5 ms·

I’m not sure if it’s relevant to the issue here, but if you want an example of a regulation that reduces cost: “you cannot sell medicine X for more than $Y”. Yo

by ks2048 3y ago

I’m not sure if it’s relevant to the issue here, but if you want an example of a regulation that reduces cost: “you cannot sell medicine X for more than $Y”. You could argue that in a pure market such a rule would never help (a competitor would naturally offer it cheaper, if possible). But if you look closely there few “pure” markets.

AnthonyMouse 3y ago
Which is better given an uncompetitive market, an regulation that says "you cannot sell medicine X for more than $Y," or a regulatory change that restores competition to the market? The latter is better to such a degree that the former is just a toy example with no practical use outside of academic discussions and corrupt politicians who want to avoid solving the underlying problem on purpose.
- ffgjgf1 3y ago
  Living in utopian abundance would be even better but sometimes not every option is feasible, especially in the short term. The objectively inferior option might still be better than doing nothing.
  - AnthonyMouse 3y ago
    Inefficient hacks are often worse than nothing because they remove the momentum behind fixing the underlying problem. You reduce the margin from 2500% to 1000% and think you're helping, but what you're really doing is condemning yourself to paying a 1000% margin forever because it's now below the threshold that people get outraged enough to do something about it.
devilbunny 3y ago
> “you cannot sell medicine X for more than $Y” This leads to shortages. I am speaking from experience here. I'm an anesthesiologist, and with three exceptions I can think of, our drugs are all off-patent, so their prices are basically a function of production costs. But the federal government of the US, which buys a lot of drugs under the VA and Medicare, has a rule that you can't increase the price by more than X% per quarter (or year, not sure). Now, we all agree that this sounds like a good regulation. Right? Nobody can just raise the price of insulin by 40000%? Except that generic drugs really don't make much money, and when one company leaves the market for a given drug (there are usually only 2-3 manufacturers per drug), the remaining corp(s) can only make up the shortfall by moving to 24-hour operations (in the short term). Staffing that means hiring more people and paying overtime. So the cost of production... doubles, at least. The part that is missing: it's a drug that sells for twenty cents for a sterile ampule. Doubling it to forty cents is not going to break the bank. It's cheap, it will continue to be cheap, and yes - in the long run, someone will set up a line to make it for ten cents and sell it at twenty. But in the short run? You run out of drugs. I've seen it in almost every category of anesthesia drugs (induction, opioids, paralytics, paralytic reversal, etc.) in the last ~20 years. You'd think that "not being aware during surgery" would be one of those things that people would care about, but it isn't.
- ffgjgf1 3y ago
  > This leads to shortages Or lower margins. After you spent millions/billions on R&D, testing and approval, why would you purposefully decrease your product just because your margin now is not 2500% but 1000%? Of course this might affect your willingness to invest into developing new drugs in the future
  - AnthonyMouse 3y ago
    It leads to shortages in a competitive market and lower margins in an uncompetitive market. But if you have an uncompetitive market on purpose as a result of patents meant to increase margins to fund R&D, a law capping prices is a screw up because it was meant to be the way it was. Whereas if you have an uncompetitive market unintentionally as a result of some other regulatory failure, a law capping prices is a screw up because you're not actually lowering margins from 2500% to 1000%, you're just raising them from the ~5% they ought to be to 1000% instead of 2500%, which is still bad.

by ks2048 3y ago

AnthonyMouse 3y ago

Which is better given an uncompetitive market, an regulation that says "you cannot sell medicine X for more than $Y," or a regulatory change that restores competition to the market? The latter is better to such a degree that the former is just a toy example with no practical use outside of academic discussions and corrupt politicians who want to avoid solving the underlying problem on purpose.

ffgjgf1 3y ago
Living in utopian abundance would be even better but sometimes not every option is feasible, especially in the short term. The objectively inferior option might still be better than doing nothing.
- AnthonyMouse 3y ago
  Inefficient hacks are often worse than nothing because they remove the momentum behind fixing the underlying problem. You reduce the margin from 2500% to 1000% and think you're helping, but what you're really doing is condemning yourself to paying a 1000% margin forever because it's now below the threshold that people get outraged enough to do something about it.

devilbunny 3y ago

> “you cannot sell medicine X for more than $Y” This leads to shortages. I am speaking from experience here. I'm an anesthesiologist, and with three exceptions I can think of, our drugs are all off-patent, so their prices are basically a function of production costs. But the federal government of the US, which buys a lot of drugs under the VA and Medicare, has a rule that you can't increase the price by more than X% per quarter (or year, not sure). Now, we all agree that this sounds like a good regulation. Right? Nobody can just raise the price of insulin by 40000%? Except that generic drugs really don't make much money, and when one company leaves the market for a given drug (there are usually only 2-3 manufacturers per drug), the remaining corp(s) can only make up the shortfall by moving to 24-hour operations (in the short term). Staffing that means hiring more people and paying overtime. So the cost of production... doubles, at least. The part that is missing: it's a drug that sells for twenty cents for a sterile ampule. Doubling it to forty cents is not going to break the bank. It's cheap, it will continue to be cheap, and yes - in the long run, someone will set up a line to make it for ten cents and sell it at twenty. But in the short run? You run out of drugs. I've seen it in almost every category of anesthesia drugs (induction, opioids, paralytics, paralytic reversal, etc.) in the last ~20 years. You'd think that "not being aware during surgery" would be one of those things that people would care about, but it isn't.

ffgjgf1 3y ago
> This leads to shortages Or lower margins. After you spent millions/billions on R&D, testing and approval, why would you purposefully decrease your product just because your margin now is not 2500% but 1000%? Of course this might affect your willingness to invest into developing new drugs in the future
- AnthonyMouse 3y ago
  It leads to shortages in a competitive market and lower margins in an uncompetitive market. But if you have an uncompetitive market on purpose as a result of patents meant to increase margins to fund R&D, a law capping prices is a screw up because it was meant to be the way it was. Whereas if you have an uncompetitive market unintentionally as a result of some other regulatory failure, a law capping prices is a screw up because you're not actually lowering margins from 2500% to 1000%, you're just raising them from the ~5% they ought to be to 1000% instead of 2500%, which is still bad.