[gwright]

Why is this 'market failure'?

It is government regulations and legal prohibitions that have created a situation in which there is no competition. The market didn't create that situation, the government did. It is no surprise the price goes up in a market where competition is effectively prohibited.

There are a few solutions: * adjust the regulatory framework to allow competition to emerge * strengthen the regulatory framework and set a price by law * apply public pressure against the sole provider into modifying their pricing

The last one is arguably the 'market' at work. The first two are just doubling down on a regulatory framework.

In any case, 'regulatory failure' seems like a much better description of the situation than 'market failure'.

[adocracy]

I don't agree here. It's both. It's a market failure when the price point (or transparency around the prices) doesn't convince new entrants to persevere through the existing regulatory process. It's market failure when the interests of all stake holders aren't successfully incorporated into the pricing. It's not a regulatory failure that the FDA has higher standards than the offered alternatives - we can't lower standards just to encourage new entrants. But it IS a regulatory failure when the FDA doesn't communicate with the FTC such that unnatural monopolies aren't controlled for, or that the FDA/FTC isn't communicating to the pharma industry that new entrants are required in order to prevent such monopolies from occurring. The FTC should be more "cross-border" effective with the government's own agencies.

[glenra]

> we can't lower standards just to encourage new entrants.

Why the heck not?

Two obvious reform options are:

(1) New rule: any medical device or medicine officially approved for use in any of (large list of countries deemed to have competent regulators) automatically is legal to use in the US as well. Seed the list with all of Europe and Japan, gradually consider adding new countries as seems appropriate.

(2) Make FDA approval optional. If a manufacturer thinks a drug and/or device works and is willing to accept the standard liability risk of selling it they can automatically do so, with the only caveat that it must include a prominent "not yet approved by the FDA" label until the product actually has finished getting approved. This label can also include a paragraph or two of more specific warning text and/or a URL to find more info if the FDA has specific concerns.

[adocracy]

(2) is untenable. A company could theoretically widely distribute a drug with unknown effects/consequences, only to find after the fact that it negatively affects >10% of patients causing death and disability in major numbers. File for bankruptcy and disappear with no ability for the sufferors to get lifetime care compensation? Catastrophic, with no recourse.

[glenra]

Why would major numbers of people take an unproven drug with unknown effects/consequences? Seems like a self-limiting problem.

When a drug is unknown and unproven, relatively few people will take it unless they have pretty good reason to think it's really effective or they are really desperate - which are exactly the situations in which you'd want people trying the drug to see if it works. If there's already a known and proven and cost-effective drug that works, people would take that instead.

The FDA alternative is that lots of people go without drugs that - even though they're safe and effective - never get to market because proving them so to the FDA's satisfaction is so expensive and time-consuming as to be not worth doing.

A lack of new drugs causes death and disability too. Me, I'd rather err on the side of too many rather than too few drug options available for people to solve their problems with.