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Commentary

The myth of the big bad drug companies
Richard A. Epstein, Los Angeles Times, 12-22-06

Epstein, a law professor at the University of Chicago, takes on the myth that pharmaceutical companies are irresponsible behemoths who ought to be considered enemies of the public health.

THE PHARMACEUTICAL industry is getting bad press. Recent books by Marcia Angell, the former editor of the New England Journal of Medicine, and Jerome Kassirer, another former editor of the journal, have harshly condemned the industry for recklessness, insensitivity and all–consuming greed. They gain sales by spicing up their titles with inflammatory phrases about "deception," "complicity" and how drug companies "endanger your health."

I take a different approach. I don't defend every business decision made by the great pharmaceutical research houses. To the contrary, much recent commentary suggests that many such companies have committed themselves to a blockbuster–drug model—in which a company's success or failure depends on a few vital, high–selling drugs—that may prove unsustainable over the long haul. If so, I believe that those firms should suffer the financial consequences of their mistaken business choices. Government bailouts are no more appropriate for Merck and Pfizer than they are for Chrysler or Ford.

Nonetheless, critics like Angell and Kassirer are absolutely wrong to portray the nation's big drug companies as heartless, avaricious behemoths that act in whatever manner they choose and always get their way. The truth is, the pharmaceutical industry is too heavily regulated. Its big problem today is not that it's free to run roughshod over the needs of consumers, but that it operates in a hostile and excessive regulatory environment that frustrates sound business decision-making and keeps down pharmaceutical company share prices in the stock market.



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