Patent Monopolies Lead to Corruption, #27,561

Today GlaxoSmithKline is offering up evidence, coughing up $3 billion as a fine for having lied about the safety and effectiveness of several of its big drugs. Yes, this is the incentive that we give to drug companies when the government grants patent monopolies that allow them to sell drugs for hundreds or even thousands of times the cost of production.

Economic theory predicts that this form of government intervention will lead to enormous economic distortions, including the sorts of misrepresentations about the quality of drugs that GlaxoSmithKline fessed up to yesterday. Why can't the NYT or anyone else ever mention this fact. When there were shortages of milk and meat in the Soviet Union were they prohibited from mentioning that it might have something to do with central planning?

Good Reporting
written by Ron Alley, July 03, 2012 7:01

Dean,

The article really supports the case against drug patent monopolies.

Despite the large amount, $3 billion represents only a portion of what Glaxo made on the drugs. Avandia, for example, racked up $10.4 billion in sales, Paxil brought in $11.6 billion, and Wellbutrin sales were $5.9 billion during the years covered by the settlement, according to IMS Health, a data group that consults for drugmakers.

“So a $3 billion settlement for half a dozen drugs over 10 years can be rationalized as the cost of doing business,” Mr. Burns said.

Few lawsuits strike large corporations more deeply than the petty cash account.

...
written by fuller schmidt, July 03, 2012 4:37

Nyt-ers aren't interested enough to think such thoughts. Isn't $3bn a mind-blowing penalty though?

-1

Small country....
written by Carl Weetabix, July 03, 2012 5:15

3 billion and still alive - really sends the picture that these aren't corporations, they're small countries.

We're so dead.

Patent Monopolies Lead to Corruption, #27,561

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