Wednesday, February 23, 2000

Drugs for Dogs

Marlee forwarded me an AP article about prescription drug pricing for humans vs. animals. According to a drug company mouthpiece, "medicines given to animals 'piggyback' on the lengthy and expensive approval process needed for use in humans."

This is rubbish. From an economic standpoint, it's irrelevant information. Humans are generally willing to pay higher prices for drugs intended for humans than those for animals. (Speciesists!) But in a free market, this effect will cause drug companies to want to sell to humans, not to animals. Thus, more drugs will be sold to humans, driving the price down. Fewer drugs will be sold to animals, driving the price up. In a free market, this won't stop, until both humans and animals are paying the same price for the same drugs. (After all, why would the drug company sell to an animal when it could get a higher price from a human?)

Unless it's not a free market. Why isn't it a free market? Well, a logical assumption is that the drug companies are manipulating prices to maximize their profits. Whether it's through monopoly, collusion or other means is beyond my grasp...
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