Another Example Of The FDA Driving Up Drug Prices

Posted by Jason | Posted in Economics, Health Care | Posted on 23-10-2010

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While everyone complains about the rising cost of health care, most Americans look to the government for the solution. It’s sort of like asking your dealer to help you kick your drug habit. All one needs to do is look at the daily examples where the government steps in and distorts the free market. This intervention is what drives up prices, and here is one of the millions of examples of how the government does this.

ViroPharma Inc. said U.S. drug regulators declined to approve an expansion of the company’s manufacturing of the drug Cinryze, which treats a hereditary disease, as the agency asked for more information.

Cinryze was approved by the Food and Drug Administration in 2008 to treat hereditary angioedema, or HAE, a rare genetic disease involving potentially deadly swelling of various parts of the body.

ViroPharma, of Exton, Pa., has sought to more than double the supply of Cinryze. Earlier this year, the company applied for FDA clearance to commercialize Cinryze manufactured using a certain industrial-scale process that’s different from the current process.

ViroPharma had expected to receive FDA approval of the industrial-scale product by the end of this year, helping sales beginning in 2011.

But the company disclosed Friday that the FDA sent a so-called complete response letter, requesting additional details about the technical process and ViroPharma responses to “quality observations” from an FDA inspection.

“The questions raised in this complete response letter are answerable in a timely manner,” ViroPharma Chief Executive Vincent Milano said on a conference call with analysts. ViroPharma plans to schedule a meeting with FDA officials as soon as possible, but Mr. Milano said it was too soon to provide a more specific timeline for next steps.

Mr. Milano said ViroPharma would proceed with plans to begin manufacturing industrial-scale lots “at risk” in the first quarter of 2011, with the hope inventory will be ready for shipment soon after FDA approval.

ViroPharma’s currently approved manufacturing process alone yields up to 60,000 doses of Cinryze annually. The industrial-scale process would add another 100,000 doses.

Cinryze generated sales of about $75 million for the first half of 2010, or about 38% of total company revenue.

via FDA Rejects Expansion Of ViroPharma Drug – WSJ.com.

I would sure hate to be inflicted with this disease, because you just got screwed by the government. The company, in pursuit of more profits, wanted to more than double the supply. In case there are any bureaucrats on here, let’s revisit our trusty Supply and Demand curves again. What happens when supply is increased without the demand curve changing? Prices go down. So with this government action alone, prices will not be driven down, which is what would have been the result of the company’s actions.

No, instead our benevolent dictators decided those inflicted do not need the extra doses at a lower cost. I’m sure they think they have their reasons. After all, this red tape is there to protect us (or strangle us). So, now not only does this extra supply not make it to the market, but ViroPharma has had to have the extra cost of paying off the mafia in hopes of doing business. Sorry, I meant the government, not the mafia. Do you think they are going to just eat that extra cost? Of course not. It’s going to be passed on to the consumer.

This example doesn’t even take into account the original FDA process that drug manufacturers have to go through to bring their drugs to market. If we had no FDA, that supply curve would shift dramatically, lowering prices.

On top of that, who knows how many people are going to die now that the extra supply won’t make it to the market. Oh well. The government has to get its cut. If someone’s got to die, then someone’s got to die.

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