well-intentioned laws can still have significant and unforeseen negative side-effects:
Brewers are facing the prospect of spending potentially thousands to determine calorie counts for every variety of beer produced. Unless they spend the money to provide the information, breweries may never get their products into chain restaurants, like Buffalo Wild Wings and Applebee’s.
As is often the case with regulations, smaller breweries stand to lose the most.
“A regional craft brewer or a major brewery can spread the cost over a much larger volume of sales and it’s not so unreasonable for them,” said Paul Gatza, a former brewer who now heads the Boulder, Colorado, based Brewers’ Association, an industry group.
“Smaller guys that are just trying to sell a keg or two here or there, they have a decision to make on whether it is worth the additional cost to try to get their beers into chain restaurants,” Gatza told Watchdog.
The Food and Drug Administration is in the process of finalizing menu labeling rules that were part of the Affordable Care Act. Intended to make Americans more aware of their dietary choices, the rules are subject to controversy on several fronts, and the FDA announced in September that implementation of the new rules would be pushed back one full year, until December 2016, as the feds try to work out the kinks.
My favourite local brewery isn’t even a micro-brewery (they’re somewhere between a pico- and a nano-brewery): every week when I drop in, there are three or four new batches ready to sample (and it’s rare that there’s anything left of last week’s offerings). If they had to spend hundreds or even thousands of dollars to comply with detailed labelling requirements for every small batch they brewed, they’d never stand a chance of making a profit. I understand the urge to ensure that people have a chance to avoid ingredients that might make them ill, but this is the sort of regulation that tilts very heavily toward the big companies that have regional or national markets. A thousand dollars per product isn’t even a drop in the bucket to them, while to a small local business, that might be more than their profit margin when you require it be done for everything they produce.
November 20, 2015
We’re in “a terrible, horrible, no good, very bad news cycle for Obamacare”
Megan McArdle on the plight of some health insurance companies as they try to offer healthcare policies and still make some sort of profit in the current American market:
… UnitedHealth abruptly said it expected to lose hundreds of millions of dollars on its exchange policies in 2015 and 2016, and would be assessing whether to pull out of the market altogether in the first half of next year.
This was part of a terrible, horrible, no good, very bad news cycle for Obamacare; as ProPublica journalist Charles Ornstein said on Twitter, “Not since 2013 have I seen such a disastrous stream of bad news headlines for Obamacare in one 24-hour stretch.” Stories included not just UnitedHealth’s dire warnings, but also updates in the ongoing saga of higher premiums, higher deductibles and smaller provider networks that have been coming out since open enrollment began.
It now looks pretty clear that insurers are having a very bad experience in these markets. The sizeable premium increases would have been even higher if insurers had not stepped up the deductibles and clamped down on provider networks. The future of Obamacare now looks like more money for less generous coverage than its architects had hoped in the first few years.
But of course, that doesn’t mean insurers need to leave the market. Insurance is priced based on expectations; if you expect to pay out more, you just raise the price. After all, people are required to buy the stuff, on pain of a hefty penalty. How hard can it be to make money in this market?
What UnitedHealth’s action suggests is that the company is not sure it can make money in this market at any price. Executives seem to be worried about our old enemy, the adverse selection death spiral, where prices go up and healthier customers drop out, which pushes insurers’ costs and customers’ prices up further, until all you’ve got is a handful of very sick people and a huge number of very expensive claims.
Some commentators, including me, worried a lot about death spirals in the early days of the disastrous exchange rollout. Some commentators, also including me, have eased off on those fears in recent years. Why the change? Because when the law was passed, I was mostly focused on whether the mandate penalty would be enough to encourage people to buy insurance. Over time, as the exchanges evolved, the subsidies, and the open enrollment limitations, started to look a lot more important than the penalty.
[…]
An earnings call like today’s can also be a bargaining tactic. Health insurers are engaged in a sort of perpetual negotiation with regulators over how much they’ll be allowed to charge, what sort of help they’ll get from the government if they lose money, and a thousand other things. Signaling that you’re willing to pull out of the market if you don’t get a better deal is a great way to improve your bargaining position with legislators and regulatory agencies.
That said, strategic positioning is obviously far from the whole story, or even the majority of it. UnitedHealth really is losing money on these policies right now. It really is seeing something that looks dangerously like adverse selection. And frankly, there’s not that much the company can get out of regulators at this point, because the Congressional Republicans have cut off the flow of funds. So while Obamacare certainly isn’t dead, or certain to spiral to its death, it’s got some very worrying symptoms.
November 19, 2015
Is a possible cure for old age now in sight?
Matt Ridley on recent developments in the search for ways to ameliorate the effects of aging:
Squeezed between falling birth rates and better healthcare, the world population is getting rapidly older. Learning how to deal with that is one of the great challenges of this century. The World Health Organisation has just produced a report on the implications of an ageing population, which — inadvertently — reveals a dismal fatalism we share about the illnesses of old age: that they will always be inevitable.
This could soon be wrong. A new book, The Telomerase Revolution, published in America this week by the doctor and medical researcher Michael Fossel, argues that we now understand enough about the fundamental cause of ageing to be confident that we will eventually be able to reverse it. This would mean curing diseases such as Alzheimer’s, heart disease and osteoporosis, rather than coping with them or treating their symptoms.
Let me show you what I mean about fatalism. The WHO report on ageing and health, for all its talk of the need for “profound changes” to health care for the elderly, actually urges us to stop trying to cure the afflictions of old age and learn to live with them: “The societal response to population ageing will require a transformation of health systems that moves away from disease-based curative models and towards the provision of older-person-centred and integrated care.”
Yet it also subscribes to the somewhat magical hope that illnesses of old age can be “prevented or delayed by engaging in healthy behaviours” and that “physical activity and good nutrition can have powerful benefits for health and wellbeing.” This is largely wishful thinking. There is no evidence that, say, Alzheimer’s can be prevented by a certain diet or activity. A lack of activity and poor nutrition can worsen health at any age, but the underlying chronic diseases of old age are caused by age itself.
When I asked Dr Fossel what he thought of the WHO report, he replied: “In 1950 we could have talked (and did) about ‘active polio’ in the sense of keeping polio victims active rather than giving up, but the very phrase itself implies that one has already given up. I would prefer that we cure the fundamental problem. Why talk about ‘active ageing’, ‘successful ageing’, and ‘healthy ageing’ when we could talk about not ageing?”
November 8, 2015
Who are the drunkest NFL fans? Come on down, Buffalo Bills fans!
A breathalyzer company conducted a study to determine who are the drunkest fanbases in the NFL, and Buffalo turned in the highest overall score:
Click to see the full-size map at CBSSports.com
Apparently, losing does drive fans to drinking, at least according to a recent study done by BACtrack.
The Breathalyzer company spent the past six weeks anonymously collecting BAC samples and what they found is that Bills fans really, really, really like to drink.
According to the study, Bills fans had an average blood-alcohol level of .076 through the first seven weeks of the NFL season, which was the highest among all NFL fan bases.
If you’re wondering how BACtrack was able to hunt down the BAC level of random fans, they didn’t. The samples came to them.
The company used anonymous samples sent in by fans who were using the BACTrack app on their phone, an app that works as a Breathalyzer.
The company then collected data on Sundays between Sept. 13 and Oct. 25 to try and accurately gauge how much fans were drinking. Only samples sent in between 6 a.m. on Sunday and 5:59 a.m. on Monday counted toward the study.
The data was only collected from geographic locations that were hosting NFL games during the first seven weeks of the season.
There were probably plenty of flaws in the study, but based on what I’ve seen from Bills fans, it’s not surprising they’re No. 1.
I find it amusing that the NFC North’s drunk fan index exactly matches the teams’ relative standings right now, with Green Bay fans the most sober (at 0.042), followed by Vikings fans (0.046), then Bears fans (0.054), and finally Detroit fans (who definitely have reason to be drinking more this season) at 0.069.
November 5, 2015
The high-church organic movement is feeling under threat
Henry I. Miller & Julie Kelly on the less-than-certain future of the organic farming community:
The organic-products industry, which has been on a tear for the past decade, is running scared. Challenged by progress in modern genetic engineering and state-of-the-art pesticides — which are denied to organic farmers — the organic movement is ratcheting up its rhetoric and bolstering its anti-innovation agenda while trying to expand a consumer base that shows signs of hitting the wall.
Genetic-engineering-labeling referendums funded by the organic industry failed last year in Colorado and Oregon, following similar defeats in California and Washington. Even worse for the industry, a recent Supreme Court decision appears to proscribe on First Amendment grounds the kind of labeling they want. A June 2015 Supreme Court decision has cleared a judicial path to challenge the constitutionality of special labeling — “compelled commercial speech” — to identify foods that contain genetically engineered (sometimes called “genetically modified”) ingredients. The essence of the decision is the expansion of the range of regulations subject to “strict scrutiny,” the most rigorous standard of review for constitutionality, to include special labeling laws.
[…]
Organic agriculture has become a kind of Dr. Frankenstein’s monster, a far cry from what was intended: “Let me be clear about one thing, the organic label is a marketing tool,” said then secretary of agriculture Dan Glickman when organic certification was being considered. “It is not a statement about food safety. Nor is ‘organic’ a value judgment about nutrition or quality.” That quote from Secretary Glickman should have to be displayed prominently in every establishment that sells organic products.
The backstory here is that in spite of its “good vibes,” organic farming is an affront to the environment — hugely wasteful of arable land and water because of its low yields. Plant pathologist Dr. Steve Savage recently analyzed the data from USDA’s 2014 Organic Survey, which reports various measures of productivity from most of the certified-organic farms in the nation, and compared them to those at conventional farms, crop by crop, state by state. His findings are extraordinary. Of the 68 crops surveyed, there was a “yield gap” — poorer performance of organic farms — in 59. And many of those gaps, or shortfalls, were impressive: strawberries, 61 percent less than conventional; fresh tomatoes, 61 percent less; tangerines, 58 percent less; carrots, 49 percent less; cotton, 45 percent less; rice, 39 percent less; peanuts, 37 percent less.
October 28, 2015
The WHO’s lack of clarity leads to sensationalist newspaper headlines (again)
The World Health Organization appears to exist primarily to give newspaper editors the excuse to run senational headlines about the risk of cancer. This is not a repeat story from earlier years. Oh, wait. Yes it is. Here’s The Atlantic‘s Ed Yong to de-sensationalize the recent scary headlines:
The International Agency of Research into Cancer (IARC), an arm of the World Health Organization, is notable for two things. First, they’re meant to carefully assess whether things cause cancer, from pesticides to sunlight, and to provide the definitive word on those possible risks.
Second, they are terrible at communicating their findings.
[…]
Group 1 is billed as “carcinogenic to humans,” which means that we can be fairly sure that the things here have the potential to cause cancer. But the stark language, with no mention of risks or odds or any remotely conditional, invites people to assume that if they specifically partake of, say, smoking or processed meat, they will definitely get cancer.
Similarly, when Group 2A is described as “probably carcinogenic to humans,” it roughly translates to “there’s some evidence that these things could cause cancer, but we can’t be sure.” Again, the word “probably” conjures up the specter of individual risk, but the classification isn’t about individuals at all.
Group 2B, “possibly carcinogenic to humans,” may be the most confusing one of all. What does “possibly” even mean? Proving a negative is incredibly difficult, which is why Group 4 — “probably not carcinogenic to humans” — contains just one substance of the hundreds that IARC has assessed.
So, in practice, 2B becomes a giant dumping ground for all the risk factors that IARC has considered, and could neither confirm nor fully discount as carcinogens. Which is to say: most things. It’s a bloated category, essentially one big epidemiological shruggie. But try telling someone unfamiliar with this that, say, power lines are “possibly carcinogenic” and see what they take away from that.
Worse still, the practice of lumping risk factors into categories without accompanying description — or, preferably, visualization — of their respective risks practically invites people to view them as like-for-like. And that inevitably led to misleading headlines like this one in the Guardian: “Processed meats rank alongside smoking as cancer causes – WHO.”
Reducing the costs of regulation
Henry I. Miller discusses a worthwhile regulatory change that would increase the availability of medicines in the US marketplace without reducing public safety:
The FDA would be a good place to start. Bringing a new drug to market now requires 10-15 years, and costs have skyrocketed to an average of more than $2.5 billion (including both out-of-pocket and opportunity costs) – largely because FDA requirements have increased the length and number of clinical trials per marketing application, and their complexity.
The detrimental effects of FDA delays in approving certain new drugs already available in other industrialized countries are well-documented and deserve as much attention as drugs’ high costs. An example is the three-year delay in the approval of misoprostol, a drug for the treatment of gastric bleeding, which is estimated to have cost between 8,000 and 15,000 lives per year.
[…]
A practical workaround to overcome regulators’ risk-aversion and capriciousness would be “reciprocity” of approvals with certain foreign “A-list” governments, so that an approval in one country would be reciprocated automatically by the others. That would make more drugs available sooner in all of the participating countries, increasing competition and putting downward pressure on prices.
Such an innovation would also help to alleviate another critical problem: The United States is experiencing shortages of certain critical pharmaceuticals, many of which have been essential in medical practice for decades. The majority are generic injectable medications commonly used in hospitals, including analgesics, cancer drugs, anesthetics, antipsychotics for psychiatric emergencies, and electrolytes needed for patients on IV supplementation. Hospitals are scrambling to assure adequate supplies of drugs that are in short supply, or to find substitutes for them. Reciprocal approvals would make numerous alternatives available.
As referenced yesterday, the FDA regulations also create temporary monopoly situations where only one company has the permit from the regulator to produce this or that medicine, so there’s nothing standing in the way of massive price increases if there are no close substitutes to provide price competition.
October 27, 2015
Update on that $750 pill and the regulatory system that made it inevitable
Tim Worstall follows up on all-world scumbag Martin Shkreli and his enabled-by-the-regulator insane price increases for a decades-old drug:
We have an interesting and important economic lesson for public policy here: markets, they work. More accurately, we don’t have to worry about someone attempting to exploit their possession of a contestable monopoly. We only have to worry, possibly take action, if someone has an uncontestable monopoly. And given that there’s very few of them that we don’t create ourselves for other reasons, this means that monopoly is just one of those things we can keep a wary eye upon but not worry over excessively.
Our example comes from Martin Shkreli. The basic background is that this entrepreneur thinks he’s found a pretty cool business model. There’s a number of pharmaceuticals out there that are well out of patent but still have small and useful markets. FDA regulations (no, we’ll not go into the details of how or why this happens) mean that it’s not as easy as one might think to produce generic versions of these out of patent drugs. So, as a business plan, buy up the rights to the permit-ed (as in, with a permit, not just those allowed, as in permitted) generics and as a result of the difficulty someone else will have in getting into the same market, some pricing power is available. You can then raise the price and start to bank your considerable profits.
This caused outrage when Shkreli announced that this was exactly what he was doing:
Turing Pharmaceuticals, the company that last month raised the price of the decades-old drug Daraprim from $13.50 a pill to $750…
A 5,000% price rise certainly indicates that Turing thinks it has pricing power and thus that it has considerable monopoly power.
[…]
Markets, they work. As Mr. Shkreli is just finding out:
Turing Pharmaceuticals, the company that last month raised the price of the decades-old drug Daraprim from $13.50 a pill to $750, now has a competitor.
Imprimis Pharmaceuticals, Inc., a specialty pharmaceutical company based in San Diego, announced today that it has made an alternative to Daraprim that costs about a buck a pill — or $99 for a 100-pill supply.
This is not the same drug: it’s a slight variation, a close substitute. But it’s close enough that Turing isn’t going to be making much money from what it thought was monopoly pricing power. Because it was a contestable monopoly, not an absolute one.
